Sampoerna plans gradual price increase<\/p>\n
The Jakarta Post
\nJakarta<\/p>\n
PT Hanjaya Mandala Sampoerna Tbk., the country's second largest
\ncigarette producer, is gradually raising prices to allow
\nconsumers to absorb the impact of a government-mandated price
\nhike, according to president director Martin King.<\/p>\n
\"There are going to be rises... but it will be done in a
\nsmooth manner taking into account consumers,\" he said after the
\ncompany's annual general shareholders meeting on Monday.<\/p>\n
But King declined to provide details of the timing and amount
\nof the planned increases due to reasons related to competition,
\nsaying that the firm had already increased prices during the
\nmonth.<\/p>\n
Earlier this month, the government announced it would increase
\nthe cigarette retail price, used as a basis to charge excise
\nduty, by 15 percent starting on July 1.<\/p>\n
The move is aimed at boosting the government's excise revenue
\nfrom Rp 29.1 trillion as previously planned to Rp 31.4 trillion
\nthis year. Excise duties, of which more than 95 percent come from
\ncigarettes, account for roughly 10 percent of all domestic taxes.<\/p>\n
The government also said the raise was aimed at discouraging
\nteenagers from smoking. The 2004 National Health Survey revealed
\nthat about 53 million Indonesians aged above 15 smoke.<\/p>\n
Earlier last week, Gudang Garam, the country's largest
\ncigarette seller with a 28.3 percent market share, increased
\nprices by 2.7 percent to maintain its margins.<\/p>\n
Although Sampoerna, which has a 21.7 percent market share,
\ncould choose not to increase prices, doing so would cut into the
\ncompanies' bottom line and profit margins.<\/p>\n
\"We must increase prices if we want our balance sheet to
\nremain solid,\" said Sampoerna director Angky Camaro.<\/p>\n
He added that the company hoped to gradually pass on the full
\nimpact of the price hike to consumers, while at least maintaining
\nthe level of last year's sales of 41.4 billion cigarettes.<\/p>\n
\"We hope the gradual increase will not affect our sales target
\nfor the year,\" said Angky, declining to specify the target.<\/p>\n
King, who was named president director following the
\nacquisition of Sampoerna's 98 percent shares by Philip Morris
\nIndonesia, also declined to comment on speculation that Sampoerna
\nwould either delist from the Jakarta Stock Exchange or issue more
\nshares.<\/p>\n
However, he said that for now, the company was committed to
\nfulfilling all the requirements of a publicly-listed company and
\ndelivering value to its shareholders, which included the 2
\npercent minority.<\/p>\n
In May, following the $4.8 billion acquisition by PMI, which
\nis a unit of Altria, the Jakarta Stock Exchange decided not to
\ncount Sampoerna's shares in the calculation of its benchmark
\nJakarta Composite Stock Index, because the company's free-
\nfloating shares fell below 3 percent.<\/p>\n
King also declined to specify any company targets for the
\nyear, citing that it would be \"inappropriate\" in light of the
\ncompetition.<\/p>\n
He said, however, that the company intended to maintain the
\nmomentum of its strong first quarter results.<\/p>\n
During the first quarter of the year, Sampoerna's net sales
\nincreased by 28.3 percent to Rp 5.72 trillion from Rp 4.1
\ntrillion during the same period last year. This rise led a net
\nincome of Rp 752 billion, up 32.4 percent from Rp 568 billion.<\/p>\n
The company also agreed to issue a final dividend of Rp 275
\nper share in addition to its interim dividend of Rp 175, which
\nwas paid last December. Last year's total dividend of Rp 450 per
\nshare represented a 99.11 percent dividend payout ratio of the
\ncompany's 2004 net income of Rp 1.99 trillion. (002)<\/p>",
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