Earnings call transcript: Avia Avian reports steady Q1 2025 growth

Investing.com

Published Apr 30, 2025 06:01AM ET

Earnings call transcript: Avia Avian reports steady Q1 2025 growth

Avia Avian PT Tbk (AVIA) reported solid financial performance for Q1 2025, with total revenue reaching $123 million. The company saw a 6% increase in consolidated sales year-on-year, driven by significant growth in its Architectural Solutions and Trading Goods segments. According to InvestingPro data, the company maintains impressive gross profit margins of 52.66% and currently offers a significant dividend yield of 5.29%. Despite soft economic conditions anticipated in the first half of 2025, Avia Avian maintained its full-year guidance, aiming for continued expansion and market leadership in the decorative paint segment.

Key Takeaways

  • Total revenue for Q1 2025 was $123 million, with a 6% year-on-year sales growth.
  • The Architectural Solutions segment contributed 81% of total sales.
  • Avia Avian plans a capital expenditure of 350 billion rupiah for growth.
  • The company launched three new products, enhancing its market offerings.
  • Market leadership in the decorative paint segment remains strong.

Company Performance

Avia Avian demonstrated robust performance in Q1 2025, with a 6% increase in consolidated sales compared to the same period last year. The Architectural Solutions segment was a major contributor, accounting for 81% of total sales. The Trading Goods segment also showed impressive growth, achieving a 15.2% increase. The company's ability to implement a price increase of 2.5-5% on February 1st further supported its revenue growth.

Financial Highlights

  • Total Revenue: $123 million, up 6% year-on-year
  • Gross Margin: 45.8%
  • EBITDA Margin: 28.7%
  • Net Profit Margin: 22.1%
  • Consolidated Gross Profit: 25 billion rupiah, a 4.5% increase year-on-year
  • Consolidated Net Profit: 447 billion rupiah

Outlook & Guidance

Avia Avian is maintaining its full-year 2025 guidance, with a planned growth capital expenditure of 350 billion rupiah. The company is also extending the completion of its third factory to 2026. Avia Avian aims to continue its tinting machine deployment strategy and target double-digit growth in the Trading Goods segment.

Executive Commentary

Andreas Timoti Hadi Krissnau, Head of Investor Relations, emphasized the importance of product innovation, stating, "Product innovations lie at the heart of our business, serving as the foundation for achieving sustainable growth in the future." Kourmia Hadi, Finance Director, highlighted the company's pricing strategy and revenue growth, saying, "We are not diluting our revenue in any way. The revenue per tinting machine has been increasing."

Risks and Challenges

  • Economic conditions are expected to remain soft in the first half of 2025.
  • The paint market is showing limited growth.
  • The company faces competition in the Trading Goods segment.
  • Avia Avian has exposure to foreign exchange fluctuations, with 70% of its raw materials affected by USD.
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Q&A

During the earnings call, analysts inquired about Avia Avian's foreign exchange exposure, pricing strategy, and market challenges during the Ramadan period. The company addressed potential impacts of government housing programs and reaffirmed its commitment to maintaining margins despite market pressures.

Full transcript - Avia Avian PT Tbk (AVIA) Q1 2025:

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Afternoon, everyone. Thank you for taking the time to participate in today's call. We appreciate your continued interest in Avia and welcome you to our quarter one twenty twenty five earnings call. For your information, we uploaded the presentation materials to our website yesterday. The plan for today is to start with a quick presentation followed by a one hour Q and A session.

If you have any questions during the presentation, please use the q and a chat box, and we will answer them during the q and a session. For those who cannot join us now, please note that the webcast of this event will be uploaded to our website not later than tomorrow. Thank you again for being here today. Allow me to start by introducing myself. My name is Andreas Timoti Hadi Krissnau.

I'm the Head of Investor Relations at Avia and will be moderating this earnings call today. We are joined today by three other presenters, starting with Mr. Ruslan Tanuko, the Vice President Director of our company followed by Mr. Robert Tanuko, the Operations and Development Director and finally, Mr. Kourmia Hadi, the Finance Director.

