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igarette maker HM Sampoerna, Indonesia’s largest company by market value, saw net profits surging 20 percent to Rp 9.1 trillion (US$699 million) in the January to September period of this year from the same period a year ago despite a “difficult environment”.

The affiliate of Philip Morris International, one of the world’s largest tobacco firms, got its profit boost from a 7.3 percent increase in sales to Rp 70.3 trillion year-on-year (yoy), while net revenues, excluding excise, rose 5 percent to Rp 31.8 trillion.

A major boost to Sampoerna’s financial performance was skyrocketing financial revenues of Rp 631 billion in the nine-month period, from Rp 25.5 billion in the same period last year.

Costs increased by 6.6 percent to Rp 53.1 trillion.

“While the industry has recently faced a difficult environment, we are confident in our continued success through our strong brand portfolio,” said Sampoerna president director Paul Janelle as quoted in an official company statement.

Sampoerna expects domestic cigarette production to contract by 1 to 2 percent this year, as a result of an average 11.3 percent increase in excise duties for tobacco products amid the government’s antismoking campaign, which requires pictorial health warnings on cigarette packs and promotional bans at sports and youth events.

The pressure, Janelle added, was likely to result in further declines in the hand-rolled segment as adult smokers continued their shift away from hand-rolled to machine-made kretek (clove cigarette) products.

In this year’s third quarter, Sampoerna’s hand-rolled kretek market share dropped to 6.6 percent, down from 7.4 percent in the same period in 2015.

Overall, Sampoerna sold 314 billion individual cigarettes nationwide last year, little change from the previous year as a result of weaker purchasing power amid six-year low economic growth in 2015.

Adding to the challenges facing the tobacco industry is a constant increase in excise taxes. Late last month, the Finance Ministry announced excise increases for various types of cigarettes by an average of 10.54 percent, which will take effect starting January next year.

The excise increases are expected to push up retail prices by an average of 12.26 percent and contribute around 0.23 percent to inflation. The prevalence of smoking among Indonesian men reached 67.4 percent of males over 15 years old, the highest figure in the world.

Despite the challenges, analysts remain optimistic about the tobacco industry on the back of a domestic economic recovery that will provide a boost to consumer spending, including on cigarettes.

“Going forward, the consumer sector will still have a positive performance,” Danareksa analyst Lucky Bayu Purnomo said. “The keywords are recovering consumer and retail sectors.”

Indonesia’s economy expanded by 5.04 percent during this year’s first half while the government has set a 5 percent growth target by year-end, higher than the 4.8 percent achieved in 2015.

“Consumers’ addiction to cigarettes is one plus point held by Sampoerna,” Asjaya Indosurya Sekuritas analyst William Surya Wijaya said. “That, added to its innovations and new products, will allow it to grow in the future.”

Shares in Sampoerna, traded on the local bourse by the code HMSP, dropped 2.16 percent following the earnings announcement, trading at Rp 4,080 apiece toward the end of the day. The stocks have gained 11 percent so far this year, underperforming the broader benchmark Jakarta Composite Index’s (JCI) 18 percent gain.