Jakarta, CNBC Indonesia – The giant issuer of consumer goods PT Unilever Indonesia Tbk (UNVR) is experiencing an unfavorable period.
This is because, first, The company’s stock price continues to be in a downward trend. Since touching the highest level of Rp 11,180/share on December 29, 2017, UNVR’s shares have plunged 65.83%. (See the graph below).
Second, The drop in UNVR’s share price occurred in line with declining financial performance. In addition, an analysis shows, the relevance of UNVR’s products is shrinking.
In 2021, UNVR’s net profit fell 19.6% on an annual basis to Rp 5.76 trillion from the previous Rp 7.16 trillion. With this, the net profit of this subsidiary of Unilever PLC has decreased for 3 consecutive days. (See the graph below).
Meanwhile, the company’s net sales also fell 7.97 percent over the same period the previous year to Rp 39.5 trillion.
The UNVR management also admitted that the decline in UNVR’s net sales over the past year was partly due to the tightening mobility policy due to the Covid-19 pandemic which had affected consumers’ purchasing power, especially in the market segment where UNVR operates.
In addition, said the UNVR, various commodity prices that are used as raw materials, some of which are crude oil (crude oil), palm-oil (CPO) also experienced a significant price spike compared to 2020.
Sluggish Finances, Shrinking Product Relevance
Looking at UNVR’s sluggish financial performance, an analysis from an investment advisory firm, Nilzon Capital, provides an interesting picture, one of which is in terms of the relevance of the company’s products.
In its analysis, Nilzon Capital provides a different position with the understanding of the Indonesian stock market players.
Nilzon Capital said, unlike what most investors think, currently UNVR is not a “consumer goods company that can maintain its value and has performance in line with the economy in general”.
This is because, explained Nilzon Capital, in the span of 2017 and 2021, UNVR showed a lower net sales performance than Indonesia’s household consumption GDP growth of 4 times out of 5 occasions. (See the graph below).
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Photo: Nilzon Capital UNVR Sales Performance vs RI Household Consumption- – |
“This fact contradicts the common belief among investors: UNVR is a safe issuer to withstand economic turmoil even in a severe economic downturn,” explains Nilzon Capital in its research.
Meanwhile, when the Covid-19 crisis hit the foundations of the economy in 2020 and when Indonesian household consumption was minus 2.63%, UNVR’s net sales could only rise by a very thin 0.12% yoy.
Nilzon Capital also wrote that the main factor that may have influenced the growth of UNVR’s net sales over the past few years is the increase in the average selling price, not the sales volume.
“As happened to its parent Unilever PLC, which showed a severe decline in market share,” added Nilzon Capital.
UNVR Open Voice
Unilever Indonesia also opened its voice following the analysis and suggestions from Nilzon Capital.
“We really respect and appreciate every opinion, analysis, and input related to the company’s performance from various stakeholders,” said Reski Damayanti, Director and Corporate Secretary of PT Unilever Indonesia Tbk to CNBC Indonesia, Wednesday (23/2/2022).
Reski continued, the Company always strives that every business action and decision is taken professionally and prioritizes the interests of the public and wider stakeholders, including investors.
“Currently, the company’s focus is to continue to accelerate growth in a consistent, competitive, profitable and responsible manner,” he said.
To that end, the company has five strategic priorities for Unilever Indonesia in 2022, namely first, strengthening and unlocking the full potential of big brands and key products through leading innovations to stimulate consumer consumption.
Second, expand and enrich portfolio to value and premium segment. Third, strengthen leadership in the main channel (GT and Modern Trade) and future channel (e-Commerce).
Fourth, lead in Digital & Data Driven capabilities and fifth, remain at the forefront of realizing a sustainable business.
“In its 88th year of operation in the archipelago, the Company continues to firmly uphold our commitment to grow with the people of Indonesia,” said Reski.
The Company is optimistic that along with the improvement in the Indonesian economy, there will also be greater opportunities for the Company to accelerate consistent, competitive, profitable and responsible business growth.
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