Indonesia's Gudang Garam H1 Net Profit Rises

Source from:  JAKARTA, July 30 (Reuters) 08/01/2007

Indonesia's largest tobacco company, PT Gudang Garam Tbk , reported on Monday a 30.4 percent rise in its first-half net profit, thanks partly to lower operating expenses. The company, which has been badly hit by rising costs and tough competition from its rivals, managed to bring down its operating expenses by nearly 1.5 percent year on year, pushing its operating income up by 9.5 percent. Gudang Garam, which has a market capitalisation of $2.3 billion, booked a net profit of 710.6 billion rupiah ($77.32 million) in January-June, up from 545.0 billion a year ago. The firm, controlled by Indonesia's Wonowidjojo family, saw its sales revenue climb to 13.4 trillion rupiah from 12.67 trillion in the first half of 2006. Subsiding inflation, which hit around six-year highs in late 2005 after the government hiked domestic fuel prices, is helping the country's consumer sector, including tobacco firms, this year. The government is forecasting a 3 percent increase in cigarette production this year to 224 billion sticks. Gudang Garam Tbk has been facing strong competition from number two PT Handaya Mandala Sampoerna Tbk , and briefly lost its top spot in December and January, industry data showed. While Sampoerna's products are aimed at a niche, younger market, less sensitive to prices, Gudang Garam has been mostly pursuing a mass market approach. Philip Morris International, the tobacco arm of Altria Group , controls nearly 100 percent of Sampoerna Tbk . Indonesia's $8-billion tobacco industry supports about 7 million people and accounts for about 10 percent of the tax revenue in the world's fifth largest tobacco market. While the number of smokers in many Western countries has fallen in recent years, experts say more than a third of Indonesia's population smokes today compared with a little over 25 percent about a decade ago. During the first half, Gudang Garam's share price rose only by 9.3 percent, underperforming an 18.5 percent rise in the Jakarta Composite Index and a 42 percent jump in the value of Sampoerna's shares. ($1 = 9,190 rupiah) Enditem