CEMENT INDUSTRY AT A GLANCE - Semen Indonesia CORP Presentation... · Together We Build a Better...

Together We Build a Better Future 0


INDONESIA’S CEMENT INDUSTRY: NOW and THE FUTURESMGR Corporate Presentation

August 2013

Together We Build a Better Future

2

1. SEMEN INDONESIA 27.7 mn ton

- Semen Padang : 6.4 mn ton

- Semen Gresik : 14.0 mn ton

- Semen Tonasa: 7.3 mn ton

2. Semen Andalas 2) 1.6 mn ton

3. Semen Baturaja 1.3 mn ton

4. Indocement TP 20.5 mn ton

5. Holcim Indonesia 10.4 mn ton

6. Semen Bosowa 3.6 mn ton

7. Semen Kupang 0.5 mn ton

TOTAL 65.6 mn ton

• Design Capacity : 60.2 mio tons 65.6 mio tons 69.0 mio tons

• Production Capacity : 54.2 mio tons 61.1 mio tons 63.9 mio tons

• Domestic Growth : 14.5% 9.0% 9.0%

• Domestic Utilization : 98% 100% 99%

•Supply

Domestic : 54.9 mio tons 59.0 mio tons 65.0 mio tons

Export : 0.2 mio tons 0.5 mio tons 0.5 mio tons

Import : 0.7 mio tons2) 3.0 mio tons 3) 3.0 mio tons3)

1) Based on the Company’s forecast

2) Imported cement by PT Semen Andalas (1.0 mio ton) and clinker by Bosawa and Kupang

3) Imported cement & clinker

Singapore

Kuala Lumpur

SMGR

2

1

3

45

1

1

67

DOMESTIC CAPACITY (2013)CEMENT INDUSTRY 2012 2013F 1) 2014F 1)

CEMENT INDUSTRY AT A GLANCE

2


‘000 tons

ton(‘000)

2012 2013F 2014F 2015F 2016F 2017F

Installed Capacity 60,270 65,600 69,520 79,020 93,070 108,570 Real Production 54,243 61,106 63,958 72,698 79,110 98,073 Consumption 54,964 59,910 65,902 71,179 77,586 84,568 Surplus/deficit (721) 1,195 (1,344) 1,518 1,523 13,504 Domestic Utilization 100% 99% 100% 99% 100% 87%Export 200 200 200 200 200 200Domestic Consumption Growth 14.5% 9% 9% 9% 9% 9%

3

DOMESTIC DEMAND VS NATIONAL CAPACITY (2012 – 2017)

20.000

40.000

60.000

80.000

100.000

120.000

2012 2013F 2014F 2015F 2016F 2017F

Installed Capacity Real Production Consumption


New Cement Capacity from Potential Foreign and Domestic Players (By 2017)

No Company Targeted Plant

Location

Capacity

(mn tons)

Pot. to be impl.

(mn tons)

Investment

(US$ mn)

Remarks + Local Partner

1 Siam Cement (Thailand) West Java 1.8 1.8 360 Greenfield, Sukabumi

2 CNBM (China) Central Java 2.4 0 350 Greenfield, Semen Grobogan

3 Semen Merah Putih (Wilmar) Banten 11.5 4.5 n.a Greenfield (PT Cemindo Gemilang –

Commercial)

4 Anhui Conch Cement (China)

- Tanjung

- Tanah Grogot

- Pontianak

- West Papua

Various

- South Kalimantan

- East Kalimantan

- West Kalimantan

- West Papua

13.7

3.8

3.8

3.8

2.4

3.8

2,350

400

600

600

750

Greenfield

Greenfield

Greenfield

Greenfield

Greenfield

5 Ultratech Wonogiri, Central Java 4.5 0 827 Greenfield

6 Semen Puger East Java 0.6 0 n.a Upgrading

7 Semen Barru South Sulawesi 3.3 0 470 Greenfield (Barru, South Sulawesi)

8 Semen Panasia Central Java 2.0 2.0 240 Greenfield (Banyumas)

T O T A L 40.3 12.1 4,470

New Cement Capacity from Existing Players (2013 – 2017)

