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INDOCEMENT

Indonesia Macroeconomic Overview INDOCEMENT

 World Bank anticipates Indonesia’s economy to grow by 5.3% in 2017 and 5.5% in 2018
and 2019 supported by resilient domestic demand and improvement in private investment
 IMF: In 2017, growth is expected to rise modestly to 5.1%, led by a gradual pickup in
private investment in response to stronger commodity prices, low interest rates, and a
recovery in external demand on the back of a pickup in global growth and trade.
 Bank Indonesia reaffirmed its estimate of 5.0% - 5.4% growth rate in the economy for
2017
 Overall, we see the cautious early signs of green shoots - improving consumer confidence
now up two months in a row and at its highest level, end of elections, talk of S&P rating
upgrade for Indonesia (the last of the three
key credit ratings agencies to give
investment grade status) and strong
Government tax collections in the first three
months.

Source: Indonesia Statistic

Slide 2 - May 2017


Q1 Results - Indocement
Indonesian Cement Industry 2017 Landscape INDOCEMENT

Lafarge Indonesia
1.6 mio ton
Semen Bosowa
0.2 mio ton (g)
4.0 mio ton
2.5 mio ton (g)
Indocement Anhui Conch
24.2 mio ton 2.6 mio ton

Semen Indonesia
10.3 mio ton Semen Indonesia
0.9 mio ton (g) 7.8 mio ton
Semen Baturaja
Semen Kupang/Merah Putih
2.1 mio ton
Semen Indonesia 0.6 mio ton
0.7 mio ton (g)
14.4 mio ton
Merah Putih 0.5 mio ton (g)
4.2 mio ton
2.0 mio ton (g) Semen Puger
Siam Cement 0.5 mio ton
2.0 mio ton Panasia
Holcim Indonesia 2.0 mio ton
11.9 mio ton Jui Shin
0.3 mio ton (g) 2.0 mio ton Total Cement Capacity in 2017 of 102.2* mio tons,
Anhui Conch from 89.9 mio tons in 2016
2.2 mio ton (g) * Total capacity in 2017 includes Finished Mills from Hao Han (0.6 mt), Semen
Slide 3 - May 2017 Source: ASI and internal estimation Jakarta (1.5 mt), and Sun Fook (0.6 mt), excludes Rembang plant from Semen
Q1 Results - Indocement Indonesia (1.5 mt)
Demand/Supply Outlook: Oversupply Market INDOCEMENT

in mio Tons
CAGR Supply 2001-2015: 3.6% CAGR Supply 2016-2025: 4.6%
CAGR Demand 2001-2015: 6.5% CAGR Demand 2016-2025: 6.9%
Year Over Supply 91.9% 92.4%
2015 15.4 88.7%
85.4% 132.3 134.3 134.3
2016 27.9 84.8% 84.1%
126.8
2017 37.1 78.9%
80.2% 80.1% 121.6 134.3
78.6%
2018 41.2 76.1% 116.9
111.6 73.4%
2019 41.6 71.2% 112.9
Consumption per capita = 243 kg 69.7%
2020 41.1 68.3% 69.0% 67.9%
Vietnam = 611 kg 102.2
66.2% 105.5
63.6% Thailand = 443 kg 63.7% 63.0% 64.4%
Malaysia = 751 kg 98.6
89.9
57.0% 58.0% Philippines = 240 kg 92.2
54.6% Singapore = 1,380 kg 86.1
77.4 Consumption per
Brunei = 899 kg 80.5
70.1 capita = 396kg
75.2
62.8 70.3
59.8 65.1
Import 62.0 62.0
50.9
54.1 58.0 59.9
48.7 55.0
47.1 47.5 47.5 47.5 46.1
44.9 44.9 44.9
48.0
40.8
Export 38.1 38.4
34.2 17.7%
31.5 31.9
15.2% 27.1 27.5 30.2 14.5%
25.7
22.3 11.4%
9.7%
7.0% 8.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
5.2% 6.2% 5.5% 5.0%
4.2% 3.3% 3.5%
1.8% 1.5% 0.9% 0.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Demand Growth Domestic Demand Domestic Supply Utilization

