Indonesia's Astra International Reports Lowest Net Profit in 5 Years
Astra International reported a 25 percent year-on-year (y/y) decline in net profit to IDR 14.4 trillion (approx. USD $1.1 billion) over 2015. This is the company's lowest net profit figure in the past five years. Main reasons for this weak performance is falling domestic consumption in Indonesia and persistently sliding commodity prices. Astra International, an investment holding company, is among the largest diversified conglomerates in Indonesia and regarded the barometer of the Indonesian economy due to the group's presence in various sectors.
Although it was expected that Astra International would post lower net profit in 2015 - given Indonesia's overall economic growth fell to a six-year low in 2015 - the 25 percent (y/y) decline was still considerable. However, it did not lead to plunging shares of the group. By 11:00 am local Jakarta time on Friday (26/02), shares of Astra International had in fact surged 3.89 percent as Indonesian blue chips were hunted by investors on optimism about G20 talks and higher oil prices. This had led to rallying stocks in Europe and the USA overnight.
Of Astra International's six business lines - [1] automotive, [2] agribusiness, [3] heavy equipment, mining and energy, [4] financial services, [5] information technology, and [6] infrastructure & logistics - only the information technology line managed to post positive net profit growth (+2 percent y/y). Meanwhile, the company's weakest business line was agribusiness (with net profit plunging 75 percent y/y in 2015). Meanwhile, the backbone of the group - the automotive line - experienced a 12 percent decline in net profit. Prijono Sugiarto, President Director of Astra International, said the weak performance of its automotive line was caused by discounts offered to consumers amid tough competition on Indonesia's automotive market and weaker demand for cars in Southeast Asia's largest economy (resulting in an oversupply of vehicles on the domestic market).
Astra International reported net revenue of IDR 184.1 trillion (approx. USD $13.6 billion) for the full year ending in December, compared with IDR 201.7 trillion one year earlier. It was the first time in five years that the company's net revenue contracted.
As the economy of Indonesia is expected to accelerate again in 2016 after six years of slowing economic growth, the performance of Astra International is also expected to improve this year. Domestic and international institutions (such as the World Bank and the International Monetary Fund) put Indonesia's GDP growth at 5.3 percent (y/y) in 2016 supported by Indonesia's recently unveiled series of economic policy packages, a stronger rupiah, lower interest rates, expanding credit growth and improving purchasing power.
However, Sugiarto said Astra International remains cautious about the immediate outlook. He emphasized, however, that Astra's strong cash generation and sound balance sheet will enable the company to invest in the future and benefit from any improvement in economic conditions.
Astra International's Financial Results:
| Subject | 2014 |
2015 | Change (y/y) |
| Net Revenue | 201,701 | 184,196 | -9% |
| Net Income | 19,191 | 14,464 | -25% |
| Net Earnings per Share¹ | 474 | 357 | -25% |
| Net Asset Value per Share¹ | 2,359 | 2,521 | +7% |
in billion of IDR rupiah
¹ in rupiah
Source: Astra International
Astra International's Net Income per Business Line:
| Subject | 2014 |
2015 | Change (y/y) |
| Automotive | 8,491 | 7,464 | -12% |
| Financial Services | 4,750 | 3,555 | -25% |
| Heavy Equipment & Mining | 3,263 | 2,342 | -28% |
| Agribusiness | 1,996 | 493 | -75% |
| Infrastructure, Logistics & Others | 491 | 406 | -17% |
| Information Technology | 200 | 204 | +2% |
| Attributable Net Income | 19,191 | 14,464 | -25% |
in billion of IDR rupiah
Source: Astra International
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