No Company Targeted Plant Location Capacity

(mn tons)

Investment

(US$ mn)

Remarks

1 Semen Indonesia Java, Sumatera, Sulawesi 11.5 970 Upgrading + green/brownfield

2 Indocement Java, Kalimantan 8.8 1,560 (E) Cement Mill + brown/greenfield

3 Holcim East Java 3.8 680 (E) Brown/Greenfield

4 Bosowa Java, Sulawesi 7.9 620 Cement Mill + Brownfield

5 Semen Andalas Sumatera 1.6 300 Greenfield

6 Semen Baturaja Sumatera 2.6 325 Greenfield/Brownfield

T O T A L 36.2 4,130

CEMENT CAPACITY COULD ALMOST DOUBLE IN THE NEXT 5 YEARS


Source: Deutsche, Indonesia Cement Association

223

kg

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

China

Singapore

Malaysia

Vietnam

Thailand

Indonesia

Philippines

India

kg/capita

COMPARISON: CEMENT CONSUMPTION PER CAPITA 2012


Source: Indonesian Cement Association & BPS Statistic

Growth

:

1.1%

Growth

:

9.7%

Growth

:

4.2%

Growth

:

1.8%

Growth

:

6.6%

Growth

:

5.8%

Growth

:

19.4%

Domestic consumption (LHS) GDP growth % (RHS)

(mio tons)

40.8

48.0

54.9

32.8

39.1

27.2 27.530.2

31.5 32.134.2

38.1

6.10%

6.00%

6.80%5.6%

4.7%

5.1%5.4%

4.4%

6.3%

6.1% 4.60%

6.50% 7.0%

14.5%

6.0%

11.5%

4.2%

9.7%

2.5%

6.6%

1.8%1.1%

5.8%

17.7%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 7M2013

0.0%

10.0%

20.0%Cement growth % (RHS)

(A)

6

INDONESIA’S SOLID ECONOMIC AND DOMESTIC CEMENT CONSUMPTION

GROWTH


21.0

6.5

18.1

1.0

16.9

1.9

20.0

2.3

22.7

3.0

23.7

3.5

23.7

3.8

25.2

5.0

25.5

6.0

26.9

5.1

28.2

6.0

32.2

5.9

32.8

6.2

34.2

6.6

39.2

8.8

44.1

10.8

25.9

6.9

0

5

10

15

20

25

30

35

40

45

1997 1999 2001 2003 2005 2007 2009 2011 7M2013

Bagged Cement Bulk Cement

Bag and Bulk cement consumption (million tons)

7Source: Indonesia Cement Association and the Company’s data

SO FAR INFRASTRUCTURE EXPANSION RELATIVELY SLOW


Retail (residential) sector is the largest

consumer of cement in Indonesia

8

Bag

80%

Bulk

20%

Key Drivers of Domestic cement demand:

• National Economic Growth

• Favorable Interest Rate Environment

• Infrastructure Expansion

• Per Capita Consumption increase from

current low levels

• Ready-mix (infrastructure):± 60%

• Fabricator (pre-cast, fiber cement, cement based industry):± 35%

• Projects (mortar, render):± 5%

• Housing:± 90%

• Cement based industry:± 10%±

±

Source: Internal Research

DOMESTIC MARKET CONSUMPTION (2012)


MARKET UPDATESMGR Corporate Presentation

August 2013


Papua

Bali & N T

Kalimantan

Sulawesi

Population Distribution (2012)

Sumatera

21.3% Java

57.5.%

8.4%

5.8%5.5% 1.5%

10

REGIONMARKET SHARE (%)

