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SCMP Reporter

Indonesian cigarettes giant Hanjaya Mandala Sampoerna has disclosed huge foreign exchange losses following an audit by Prasetio, Utomo & Co, an arm of international accountants Arthur Andersen.

  The listed group said it incurred an additional 413 billion rupiah (about HK$370 million) in unexpected losses last year, arising from long-term foreign currency debts and forward contracts.

  'The losses were not foreseen as of our several announcements of last year,' Sampoerna spokesman Jonathan Zax said.

  Sampoerna's financial results have been delayed while the company works out how to appropriately treat the foreign exchanges losses in its accounts.

  However, chief financial officer Eka Kasih last month said he still expected the group to report a net profit.

  Sampoerna had about US$400 million in US dollar debt with the principal hedged at an exchange rate of 2,450 rupiah to the dollar.

  The company said: 'As expected, foreign exchange losses in the second half of the year on the company's approximately US$400 million in debt will be largely offset by gains on the corresponding forward contracts.

  'However, the liabilities arising from the company's outstanding commitment to pay dollar-denominated swap premiums through the maturity of forward contracts will also incur foreign exchange losses.'   Aggregate premiums payable at the end of last year were US$193 million, based on an exchange rate of 4,650 rupiah to the dollar.

  The rupiah, which has plunged more than 70 per cent in value against the dollar since July, closed trading on Monday at about 8,500 to the dollar before yesterday's Indonesian bank holiday.

  Sampoerna has also announced an average 13 per cent increase in cigarette distribution prices, following a rise of government excise taxes effected on April 1.



Cigarette giant dealt currency blow