Indonesian Earnings Disappoint Most in 19 Months on Slow Growth
Indonesian Earnings Disappoint Most in 19 Months on Slow Growth
(Bloomberg) -- Indonesian companies are off to a bad start to the year as first-half earnings so far missed estimates by the most since December 2017 on sluggish economic growth.
About half of the 584 companies listed on the Indonesian stock exchange have reported as of Wednesday. Earnings so far are 6.8% lower on aggregate than analyst estimates, with industrial and consumer services sectors disappointing the most, lagging 18.5% and 17.9%, respectively. The list of the top 45 biggest firms doesn’t paint a rosy picture either, with 18 firms that have reported missing forecasts by 6.9%.
The slowing domestic economy has been a concern for companies as it’s holding back consumer spending, said Taye Shim, head of equities and capital market at PT Mirae Asset Sekuritas Indonesia. Weak consumer sentiment has contributed to a lackluster performance of the nation’s benchmark index, whose 2.9% gain this year is well behind the 8.7% gain for the MSCI Asia Pacific Index.
“Most Indonesian companies sell staple goods or basic necessities and the competition is fierce in the mass market,” Shim said. “However inflationary pressures are nowhere to be found right now that can trigger price increases and spending.”
Major conglomerate PT Astra International, for instance, saw its net income fall 5.6% in the first half from the year-earlier period. Astra attributed the decline to weak domestic consumption and said challenging conditions will continue until year-end.
Both the Indonesian government and central bank have lowered this year’s growth projection from previous estimates, citing trade war tensions, falling global trade and commodity price declines as major risks. While the government had expected a 5.2% expansion in 2019, Bank Indonesia sees growth at below that level.
To contact the reporter on this story: Tassia Sipahutar in Jakarta at ssipahutar@bloomberg.net
To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Teo Chian Wei
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