HM Sampoerna

Stock Quote HM Sampoerna - HMSP:

Business Summary

HM Sampoerna is the number one cigarette brand in Indonesia and the world's largest kretek (clove) cigarette manufacturer. It is the producer of some of the most well-known kretek cigarette brands, such as Sampoerna Hijau, Sampoerna A Mild, and the legendary “King of Kretek” Dji Sam Soe. On 18 May 2005, the company was acquired by Philip Morris International, thus becoming part of one of the world’s largest tobacco companies. Today, the company also distributes Marlboro, the world’s best-selling cigarette brand, in Indonesia.

Sampoerna sells and distributes cigarettes through a total of 106 sales offices on the islands of Sumatra, Java, Bali and Kalimantan as well as in Eastern Indonesia.

Sales & Distribution Locations HM Sampoerna:

The kretek-type cigarettes are tremendously popular among Indonesia's population. It is the favorite cigarette of Indonesian cigarette consumers. About two-thirds of Indonesian men smoke, and are thus known as the world's top smokers. The percentage of Indonesian women that smoke is small (approx. five percent) as it is considered negative for a woman to smoke. Recently, however, there has been a large increase in female smokers among the country's middle class in the urban areas.

The company conducted a successful rights issue in October 2015, which was the largest-ever secondary placement in Southeast Asia and the largest equity offering in Indonesia since 2008.

HM Sampoerna's Financial Highlights:

	2015	2016	2017	2018
Net Sales	89,069	95,467	99,091
Gross Profit	21,764	23,855	24,216
Net Profit	10,355	12,530	12,483
Net Operating Income	14,048	16,020	16,111
Profit before Income Tax	13,933	17,011	16,895
Total Assets	38,011	42,508	43,141
Total Liabilities	5,995	8,333	9,028
Earnings per Share¹ ²	93	110	109
Dividend per Share¹	8,801	2,225

 

	2009	2010	2011	2012	2013	2014
Net Sales	38,972	43,382	52,857	66,626	75,025	80,690
Gross Profit	11,228	12,656	15,196	18,507	20,071	20,500
Net Profit	5,087	6,421	8,065	9,945	10,818	10,181
Net Operating Income	7,265	8,711	10,617	13,350	14,600	13,805
Profit before Income Tax	7,213	8,748	10,911	13,383	14,510	13,718
Total Assets	17,716	20,525	19,330	26,247	27,405	28,381
Total Liabilities	7,250	10,310	9,027	12,939	13,250	14,883
Earnings per Share¹ ²	n.a	n.a	n.a	90	98	92
Dividend per Share¹	n.a	n.a	n.a	7,670	9,945	10,651

^{in billion IDR rupiah, unless stated otherwise
¹ in IDR rupiah
² adjusted to stock split
Source: HM Sampoerna, Annual Report 2017}

Overview of the Tobacco Industry in Indonesia

Indonesia has a large and diverse tobacco consumer market with a significant percentage of adult smokers. Approximately 67 percent of Indonesian men and 5 percent of Indonesian women are smokers (Indonesia contains a total population of over 250 million people). Raw materials are mostly sourced domestically and in combination with cheap labour it makes production costs relatively low. As such, the price of a package of cigarettes in Indonesia is cheap. This has also been the reason why Indonesia's tobacco industry was not touched by the recent global economic downturn. Indonesians continue to consume more cigarettes, although exports have declined. However, exports contribute little to Indonesian tobacco producers' sales and profit figures and therefore the declining export numbers are not an issue.

Read more: Overview of Indonesia's Tobacco & Cigarette Industry

The most popular cigarettes in Indonesia are kretek cigarettes. About 85 percent of all smokers in Indonesia prefer kretek cigarettes to white cigarettes. Kretek are clove cigarettes that consist of tobacco (70 percent) and ground cloves, clove oil and other additives (30 percent). The kretek cigarette is a trademark of Indonesia.

Issues that can curb expansion of the tobacco industry in Indonesia are government policies. The government regularly decides to increase taxes or excises on cigarettes. Moreover, the government issued new rules that order tobacco companies to put various warning labels on cigarette packages, aimed at warning consumers about its health effects. In other words, it aims to make cigarettes less attractive. 

Lastly, weak clove harvests in Indonesia can cause temporarily high production costs (as happened in 2012).

There are four Indonesian tobacco companies that are listed on the Indonesia Stock Exchange (IDX):

• Gudang Garam
• HM Sampoerna
• Bentoel Internasional Investama
• Wismilak Inti Makmur

Both Gudang Garam and HM Sampoerna are among the companies with the largest market capitalization in Indonesia.