Gudang Garam's Cigarette Sales Decreased By 8.8 Percent Due To The COVID-19 Pandemic

Illustration. (Photo: Unsplash)

JAKARTA - The national cigarette producer, PT Gudang Garam Tbk (GGRM), was also affected by the COVID-19 pandemic. The company reported a decrease in the sales volume of the company's cigarettes produced by 8.8 percent to 42.5 billion sticks in the January to June 2020 period.

In a press release, Monday, August 24, Gudang Garam management explained, for the full flavor machine-made kretek cigarette (SKM FF) category fell 6.6 percent to 35.8 billion sticks, and low tar nicotine machine kretek cigarettes (SMK LTN) fell by 45, 6 percent to 2.3 billion sticks.

"Hand-rolled kretek cigarettes (SKT) was the only segment that recorded growth, namely 7.5 percent to 4.5 billion sticks," said Gudang Garam management.

This decline is in line with weakening industrial sales. Based on Nielsen's market research data quoted by Gudang Garam, the industry's total sales volume fell 12.8 percent to 110.4 billion units.

From the financial side, Gudang Garam recorded a slight growth in operating income, namely 1.7 percent to IDR 53.7 trillion compared to IDR 52.7 trillion in the first half of 2019.

"This revenue growth is due to an increase in sales prices," said Gudang Garam management.

Meanwhile, excise expenses, including VAT and cigarette taxes reached 79.5 percent of the company's total sales costs during the first semester of 2020, a slight increase compared to 78.4 percent in the same period last year.

Meanwhile, its gross profit fell by 13 percent to Rp.8.7 trillion from the previous Rp10 trillion. Comprehensive income in the first semester of 2020 was recorded to have decreased by 10.7 percent from IDR 4.3 trillion to IDR 3.8 trillion.

Gudang Garam management stated that the COVID-19 pandemic made the challenge even more difficult because people's purchasing power was depressed, especially the lower class. Gudang Garam will continue to be alert and monitor these developments closely.