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Weak rupiah to weigh on consumer, pharmaceutical firms this year

Analysts warn the currency could remain under pressure throughout 2025 and suggest investors turn to “defensive” stocks.

Aditya Hadi (The Jakarta Post)
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Thu, March 20, 2025 Published on Mar. 17, 2025 Published on 2025-03-17T19:45:41+07:00

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Weak rupiah to weigh on consumer, pharmaceutical firms this year A woman looks at sugar-sweetened beverages in a Jakarta supermarket on Dec. 14, 2023. (Antara/Cahya Sari)

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onsumer goods and pharmaceutical firms including Mayora and Kimia Farma have been struggling to maintain profitability despite steady sales growth, partly because a depreciated rupiah has driven up the cost of imported raw materials.

Analysts say the Indonesian currency could remain under pressure throughout this year and suggest investors turn to “defensive” consumer stocks, like Japfa, Alfamart and Indomie, to weather a phase of volatility.

PT Mayora Indah saw its net sales grow 14.5 percent to Rp 36.1 trillion last year, fueled by strong demand for consumer staples like Kopiko and Beng-Beng. Yet the company’s net profit slipped 6.3 percent to Rp 3 trillion as its gross margin shrank from 26.7 percent to 23 percent.

The same pattern hit other fast-moving consumer goods (FMCG) companies, including industry heavyweight PT Unilever Indonesia and PT Ultrajaya Milk Industry & Trading Company, which saw their bottom lines plunge 29.8 percent and 2.6 percent, respectively.

The weak earnings weighed heavily on stock prices.

A February report by global investment firm Morgan Stanley highlighted that Indonesian consumer stocks underwent a 12 percent de-rating in 2024, now trading at a 33-percent discount to their five-year average forward PE multiples.

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The firm attributed this slump to sluggish growth, political uncertainty, corporate governance concerns, rising capital costs and rupiah fluctuation. It also noted a spillover to the broader market, with some companies delivering solid earnings but still facing declining valuations.

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