Unilever says innovation helped boost profit

JAKARTA. Product innovation coupled by strong purchasing power helped consumer goods giant PT Unilever Indonesia report strong business growth in the first semester of the year, a top official said.

Unilever Indonesia, listed on the local bourse under the code UNVR, reaped Rp 13.36 trillion (US$1.4 billion) in net sales during the January-to-June period of the year, up 16 percent compared to Rp 11.46 trillion during the same period last year.

“The growth in revenue was the result of innovation of our products, both home and personal care as well as food and ice cream segments,” Unilever director Sancoyo Antarikso said on Monday.

Unilever’s businesses are grouped into two main segments: home and personal care — which relates to household cleaning products and cosmetic products, and the food and beverage segment. Home and personal care contributes about 75 percent of the company’s total business.

In line with the sales growth, the company’s cost of goods sold rose 18 percent to Rp 6.62 trillion in the first semester of the year compared to Rp 5.56 trillion year-on-year. The Magnum maker’s gross profit stood at Rp 6.74 trillion in the first six months of the year, up 14 percent from Rp 5.9 trillion in the same period last year.

The company booked Rp 2.33 trillion in net profit in the first half of the year, up 12 percent from Rp 2.09 trillion year-on-year.

Unilever’s total assets were worth Rp 13.93 trillion, with liabilities of Rp 10.18 trillion and equity at Rp 3.75 trillion at the end of June.

Andrew Argado of PT eTrading Securities said that Unilever’s growing performance had been anticipated.

“It is in line with the expectation of growth between 15 to 20 percent. The company has a large presence, therefore, a 16 percent increase in the range is okay as it means trillions of rupiah,” Andrew said.

According to Andrew, Unilever will continue benefiting from its home and personal care businesses. However, he said, the room for growth has reached its peak and the company would seek further improvement in the food and beverage segment.

“I think the company also sees that the home and personal care business has entered the maturity point. Population growth, advertisement and increase in selling price will drive this segment’s growth,” Andrew said.

Andrew gave an example of how Unilever encouraged customers to use its products such as body lotion from once to three times a day, thanks to a successful promotion particularly broadcast on television.

According to its financial report, Unilever spent Rp 1.31 trillion for advertising and market research during the January-to-June period of the year, increasing by 12 percent compared to Rp 1.17 trillion year-on-year. The company also used Rp 528.71 billion for promotions in the first six months of the year, up 21 percent from Rp 433.78 billion during the same period last year.

Sancoyo said that Unilever would see higher demand ahead of Lebaran, when Muslims are expected to spend more, particularly for food and beverage products.

“Margarine is highly in demand during the fasting month. Beauty products see a rise during Lebaran,” Sancoyo said.

Shares in Unilever were unchanged at Rp 24,100 on Monday. The company’s market capitalization reached Rp 183.9 trillion, the fourth largest on the bourse. (Raras Cahyafitri/ The Jakarta Post)