SMGR INTP SMCB BSWA ANDLS BTRJA KPG

1. JAVA 39.1 40.3 18.7 2.0 - - -

2. SUMATERA 45.4 13.0 13.7 3.0 16.0 9.0 -

3. SULAWESI 64.6 13.2 0.9 21.0 - - -

4. KALIMANTAN 51.8 27.9 10.9 9.0 - - -

5. NUSA TENGGR. 41.7 31.6 3.7 16.5 - - 6.0

6. EASTERN IND. 53.2 22.7 0.8 23.1 - -

TOTAL

INDONESIA43.7 30.7 14.5 5.3 3.3 2.0 0.3

SG

SP

ST1

234

5

6

21.3%

7.0%

7.7%5.8 2.2%

Java

55.9%

Sumatera

Cement Distribution (7M 2013)

Domestic Market Share (7M-2013)

MARKET BY GEOGRAPHY

Together We Build a Better Future*) Source: Indonesia Cement Association, un-audited figures 11

AREA 7M 2013 7M 2012 CHANGE (%)

Jakarta 3,100,149 2,931,018 5.8

Banten 1,992,328 1,840,395 8.3

West Java 4,777,748 4,484,707 6.5

Central Java 3,821,570 3,381,628 13.0

Yogyakarta 551,516 459,054 20.1

East Java 4,139,932 3,856,119 7.4

Total Java 18,383,244 16,952,920 8.4

Sumatera 6,997,806 6,817,960 2.6

Kalimantan 2,533,931 2,286,612 10.8

Sulawesi 2,316,225 2,211,146 4.8

Nusa Tenggara 1,903,735 1,752,573 8.6

Maluku & Papua 722,131 681,730 5.9

TOTAL

INDONESIA32,857,071 30,702,942 7.0

Export Cement 88,640 56,852 55.9

Export Clinker 156,640 100,416 56.0

Total Export 245,280 157,268 56.0

GRAND TOTAL 33,102,351 30,860,210 7.3

7M 2013 – Domestic Consumption (mio tons)

DESCRIPTION 7M-13 7M-12 CHANGE (%)

DOMESTIC 14,370,439 12,280,199 17.0

Indonesia7,487,197

6,200,608 20.7

Padang3,978,748

3,704,399 7.4

Tonasa2,904,493

2,375,192 22.3

EXPORT141,307

36,630 285.8

GRAND TOTAL 14,511,746 12,316,829 17.8

Industry Sales Type (mio tons)

7M-13 7M-12 YoY Change

Bag 25.9 (79.0%) 24.9 (81.2%) 4.2%

Bulk 6.9 (21.0%) 5.7 (18.8%) 19.4%

7M 2013 - SMGR Sales Volume (million tons)

MARKET UPDATE - Cement Consumption 7M-2013

SMGR Sales Type (mio tons)

7M-13 7M-12 YoY Change

Bag 11.0 (76.8%) 9.7 (79.4%) 13.1%

Bulk 3.3 (23.2%) 2.5 (20.6%) 32.0%


COMPANY PROFILESMGR Corporate Presentation

August 2013


1957 : Inauguration of Gresik I, installed capacity of 250,000 ton cement per annum

1991 : Initial Public Offering, Market Cap.: IDR0.63tn, resulting shareholding structure post IPO:

● Government of Republic of Indonesia: 73%

● Public: 27%

1995 : Acquisition of PT Semen Padang (Persero) and PT Semen Tonasa (Persero)

1998 : Cemex became a strategic partner, Market Cap.: IDR4.9tn

2006 : Blue Valley Holdings bought Cemex’s 24.9% stake in SMGR, Market Cap.: IDR21.5tn

2010 : In March 31, Blue Valley Holdings sold all of its stake ownership in SMGR, Market Cap per April 30, 2010: IDR72.1tn

2011 : Total installed capacity of 20.00mm tons, Market Cap per June 29, 2012: IDR67.0tn

2012 : Acquisition of Thang Long Cement Vietnam, Total installed capacity of 2.3mm tons, Market Cap Dec 19th, 2012: IDR91.9tn

BRIEF HISTORY

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1957 -

1970 -

1980 -

1984

1985

1986 -

1990 -

1995

1997

1998 -

2006

2007

2008

2009

2010

2011

2012

SMGR CAPACITY BUILD-OUT (MM TONS)

Pre-consolidated capacity

Post-consolidated capacityInstalled capacity: 25.3 mio tons (2012)

including TLCC

_ _ _ _ _ _

SMGR IS THE #1 CEMENT COMPANY IN INDONESIA


Public The Government of the Republic of Indonesia

PT Semen Indonesia (Persero) Tbk.