In quarter one, Afian brands delivered a total revenue of US123 million dollars The company maintained robust profitability, reporting a gross margin of 45.8%, an EBITDA margin of 28.7% and a net profit margin of 22.1%. Avian brands emphasize operational excellence across all segments, ensuring industry leading service to more than 58,000 customers. This commitment is further supported by over 9,000 dedicated employees and an extensive distribution network comprising 125 wholly owned DCs and thirty eight third party DCs. This page highlights the company's quarter one twenty twenty five year on year performance. We have expected economic conditions to remain soft, at least in the first half of this year, and quarter one has confirmed this expectation.

During this period, we also had fewer working days compared to last year due to the timing of the eighth holiday. This challenging market leads us to focus even more intensely on our growth strategies. The company decided to increase our prices by 2.5 until 5% on February 1 to offset the risk from the US dollar against IDR exchange rate. The price hike was implemented across all the architectural solution segments. This adjustment was generally accepted by our customers considering that we did not participate in any price hikes last year even though many of our competitors increased their prices.

Avian brands launched three new products in the wall, waterproofing and wood care segments. The company strengthens its key product segments through continuous innovations, allowing us to expand our market reach and achieve a broader customer base. These innovations are further supported by high quality services that foster long term customer preference. Product innovations lies at the heart of our business, serving as the foundation for achieving sustainable growth in the future. We expanded our distribution footprint by adding one wholly owned DC.

Empowered by our nationwide distribution network, we strive to provide the best service that is unrivaled in the industry. This commitment is evident in our 90% achievement of one day delivery service fulfillment. In addition, we have the capacity to facilitate more than 15,000 deliveries on a daily basis. We continue to refine our operations by proactively implementing improvements for greater efficiency and service excellence. Consolidated sales grew by 6% year on year supported by positive achievements in both the Architectural Solutions and Trading Goods segments.

The number of customers exceeded 52,000 retail outlets in the first quarter, growing by over 1,500 customers compared to the same period last year. Avian brands remain committed to maintaining strong relationships with all customers regardless of market conditions. Even in challenging times, we have proven to be a trusted and reliable partner for our customers. I will now pass to Pahadi to continue the presentation.

Ruslan Tanuko, Vice President Director, Avia: Thank you, Andreas, and good afternoon, everyone. As shown in the chart on the left, the Architectural Solutions segment contributed 81% of total sales. The wall with and metal and waterproofing maintained their position as the top three sales contributor for the company. In q one, the wall segment delivered double digit growth year on year. The waterproofing segment also achieved positive growth during the quarter, while the wood and metal segment remained flat compared to the same period last year.

Sales from traditional retail outlet made up 93% of our total revenue. Additionally, around 89% of overall sales are generated through our wholly owned distribution center. In q one, Afian brand registered a consolidated gross profit of 25,000,000,000 rupee, by 4.5% compared to the same period last year. The consolidated gross margin for the quarter was 45.8%. The consolidated EBITDA was reported at 580,000,000,000 rupiah, representing an EBITDA margin of 28.7%.

On the other hand, consolidated net profit for the quarter was 447,000,000,000 rupiah with a recorded net profit margin of 22.1%. The recorded margin in q one are largely aligned with the full year 2024 achievement, reflecting consistent and stable profitability. Sales for the Architectural Solutions segment increased by 4% year on year in q one amounting to 1,600,000,000,000.0 rupiah. During the quarter, total volume for this segment grew by 5.8% over the same period last year. Our focus remain on the execution of our sustainable growth strategies.

Despite the soft market condition, we are sharpening our effort on key initiative to reinforce our operational foundation. We are confident that this strategic measure will help us achieve stronger growth when the demand improve. The company recorded transaction from over 47,900 retail outlets, making an increase more than 1,600 retail outlet compared to the same quarter last year. The trading good segment continue its growth trajectory in the first quarter, achieving a double digit growth of 15.2% year on year, reaching 381,000,000,000 rupee. The growth was mainly supported by the strong performance in the PVC pipe category.

The trading goods segment maintains strong synergy within our business. During q one, more than 39,700 retail outlets conducted transaction in this segment, representing 76% of the total consolidated customer for the quarter. This page present the gross profit by segment for the first quarter. The Architectural Solutions segment achieved a gross profit of 851,000,000,000 rupiah. During the same period, the recorded gross margin for this segment was 52%.

