PT Gudang Garam Tbk (GGRM) was reported to have laid off thousands of employees.

This news spread after a video circulated showing Gudang Garam workers holding a farewell gathering. The report further casts a shadow over Indonesia’s labor sector. Declining consumer purchasing power and the weakening national economy have caused cigarette sales and production to drop, leaving the company with no choice but to resort to layoffs.

However, GGRM’s Director and Corporate Secretary, Heru Budiman, denied the allegations. He clarified that what actually happened was the release of 309 employees carried out in a normative manner, either through normal retirement, voluntary early retirement, or the expiration of fixed-term contracts.

Heru emphasized that this process had no impact on the company’s operational continuity and did not create any legal issues.

“At present, the company’s operations are running as usual, from production to distribution,” he stated in an official disclosure, quoted Wednesday (September 10, 2025).

Meanwhile, Gudang Garam reported a net profit of Rp117.1 billion in the first half of 2025. This figure plummeted 87.3% compared to the Rp925.5 billion recorded in the same period of 2024.

According to the company’s financial statements disclosed through the Indonesia Stock Exchange (IDX), the sharp decline in profits was due to a drop in revenue, which fell 11.4% to Rp44.3 trillion as of June 2025, from Rp50.01 trillion in June 2024.

The cost of goods sold also declined to Rp40.5 trillion. Consequently, GGRM’s gross profit by June 2025 fell to Rp3.7 trillion from Rp5.06 trillion in June 2024.

Operating profit in the first half also dropped significantly to Rp513.7 billion, compared to Rp1.613 trillion in June 2024.

This decrease was driven by lower other income, which fell to Rp148.7 billion, while operating expenses only decreased by 5%, much smaller than the revenue decline, reaching Rp3.4 trillion. In addition, other expenses rose to Rp2.3 billion, and the company recorded a foreign exchange loss of Rp1.7 billion, after previously posting a forex gain of Rp39.3 billion.

GGRM’s total assets as of the first half of 2025 also shrank to Rp79.8 trillion from Rp84.9 trillion at the end of 2024.

Heru stated that the company had launched several new products in 2024 as part of its efforts to adjust to weak consumer purchasing power. “The company will continue to take adaptive measures toward market conditions, which are currently heavily influenced by developments in excise regulations and enforcement against illegal cigarettes that do not comply with excise rules,” he said.