Profit Of Gudang Garam, Owned By Conglomerate Susilo Wonowidjojo, Reaches IDR 5.32 Trillion In 2023, This Is The Motivater Factor

JAKARTA - PT Gudang Garam Tbk (GGRM) recorded a net profit in 2023 of IDR 5.32 trillion, up 91.55 percent on an annual basis. In fact, the revenue of cigarette issuers owned by conglomerate Susilo Wonowidjojo was eroded last year.

In GGRM's financial report, quoted by VOI Monday, April 1, the company reported a profit attributable to owners of the parent entity of IDR 5.32 trillion. This number increased significantly considering that in 2022 GGRM recorded a profit of IDR 2.77 trillion.

One of the factors driving the company's profits is the ability to make efficiency in the cost of revenue. GGRM managed to record revenues of IDR 118.95 trillion throughout 2023. GGRM's revenue fell 4.60 percent year-on-year (YoY) from the position of IDR 124.68 trillion in 2022.

In line with the declining income, the cost of revenue also decreased by 8.13 percent or equivalent to Rp. 104.35 trillion. In 2022, GGRM's cost of revenue was recorded at Rp. 113.58 trillion.

GGRM's financial report explained that the reduction in the cost of revenue occurred due to a sloping production cost. The total cost of GGRM production is IDR 15.54 trillion, down 19.95 percent YoY.

At the same time the cost of excise stamps, VAT and cigarette taxes also fell to Rp73.29 trillion from the position of Rp97.59 trillion. This is closely related to the sales performance of GGRM cigarettes.

From the total income that was eroded to IDR 118.95 trillion, the engine kretek cigarettes segment was the deepest depressed. Sales of machine kretek cigarettes were recorded at IDR 96.02 trillion, down 15.97 percent YoY.

The increase in sales occurred in hand-rolled kretek cigarettes. However, the increase has not been able to offset the decline in machine kretek cigarettes. The sales of hand-rolled kretek cigarettes amounted to Rp9.30 trillion, an increase of 6.10 percent YoY.

As a context, hand-rolled kretek cigarettes become the segment with the smallest excise increase compared to other segments. This is alleged to make consumers substitution to cheaper products.

Regarding the excise tariff after President Joko Widodo (Jokowi) at the end of 2022 has approved an increase in cigarette excise by 10 percent which is valid in 2023 and 2024. The tariff is intended for SKM 1 and 2 which on average increases 11.75 percent to 11.5 percent, white machine cigarettes (SPM) 1 and 2 increased 12 percent to 11.8 percent.

Meanwhile, hand kretek cigarettes (SKT) 1, 2, and 3 increased by 5 percent, meanwhile, electric cigarette excise rose 15 percent and 6 percent for other tobacco processing products (HPTL) applied an increase every year from 2023 to 2028.

Returning to financial reports, GGRM's revenue was not further depressed due to construction revenues worth Rp. 12.41 trillion. This revenue is closely related to the completion of the construction of Dhoho International Airport, Kediri, East Java, which was worked on by PT Surya Dhoho Investama (SDHI), a subsidiary of GGRM.

In its financial report, GGRM reported that it had signed Government and Business Entity Cooperation (KPBU) through SDHI with the Ministry of Transportation (Kemenhub) for the construction, operation and maintenance of Dhoho International Airport.

"The KPBU validity period starts on September 7, 2022 and will end in the 50th year from the commercial operating date, unless it ends early according to the provisions of the KPBU," GGRM wrote in its financial report.

The service concession agreement made SDHI recognize intangible assets worth IDR 13 trillion, other long-term liabilities worth IDR 590.35 billion and construction revenues of IDR 12.41 trillion.

To build Dhoho International Airport, GGRM has injected capital into SDHI worth a total of IDR 14 trillion. Through SDHI, GGRM is the initiator of the airport's government-business cooperation project (KPBU) in Kediri, East Java.

Thanks to Dhoho International Airport, GGRM's total non-current assets became IDR 38.33 trillion at the end of 2023, up 15.76 percent YoY. After being combined with current assets, Gudang Garam's total assets were recorded at IDR 92.45 trillion at the end of 2023, up 4.39 percent YoY from the position of IDR 88.56 trillion in 2022.

GGRM reported total liabilities of IDR 31.58 trillion at the end of 2023, up slightly from IDR 30.70 trillion at the end of 2022. Meanwhile, the company's total equity was IDR 60.86 trillion, up 5.20 percent YoY with recorded GGRM cash and cash equivalents of IDR 3.61 trillion at the end of 2023.

Outside the cigarette business, GGRM will also build the Kediri-Tulungagung Toll Road. This 44.51 km toll road will later become a vehicle connecting Dhoho International Airport to the Trans Java toll road network via the Ngawi-Kertosono-Kediri toll road.

GGRM entered the toll road business through its subsidiary which is the Toll Road Business Entity (BUJT), namely PT Surya Sapta Agung Tol (SSAT). This BUJT has been designated as the winner of the Kediri-Tulungagung Toll Road business auction on December 14, 2023.

Meanwhile, the total investment cost to build the Kediri-Tulungagung Toll Road is projected to be IDR 9.92 trillion with a land acquisition cost of IDR 3.14 trillion.