Regarding the trading goods segment, the gross profit for the quarter was $774,000,000,000, a 19.3% gross margin. I will now pass to Robert to continue the presentation.

Robert Tanuko, Operations and Development Director, Avia: Thank you, Badi, and good afternoon, everyone. Moving on to the cost structure. You can see on the slide that Avian brands maintained stable operating expenses during the first quarter. G and A expenses hovered around 3% of total sales, while sales and marketing accounted for 16.8%. Talking about the COJ's breakdown, an increase in raw material prices led to a higher proportion of raw material costs accounting for 28.7 of total sales.

The increase in raw material prices was affected by the weakening of rupiah against the US dollar. In addition, below the line marketing expenses were 7.8% of total sales. The company continues to optimize its PTL spending. Turning to our next slide. Working capital was well managed throughout the quarter, holding a consistent level at around 28% of total sales.

Total capital expenditure accounted for 6.7% of total sales, with around 3% allocated to the routine CapEx. Higher routine CapEx was driven by upgrades to our existing production facilities and warehouses. And in addition, Airfield branch is accelerating the deployment of TD machines at retail outlets as part of its strategic initiatives. For the full year 2025, we expected routine CapEx to normalize to around 2.5% of total sales, slightly above historical levels driven by our aggressive rollout of giving machines. Avian brands generated strong free cash flow equivalent to around 15% of total sales.

We are committed to maximizing shareholder returns, and the company continues to uphold its policy of distributing a minimum of 50% of total net profit as dividends. For your informations, company distributed a total cash dividend of 1,300,000,000,000.0 rupiah for its full year 2024 net profit, representing an 80.4% payout ratio. Avian Brands continues its consistent track record of delivering above 80% dividend payout ratio. The figure on the left illustrates our achievements in the on time collections of account receivables. The fact that retail outlets continue to prioritize Avian brands in payment both in good and bad times underscores the strength of our relationship.

This trust is a result of the company's dedicated efforts, and we remain committed to preserving and strengthening it for the long term. Meanwhile, the tables on the right highlights the company's effective management of uncollectible receivables and internal fraud. I've been Brett successfully implemented a well structured accountability system that minimizes internal fraud risk. This success is driven by a strong corporate culture and a business model that emphasizes transparency and robust internal controls. On March 13, I feel press announced its acquisition of 16.67% stake in Pettendexton Lamingo, Our nationwide distribution network serving over 58,000 duty metro stores provides a strong foundation for expanding textile market presence.

Currently, we are focusing on driving sales growth and reinforcing our combined position as the second largest player in the industry. We have an ambitious goal to become the number one player in Indonesia's adhesive and sealant market. Despite persistent economic pressures, except further elaborated by global disruptions impacting the local market conditions, we maintain our full year 2025 guidance. We will not waver from our sustainable growth strategies, and our team is working relentlessly to ensure their disciplined execution across all aspects of our businesses. As the market continues to be weak, we doubled down our efforts to accelerate growth and market share gain, reinforcing our leadership positions in the market.

As previously disclosed, we have received shareholder approval for launching an additional share buyback program. The maximum authorized number of shares for buyback is 1,400,000,000.0 shares with a maximum allocated of INR 1,000,000,000,000. The program will be implemented over a period of twelve months with the latest completion by April 2026. In addition, we are pleased to welcome Oscar Wiesenbik as our independent commissioner. We are excited to have him on board and look forward to further advancing our operations and governance practices.

That concludes our q one twenty twenty five presentations. Thank you very much for your joining to this earning call. I will pass now to Panrias to moderate the q and a session. Thank you.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Thank you, Parobert. We can now proceed with the q and a session, which will last for one hour. So if you have any questions, feel free to ask. First question coming from Felix. Why is the performance of trading goods so strong?

Are there any catalysts possibly in the pipe segments or elsewhere? How much US dollar against IDR exposure does Avian have?