PT Semen Padang PT Semen Tonasa

OWNERSHIP STRUCTURE1

¹ As of Dec 18, 2012

51.01% 48.99%

99.99% 99.99%

Name Activities % Ownership

1. Igasar Cement distribution & Trading 12.00%

2. Sepatim B General trading, cement packaging 85.00%

3. Bima SA General trading, cement packaging 80.00%

4. SUPS Cement Packaging 10.00%


1. UTSG Limestone & Clay Mining 55.00%

2. IKSG Cement Packaging 60.00%

3. KIG Industrial Estate 65.00%

4. Swadaya Gra Steel fabrication, contractor 25.00%

5. Varia Usaha Transport and general trading 24.90%

6. Eternit Gresik Building materials 17.60%

7. SGG Prima Coal Trading Coal 99.99%

8. SGG Prima Beton Ready Mix Concrete 99.99%

Thang Long Cement, VN

70.00%

PT Semen Gresik


1. UTSG Limestone & Clay Mining 55.00%

2. IKSG Packaging Paper 60.00%

3. KIG Industrial Estate 65.00%

4. Swadaya Graha Conyractor & Machine Fabricator 25.00%

5. Varia Usaha Transport and general trading 24.90%

6. Eternit Gresik Building materials 17.60%

7. SGG Energy Prima Coal Mining and Trading 97.00%

8. SGG Prima Beton Ready Mix Concrete 99.99%

FOCUSES IN CORE BUSINESS

Competitiveness of Semen Indonesia

Integrated Cement Plant 4 location

Kiln 13 Unit

Cement Mill 22 Unit

Grinding Plant 2 location

Cement Mill 4 Unit

Warehouse 30 location

Packing Plant 21 location

Sea Port 11 location

Kiln 1 unit

Cement

Mill1 unit

Kiln 4 unit

Cement

Mill6 unit

Kiln 4 unit

Cement

Mill9 unit

Grinding

Plant

1 unit Cement

Mill

Kiln 4 unit

Cement

Mill6 unit

Grinding

Plant

3 unit Cement

Mill


FINANCIAL UPDATESMGR Corporate Presentation

August 2013


EBITDA (Rp billion)

NET INCOME (Rp billion)

EBITDA Margin (%)

FY07 FY08 FY09 FY10 FY11 FY12

29.7 31.7 33.2 34.6 33.0 35.0

NET INCOME Margin (%)

FY07 FY08 FY09 FY10 FY11 FY12

18.5 20.7 23.1 25.3 24.0 24.7

4,9704,7733,867

2,849

2,234

6.869

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

2007 2008 2009 2010 2011 2012

4847

3,6333,326

2,524

1,775

1,296

0

1.000

2.000

3.000

4.000

5.000

2007 2008 2009 2010 2011 2012

Description

(Rp bn)FY 2011 FY 2012

Change

(%)

Net Revenue 16,379 19,598 19.7

Cost of Revenue 8,892 10,300 15.8

Gross Profit 7,487 9,297 24.2

Operating Expenses 2,595 3,116 20.1

Operating Income 4,892 6,181 26.4

EBITDA2) 5,402 6,869 27.2

Net Income 3,925 4,847 23.5

EPS (Rp) 662 817 23.5

FINANCIAL SUMMARY: FY2012 RESULTS


FINANCIAL HIGHLIGHT – 1H2013

Description

(Rp bn)1H2012 1H2013

Change

(%)