Slide 4 - May 2017


Q1 Results - Indocement
Cement demand shows down trend 4 years in a row as multiplier INDOCEMENT

effect of infrastructure spending has not been realized


Source: Indonesian Cement Association, BPS Statistic 59.9 62.0 62.0
17.7% 55.0 58.0
15.2% 48.0 14.5%
38.1 38.4 40.8
31.5 31.9 34.2
27.5 30.2
9.7%
25.7 27.1
7.0% 11.4%
5.2% 6.3% 6.2% 6.2%
14.7 14.8
5.7% 5.5% 6.0% 6.0% 5.6%
4.5% 4.8% 5.0% 4.6% 5.0% 4.7% 5.0% 4.9% 5.0%
4.2% 6.2% 5.5%
3.3% 3.3% 3.5% 4.6%
1.8% 1.5% 0.9% 0.5%
0.0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 Q1
2016 2017

Domestic Demand (mio T) GDP Growth Demand Growth

Cement Demand still flat amid strong trade balance signal


Mortgage In line with relatively high mortgage rate % Demand Bio USD
% Demand
Rate % Growth In line with slowing commodity & Coal Growth
12.0% 20% 30.0 20%
17.7% 10.5% 18% 25.0 18%
10.0% 10.0%16% 17.7%
9.5% 20.0 16%
14.5% 14% 15.0 14.5% 14%
8.0%
7.5% 12% 10.0 12%
5.0 10%
6.0% 10%
0.0 8%
4.8% 8% -5.0 6.2% 6%
4.0% 6.2% 6%
5.5% 4.6%
5.5% -10.0 4%
3.3% 3.5%
2.0% 3.5% 4% -15.0 2%
3.3% 0.5%
2% -20.0 0.0% 0%
0.0% 0.0% 0% 2010 2011 2012 2013 2014 2015 2016 Q1 Q1
10 11 12 13 14 15 16 2016 2017

Non Oil and Gas Oil and Gas


BCA - KPR BI Rate
Cement Demand
Slide 5 - May 2017
Q1 Results - Indocement
Domestic Consumption Growth & Market Share per region
YTD March 2017 INDOCEMENT

Source: Indonesia Cement Association


Market Growth:
>15% For Q1 2017, Indocement’s home market, Western
Java recorded negative growth of -3.2% YoY. Java
indicated recovery with overall growth of 3.9%
10-15% supported by double digit growth in Central and
East Java. Meanwhile Outside Java growth is
5-10% -3.5%. In 2016, Sulawesi was able to deliver
double digit growth however, this year indicates
negative growth along with Sumatera and
0-5% Kalimantan. Growth in East Indonesia and Nusa
Tenggara were not able to offset the slump in other
<0% islands due to lower volume. Commodity price
recovery has not translate into positive growth in
Sumatera and Kalimantan yet.
Slide 6 - May 2017
Q1 Results - Indocement Source: Indonesia Statistic (processed)
Java is still key market area in delivering strong results INDOCEMENT

Geographic composition of Sales

76% 31%
30%
75% 30%
29%
74% 28% 29%
28%
28%
73% 28%
27% 27%
72% 27% 27%
26%
71% 26%

70% 26% 25%

69% 25% 24%

68% 23%
73% 74% 75% 72% 73% 70% 74% 71% 72% 72% 73%
67% 22%
Q1 '15 Q2 '15 Q3 '15 Q4'15 FY 2015 Q1 '16 Q2 '16 Q3 '16 Q4 '16 FY 2016 Q1 '17

Java (LHS) Outside Java (RHS)


• On absolute terms Java remains the dominant factors in delivering strong
results
• Indocement is able to protect home market and maintain stable sales, however
declining sales from outside Java brought down total domestic sales
Slide 7 - May 2017
Q1 Results - Indocement
The importance of bulk sales continues INDOCEMENT

