Unilever has fastest profit growth in Q3

Unilever has fastest profit growth in Q3

Wahyudi Soeriaatmadja and Soraya Permatasari, Bloomberg, Jakarta

PT Unilever Indonesia, the local unit of the world's biggest maker of soap and shampoo, posted its biggest quarterly profit growth this year, aided by higher prices.

Profit in the third-quarter ended Sept. 30 rose 21 percent to Rp 394 billion (US$40 million) from Rp 326 billion a year earlier. The three-month figures, which the Jakarta-based company didn't announce, were derived by subtracting first-half earnings from the nine-month results announced today. Sales increased 27 percent to Rp 2.72 trillion.

Unilever Indonesia, which sells Lux soaps and Rinso detergents among the 33 brands on offer in the Southeast Asian nation, said on Oct. 19 it has no immediate plan to increase prices after a 5 percent rise earlier this year. Profit grew 11 percent in the second quarter and fell 0.2 percent in the first after increasing 22 percent in the fourth quarter last year, Bloomberg data showed.

"The third-quarter result was quite an improvement from the first half," said Katarina Setiawan, an analyst at Kim Eng Securities who had a "long-term buy" rating on the stock. "The management has been successful in keeping up growth both on the top line and the bottom line."

Unilever Indonesia shares rose Rp 125, or 3.1 percent, to 4,225 at the midday break on the Jakarta Stock Exchange.

The company wants to maintain a sales growth target of at least 10 percent this year and next, the company said on Oct. 19. Unilever Indonesia competes with Procter and Gamble Co., the largest U.S. household-product maker, in a nation where consumer spending makes up more than 60 percent of the $258 billion economy. Southeast Asia's biggest economy, with a population of more than 238 million, expanded 5.1 percent last year, the fastest in eight years, and is forecast by the government to grow 6 percent this year.

In the nine months ended Sept. 30, profit rose to Rp 1.2 trillion, or Rp 157 a share, from 1.09 trillion, or Rp 143, a year earlier, the Jakarta-based unit of Unilever NV said in a stock exchange statement. Sales rose 15 percent to Rp 7.6 trillion.

Profit margins may shrink because packaging costs are rising, the company said on Oct. 19. Oil prices are pushing up prices of petrochemicals used to make plastic packaging. Production costs are also higher after the government raised fuel prices for industrial use several times this year, the company said then.

To boost efficiency Unilever Indonesia is using cheaper alternative raw material and is converting its energy source to gas, which is cheaper than oil-based fuel, company director Muhammad Saleh said on Oct. 19.

Unilever Indonesia said in June it was targeting an operating profit margin, which measures profit from operations against sales, of 22.7 percent, the same as last year. Operating profit margin was 22 percent in 2003, 19 percent in 2002 and in 2001.