Revenue 8,658 11,422 31.9

Cost of Revenue 4,696 6,275 33.6

Gross Profit 3,961 5,146 29.9

Operating Expenses 1,318 1,779 35.0

Operating Income 2,644 3,366 27.3

EBITDA 2,893 3,858 33.3

Net Income 2,103 2,584 22.9

EPS (full amount) 355 436 22.9

Ratio (%) Formula 1H2012 1H2013

Ebitda Margin Ebitda / Revenue 33.4 33.8

Interest Coverage (x) Ebitda / Interest Expense 237.0 24.9

Total Debt to Equity a) Total Debt / Total Equity 15.8 22.2

Total Debt to Asset a) Total Debt / Total Asset 10.4 15.5

a) Total debt calculated from interest bearing debt


Cash balance (IDR bn) Total debt (IDR bn)

3,905 33173,6823,8465,283

2008 2009 2010 2011 2012

3,850

251 199686

1,871

2008 2009 2010 2011 2012

* Include short term investment

Debt/EBITDA Return on Assets

0,06x

2,00x

0,35x

0,04x0,14x

0.56x

2008 2009 2010 2011 2012

The projected adjusted debt/EBITDA of 2.0x and

operating margin below 20-%23% to maintain rating

level from Moody’s Investors Service.

18.2%24.0%

25.8%23.5%

20.1%

2008 2009 2010 2011 2012

19

STRONG BALANCE SHEET AND RETURNS


50% 50% 55% 50% 45%50%

2007 2008 2009 2010 2011 2012

Average: 50%

SMGR DIVIDEND PAY OUT RATIO IN THE LAST 6 YEARS

REGULAR DIVIDENDS

Key determinants of dividend policy:

•Historical dividend payout trends

•Comparison with peers

•Projected cash-flows available for dividends (after taking into account potential expansionary capex etc)

•Analyst and investor expectations

•Shareholder profile

REGULAR DIVIDEND PAYMENTS WITH ATTRACTIVE YIELD

887,7

1261,7

1829,5 1816,71962,7

2181,3

0,0

500,0

1000,0

1500,0

2000,0

2500,0

2007 2008 2009 2010 2011 2012

Total Dividen Pay Out

total dividen (IDR billion)


STRATEGIC PROJECTSSMGR Corporate Presentation

August 2013


SMGR

THE OVERALL

STRATEGY

COMBINES

6 CRITICAL

ELEMENTS

1. Undertake Capacity Growth

2. Manage Energy Security

3. Enhance Company Image

4. Move Closer To The Customer

5. Enable Corporate Growth

6. Manage Key Risks

SMGR LONG TERM STRATEGIC FOCUS


Tuban’s view

Pyroprocessing Tonasa V

Jetty Extension Area

Tuban

Tonasa

Tonasa

ESP Power Plant

These strategic projects will ensure sustainability of

the Company’s market leadership

Preheater Tuban IV

Raw Mill Dept. Tonasa V

New Plants

Location

Capacity

(mn tons)

Investment

(US$ mn)

Construction

Start Completed

Indarung VI-SumBar 3.0 352 2013 Q4-2015

Rembang-Java 2 3.0 403 2013 Q2-2016

TOTAL CAPEX 6.0 755

CEMENT PLANTS PROJECTS


17.1 18 19 19 20.225.3

30 31.8 33.3

39.3 40.8

2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F

Installed Capacity

INSTALLED CAPACITY (Mio Ton)


CONCLUSION: WHY SMGR?SMGR Corporate Presentation

August 2013

25


Outstanding

performance

Experienced

management

team

Conservative

capital

structure and

financial

policies

Robust cash flow

generation

Outstanding

business

performance

Favorable

industry

outlook

Outstanding business performance– Leading cement player in Indonesia with over 43.% market share based on

sales volume for 7M-2013 and approximately 41% share of total installed cement capacity (Source: Indonesia Cement Association (“ASI”))

– Strategically plants location is close to key markets throughout the country

– As of Dec 2012, acquired Thang Long Cement Company, Vietnam by 70% share with installed capacity 2.3 mio tons per annum

– Substantial growth opportunities through expansion and optimization

– Superior distribution network and strong brands recognition

– Long-term access to raw materials for cement production and coal for fuel consumption

– Concerns on environmental and Corporate Social Responsibility programs to ensure sustainable growth.