In thousand tons Bag/Bulk sales composition Jan - Dec


20,000
18,000
16,000 3,517 20% 3,931 21%
4,109 24%
3,860
14,000 24%

12,000 • Stronger focus on increasing


bulk sales
10,000 • High bulk volume in Jakarta
8,000 • Indocement benefits from
14,459 14,568 proximity to Jakarta
6,000 12,943 12,518
4,000 861 21% 22%
845
2,000 3,144 3,008
-
2013 2014 2015 2016 Q1 '16 Q1 '17
Bag Bulk

• Portion of bag sales is lower than bulk due to declining sales especially in outside Java
for Q1 2017
• Composition of bag vs bulk sales in Q1 2017 is 78.1% vs. 21.9%
• Indocement positions itself as a reliable partner for infrastructure projects providing
quality bulk cement and concrete at timely delivery

Slide 8 - May 2017


Q1 Results - Indocement
Continuous focus on cost control with disciplined INDOCEMENT

spending on promotional activities


Composition of Manufacturing Cost as % Fixed Cost Control – bio IDR

Trend 600
542 -6% 524
+7%

490
50% 45.4% 500
-10%

40% 400

30% 300
22.8%
20.5%
20% 42.6% 200
152 141 +8%
11.3% 130
24.2% 24.1% +0%
10% -15% 100
24.5% 9.2%
10.6% 43.0% 21.9%
0% -
Raw Materials Direct labor Fuel and Man. Q1 2015 Q1 2016 Q1 2017
Power Overhead
Jan - Mar 2015 Jan - Mar 2016 Jan - Mar 2017 Selling Expense G&A Expense
• Increase in coal price only caused slight increase in fuel and power cost, due to gain in running the
most efficient kilns.
• Manufacturing Overhead portion decreases due to cost savings activities including repairs.
• Ramping up of P14 kiln in Q1 already starts to deliver savings; full savings expected starting in H2.
• Increase in SG&A relates to additional cost to support end user program and Rajawali promotion.

Slide 9 - May 2017


Q1 Results - Indocement
Continue in Cost Leadership to maintain a decent margin INDOCEMENT

in Q1 2017
New market entrants leading to higher competition and pricing pressure
but Indocement maintains better margin compared to peers

INTP Gross margin development INTP EBITDA margin development


50.0%
40.0%
40.0% 35.0%
34.5%
30.0%
30.0% 25.0% 22.3%

43.2% 20.0%
20.0% 41.8% 41.7% 41.2% 33.9%
15.0% 31.8% 31.1% 30.3%
10.0% 10.0%
5.0%
44.5% 45.0% 44.6% 44.4% 34.8% 34.5% 34.0% 33.8%
0.0% 0.0%
Jan-Mar Jan-Jun Jan-Sep Jan-Dec Jan-Mar Jan-Jun Jan-Sep Jan-Dec
2015 2016 2017 2015 2016 2017

Continue competitive environment, Management focus on taking respective initiatives early on during
the year:
 Operational Excellence program
 Fix cost reduction program
 Managing efficient kiln utilization

Slide 10 - May 2017


Q1 Results - Indocement
Financial Result INDOCEMENT

Consolidated Statement of Comprehensive Income

• Operating margin reduction from 27.5% to 14.8% contributed by lower revenues by -14.1% due to strong competition on weak
demand situation which impact was reduced by cost efficiency in production (-0.8%) amid cost pull from current soaring coal price.
• Active end user program initiated at beginning of year to support the volume performance.
Slide 11 - May 2017
Q1 Results - Indocement
Balance Sheet INDOCEMENT

Consolidated Statement of Financial Position

• Trade receivables are declining following weak demand on start up year after reach its peak at end of
year’s quarter. Inline with receivables sides, lower activities reduced the payable balance.
• Increase in Non-Current Assets compare to same period last year was mainly due to spending in capital
expenditures and tax assets revaluation.
• Dividend Payment history:
2013 2014 2015 2016

Dividend/Share * 450 900 1,350 415


Avg. Share Price 21,604 23,390 21,159 18,225
Dividend Yield 2.1% 3.8% 6.4% 2.3%
% Div. Payout 34.8% 66.1% 94.3% 35.1%

* based on previous Fiscal Year Earnings

Slide 12 - May 2017


Q1 Results - Indocement
Our P14 in Citeureup has already started INDOCEMENT

A new Tiga Roda cement plant, with annual


installed production capacity of 4.4 million
cement at Citeureup, Bogor - Indonesia.
IDR ~6 Trillion investment.

