Here's Sido's Business Strategy And Strategy Appears In The Year Of Naga Kayu

Photo: Doc. Sido Muncul

JAKARTA - PT Industri Jamu and Pharmacy Sido Muncul Tbk (SIDO) prepared a number of moves to improve the company's sales performance in Naga Kayu. This step was taken after the producer of Tolak Angin posted an unsatisfactory financial performance in 2023.

For information, the company's net profit attributable to owners of the parent entity at the end of 2023 reached Rp950.64 billion. This number decreased by 13.95 percent year-on-year (yoy) compared to the same period in 2022 which amounted to Rp1.10 trillion. The decrease in net profit was caused by the weakening of people's purchasing power.

Meanwhile, in terms of sales, the company managed to reap IDR 3.56 trillion, or a decrease of 7.75 percent on an annual basis compared to revenue in the same period in 2022 of IDR 3.86 trillion.

"This is a result of weak purchasing power and fairly high food inflation in 2023," explained Sido Muncul's management.

Despite being faced with challenging economic conditions, SIDO still managed to maintain its market share, especially in its flagship product, namely Tolak Angin. Until the end of 2023, this wind-repulsing drink managed to control 72 percent of the market share.

Then to reject the performance of 2024 which has caught air, SIDO will continue to innovate through the expansion of the product portfolio, including Alang Sari Cool (ready to drink products), Sido Muncul Vitamin C+D (ready to drink products), Esemag (Herbal), Sari Kunyit Plus (Herbal), and Female Balance (Herbal).

SIDO management revealed that the ready-to-drinking business (RTD) grew by 42 percent compared to the previous year. This growth was driven by a positive response to the launch of the Alang Sari Cool and Sido Muncul Vitamin C+D (VCD) products.

Judging from its performance per quarter, SIDO managed to record net sales of IDR 1.2 trillion in the fourth quarter of 2023. This figure shows an increase of more than 70 percent quarter-on-quarter (QoQ) compared to the third quarter of 2023. In addition, export sales also grew by more than 80 percent QoQ.

Stockbit Sekuritas analyst Edi Chandren revealed that SIDO's performance throughout 2023 has surpassed the ex-party of consensus amid various economic challenges. He also believes that this herbal issuer is able to navigate 2024 with impressive performance.

"The 2023 net interest exceeds (108 percent) consensus expectations. This result was supported by strong performance on 4Q23, with a net profit of IDR 364 billion (+162.9 percent qoq, -5.3 percent yoy)," he explained in a recent research.

He also revealed that SIDO's performance in the fourth quarter of 2023 itself was driven by revenue recovery which reached IDR 1.2 trillion (+70 percent qoq, -3.8 percent yoy).

"Margin also recovered significantly on a quarterly basis thanks to the increase in cost of goods sold (+43.1 percent qoq) and operating expenses (+8.7 percent qoq) which are much more moderate than revenue," he added.

After this, continued Edi, SIDO's performance will recover in 2024, although not very significantly. The company's recovery in performance will be driven by better people's purchasing power, so that sales can grow positively again.

"The improvement in people's purchasing power itself will be supported by spending related to campaigns in the political year, increasing the budget for social protection programs, and the low inflation rate at the level of 2-3 percent," concluded Edi.