Kourmia Hadi, Finance Director, Avia: I'll take the first part of the question from Felix. So, I think I mentioned this before. Right? The if you look at the competitiveness landscape in the trading goods or specifically in the pipe segment, the number of competitions that we have is far far less than that of the paint company. So simply put, it's much easier market for us to navigate because the competitions are not as strong as what we see in the paint market.

Our largest competitor in the pink PVC market actually is a local company. None of the multinational companies actually make it in the top three in Indonesia. So, you know, I think that give you a bit of context with regards to the competitiveness landscape. That's why it's just easier. IDR exposure, I'll pass it to Hadi to answer.

Ruslan Tanuko, Vice President Director, Avia: Thank you, Bhavan san. So for Afian for Afian, around 70% of raw material is affected by US dollar, 30 5 percent is directly imported, and the other is actually, it's sourced locally, but the price is related to the US dollar. And for raw material itself account for around 50% of the total COGS. So roughly, it's around 25, 20 six percent of sales.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Next question coming from David Gan. Congratulations on a resilient set of results. Would you consider further ASP increase to offset FX impact?

Kourmia Hadi, Finance Director, Avia: So I think I'll answer that. So since we implemented our price hike on the February 1, there has been at least four other companies that decided to follow suit with regards to their price hike. So the short answer to that is, yes. We will definitely consider the impact of FX, if they continue to weaken. But luckily, from what we've been seeing in the past few days, right, you know, rupiah has strengthened a little bit to 16,650, and that's still within the range that we have allowed when we implemented our price tag on the February 1.

Thank you.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Next question coming from Handyman. Just wondering how Afya can achieve and maintain much higher margins compared to the other global pain companies. How would Avia response if competitors can achieve the same margins and initiated more aggressive price war?

Kourmia Hadi, Finance Director, Avia: Yeah. So if you look back at the Indonesian paint industry, it is quite mature. Right? If I'm not mistaken, the oldest paint company in Indonesia is more than 80 years old. So in that context, Avian being a, you know, 46, 40 seven year old company is relatively young.

What I've noticed in the past twenty three years that I've been involved in this company helping the families is that the high margins that exist in Indonesia is only not with Avian. You know, another close competitor of ours who also published their Indonesian results, also post similar profit margin. So and if we look back during COVID time when price hikes happened the most, you know, six times in two years, never happened before, well, what we noticed was that the participants from all top five players decided to also implement their price hikes. So I think from that point of view, it's safe to say that I think the desires from all the top five players to maintain their high profit margin in Indonesia is still very strong. So, you know, last year last year, a few of them implemented price hikes even though we did not.

But some of them, again, this year decided to, implement another price hike. So I think that's basically what I can share. So any other companies that try to enter Indonesia using an effort of just making the prices cheaper is really not gonna work because when consumers buy the product in in the paint segment, they obviously look at the brand. They don't look at look at just prices. Thank you.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Thank you, Bhat. Next question come here from Sameer Mehta. Can I get some update on competitive dynamics? Number one, on the main competitors and market share trends. Number two, pricing and discounts by competitors.

Number three, our positioning across premium, mid and low end pains, and how do we stand versus our biggest competitors?

Kourmia Hadi, Finance Director, Avia: So on the worst on the first one, on the main competitors and market share trend. So, I mean, we obviously, only requested Frost and Sullivan to actually conduct a broad market share study just before the listing. So the data that we had was back in 2020. While we did have a definite market leadership in Indonesia, you know, our second competitor back then had about maybe six or so percent point difference in terms of market share. And in the past few years, they have grown, you know, slightly faster than we have.

So with that in mind, we think that the gap has narrowed. You know, if it was 6% between us and them, I think it's now between maybe four to, because we've also done, relatively okay even though the market has not been growing. The other thing is that in respond to other players. Right? So if we look at the player number three, four, and five, in in our assumption, I don't think they have actually been growing because the market conditions for building materials has not been all that easy.

Right? We can see at other cement industries and a few others, in the ceramic tile and so on that we basically can see that the market has not been growing well. In particular, if we look at the first quarter of this year, right, there's a company that publishes their report for their q one this year, which is Jatto Santosa. So Jatto Santosa has two different business. One is the distribution side, and the second one is the retail side.

