Surabaya, September 12, 2022 - PT Avia Avian Tbk. (“AVIA”) recorded positive performance in the first half of 2022. Total sales recorded were Rp 3.38 trillion, an increase of 4.5% compared to Rp 3.23 trillion in the first half of last year. Supported by continuous product innovation, distribution channel development reaching all regions of Indonesia, and aggressive yet measurable marketing strategies, Avian Brands is optimistic it can continue to improve positive operational performance.
Economic conditions in Indonesia in the first half of this year were influenced by increasing inflation which affected people's purchasing power. Building material products such as paint, cement, ceramics, and other products have experienced double-digit price increases since last year. On the other hand, the increase in global oil prices also affected raw material price increases, which ultimately also impacted profit margins. Through prudent efforts and strategies to increase product selling prices and cost control in H1 2022, Avian Brands management has also been able to maintain strong and healthy profit margins, as reflected in Avian Brands' financial performance, which recorded a gross profit margin for the first half of this year of 41.1% or equivalent to Rp 1.39 trillion. On the other hand, EBITDA margin and net profit were at 27.1% or equivalent to Rp 917 billion and 23.0% or equivalent to Rp 777 billion, respectively.
Despite these challenging economic conditions, Avian Brands continues its efforts to add distribution centers. As of the first half of this year, the total number of distribution centers is 139 locations, consisting of 105 self-owned distribution centers and 35 third-party distribution centers. As one of its competitive advantages, the addition of self-owned distribution centers is targeted to reach 140 locations by 2026. Additionally, Avian Brands also plans to build mini distribution centers, targeting 35 locations to complement the self-owned distribution centers. Currently, Avian Brands' distribution network has reached all regions of Indonesia, covering all 37 provinces and 98 cities in Indonesia, with over 54,500 building material store customers. In the first half of this year, the number of customers increased by 3.9% compared to last year. This increase in the number of customers is an important metric for measuring product market penetration.
To seize opportunities and achieve sustainable growth, Avian Brands also continues to innovate to create products that meet customer needs and are of the best quality. Throughout the first half of this year, Avian Brands launched several new products, including some in the wood care segment, which has significant market potential, where the sales contribution of this segment is only 6.6% of total sales. Other new products are Avitex Anti-Virus for the wall paint category and No Drop Tape for the leak-proof coating paint category. Avitex Anti-Virus is Green Label Singapore certified and has passed laboratory tests from Analytical Lab Group (United States) and Airlangga University (Indonesia). To introduce and educate the public, Avian Brands collaborated with Dr. Reisa Broto Asmoro as a member of the Public Communication Team of the Task Force for the Acceleration of Covid-19 Handling. Furthermore, the No Drop Tape product also received a good market response, proven by more than 6,000 retail stores purchasing this product since its initial introduction. Subsequently, in July 2022, Avian Brands also launched a new innovative product for the leak-proof coating paint segment, namely No Drop Anti Panas, which not only provides leak-proof protection but also heat-proof protection. The presence of this product is expected to strengthen the leak-proof coating paint product segment, which is a flagship segment for Avian Brands.
Based on performance per segment, architectural solutions contributed 82% to sales, while the remaining 18% came from the merchandising segment. Total sales for the architectural solutions segment this semester increased by 6.5% from last year to Rp 2.8 trillion. Within the architectural solutions segment, leak-proof coating paint holds the first position as the highest sales contributor at 24.8% of total sales, followed by the wall paint category at 22.9% and wood & iron paint at 19.2%. For the merchandising segment, the highest contribution came from the pipe product category, which was 12.8% of total sales. Furthermore, from the perspective of gross profit margin, the architectural solutions segment was at 45.6%, while the merchandising segment had a gross profit margin of 20.3%.
Industry and market conditions in H2 2022 will be heavily influenced by the expected high inflation rate, which will significantly impact paint sales growth in Indonesia. However, by remaining focused on management's strategic steps to continue innovation, expansion, and maximizing its resources, including leveraging its strong and widespread distribution network across Indonesia, Avian Brands projects to still achieve sales growth of between 10%-15% by the end of 2022.
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Overview of PT Avia Avian Tbk
PT Avia Avian Tbk. was established in 1978 as an integrated paint manufacturing company. Known as Avian Brands, the Company has produced and sold a range of architectural solution products used in home construction. Some of the products produced by AVIA include wall paint, leak-proof coating paint, wood and iron paint, wood care paint, and others.
Listed on the Indonesia Stock Exchange (BEI) on December 8, 2021, with stock code (IDX: AVIA), the Company is a market leader in the paint and decorative coatings industry in Indonesia, with a total market share of approximately 20%, based on Avian Brands' sales revenue in 2020 generated from paint and decorative coating products, according to Frost & Sullivan. The Company has strong manufacturing capacity and capabilities through its manufacturing facilities in Sidoarjo and Serang, Indonesia, as well as the widest distribution network in Indonesia, which includes 101 self-owned distribution centers and 33 third-party distribution centers as of the end of 2021. All these distribution centers serve more than 54,500 building material stores across Indonesia.