A production line that equipped with modern and energy efficient facility.
Designed to utilized alternative fuels and materials and owns state-of-art emission system and
environment-friendly production facility with bag filter as effective dust filter in all production lines.

• Kiln line already fully operational starting end of last year and savings already started with full
benefit expected in H2.
• Currently its benefit USD 4-5/t.

Slide 13 - May 2017


Q1 Results - Indocement
Capacity Expansion & Future Investment to participate in INDOCEMENT

Industry Growth

 Full Operation in 2017 with combined cycle operation of 1 unit of aero


derivative gas turbine (ADGT) to supply 73 MW (including power supply from
Steam Turbine to Citeureup factory); Investment cost: IDR 468.3 Bio and
started operation in Oct, 2016
Cement tank 300 Ton installed
 Full Operation in 2017 for 1 Cement and packing floating terminal in in Pontianak Terminal

Pontianak to strengthen our bag and bulk cement supply in West Kalimantan
area – Investment Cost: IDR 56.3 Bio and started operation in May 2016
Future Projects:
 2 greenfield or brownfield project with each capacity of 2.5 mio ton: one in
Central Java (under final Supreme Court appeal process for Environmental
permit issues) and one in outside Java: IDR 8.9 Trillion
 Study for some potential Cement Terminals in Sumatra: IDR 182.0 Bio
Loading conveyor to truck

Million Tons + 5-8 mt


+ 4.4 mt
+ 1.9 mt
+ 0.6 mt + 1.5 mt

16.6 17.1 18.6 20.6 25 30-33

2005 2007 2010 2014 2016 2020/2025

Strategically well positioned to capitalize on further demand


Slide 14 - May 2017
Q1 Results - Indocement
Ready Mix Concrete and Aggregates Expansion INDOCEMENT

• Strengthening Ready-Mix Concrete business particularly high-


grade quality in order to meet the increase demand of
infrastructure development in Indonesia.
• Current focus is on infrastructure projects and its domino-effect on
development of residential, industrial area and high rise building.
• Q1 2017 sales volume decreased by 21% YoY due to slowing
down construction activities across Indonesia and lower economic
growth in general.
• Pionirbeton, a subsidiary, is one of market leaders in RMC
business.
• Secured concrete market by signing exclusive and long-term
contract of andesite and sand supply from Ketapang and Belitung.

4,800
000m3 4,430
4,500 RMC Sales Volume AGG Sales Volume
4,200 3,947
3,900
3,517 3,377
3,600
3,300 2,988

3,000
2,700 2,429
2,400
2,100
1,800
1,500 1,221
1,200 930 956
800
900 630 683 667
527
600
300
0

Slide 15 - May 2017


Q1 Results - Indocement
CEMENT MARKET Outlook for 2017 INDOCEMENT

Market Condition
• National cement consumption growth is predicted to be better around 3 to 5% in
2017 (versus flat in 2016)
• Consumption in 2017 will increase in line with higher Government’s projects and
some commercial and residential projects after Tax Amnesty, decrease of
mortgage (KPR) interest, loosened regulation on LTV ratio, second mortgage
availability for “off-plan” properties, reduction in tax for transfer of ownership,
clarity in property ownership by foreigners, and simplification of regulations.
• Strong concrete and bulk cement demand anticipated in outside Java and more
spread area in Java due to faster Government’s infrastructure projects in 2017
 Expansion in Cement Terminals and Batching Plants are required.
• Over supply of about 27 mio tons in 2016 and up to 37 mio tons in 2017 will
change the cement market outlook and we expect the continuing tight
competition among 19 brands from 15 players (from 9 brands and 9 players
previously)
• Recent hike in coal price will curb the potential further drop in prices in near
future and possible consolidation. Coal price has slide back to $82 in March
2017 from peak of $102 in December 2016 however, remain considerably higher
than last year.
Slide 16 - May 2017
Q1 Results - Indocement
Indocement’s Action Plan in 2017 INDOCEMENT