The the retail side, they operate under Mitra ten shops. So Mitra ten currently has maybe almost 60 outlets in Indonesia. So it was quite surprising in a way that when they when we saw their results for q one, that the retail actually dropped by one and a half percent. Now I need to highlight that last year, they actually added eight new shops. So you can imagine that their SSSG is even lower.

Now if you think into the context of who actually go into the Mitra ten as compared to those who goes to the traditional shops, well, I think we all can conclude that the customers that go to a Mitra ten or a modern trade tend to be a bit higher in class because, you know, they're comfortable shopping at supermarkets, building materials, and and and so on. Whereas those kind of consumers that go to traditional market to the traditional shops tend to be, you know, painters and direct homeowners and and and so on. So the market has not been easy. On the second question, pricing and discounts by competitors. Look.

I think it goes back to the previous question, right, where, you know, the desires to maintain high profit margin in Indonesia, it's still very strong among the top five players. So, you know, obviously, pricing and discounts, pricing, not so much in terms of competition. It's more on the discount and promotions. Right? So that obviously happens the most between us as the leading player in the decorative segment and the second player in the in Indonesia.

Many of the players basically do, you know, different kinds of things. They also try to imitate some of our promotions here and there, but I don't think they are able to actually gain significant market shares in Indonesia. The third question, our positioning across premium, mid, and low end. The biggest area of weakness for us is in the premium market. And the reason for that is that if you imagine the consumers for the premium market, these are our consumers with money.

Right? So for them, bargaining power or, you know, value you know, cheaper products really doesn't matter. Right? They can always have money. And with that in mind, the higher end consumers tend to be quite loyal to the brands that they've used before.

So if we look at it from the all the different segments that exist within the decorative paint, in my opinion, the premium market is the toughest one to crack. So it definitely will take us a bit more time to gain our momentum in the premium segment considering the fact that even though our company is, you know, forty seven years old, we only started venturing into premium market about twenty years or so ago, whereas other leading companies in Indonesia, they've been around for this segment more than sixty years. So we still have a lot to catch up. Now if we look in the mid tier and low low end markets, well, our position strengthened significantly. We believe that in the mid tier, we're at least number two, whereas in the low end, we should be number one.

So, you know, the most of the work still needs to, happen in the mid tier and, obviously, in the premium segment. Thank you.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: There any questions? Additional question coming, from Sameer Mehta. Thank you. Another question. If macro conditions in Indonesia do not change much, what can we do to accelerate growth on our own?

Kourmia Hadi, Finance Director, Avia: Yeah. So I think we highlighted the fact that when the market has really not been growing, the only way for us to sustainably grow is by getting it from the others. Now this is where the role of r and d come into play. Because I think if you notice in the past three years or so, we've been launching new products, you know, much more faster than what we had done previously. And this was done on purpose so that we can actually look at the various segments that we currently can still, you know, improve our positioning, gain more market shares, and so on.

So if we look back at the products that we launched specifically in this quarter, we launched one product called Avitex Top. This is a product that we didn't have before, and this is a product that is specifically designed to attack. There are two large maybe three large, regional players in which this product is directly competing. So we specifically created this product. We look at their products to benchmark, and then we come up with a product that is superior than theirs.

And then we launch this into the market knowing that these this is the exact product that we will use to target these three large regional players. And if we look at the right hand side, which is Boyle wood stain two in one, this is another product that was specifically launched to attack the market share of one of the company who has a presence in this woodstain category. They're very strong in this segment, and it's a product more in the more premium quality. So we're trying to create something with added value, which is why it's called two in one. So the only way for us to continue with our market share gain is by obviously getting it from the others, and that's basically what we've been focusing on.

Thank you.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Thank you, Bob. Next question coming from Danif. Which component of raw materials saw largest increase?

Robert Tanuko, Operations and Development Director, Avia: Yeah. So I'll answer to that question. So the most affected of raw materials mostly are affected by the effect of the hedges rate, the weakening of rupiahs against US dollar. Right? But overall, on this resin category, it's also most impacted by the increase of raw materials of which is the monomer's price for the resin as well as the raw material for the solvent based resin, which is the soybean oil, which is also some pressure of high demand and shortage due to weather conditions.

