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Preserving Margin In A Challenging Market

Preserving Margin In A Challenging Market

Press Release No. 006/KFCP-DIR/PR/IV/15

Jakarta, April 30, 2015 – PT Kalbe Farma Tbk and Subsidiaries (“Kalbe” or “the Company”) today announced net sales of Rp 4,247 billion for the first quarter of 2015, an increase of 4.4% compared to the first quarter of 2014 of Rp 4,067 billion.

“Macro situation is still challenging, marked by declining purchasing power and depreciating Rupiah value. High inflation rate in 2014 of around 8% has adversely affected consumer purchasing power until the first quarter of this year” stated Vidjongtius, Kalbe’s Finance Director and Corporate Secretary. “Further, the slowdown in overall growth was also affected by a negative sales growth in distribution and logistics business, as well as the impact of the recall of a prescription pharmaceuticals product,” stated Vidjongtius. However, he added that in this challenging situation, Kalbe has managed to maintain a positive net earnings growth.

Kalbe recorded net sales of Rp 4,247 Billion for the first quarter of 2015, up by 4.4% compared to Rp 4,067 Billion in the same period in 2014. This was mostly attributable to slowing volume growth as a result of inflation, impact of the product recall of a pharmaceuticals product and affected by the decline in the Distribution and Logistics Division due to discontinued distributorship agreement with a third party principal at the end of 2014.

Gross profit grew by 8.1% in the first quarter of 2015, higher than top line growth. Change in the Company’s business mix and product mix has brought positive impact to gross profit margin to reach 49.5% in the first quarter of 2015 compared to 47.8% in the same period last year.

Operating profit grew by 6.3% in the first quarter of 2015 compared to the same period last year. Operating profit margin in first quarter 2015 increased to 16.1% from 15.8% in the same period in year 2014. The Company is committed to maintain its operating profit growth by evaluating and improving its marketing and sales effectiveness and managing the other operating expenses.

Net profit grew by 7.2% to Rp 529 billion in the first quarter of 2015 compared to Rp 493 billion in the same period last year. Net profit grew higher than net sales mostly due to gross profit margin increase.

At the beginning of the year, the Company announced to target net sales growth of 11-13% and net earnings growth of 14-16%, with operating profit margin within the range of 16% - 17%. However, looking at the fragile and unstable macro condition and taking into account the impact of product recall, we revise our target to 7% - 9% net sales growth and 9% -11% net earnings growth and maintained operating profit margin at the level of 16% - 17%. A capital expenditure budget of Rp 0.9 - 1.1 Trillion has been set for both production and distribution capacity expansion.

Kalbe at a Glance
PT Kalbe Farma Tbk. (“Kalbe”) was established in 1966 and is one of the largest publicly-listed pharmaceutical companies in Southeast Asia. Kalbe has four main divisions managing a broad and strong portfolio of brands; prescription pharmaceuticals division (Cefspan, Brainact, Broadced, etc), consumer health division comprising over-the-counter drugs (Promag, Mixagrip, Komix, Woods, Fatigon, etc) as well as ready-to-drink and energy drink products (Hydro Coco, Extra Joss, Nitros), nutritionals division (ChilKid, Prenagen, Diabetasol, etc), and distribution division. Kalbe currently has more than 20 subsidiaries and 9 production facilities with international standards, supported by around 17,000 employees and 6,000 sales and marketing personnel, spread in 70 branches across Indonesia.  Since 1991, Kalbe’s shares have been listed on the Indonesia Stock Exchange (IDX: KLBF).

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