• 2023 was a year of turnaround marked by Sampoerna's profit growth enabled by the strength of its brand portfolio across key segments.
• Sampoerna reached significant milestones for advancing scientifically substantiated smoke-free products, increased its investment and employment in Indonesia, and generated a strong multiplier effect for the broader ecosystem, in line with the country’s priority to enhance down-streaming.
• The AGMS approves the succession of Sampoerna president director from Vassilis Gkatzelis to Ivan Cahyadi and the appointment of Yohan Lesmana as sales director.

PT HM Sampoerna (Sampoerna/IDX: HMSP) announced its 2023 results, with its net profits growing by 28 percent versus 2022 to reach Rp 8.1 trillion, while maintaining its leadership in Indonesia's tobacco industry with a market share of 28.6 percent and an overall volume of 83.4 billion sticks; this was enabled by a strong portfolio across segments, particularly the growth in the labor-intensive hand-rolled kretek cigarette (SKT) segment.

"The year 2023 marked a return to robust profitable growth, with Sampoerna reaching significant milestones for advancing scientifically substantiated smoke-free products, increasing its investment and employment in Indonesia, and generating strong multiplier effects, in line with the country’s priority to enhance downstreaming.” said Sampoerna president director Vassilis Gkatzelis, at the annual general meeting of shareholders on April 23.

In the tobacco industry, the impact of double-digit excise tax increases, significantly above the inflation rate, the widening excise tax gap between Volume Tier 1 versus the lower-taxed Below Volume Tier 1 segments, as well as the increase in circulation of illegal cigarettes continued to be the main challenges. Overall, for the full year, the industry’s cigarette volume declined by 4 percent compared with last year. Despite the challenging environment, Sampoerna’s net revenue increased by 4.3 percent to Rp 116 trillion, although profitability remains well below pre-pandemic levels.

In 2023, Sampoerna's smoke-free products reached strategic milestones. In the Jakarta urban area, IQOS achieved a market share of 3.5 percent in the fourth quarter of 2023, an increase of two points from the fourth quarter of 2022. Urban Jakarta represents West, Central and South Jakarta, which are home to an estimated 1.5 million legal age nicotine users.

In line with the strategic priority to accelerate the commercialization of its innovative smoke-free tobacco products, Sampoerna took major initiatives in 2023, starting with the inauguration of the Karawang production facility and the first export shipment; the introduction of the latest innovation of IQOS ILUMA to be exclusively used with TEREA tobacco sticks; the commencement of operation of the world-class testing and analysis laboratory with state-of-the-art facilities for innovative smoke-free tobacco products in the third quarter; and followed by the introduction of the clove variant of TEREA tobacco sticks for adult smokers and adult users of tobacco/nicotine products in Indonesia.

IQOS ILUMA heats tobacco sticks using real tobacco leaves without combustion. Like previous IQOS devices, IQOS ILUMA emits on average 90-95 percent lower levels of harmful and potentially harmful chemicals compared with cigarettes. While not risk-free, Philip Morris International’s (PMI) innovative smoke-free tobacco products are a better alternative for adult smokers who decide to continue using tobacco or other nicotine products.

"As of the end of 2023, our investment in smoke-free products in Indonesia amounted to approximately US$300 million. Our production facility for smoke-free tobacco products is PMI’s first in Southeast Asia and seventh globally and is focusing on exports to the Asia Pacific region, as well as meeting domestic market demand in line with the government's downstreaming program. The testing and analysis laboratory for innovative smoke-free tobacco products involves more than 200 talented Indonesian scientists and is part of our commitment to absorb highly skilled labor, especially in supporting the transformation of the national tobacco industry," Vassilis explained.

Moreover, the SKT segment’s performance is showing signs of recovery, with a market share of 28 percent in 2023, after a downward trend in market share from 37 percent in 2006 to 17 percent in 2019. This is supported by the government's policy on tobacco products excise tax that considers the segment’s job creation and the absorption of tobacco and clove from local farmers. In line with this, Sampoerna added SKT production facilities and third-party operators (MPS) in early 2024, which directly created employment for tens of thousands of new workers. With this addition, Sampoerna's total direct and indirect workforce is more than 90,000 people.

"One-hundred-and-eleven years into Sampoerna's presence in Indonesia, we consistently strive to play an active role in supporting national economic growth through long-term investment, value creation in the industry supply chain, and employment absorption, which is in turn contributes to the generation of multiplier effects in Indonesia," Vassilis said.

At the annual general meeting of shareholders, the company announced a total dividend payment of Rp 8.06 trillion from the company's retained earnings for the fiscal year ending Dec. 31, 2023, with a dividend payout ratio of 99.6 percent, or Rp 69.3 per share.

New president director and director

Furthermore, at the annual general meeting of shareholders, the shareholders also approved the appointment of Ivan Cahyadi as Sampoerna's new president director, succeeding Vassilis as of May 1, as well as the appointment of Yohan Lesmana as a director of the company. The agenda of the 2024 annual general meeting of shareholders and its revision was submitted to the Indonesia Stock Exchange (IDX) and the Financial Services Authority (OJK), respectively, on April 1 and April 8.

"Vassilis has successfully led Sampoerna through a stellar performance over the last two years, allowing it to continue to realize its commitment to creating value and multiplier effects for the society at large. I would like to thank Vassilis for his contributions to Sampoerna and congratulate him on his new global leadership role at PMI," said Sampoerna president commissioner John Gledhill.

PMI, Sampoerna's ultimate shareholder, has entrusted Vassilis to join PMI’s executive leadership team as president East Asia, Australia and PMI Duty-Free Region, reporting to the company’s CEO Jacek Olczak, and overseeing PMI’s strategic markets such as Japan, South Korea and China.

The Sampoerna president director post is passed on to Ivan, who has around three decades of experience at both Sampoerna and PMI. Ivan is the right leader to continue solidifying Sampoerna's position as an industry leader in Indonesia. "With his extensive experience at Sampoerna, we believe Ivan is the right person for Sampoerna to continue cementing the company's position as an industry leader in Indonesia to continue creating the multiplier effect for all stakeholders," John said.

Ivan joined Sampoerna in 1996 as a management trainee and progressed through many positions in Sampoerna including organization development manager (1999-2000), manager market intelligence (2000- 2004), head of sales strategic development (2004-2005) and head of sales zone (2005-2009). He was then entrusted as director sales and distribution for PMI’s affiliate in Malaysia in 2009, before returning to Sampoerna in 2010 as head of zone and being appointed as a member of the board of directors in 2016.

Meanwhile, regarding Yohan’s appointment as director, John said, "Yohan can articulate a vision through data-driven strategies and embraces a participative leadership style. His collaborative approach and outstanding drive for impact combined with care will be of immense value to strengthen Sampoerna’s position as an undisputed multi-category market leader in Indonesia."

Yohan joined Sampoerna in 2003 as a graduate trainee and his career progressed through various roles in Sales, including manager sales strategy at PMI's operating center in 2011 in Switzerland and head of sales zone in 2016 in Indonesia. In 2019, Yohan was appointed as head of commercial transformation, and as director of sales and distribution of Philip Morris Fortune Tobacco Corporation (PMFTC) in 2021.

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