1H25 results below expectations due to higher promotional costs – Delfi reported 1H25 earnings of US$12mil, down 38% y-o-y and forming just 41% of our earlier FY25F estimates. This is a significant miss, especially as 1H is seasonally stronger with Lebaran and Valentine Day celebrations.
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1H25 revenue remained resilient with soft Indonesia performance offset by growth in Regional Markets.
Revenue came in at US$261mil, down 0.5% y-o-y. The steepest decline was seen in Indonesia Agency Brands, which fell 21% y-o-y due to reduced promotional support. This was offset by stable Indonesia Own Brands which grew 2% y-o-y in 1H25, supported by higher promotional spend.
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1H25 EBITDA margin reached a new low of 9.4% (below COVID-period levels), down from 12.6% in 1H24.
While revenue held up, we believe this was largely sustained by elevated promotional spending, with distribution costs rising from 13.5% to 15.1% of revenue in 1H25.
In addition to higher promotional expenses, increased cost of goods also weighed on profitability, as gross margin contracted from 28.8% to 27.5%, likely due to elevated cocoa prices.
Declared an interim dividend of 1.0 US cent, down 51% y-o-y, representing 50% payout ratio.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
