Gudang Garam 4th-Qtr profit falls 20% on lower demand

Gudang Garam 4th-Qtr profit falls 20% on lower demand

Bloomberg, Jakarta

PT Gudang Garam, Indonesia's biggest cigarette maker, posted a
20 percent decline in fourth-quarter profit after demand for
hand-rolled clove cigarettes fell and foreign-exchange losses
widened.

Net income fell to Rp 271.4 billion (US$29 million) in the
three months ended Dec. 31 from Rp 337.2 billion a year earlier.
Sales rose 4 percent to Rp 5.42 trillion. Fourth- quarter
results, which Gudang Garam did not release, were derived by
deducting nine-month results from full-year numbers published in
the Bisnis Indonesia newspaper today.

"At its current share price, Gudang Garam is attractive to
collect, compared with rival PT HM Sampoerna, which recently
rose" after a takeover bid by Philip Morris, Irvin Patmadiwiria,
which counts the stock among the equivalent of $157 million of
Indonesian assets he helps manage at Batavia Prosperindo Aset
Manajemen in Jakarta.

The shares of Kediri, East Java-based Gudang Garam, which have
gained 23 percent this year, rose Rp 100, or 0.6 percent, to
16,000 as of 10:35 a.m. on the Jakarta Stock Exchange. The stock
is trading at 17 times its earnings last year, compared with
Sampoerna, which is trading at 23 times last year's profit at
Rp 10,350, Bloomberg data showed.

Earlier this month, Altria Group Inc.'s Philip Morris division
agreed to buy 40 percent of Sampoerna from the grandson of the
company's founder for Rp 10,600 a share and plans to buy the
remaining shares in a tender offer for the same price.

Gudang Garam's foreign-exchange losses widened to Rp 44.8
billion in the fourth quarter from Rp 17.6 billion a year
earlier. Gudang Garam makes mostly "kretek" cigarettes, which
contain a mixture of tobacco and cloves. About 90 percent of
Indonesian smokers prefer "kretek."

The Indonesian rupiah fell 9.2 percent against the dollar last
year. Yesterday, the currency fell 0.8 percent to Rp 9,523 a
dollar after an earthquake killed at least 426 people and spurred
concern the government will need to increase spending to provide
emergency relief.

Gudang Garam probably sold 1.1 billion fewer hand-rolled
cigarettes last year from 10.5 billion cigarettes sold in 2003,
the company said on Dec. 3. Sales of its machine-made cigarettes
may have risen by as many as 3.5 billion sticks from 56.8 billion
in 2003, it said.