• Run P14 production (10,000 tpd) in full-swing by Q1/2017 will help to reduce
further production cost by about USD 7-8 per ton
• Optimize product mix from 13 line of cement production will bring competitive
advantages of Indocement to introduce different type of cement (OPC, PCC,
PPC, TR Rapid, PCC Industry and future products- slag cement)
• Clinker exports and domestic clinker sales will be done more during
oversupply. (2016: cement export 72,000 ton, clinker export 319,000 ton; target
2017: cement export 168,000 ton, clinker export 333,000 ton)
• Strengthen our Pull demand in bagged cement segment from end-user
customers and Retail/ Distribution channel to strengthen our Brand, TIGA
RODA Cement
• Using RAJAWALI brand as fighting brand to get some volume for customer
who perceive cement as “commodity” product and in low-price cement
segment - in competition with 2nd tier brands out of new players
• Strong balance sheet with no gearing is an important winning factor in
competition and in future consolidation phase if happen in near future

Slide 17 - May 2017


Q1 Results - Indocement
New Brand of “RAJAWALI” as “fighting brand” INDOCEMENT

• The public need for cement at affordable prices is increasing signed by new entry cement players
growth.
• Indocement realizes the importance of building every home in Indonesia with quality products.
• Semen Rajawali present is to answer the needs of the community for cement with guaranteed quality
and affordable price.
• Through its existing distribution channel, Rajawali was initially launched on Oct 10, 2016 with
presence in three cities in 2016 and will be introduced to all cities in West Java in 2017.
• Currently available on 9 cities in West Java, 3 Cities in Banten, and 5 Cities in Central Java.

• Quality assurance from Indocement.


• Produced with Indocement standard technology,
equipment and materials,
• Semen Rajawali has a very consistent quality.
• Not easy to crack.
• Specially designed for easy builders as it suitable
for any building type from structural work, plaster,
acian and others.
Sticky, Strong & More • Manufactured with environmentally friendly
environmentally technology.
cement product!!! • … Affordable prices!

Slide 18 - May 2017


Q1 Results - Indocement
End User Program INDOCEMENT

Slide 19 - May 2017 source: www.sementigaroda.com


Q1 Results - Indocement
41 Years Building Indonesia KOKOH INDOCEMENT

Slide 20 - May 2017


THANK YOU
Q1 Results - Indocement
Important Notice INDOCEMENT

Disclaimer
This presentation contains general information which provided without any representations or warranties, express or implied and does not
constitute or form part of, and is not made in connection with, any offer for sale or subscription of or solicitation, recommendation, or invitation of
any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be relied on in connection with any contract,
commitment, or investment decision whatsoever.

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Forward-Looking Statements
This presentation includes forward-looking statements, which are based on the expectation or forecast about future events, formed by Indocement
after reviewing existing data and research. Such statements involve known and unknown risks including factors such as: (i)Global macroeconomic
and geopolitical situations; (ii) Indonesia macroeconomic and geopolitical situation; (iii) Competition from incumbents and new players; (iii)
Changes in laws, regulation, taxation, or accounting standards or practices; (iv) Acquisitions, divestitures, and various business opportunities that
we may pursue; (v)Force majeure; (vi)Labor unrest or other similar situations; (vii)Outcome of pending or threatened litigation

Indocement does not give assurance that such outcome will be attained. If you have any specific questions about any legal, financial or tax matter,
you should consult your lawyer/financial/tax Consultant or other professional legal services provider.

For further information please contact


PT Indocement Tunggal Prakarsa Tbk.
Wisma Indocemen, 8th Floor
Jl. Jend. Sudirman Kav 70 - 71
Jakarta 12910, Indonesia
Phone : +62 21 2512121
e-mail: investor.relations@indocement.co.id.

©2017, PT Indocement Tunggal Prakarsa Tbk. All rights reserved.

Slide 21 - May 2017


Q1 Results - Indocement