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Gudang Garam's net profit down nearly 12%

JAKARTA - Indonesia's largest cigarette maker PT Gudang Garam said its net profit declined 11.88 percent year-on-year to Rp1.84 trillion (US$213 million) in 2003 due to higher costs.

The company said sales rose to 23.13 trillion rupiah from 20.94 trillion a year ago. But gross profit declined to 4.52 trillion from 4.83 trillion as the cost of goods sold rose to 18.61 trillion from 16.11 trillion. Operating costs also rose, to 1.59 trillion from 1.37 trillion, mostly due to marketing expenses, pushing down the company's operating profit to 2.93 trillion rupiah from 3.45 trillion.

Below the operating line, the company booked other net charges of 301.23 billion against 448.32 billion, mostly for debt repayments.

Gudang Garam's results were similar to those of other cigarette producers, especially its main rival PT HM Sampoerna. Sampoerna reported a 16 percent year-on-year profit fall on Monday to 1.41 trillion rupiah in 2003 amid rising excise taxes and marketing costs.

Analysts expected Philippine cigarette makers to report volume contraction last year partly due to the increase in minimum retail prices, which were used as the basis for calculating excise tax. Over the past three years, the government increased the minimum retail price five times.

The government estimates that industry-wide cigarette output reached around 190 billion sticks last year and the cigarette excise tax pulled in revenue of 26.1 trillion rupiah. The government targets excise tax revenue of 27.6 trillion this year. To achieve this goal, it does not plan to increase the retail price but hopes that the industry can boost output to 200 billion sticks.

(AFX)

Mar 31, 2004

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