PUBLIC

 EXPOSE  

A U G U S T   2 8 T H ,   2 0 1 8  

I N D O N E S I A   S T O C K   E X C H A N G E  
J A K A R T A  
Public  Expose  
• GG  Profile  
• Management  
• Premium  Quality  Products  
• Corporate  Sustainability  
• CigareNe  Industry  
• Company  Financials  
• Outlook  

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GG  Profile  
Management   There  were  no  changes  to  Board  
of  Directors  since  last  year  

PRESIDENT  DIRECTOR  
Susilo  Wonowidjojo  

DIRECTOR   DIRECTOR   DIRECTOR   DIRECTOR   DIRECTOR   DIRECTOR  

Heru  Budiman   Herry  Susianto   Buana  Susilo   Istata  Taswin  Siddharta   Lengga  Nurullah   Sony  Sasono  Rahmadi    

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Board  of   There  were  no  changes  to  Board  
of  Commissioners  since  last  year  
Commissioners  

PRESIDENT  COMMISSIONER  
Juni  SeWawaW  Wonowidjojo  

INDEPENDENT  COMMISSIONER   COMMISSIONER   INDEPENDENT  COMMISSIONER  

Frank  Willem  van  Gelder   Lucas  Mulia  Suhardja   Gotama  Hengdratsonata  

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Corporate    
Sustainability  
Corporate  Social  Responsibility  
• Local  community  care,  sports,  educaWon  &  healthcare,  cultural  
beliefs,  special  relief  programmes  and  healthy  living  condiWons  
Environmental  and  Occupa@onal  Safety  Management  
• Health,  Safety  and  Environment  (HSE)      
• Wastewater  management  
• Air  polluWon  control  
• Hazardous  and  toxic  (B3)  waste  management  
• Non-­‐B3  waste  management  
• BLUE  PROPER  raWng  from  Environment  Ministry  
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Premium  Quality  Products   • Comprehensive  coverage  –  no  new  launches  
• SKT,  SKM  FF  and  SKM  LTN  well  supported  by  
our  customers:  overall  growth  of  2.4%  

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CigareBe  
Industry  
 CigareBes  Industry  Volumes  by  Sector    
(Source:  Nielsen  market  data)    

Total  Industry  performance  shows  7.2%  downtrend  first  3  months  2018  vs  2017  

 SKT:  down  11.1%   Changing  preferences:  SKT  share  down  from  18.3%  to  17.6%  
 
SKM  FF:  up  0.6%   FF  gains  con@nue:  from  34.5%  2015  to  40.7%  market  share  today  
 
SKM  LTN:  down  12.3%   Intense  compe@@on  
 
Non  Kretek:  down  10.8%     <  6%  of  na@onal  sales  –  Gudang  Garam  not  represented  in  
this  market  
  9  
Industry  Volume   Propor@onal  mix  analysis:    
 
Full  year  2015  to  2017  
Q1  2017/2018    
plus  total  sWcks  for  each  period  
287.2  bn   284.9  bn   279.5  bn  

SPM   6.2%   5.8%   5.4%   72.5  bn   67.3  bn  

20.1%   19.0%   18.1%  
SKT   5.6%   5.4%  
38.6%   18.3%   17.6%  
34.5%   36.2%  
SKM  FF  
37.6%   40.7%  

SKM  LTN   39.2%   39.0%   37.9%   38.5%   36.3%  

2015   2016   2017   Q1  2017   Q1  2018  

Based  on  Nielsen  Market  Data  

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Company    
Financials  

11  
Performance  
Highlights  
(Unaudited)  3  months  data  

Q1  
Comment  
Rp  billion     2017   2018  

Sales  revenues   19,970   21,981            10.1%  

Volumes  (billion  sWcks)   19.4   19.8            1.8%  

OperaWng  expenses   (1,645)   (1,730)            5.2%  

PBIT   2,534   2,531            (0.1)%  

Profit/Total  Comprehensive  Income   1,890   1,893            0.1%  

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GG  Volume  Development  
Billion  SWcks  
77.1  bn   78.7  bn  

