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Sustaining Growth in a Weaker Environment

Sustaining Growth in a Weaker Environment

Press Release No.  029/KFCP-DIR/PR/X/14

Jakarta, October 31, 2014 – PT Kalbe Farma Tbk and Subsidiaries (“Kalbe” or “the Company”) today announced its first nine month 2014 results. Net sales grew by 11.5% to reach Rp 12,758 billion from Rp 11,440 billion in the same period last year.

“We forecast that market condition will remain challenging in the near term. Nonetheless, we stay consistent to our strategy to expand product portfolio and drive innovation to strengthen our future position,” stated Vidjongtius, Kalbe’s Finance Director and Corporate Secretary. “Until the first nine month period of 2014, we were glad to observe that internal Kalbe products continued to grow, supported by active marketing activities and distribution penetration. However, third parties (non-Kalbe) products in the Distribution & Logistic Division continued to show slower growth. Despite the challenges, we remain optimistic to achieve optimal results for the year.”

The Company booked net sales of Rp 12,758 billion in the first nine month of 2014, or growing by 11.5% compared to the same period in 2013 of Rp 11,440 billion. Sales growth was supported by volume growth, while price increase was effected at the end of the first quarter of 2014.

Gross profit was up 10.0% to Rp 6,131 billion. The gross margin declined by 0.6% from 48.7% to 48.1%, mostly reflecting the weakening trend of Rupiah. Rupiah depreciated 15.9% year-on-year from Rp 10,150 per 1 USD in the first nine month period in 2013 to Rp 11,766 per 1 USD in the same period in 2014.

Operating income grew by 9.0% compared to the same period last year, with a ratio of 15.7% of net sales. Selling and marketing expense accounted for 26.8% of sales, lower compared to 27.1% in the first nine month period last year. Selling and marketing expense grew by 10.2% in line with consistent marketing efforts to generate sustainable demand, while we continue to work on increasing marketing effectiveness. The ratio of general and administrative expense and research and development expense stood at 4.8% and 0.8%, respectively. Research and development activities are part of our overall innovation strategy to strengthen our product portfolio across the board, including research-based drugs.

Our net profit increased by 8.8% year-on-year. Lower net profit growth compared to sales growth was mostly attributable to contraction in gross profit margin and higher interest expense and financial charges as well as miscellaneous expenses.

For full year 2014, the Company maintains its revenue growth target of 11% - 13%. This lower target was attributed to weaker growth of non-Kalbe products. Operating profit margin is targeted in the range of 16.0% - 17.0%, while earnings per share is expected to grow at 11% - 13% in line with top line growth, excluding the impact of foreign exchange translation. Capital expenditure of the Company is at the range of Rp 1.0 billion to Rp 1.2 billion which is mostly planned for capacity expansion. Our dividend policy ranges at the level of around 40% - 50%, depending on cash availability and internal fund requirement. For fiscal year 2013, we have distributed dividend equivalent to a 42% payout ratio which has been paid on July 2, 2014.

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 10 production facilities with international standards, supported by more than 17,000 employees and 6,000 sales and marketing personnel, spread in 69 branches across Indonesia.  Since 1991, Kalbe’s shares have been listed on the Indonesia Stock Exchange (IDX: KLBF).

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