JAKARTA, thekabarnews.com—Indonesian cigarette manufacturer PT Gudang Garam Tbk reported a sharp profit recovery in the first half of 2026. Declining revenue indicated continued pressure on tobacco sales.

The company, which trades on the Indonesia Stock Exchange under the ticker GGRM, recorded consolidated net profit of Rp2.976 trillion for the six months ended June 30.

Profit increased approximately 2,375% from Rp120.25 billion in the same period of 2025.

Gudang Garam’s unaudited interim financial statements showed that revenue declined 7.19% year on year to Rp41.18 trillion from Rp44.37 trillion.

The contrasting results indicate that cost reductions, rather than sales growth, drove the company’s bottom-line recovery.

Gudang Garam reduced its cost of revenue by 13.28% to Rp35.19 trillion from Rp40.58 trillion. Because costs fell faster than revenue, gross profit increased 58% to Rp5.99 trillion from Rp3.79 trillion.

Operating expenses also declined 33.83% to Rp2.26 trillion. Consequently, operating profit surged to Rp3.90 trillion, more than seven times the Rp513.72 billion recorded a year earlier.

Lower financing expenses provided another major boost. Interest expenses dropped 97.94% to Rp4.52 billion from Rp219.35 billion.

The company reported no short-term bank loans as of June 30, compared with Rp761.93 billion at the end of December 2025.

Total liabilities increased to Rp13.78 trillion from Rp12.68 trillion during the same period. This mainly reflected higher excise, value-added tax and cigarette-tax payables.

The improvements lifted Gudang Garam’s net profit margin to approximately 7.23%, up from just 0.27% in the first half of 2025.

The company’s profit has recovered, but declining revenue continues to pressure its performance.

Gudang Garam continues to face changes in consumer purchasing power and cigarette consumption patterns, competition from lower-priced products and uncertainty surrounding Indonesia’s tobacco-excise policy.

Government figures underline the industry’s wider economic importance. Indonesia collected Rp48.8 trillion in tobacco-excise revenue during the first quarter of 2026. Receipts declined 12.4% year-on-year, according to the Finance Ministry’s APBN KiTa report.

Overall customs and excise revenue reached approximately Rp152 trillion in the first half of 2026, equivalent to 45.2% of the government’s annual target.

Gudang Garam improved profitability during the sales downturn by tightening cost controls and reducing financing expenses.

Future sales volumes, pricing power, production costs and government excise policy will determine whether the company can sustain the recovery.