8.5   8.6  
SKT  

SKM  FF   58.7   61.7  

19.4  bn   19.8  bn  

2.1   2.1  

14.8   16.1  
9.9   8.4   2.5   1.6  

2016   2017   Q1  2017   Q1  2018  

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Cost  Growth   Raw  materials  and  excise  cost  
remain  key  factors  

Cost  of  Sales   Rp54.9  tr   Rp59.7  tr   Rp65.1  tr  

In  Rp  Tr  
 2,231    
 3,577     Rp15.6  tr   Rp17.6  tr  
 13,232    
Others    3,769    
 13,478      1,912    
 13,429      869    
Raw  materials    3,074    
 3,195    

Excise   11,508   12,582  

37,681   42,602   49,621  

2015   2016   2017   Q1  2017   Q1  2018  

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Margins      
Q1  
Comments  
2017   2018  

Gross  Margin   22.0%   20.1%   Excise  duty  increases  (see  below)  

OperaWng  Margin   13.9%   12.4%   OperaWng  costs  well  managed  

Net  Margin   9.5%   8.6%   Non  operaWng  expenses  lower  
Excise  duty,  VAT  &  Cig  tax    
73.9%   71.6%   Remains  the  largest  cost  in  COGS  
as  %  of  COGS  

Excise  duty,  VAT  &  Cig  tax    (Rp  bn)   11,508   12,582   9.3%  increase  

Reflects  excise  rise,  relaWve  to  other  

Raw  materials  %  of  COGS   20.5%   17.5%  
cost  components  
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Financial  posi@on:   Audited  12  months  for  2017  
(Unaudited)  3  months  2017  and  2018  
Assets  
Full  Year   Q1   Q1   YOY  Q1  
Rp  billion   Comment  
2017   2017   2018   ∆%  
Cash   2,329   2,329   2,203   (5.4)  

Receivables   2,229   2,026   2,493   23.1  

Moving  average  cost  
Inventories   37,920   33,788   34,718   2.8  
basis  
Other   1,287   583   1,064   82.5  

Total  current  assets   43,765   38,726   40,478   4.5  

Fixed  &  other  assets   22,995   20,765   22,826   9.9  

Total  assets   66,760   59,491   63,304   6.4  

16  
Financial  posi@on:   Audited  12  months  for  2017  
(Unaudited)  3  months  2017  and  2018  
Liabili@es  &  Equity  
Full  Year   YOY  Q1  
Rp  billion   Q1  2017   Q1  2018   Comment  
2017   ∆%  
Cash  flow  used  to  reduce  
Short  term  loans   20,600   7,254   6,100   (15.9)  
outstandings  
Payables  (including  taxes)   1,521   1,495   1,662   11.2  

Excise  duty,  VAT  &  cigareNe  tax  payable   1   7,071   8,974   26.9  

Other   2,450   2,273   2,488   9.5  

Total  LiabiliWes/Equity   58%   43%   44%   -­‐   Improved  gearing  sustained  

   
Shareholders  equity  incl.  retained  earnings   42,188   41,397   44,080   6.5  
   

Total  LiabiliWes  &  Shareholders’  equity   66,760   59,491   63,304   6.4  

17  
Outlook  
 Outlook  for  the  Indonesian  consumer  and  the  
economy  
Upside  opportunity   Near  term  concerns  
• Q2  2018  GDP  growth:  5.27%  a  four   • Pre-­‐elecWon  cauWon  impacWng  
year  quarterly  high  
consumer  spending  
• Bank  Indonesia:  prudent  interest  rate  
adjustments;  commercial  loan  growth   • The  Rupiah,  the  current  account  
of  10%  YTD  indicaWve  of  posiWve   deficit,  US  trade  policy  &  weaker  
business  senWment   emerging  market  senWment  
• Investment  programmes  in   • Fiscal  pressure  -­‐  ongoing  risk  of  
infrastructure,  sWmulus  conWnue   higher  Government  excise/
• Successful  Asian  Games  and  IMF/ regulaWons  for  cigareNe  industry  
World  Bank  meeWng  in  Bali    
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