JAKARTA: Pharmaceutical company PT Kalbe Farma’s net profits have been stagnant as of September, compared to last year and the company predicts its full year profit growth will drop due to the economic slowdown and weak rupiah.
Kalbe, a publicly listed drugmaker, reported on Friday that its net profits had stagnated at Rp 1.5 trillion by the end of the third quarter compared to the Rp 1.49 trillion it booked in the same period last year.
However, its net sales moved up by around 3 percent to Rp 12.76 trillion in the first nine months of this year, from Rp 13.13 trillion in the same period last year.
In contrast, the company’s revenue and net profits grew by 11.54 percent and 8.76 percent year-on-year(yoy), respectively, in the January to September period last year.
Kalbe Farma corporate secretary Vidjongtius said in a press statement that his company was facing challenges from unfavorable macroeconomic conditions.
“The company’s performance until the third quarter of 2015 still reflects the slowing Indonesian macroeconomic conditions, particularly the weaker purchasing power and unstable rupiah exchange rate. Amid these tough conditions, the company has managed to book positive growth, particularly for its internal products,”
Given the slowing macroeconomic conditions and tough market competition, the company estimates that its sales growth outlook for this year will be around 2 to 3 percent, while its net profit is projected to slip by around 3 to 4 percent, according to the statement.
The country’s economy is growing at its slowest pace since 2009, and the rupiah has been steeply depreciating against the greenback throughout the year. The rupiah has fluctuated between 12,500 per US dollar to 14,800 — the lowest level since the 1998 Asian financial crisis.
Typical for companies operating in the consumer goods sector, Kalbe has been hit hard by people’s weakening purchasing power. Due to the unavailability of raw materials needed for producing drugs in the country, Kalbe — just like other pharmaceutical companies — needs to import most of its materials.
Vidjongtius added that the company’s performance was also affected by the recall of one of its prescription drug varieties, as well as a discontinued distributorship agreement with a third party in late 2014.
Kalbe recalled an anaesthesia product earlier this year following fatal incidents at Siloam Hospital in Tangerang.
Dang Maulida from KDB Daewoo Securities Indonesia said that the broker had to lower its performance projection of the company to the lowest estimation figure given by the company, particularly due to tougher competition in the prescription drug market.
However, she added that the consumer health and nutritional division of the company was expected to generate a significant contribution to Kalbe’s growth, emphasizing the need for further innovation with the division’s well-know products..
Kalbe, which produces brands such as gastric medicine Promag, infant food Milna and milk Prenagen, saw distribution and logistic contribute 30 percent to its sales, while its nutritional division contributed around 28 percent.
Prescription pharmaceutical and consumer health made up 24 percent and 18 percent of the company’s first-nine-month sales, respectively.
The company, which is the largest listed drugmaker in Southeast Asia, exported 5 percent of its total sales.
