Author: Mei Ling Tan

The earnings of Indonesian companies as of September has revealed a patchy recovery in local firms as they continue along a bumpy road with persistently weak demand. However, efficiency and currency gains are compensating for financial pressures.

The mixed results of the January to September financial performance of publicly listed firms is reflected in the performance of the benchmark Jakarta Composite Index (JCI), which has hovered around the 5,400 level for the past two weeks during corporate earnings announcement season.

“The 50:50 result, by which half of the listed companies announced higher-than-expected earnings while the other half were bad, brought the index nowhere,” Recapital Securities analyst Kiswoyo Adi Joe said on Tuesday.

Indonesia’s economy is expected to recover this year and reach a 5 percent growth rate from a six-year low level of 4.79 percent last year.

But sluggish global demand and a slump in commodity prices are hampering sectors such as trade, mining and agribusiness, while consumer goods, infrastructure and financial companies are showing resilience, according to the JanuarySeptember financial reports submitted to the Indonesia Stock Exchange (IDX).

Diversified conglomerate Astra International, whose miningrelated business is being hit by low prices this year, saw net profits contract by 6 percent to Rp 11.28 trillion (US$865.3 million). Revenues were 4 percent lower in the January-September period year-on-year (yoy).

“Astra’s performance is a reflection of our domestic economy. If it’s good, we can hope the economy will move faster,” Kiswoyo said. The second largest listed Indonesian company by market value has seven business lines from automotives and palm oil to finance and heavy equipment.

Cigarette maker HM Sampoerna, Indonesia’s largest company by market value, saw net profits surge 20 percent to Rp 9.1 trillion on the back of huge financial revenues and a 7.3 percent rise in sales to Rp 70.3 trillion in the January to September period yoy.

Another consumer goods giant Unilever saw its net sales and net profits grow by 9.5 percent and 14.3 percent yoy, respectively. The company’s efforts to lower operating costs included lowering advertising and promotions spending in the third quarter of this year from the previous quarter.

Instant noodle maker Indofood CBP saw its sales increase by 10 percent while its net profit jumped by 19.1 percent.

Overall, consumer goods stocks on the IDX rose by 0.57 percent during the earnings announcement season in October as the benchmark stock index flat-lined.

In the telecommunications sector, a stronger rupiah has helped XL Axiata reverse its losses although its revenues dropped by around 5 percent.

Financial revenues from interest on time deposits and plunging costs have also helped state-owned miner Aneka Tambang (Antam) prop up its earnings. The state-run miner reversed its losses amid sales that contracted by more than 28 percent and costs that dropped by almost 30 percent.

In the financial sector, banks booked varying results. State-owned lenders mostly recorded positive performances across the board, but private companies recorded gloomier results as their credit growth was still floating around or even below the industry average.

Going forward, banking remains the overweight sector for First Asia Capital analyst David Sutyanto.

“Banking will perform well because they’ll get fresh funds from the tax amnesty,” David said. “Second, the mining sector will get a windfall from rising commodity prices.”

The government’s ongoing tax amnesty runs from July this year to next March and has seen nearly Rp 3.9 quadrillion in assets declared, of which Rp 143 trillion have been repatriated from overseas.