T

he nation’s publicly listed cigarette makers are struggling to book profits amid public health campaigns and pressure from increased operating costs on their bottom lines.

Of the three cigarette companies listed on the Indonesian Stock Exchange, only PT Hanjaya Mandala Sampoerna said it booked higher profits in the first half of 2012 when compared to the same period last year.

Meanwhile, PT Gudang Garam said its profits declined on an increase in the cost of goods sold, while PT Bentoel Internasional cited higher operating costs behind its lackluster performance.

Sampoerna said its net revenue was Rp 32.87 trillion (US$3.48 billion) from January to June, up 29 percent from
Rp 24 trillion in the same period last year, while it recorded profits of Rp 4.88 trillion in the first half, up 28 percent from Rp 3.79 trillion.

A recent note published by Philip Morris International, whose subsidiary PT Philip Morris Indonesia holds a 97.95 percent stake in Sampoerna, said that total cigarette sales in Indonesia rose 6.9 percent to 79.6 billion cigarettes in the first half.

Philip Morris said that the combined market share of its brands on offer in Indonesia increased by 3.1 points to reach 33.5 percent.

The market share of Sampoerna A in the premium segment increased 1.2 points to account for 13.1 percent of the market, U Mild was up 1 point to 2.8 percent, Marlboro was up 0.3 point to 4.5 percent while Dji Sam Soe was unchanged at 7.4 percent.

Gudang Garam reported sales of Rp 23.56 trillion in the first half, up 18 percent from Rp 19.85 trillion in the same period of last year, although a 26 percent increase in its cost of sales to Rp 19.01 trillion, among other factors, led an 8 percent decline in net profits to Rp 2.1 trillion in the first half, from Rp 2.29 trillion year-on-year.

The nation’s third largest cigarette producer, Bentoel, said it booked Rp 4.79 trillion in revenue during the January-to-June period, up 2 percent over Rp 4.7 trillion in the same period last year.

A 13 percent surge in Bentoel’s cost of goods and substantial spending on non-operational expense put the company’s bottom line in the red, with net losses amounting Rp 156.14 billion.

The firm attributed its poor financial performance to an increase in clove prices in late 2011, increasing its cost of goods sold in the first half of 2012.

“Simultaneously, there has been a decline in sales volume as result of the increase in the cigarette excise tax, a correction in supply and ongoing investment,” Bentoel corporate secretary Jusuf Salman said.

According to Jusuf, Bentoel was expecting that clove prices would decrease in line a better harvest this year.

“We are expecting that the decline in price will be realized as profit by 2013,” Jusuf said.

—JP/ Raras Cahyafitri