But we believe that the prices are going to normalize going forward to the q two twenty twenty five. And most of the other raw materials, like including the TiO twos, pigments, everything, actually still stabilize. So we don't see any worry about that from the pigment side.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Thank you, Bharat. Next question coming from Kevin Harlan. Hi, Avia management. Several questions from my side. Number one, can you share the cost outlook for upcoming quarters?

Will lower commodity prices, especially oil price, impact your margin positively? Number two, can you share how the pain volume looks like in the month of April? Number three, any particular reason why your wall pain segment has been growing the fastest?

Kourmia Hadi, Finance Director, Avia: Thank you for the question, Kevin. So the first one, cost outlook for the upcoming quarters, whether will the lower commodity prices, especially oil, impact our margin positively. In our view, the impact from, oil price has always been indirect. So in the medium to longer term, if oil can stay relatively lower, then, obviously, it'll be better for us. Right?

Some of our products directly impacted by oil, including, plastic packaging, for instance. So, obviously, the moment the prices for oil go up, then the, you know, the resins for plastic packaging also immediately go up. But the rest of the other products, don't really adjust to, don't really get impacted by oil prices that that instant. It usually has a time lag of few months. Number two, can you share how the paint volume looks like in the month of April?

So I think I wanted to highlight that if the month of March this year is exactly the same in terms of the March of, the March the month of March last year in terms of the number of working days, our performer will definitely improve quite a bit. Because, you know, due to the change of the eight holidays, we did definitely have lesser working days in the month of March, so that impacted our sales quite a bit. So in contrast to that, the month of April last year, we had more holidays, whereas the month of April this year, we have less holidays. So the growth with regards to the volume is actually in, you know, high teens. So we're, you know, performing much, much better in the month of April because we're actually gaining, you know, a a few days, three days to be exact.

So, yeah, I think that's what I can share about the pain volume. But maybe one thing that I could add to you guys. So I just came back from a week long of essentially road trip, but not meeting investors, but rather than to actually meet customers. So I went from Surabaya all the way to Madill and Badidi all the way to Yogyakarta. So I met with a bit more than a dozen customers.

So the the the the one thing that they all shared was that the month of fasting leading to the eighth holiday was really quite soft. So I think that's the one thing that I could share with you. So they all said that, look. We didn't see any pickup of any significant amount during the fasting month, which usually is the highest month because, so people don't really repaint so much. So that's the one thing that I can share with you.

The third question, any particular reason why the wall paint segment has been growing the fastest? So I think, you know, for the for many years, we identified that an area of weakness for us has always been the wall segment. You know? And in contrast, if we look at the wood and metal as well as waterproofing, we know for a fact that we have market clear market leadership positions. So because of that, then, you know, we have been launching more products in the wall segment as compared to the wood and metal or waterproofing.

And, obviously, because we selectively target some of these products that our regional or local competitors have, I think that has been able to help us with our faster growing in the wood, in the wall segment as compared to the other three. Wood and metal is a segment that has been relatively stagnant because there's been many, many more product replacements. So if we go back, you know, three decades ago or so, you know, most of our doors and window frames were all made out of wood. Now no more. Right?

There's been a lot of product replacements, UPVC, aluminum, you know, stainless steel, glass, and you you name it. So we know for a fact that the wood and metal segment is is gonna be one segment where growth is not gonna be easy to come because the market itself is not growing. Thank you.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Deepak? Next question coming from the Dafa, Dafa x Sandy. I've been looking into your trading goods lineup. During quarter one twenty twenty five, which product segment under trading goods saw the highest growth? If you're able to share, I'd also be interested to hear the growth percentage for that segment and how you see it performing for the rest of the year.

Kourmia Hadi, Finance Director, Avia: Yeah. I think as mentioned before, the growth from the trading good segment, actually came from the PVC pipe, and that's obviously because the competitiveness landscape in the PVC pipe industry is not as, tough as that in the as as compared to the paint industry. We believe that we'd still be able to maintain a double digit growth for the trading goods segment and, in particular, in the pipe segment. Another small contribution coming from the trading goods are from the paint accessories. So we also think that we'll also be able to grow the, paint accessories market to also in the double digit growth.

