Who says the FMCG (Fast-Moving Consumer Goods) business in Indonesia is declining again? Unilever Indonesia ($UNVR) has just announced that it has managed to book a net profit of 1.24 trillion rupiah in its financial statements for the first quarter of 2025. This figure showed -15% YoY but jumped 245% QoQ. Not only that, but this achievement exceeded consensus expectations projected by only 32% of the 2025 estimate.

Although its performance in the quarter showed significant improvements in terms of cost efficiency, Unilever’s revenue trend is still relatively weak. However, there are positive signals from margin recovery that imply that their management measures are starting to bear fruit.

Significant Recovery in Margin

Unilever’s gross profit margin recovered to 48.2% in the quarter after being depressed. This is good news considering that they were previously in the area around 45% for two consecutive quarters. In addition, operating profit margin also recorded a more significant improvement, now at the level of 17.1%, much better than the 6.7% they experienced previously.

This increase was supported by a 45% YoY decrease in salary costs, as well as one-off costs due to employee reductions. Although advertising costs remain stable at 9.2% of revenue, weakening revenues have the potential to be a major concern for investors.

Revenue Still Recorded Weak

Unilever’s revenue was recorded at only 9.47 trillion rupiah in the first quarter of 2025, down by -6% YoY but up 23% QoQ. Unfortunately, domestic sales volume actually fell by -8% YoY, although the average selling price (ASP) increased by 1.3% YoY.

From the sales segment, home and personal care products experienced a sharper decline at the level of -9% YoY, while the food and refreshment segment was still fairly stable with a decrease of only -1% YoY. Although the home and personal care segment’s revenue began to recover with gross profit margins increasing by 50.2% in 1Q25, in fact, overall performance still posed a challenge for management.

Key Takeaway

Overall, Unilever’s performance suggests that the company may have gone through its worst times. Based on the trend of net profit growth rising from -62% in the third quarter of last year to -15% in the first quarter of this year, there is hope for the coming period. Unilever’s management even remains optimistic that the positive results of the revamping program will be more visible in the second half of 2025. If Unilever can show better progress on the earnings side, their share price has the potential to recover more significantly.

Unilever also recorded an impressive increase in the past month, with the recovery increasing to 19.6%, higher than the JCI which was only at the level of 7.3%.