Simon-Kucher Study Shows ASEAN Companies Leave Profit Potential Untapped
The top five ASEAN economies are losing USD 15 billion in profit, according to
the Simon-Kucher ASEAN Pricing Stress Test 2013 which analyses firms in
Singapore, Malaysia, Indonesia, Thailand and the Philippines. But companies
can stop losing money – if they would just allow for small price increases.
SINGAPORE -- November 4, 2013
The economies in ASEAN are growing steadily. Nevertheless, increasing price
pressure from competitors, rising raw material costs and inflation rates worry
company managers. As the ASEAN Pricing Stress Test 2013* of the international
consultancy Simon-Kucher & Partners reveals, the top five economies in the
region could earn added profits of approximately USD 15 billion if companies
would implement a marginal price increase of two per cent. The consultancy
analysed approximately 1,400 companies listed on the stock exchanges of
Singapore, Malaysia, Indonesia, Thailand and the Philippines and calculated
the impact of small price increases on a company’s profit. “Companies in ASEAN
are losing out by focusing solely on cost-cutting,” explains Dr. Jochen
Krauss, Managing Director of Simon-Kucher’s office in Singapore. “They have to
look at the real profit driver – their prices.” Krauss recommends professional
price management to companies.
Consumer/retail sector shows highest profit potential
The study reveals that the highest average profit growth potential lies in
companies in the consumer/retail sector (+48 per cent), followed by
manufacturing (+41 per cent), construction (+32 per cent) and
telecommunications (+27 per cent) enterprises. “Companies with low returns
have the biggest potential,” reports Jan Weiser, Director at Simon-Kucher.
“That’s why just small price increases can have the largest profit impact
here.” This statement also reflects the ranking of the top 10 ASEAN companies
with the greatest potential to increase profits by raising their prices by two
Synnex Thailand PCL has the largest potential impact with a possible profit
increase of 265 per cent, followed by three other Thai players. Companies from
Singapore, Indonesia and Malaysia fill ranks five to ten; companies from the
Philippines perform somewhat better in comparison, which is why they are not
among the top 10. On average, more than eight out of ten of the analysed
companies can count on a two or three-figure percentage increase with minimal
*Analysis available upon request.
Dr. Jochen Krauss is the Managing Director of Simon-Kucher’s Singapore office.
Jan Weiser is a Director at Simon-Kucher.
Simon-Kucher & Partners
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