However, in terms of revenue, you know, the the the pipe, within the trading goods, you know, far far far greater than that of the paint accessories. But we remain confident in our ability to deliver double digit growth in the trading good segment, mostly dominated by PVC pipe. We're also adding, you know, a few more products to complement our product portfolio, including, like, water hose, for instance. So we'll be launching a water hose, to add to our PVC pipe lineup, in the next, two

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: weeks. Thank you. Next question coming from Farrell Agung. Number one, growth CapEx and capacity utilization. Could you elaborate on the planned growth capital expenditure or CapEx for this year and the foreseeable future.

Specifically, what percentage of the current production capacity utilization is prompting this investment? Number two, strategic momentum of growth CapEx. Considering the current market dynamics and company's operational performance, do you believe this is the optimal time to proceed with the planned growth CapEx, or would a more conservative approach be advisable? There are two questions.

Kourmia Hadi, Finance Director, Avia: Adi, you wanna take the first one?

Ruslan Tanuko, Vice President Director, Avia: Yeah. I think our growth cutback is when not only for a short term. Right? We we plan this third factory for, like, twenty years to come. So we understand that currently, the economic condition is not that good, but we already planned this CapEx for a long time.

So I think it's still reasonable for us to continue with the the plan. For this year, we projected we budgeted around 350,000,000,000 our CapEx for this factory in. Yeah.

Kourmia Hadi, Finance Director, Avia: If I can add to that, keep in mind that when it comes to our water based production utilization, we're actually, you know, at more than 90% because the wallpane segments have been growing, very well, as as well as the waterproofing, for instance, and most of them are water based. We are, going to encounter into some production, bottleneck if we do not proceed with our Chirapon, third factory. Now that being said, we are expand we are extending the deadline of our Chirapon, factory completion. It was originally meant to actually be completed in 2025, but now we're extending, a portion of that so that they will only be completed in 2026. So we are being mindful of the current market conditions.

Let me answer the second one to that. Considering the current market dynamics and company operational, do you believe this is the optimal time to proceed with the planned growth CapEx? Look. The one of the aspects that we mentioned earlier with regards to the CapEx is that in the addition of tinting machines. I think this is still a strategy that we believe will position Avian brands in a much, much more strong, you know, with with much more strong fundamentals going into the medium or even long term.

Because the capital that is required to for tinting machine deployment is is one that not many medium or even smaller companies can imitate. Right? And I think with more and more emergence of younger generation store operators, these generations are a lot more easier to influence. So we can we can explain the benefits of having multiple, the the benefits of having tinting machines as compared to ready mixed products when it comes to working capital, you know, slow and debt inventory, and and so on and so on. So but, ultimately, for us, the most important metric is that the revenue per tinting machine.

So while we have been adding more tinting machines, I can share with you that our revenue per tinting machine have been growing. So I think that's a it's it's a very good indicator. So, you know, we're not diluting our revenue in any way. So the revenue per tinting machine is has has also been increasing.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Thank you. Thank you, Bob. Coming question. Another one from David Gunn. Could you share with us if there are any progress with regards to the 3,000,000 housing program?

Kourmia Hadi, Finance Director, Avia: Yeah. David, I think your guess is just as good as ours. I think what I believe is that the government of Indonesia under the new president, you know, it seems to me that they're trying to launch too many ambitious programs. And, you know but, obviously, what they're trying to do because they don't have enough budget is trying them to cut from all the other, you know, budgets that they have. But I think the fact that they signed with, if I'm not mistaken, the Qatari government to help us with at least the 1,000,000 housing program, well, I think it's a step in the right direction because then they don't have to, you know, bear the entire cost of the plan, 3,000,000 housing programs on their own.

Right? There are outside parties, FDIs that will be coming into Indonesia that hopefully will participate in the, housing program. But between, you know, when this initiative was first mentioned until now, which is, what, five, six months, we really haven't seen anything, of significant movements. So I think, you know, there's still a lot more things to be done. And keep in mind that the when it comes to, you know, local regulations that will be required to get all these things done look.

