Wismilak’s Sales Pressure amidst Weakened Purchasing Power

Wismilak Inti Makmur, Tbk (WIIM:IJ) registered sales totaling IDR679.84Bn in the period 1H18, or shrinking 10.63% over the same period last year valued at IDR760.68Bn. According to its financial statements last July, Wismilak registered a net profit of worth IDR18.49Bn, or growth 59.53% compared to the same period last year of IDR11.59Bn.

Wismilak’s sales pressure amidst the purchasing power and cigarette excise increase. With a cigarette excise increase, then consumers must expend cigarettes more expensive. Meanwhile, during the last three years the purchasing power weakened. The drop in sales also recorded by Gabungan Produsen Rokok Putih Indonesia (Gaprindo), which explains the cigarette industry continued to decline over two to three years. In that period, the cigarette industry’s sales declined 2%-3% per year, and consequently the price of cigarettes can hike.

Pace of the Economy Reflected Purchasing Power

The Low Core Inflation, amidst Low Purchasing Power Parity

If the Government raised the cigarette excise, then the industry would raise the selling price. As for the average cigarette price increase is the equivalent of a cigarette excise increase, or about 10%. In addition to the pressure on the cigarette excise continues to rise, the industry was also hit by other policies, such as advertising and more restricted non-smoking areas. For the record, the industry contributed to the State’s tax cigarettes around IDR150Trn in 2017.

Government to Fasten Cigarette Excise Tariff Policy Issuance

Cigarettes Tax Rose 10.04% in January 2018

From the internal side, Wismilak’s management efficiency in December 2017, relocated its production from Surabaya to Bojonegoro. Wismilak also has yet to be expanded and still focus on existing products to improve performance in the period 2H18.