Favourable industry outlook– Cement consumption pretty much in-line with Indonesian economic growth

– Real estate and infrastructure projects and declining interest rates key demand drivers

– High barriers to entry (plant, distribution and brand investment costs)

– Disciplined investment on supply side

Robust cash flow generation– Historically strong revenue, margin and price trends

– High plant utilization and strong focus on cost and revenue management

Conservative capital structure and financial policies– [Investment grade-like credit metrics]

– Conservative capital structure policy; low use of leverage

– Access to capital markets for expansion initiatives

Experienced management team– Experienced and successful management team

Strengths of SMGR

SMGR’s COMPARATIVE & COMPETITIVE ADVANTAGE DRIVES SMGR TO BE

THE MARKET LEADER IN INDONESIA


Main Office:

Semen Gresik Tower

Jln. Veteran

Gresik 61122 – Indonesia

Phone: (62-31) 3981731 -2, 3981745

Fax: (62-31) 3983209, 3972264

Jakarta Office:

The East Building, 18th Floor,

Jln. DR. Ide Anak Agung Gde Agung Kav. E3.2 No.1,

Mega Kuningan, Jakarta 12950 – Indonesia

Phone : (62-21) 5261174 – 5

Fax : (62-21) 5261176www.semenindonesia.com

THANK YOUIMPORTANT NOTICE

THIS PRESENTATION IS NOT 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 INCONNECTION WITH ANY CONTRACT, COMMITMENT OR INVESTMENT DECISION WHATSOEVER.

THE SLIDES USED IN THIS PRESENTATION ARE STRICTLY CONFIDENTIAL AND HAVE BEEN PREPARED AS A SUPPORT FOR ORAL DISCUSSIONS ONLY. THE INFORMATION CONTAINED INTHIS PRESENTATION IS BEING PRESENTED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED OR REDISTRIBUTED TO ANY OTHER PERSON, IN WHOLE OR INPART.

This presentation includes forward-looking statements, which are based on current expectations and forecast about future events. Such statements involve known / unknown risks uncertaintiesand other factors, which could cause actual results to differ materially from historical results or those anticipated. Such factors include, among others:

● economic, social and political conditions in Indonesia, and the impact such conditions have on construction and infrastructure spending in Indonesia;

● the effects of competition;

● the effects of changes in laws, regulations, taxation or accounting standards or practices;

● acquisitions, divestitures and various business opportunities that we may pursue;

● changes or volatility in inflation, interest rates and foreign exchange rates;

● accidents, natural disasters or outbreaks of infectious diseases, such as avian influenza, in our markets;

● labor unrest or other similar situations; and

● the outcome of pending or threatened litigation.

We can give no assurance that our expectations will be attained.

DISCLAIMER

The information contained in this report has been taken from sources which we deem reliable. However, none of PT Semen Indonesia (Persero) Tbk and/or its affiliated companies and/or their respective employees and/or agents make any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue thereof.

We expressly disclaim any responsibility or liability (express or implied) of PT Semen Indonesia (Persero) Tbk, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claim, proceedings, action, suits, losses, expenses, damages or costs) which may be brought against or suffered by any person as a result of acting in reliance upon the whole or any part of the contents of this report and neither PT Semen Indonesia (Persero) Tbk, its affiliated companies or their respective employees or agents accepts liability for any errors, omission or mis-statements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy therein or omission therefrom which might otherwise arise is hereby expresses disclaimed.

CEMENT INDUSTRY AT A GLANCE - Semen Indonesia CORP Presentation... · Together We Build a Better...

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Transcript of CEMENT INDUSTRY AT A GLANCE - Semen Indonesia CORP Presentation... · Together We Build a Better...