The cigarette excise rates in this year has burdened the financial performance of PT HM Sampoerna Tbk (IDX: HMSP) but not PT Gudang Garam Tbk (IDX: GGRM) - Photo: Special

JAKARTA (TheInsiderStories) – The cigarette excise rates in this year has burdened the financial performance of PT HM Sampoerna Tbk (IDX: HMSP) but not PT Gudang Garam Tbk (IDX: GGRM). As known, the government has set the average tobacco excise rates 12.5 percent in this year to reduces the young smokers.

In the first quarter (1Q) of 2021, HM Sampoerna reported the net profit declined fell 22.1 percent to Rp2.58 trillion (US$177.94 million) compared to the same period last year Rp3.32 trillion. The revenues also decreased 4.4 percent from Rp23.68 trillion to Rp23.55 trillion in annual basis.

From the types, machine kretek cigarettes‘ revenues was down 5.14 percent to Rp15.68 trillion, hand-rolled kretek tobacco grew 12 percent to Rp5.32 trillion, machine white cigarettes rose 7.4 percent to Rp2.32 trillion, and hand white cigarette contributed Rp36.65 billion from last year did not generate income.

Domestic sales recorded of Rp23.36 trillion or decreased by 0.42 percent in 1Q of 2021 compared to last years. Export sales slumped by 64.05 percent to Rp35.21 billion from the same period in 2020 of Rp97.96 billion.

Its competitor, Gudang Garam‘ net profit fell 28.68 percent to Rp1.74 trillion in the first three months of this year from Rp2.35 trillion in the same period of 2020. The revenues rose by 9.09 percent to Rp29.74 trillion in the same quarter compare to a year ago Rp26.19 trillion.

Of the total sales, sales to the export market fell 40 percent to Rp325.25 billion compared to the three months of last year worth of Rp546.83 billion. While, the domestic sales edged up by 5.01 percent to Rp26.35 trillion from Rp25.64 trillion in 1Q of 2020. The largest sales were still contributed by machine kretek cigarettes, 90.83 percent of Gudang Garam‘ total revenue and hand kretek tobacco 7.89 percent. The rest from klobot cigarettes, paperboard, and other sales.

Starting February, tobacco excise tariff was effective. In detail, the excise rate for machine-made kretek cigarettes rose 23.39 percent, machine white cigarettes up 29.95 percent, hand kretek cigarettes and hand white cigarettes increased 12.84 percent.

Finance minister, Sri Mulyani Indrawati, has said the reasoned her ministry took the decision, caused number of smokers increased among women from 2.5 percent to 4.8 percent and among children up from 7 percent to 9 percent. She conveyed, the adjustment calculated based on the weighted average number of production of each type and group.

In addition, there were five aspects that the government had paid attention like the consumption, labor, farmers, illegal cigarettes, and the state revenues. The government has hike the cigarette tax four times. In 2015, the country raised the excise by 8.72 percent, in 2016 11.19 percent, 2017 10.54 percent, and 2018 10.04 percent. Initially, the government planned to increase the cigarette tax again by 23 percent in this year.

But, do various reasons, Indonesia not run the program. With the policy, is estimating the average retail selling price of cigarettes to lift by 35 percent from the current selling price. The minister assured that with the new policy, the government could maintain this year’ tax revenues.

US$1: Rp14,500

Written by Editorial Staff, Email: theinsiderstories@gmail.com