We're trying to build warehouses in multiple locations. And, you know, some of the permits have, you know, taken more than eight months. So I don't know how much success the Qatari government, let's say, will have with regards to their plan 1,000,000 housing program if, you know, us as locals, we also cannot get these permits to be, you know, given to us as easily as that. And, so I think it remains to be seen what, this initiative will actually bring to the country, and I'll I think it will take a bit more than a year for us to really see the impact. An additional note is that we continue to make progress with various government departments when it comes to introducing our products, when it comes to inviting them to visit our facility, our r and d centers so that they know that, you know, that we are one of the right companies to partner up with, in particular because of our wholly owned DCs presence, which are available, you know, in in more than a 40 locations in the country.

Thank you.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Next question coming from Theodorus Melvin. Hi, Afya management. Thank you for the opportunity. This is Melvin from StockBit. I have a few questions.

Number one, could you provide some insights into the sales trend for second quarter twenty twenty five, particularly in light of Labaran seasonality shift? Number two, I noticed that ASP has risen quarter over quarter, which is interesting given the broader trend of weakening consumer purchasing power in Indonesia. Could you share more details on this? K. Two question from Mel and Bob.

Kourmia Hadi, Finance Director, Avia: Yeah. So, you know, from the dozen or so customers that I met, during my visit into the market last week, Melvin, you know, I as I mentioned earlier, right, you know, the one thing that they have all in common is that they don't they don't sense that the spending or the traffic that visit visited their shops during the, you know, pre Labaran was actually rising. So this but I think this is pretty much in line with our expectations. Right? We also expect that that Labarad this year is not gonna be one where it's gonna be particularly strong.

You can also look at the number of people which decided to come home. Right? It's down a couple million or something like that. So so I think because people don't come home as I mean, the number of people don't go home, you know, as high as how they were in previous years, I think that also could lead to well, I don't really need to repaint my house because the number of people visiting my house may not be as many as the previous years. So, yeah.

So I think safe to say that the buying power from consumers is still quite, weak. The second on the ASP that has been risen quarter over quarter but I think you're a bit mistaken, Melvin. Maybe Hadi wants to add to that.

Ruslan Tanuko, Vice President Director, Avia: Yeah. Actually, when we comparing ASP in q one twenty twenty five to q one twenty twenty four, there is a slight decrease from 34,600.0 rupee to 33,800.0 rupee per kg. However, throughout 2024, our ASP tend to decline in q three and q four. As we mentioned in the previous earning call, this was primarily due to strong growth in the wall paint category during those quite quarter. Well, pain, I think, has ASP around 20,000 rupee per kg.

This is significantly lower compared to overall blended ASP for PIN at around $3,334,000 rupee. Yeah. So and because the growth for is outperforms at the category, so it also drove the ASP to decline, yeah, to downtrend.

Kourmia Hadi, Finance Director, Avia: But it's still a very small decline, Melvin, about

Ruslan Tanuko, Vice President Director, Avia: 2%. That is

Kourmia Hadi, Finance Director, Avia: about 2% or so.

Ruslan Tanuko, Vice President Director, Avia: Yeah. But if if we look at the for q one twenty five, the net ASP is approximately about 33,900.0 rupee compared to full year '24 is around 33,400.0 rupee. So still increase by 1.3%, but this is in line with the price increase that we implemented for the paint product in 02/01/2025. Thank

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: you, Bahadi. Is there any other questions?

Kourmia Hadi, Finance Director, Avia: Okay.

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: Shall we close, Pat?

Kourmia Hadi, Finance Director, Avia: Yeah. I mean, if

Andreas Timoti Hadi Krissnau, Head of Investor Relations, Avia: If you have any other questions that have not been answered, please do not hesitate to reach out. I will make sure to coordinate with the management and get back to you as soon as possible. Once again, we appreciate your participation in our quarter one twenty twenty five earnings call today, and hope to see you soon again in our next earnings call. Take care. Bye bye.

Bye. Yeah.

Ruslan Tanuko, Vice President Director, Avia: Bye. Thank you. Bye.

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