Tito Summa Siahaan & Francezka Nangoy – Profit for many Indonesian companies rose in the third quarter, with banks and consumer-related manufacturers leading the way, amid an increase in spending buoyed by strong economic growth.
The combined net income of 40 of the 45 companies that make up the LQ-45 index in the July-September period rose 8.5 percent from a year earlier to Rp 40.77 trillion ($4.2 billion), according to Bloomberg data.
Publicly traded firms that make up the 45-member index are among the largest by value and have total market capitalization of Rp 2,592 trillion – amounting to 67 percent of all stocks that trade on the Indonesia Stock Exchange.
Six lenders in the stock measure – Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia, Bank Jawa Barat Banten, Bank Danamon and Bank Central Asia – reported combined net income of Rp 14.5 trillion, a 22 percent increase.
Lenders have grown quickly in recent years, as rising middle-income households' demand for credit climbs with borrowing costs at record lows. Corporations have also been rushing to seek loans to fund their expansion plans as the economy continues to grow above 6 percent.
Infrastructure-related companies also posted higher profit as projects for homes, roads and facilities increase. At Semen Gresik, the country's largest cement producer, net income rose 45 percent to Rp 1.3 trillion. Earnings at rival Indocement Tunggal Prakarsa climbed 35 percent to Rp 1.2 trillion.
Among food manufacturers, Unilever Indonesia, the country's largest consumer goods company, posted net income of Rp 1.3 trillion, a 38 percent increase. Earnings at Indofood Sukses Makmur, an instant-noodle maker, rose 17 percent to Rp 866 billion.
Property companies also reported strong performances. Net income at Alam Sutera Realty jumped 78 percent to Rp 225 billion, while that of Bumi Serpong Damai surged 70 percent to Rp 395 billion.
Meanwhile, profit growth at Astra International, the country's largest listed company with businesses ranging from automotive retailing to farming, was held back by its heavy equipment business. Astra's net income rose 2.9 percent to Rp 4.99 trillion. Earnings at its unit United Tractors dropped 24 percent to Rp 1.38 trillion.
"For Astra, its car sales will continue to grow, but when consolidated with its other businesses, especially with the heavy equipment unit... Astra's earnings may look a bit flat," said Reza Priyambada, the head of research at Trust Securities.
Lower commodities prices have also dragged down the bottom line for mining companies. Vale Indonesia, the country's largest nickel producer, reported profit plunged 68 percent to Rp 222 billion. Net income at Aneka Tambang, a state-controlled miner, dropped 72 percent to Rp 152 billion.
"Mining and commodity companies are still struggling," said Reza, adding that he expects natural resources firms will continue their poor performance until the end of the year.
Five companies – Bumi Resources, Lippo Karawaci, Borneo Lumbung, Energi Mega Persada and Indika Energy – have yet to file their third-quarter earnings reports.