Sampoerna may issue bonds this year

Rendi A. Witular, Jakarta

Publicly listed PT HM Sampoerna, the country's third largest cigarette producer in terms of market share, may sell bonds by the end of this year, in a bid to refinance debt maturing in January next year.

Sampoerna's 25-year-old president director, Michael Sampoerna, said the company would refinance Rp 1 trillion (US$106 million) of its debts probably in the next couple of months or in the next quarter.

"We are looking at various options to finance our debt, in the form of bonds possibly. We have to refinance it at some point," Michael told reporters after a company presentation for investors and the media on Friday.

Michael said that by the end of this year, the company had projected its market share to increase due to stronger demand for its cigarettes. In the next couple of years, the company is expected to have a 30 percent market share.

During the presentation, Sampoerna director Angky Camaro said the surge in cigarette sales this year would be mainly driven by a more stable pricing environment and to a lesser extent the windfall from general election activities.

"After facing a tough year in 2003 due to unfavorable excise policy, cigarette sales this year are expected to recover due mostly to election spending," said Angky without giving any figures for the projected increase in sales.

Angky said that the company would still rely on the popular Dji Sam Soe and A Mild clove cigarette brands as the two pillars for sales growth. The company also expects its Sampoerna Hijau clove cigarette brand to become the third growth pillar.

Sampoerna shares on the Jakarta Stock Exchange, which are included in the blue-chip list, ended unchanged on Friday's trading at Rp 5,050.

According to AC Nielsen's first quarter report on the country's cigarette industry, Kediri-based PT Gudang Garam is still the country's largest cigarette producer with a 29.9 percent market share, followed by PT Djarum with 21.5 percent, Sampoerna with 19.2 percent, PT Philip Morris Indonesia with 4.5 percent, PT Bentoel with 3.2 percent and PT British-American Tobacco Indonesia with 2.6 percent.