JAKARTA (TheInsiderStories) — Indonesian Finance Ministry’s new regulation about ethyl alcohol excise tariff will be implemented starting in 2019. In the new rules, up to 5 percent of alcoholic beverages will have a 15.38 percent excise increase, to Rp15,000 (US$1.03) per litre.
According to the government, the excise adjustment takes into consideration the inflation level over the last four years. As a consequence, beer companies profit are estimated to dry up.
Beer maker, PT Multi Bintang Indonesia Tbk (IDX: MLBI) that holds Bintang, Heineken, Guinness, and Fayrouz brands, stated that prepaid excise was Rp92.32 billion. It contributed around 10 percent to the company’s total costs.
To cope with the excise hike, beer makers are expected to follow with sales price increases. Multi Bintang booked profits were lower in the third quarter of 2018. Its net profit diminished by 13.2 percent from Rp920.68 billion to Rp799.06 billion.
Nevertheless, the producer’ profit kept increasing in the last year and before. Multi Bintang’s profit this year declined, as the operating and production costs of goods sold hiked higher than its revenue increase.
Meanwhile, Jakarta government-owned PT Delta Djakarta Tbk (IDX: DLTA) stated value-added tax and customs excise payment for Rp544.98 billion in third quarter.
Even so, the company could still make gains. Delta Djakarta’s revenue increased by 15.03 percent to Rp627.78 billion and the net profit could be managed to raise by 23.21 percent to Rp232.88 billion.
DLTA, 58.33 percent owned by San Miguel Malaysia Pte. Ltd. and 23.33 percent by Jakarta provincial government, holds several brands such as Anker, Carlsberg, San Miguel, San Mig Light, Cerveza Negra, Kuda Putih, and Batavia.
The beer excise hike policy adds another pressure to the brewers’ stocks. Delta Jakarta stocks shrank by 2.28 percent to Rp5,350, while Multi Bintang discounted by 0.16 percent to Rp15,850.
The beer industry has been waddling over the last few years. The government seemed to increase its efforts in controlling people’s consumption onf alcoholic beverages. In 2015, the government prohibited alcoholic beverages frm being sold in mini markets and kiosks. The regulation hit beer makers revenues.
Not only that, the alcohol excise revenue that was in an uptrend during 2011-2014, temporarily diminished after the sales prohibition. Alcoholic beverages contributed around Rp5trillion to excises in the last few years.
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