Jakarta – PT Gudang Garam Tbk (GGRM), one of the country's major cigarette producers, will expand into the road construction business to increase the company's sources of revenue, although cigarette production remains among the most lucrative lines of business in the country.
Gudang Garam said in a statement filed to the Indonesia Stock Exchange (IDX) on Monday that it had established a subsidiary named PT Surya Kerta Agung (SKA) to run the new business, which will include road and bridge construction and the operation of toll roads.
The new subsidiary, with authorized capital of Rp 200 billion (US$14.26 million) and paid-up capital of Rp 100 billion, was established jointly with fellow Indonesian company PT Suryaduta Investama, with Gudang Garam owning 99 percent of shares and Suryaduta Investama owning 1 percent.
Corporate secretary Heru Budiman said the establishment of the subsidiary would not change Gudang Garam's core business as a cigarette producer."The establishment of the subsidiary will not have any impact on operational activities, legal affairs, financial conditions or business continuity," he wrote in the statement.
Gudang Garam booked a net revenue of Rp 26.20 trillion in the first quarter of this year, a 19.18 percent increase from Rp 21.98 trillion in the same period, last year. During the same period, its net profit rose 24.44 percent to Rp 2.36 trillion year-on-year.
In 2018, the cigarette producer's revenue rose 14.89 percent to Rp 95.71 trillion from Rp 83.31 trillion in 2017. In the same period, its net profit rose 0.49 percent to Rp 7.79 trillion from Rp 7.75 trillion. (hen)