SMGR Corp Material Presentation_December 2008.

(1)

Striving to maximize value

Corporat e Present at ion – December 2008

(2)

AGENDA

I. Indonesia Cement Highlights

II. Corporat e Prof ile

III. Financial Perf ormance

IV. St rat egic Init iat ives

(3)

Singapore Kuala Lumpur

SGG

*)

Semen Andalas Indonesia

Lhok Nga, Nanggroe Aceh D.

Cap. 1.4 mn tons

(under plant reconstruction)

Indocement Tunggal Perkasa

Jakarta

Cap. 17.7 mn tons

Semen Tonasa

South Sulawesi, Cap. 3.5 mn tons

Semen Padang

West Sumatera, Cap. 5.9 mn tons

Holcim Indonesia

Jakarta

Cap. 7.9 mn tons

Semen Bosowa Maros

Maros, South Sulawesi

Cap. 1.8 mn tons

Semen Baturaja

Palembang, South Sumatera

Cap. 1.25 mn tons

Semen Gresik

East Java, Cap. 8.6 mn tons

_{Semen Kupang}

Kupang, East Nusa Tenggara

Cap. 0.57 mn tons

1. INDUSTRY STRUCTURE AND PLANTS LOCATION

*)

Semen

Gresik Group

*)

Semen

Gresik Group

• Total Installed National Capacity as of Sept. 2008: 47.22 mn tons/

year (EoY 2007:45.07 mn tons cement / year).

• National cement consumption in 11M2008: 34.96 mn tons (12.6%

growth y-o-y) and 34.2 mn tons in 2007 (6.6% growth y-o-y).

• Domestic utilization rate per Nov. 2008: 81% (EoY 2007: 76%).

PT Semen Gresik (Persero) Tbk.

Total Cap. 18,0 mn tons

PT Semen Gresik (Persero) Tbk.

(4)

AGENDA

I. Indonesia Cement Highlight s

II. Corporate Profile

III. Financial Perf ormance

IV. St rat egic Init iat ives

(5)

SGG IS THE #1 CEMENT COMPANY IN INDONESIA

n

Founded August 1957 by the

first President of the Republic

of Indonesia

n

Capacit y: 250, 000 t ons per

annum (“ t pa” )

n

Rights Issue

n

Acquisition of Semen

Padang and Semen Tonasa

n

GoI: 65%, Publ ic: 35%

n

Capacit y: 8. 5mn t pa

n

EoY market cap:

IDR 3. 8tn

n

July 1991, Initial Public

Offering—listed on the

Jakarta Stock Exchange and

Surabaya Stock Exchange

n

Government of Republic of

Indonesia: 73%, Public: 27%

n

Capacit y: 1. 8mn t pa

n

EoY market cap:

IDR 0. 63tn

n

Cemex S. A. de C. V.

("Cemex") became a

strategic partner by

buying a 14% stake

n

GoI: 51%, Publ ic: 35%,

Cemex: 14%

n

Capacit y: 17. 3mn t pa

n

EoY market cap:

IDR4. 9tn

n

September 1999, Cemex

upsized its stake to 26%

n

GoI: 51%, Publ ic: 23%,

n

July 2006, Blue Valley Holdings

PTE Ltd. (“ Blue Valley” )

bought Cemex’ s 24. 9% stake in

SGG

IDR33. 2tn

2008

n

GoI: 51%, Publ ic:

24%, Blue Valley:

25%

n

Capacit y: 18. 0mn

t pa

(6)

OWNERSHIP STRUCTURE

Not e: As of Sept . 30, 2007

_{Six subsidiaries}

Non-cement producers

PT Semen Gresik

PT Semen Padang

PT Semen Tonasa

99. 9%

Blue Valley Holdings PTE Ltd.

Government of the Republic of Indonesia

Public

n

24.9% ownership

n

Raj awali Group purchased st ake f rom Cemex f or US$337 mil lion t hrough Blue Valley Hol dings

n

Raj awali Group is a maj or domest ic congl omerat e wit h businesses and global part nerships in t he foll owing indust ries:

n

51.0% ownership

n

Original st ake reduced f ollowing Cemex’ s ent rance as a st rat egic part ner

n

24.1% ownership

Tobacco

Telecommunicat ions

Ret ail

Hot els

(7)

AGENDA

I. Indonesia Cement Highlight s

II. Corporat e Prof ile

III. Financial Performance

IV. St rat egic Init iat ives

(8)

FINANCIAL HIGHLIGHTS

Total Equity

22.2 Total assets

41.4 Net profit

34.5 Operating profit

31.0 Gross Profit

24.1 (Rp billions)

KEY FINANCIAL HIGHLIGHTS

*) Unaudit ed

(9)

Ot her s 8. 1%

Player 2 19. 3%

Player 1 34. 7% T onasa 7. 8%

CAPACITY SHARE — 2007

Sem en

Player 1 30. 9% Player 2

14. 6%

Total Capacity = 45. 07 mn tons

SGG

Total 37.9%

SGG

Total 44.4%

MARKET LEADER IN TERMS OF REVENUE AND CAPACITY SHARE

Leading market share for the past several years

Total Consumption = 34. 2 mn tons

DOMESTIC MARKET SHARE — 2007

Source: Research report s, management plan

CAPACITY SHARE — 11M 2008

DOMESTIC MARKET SHARE — 11M 2008

SGG

Total 43.6%

Total Consumption = 34. 96 mn tons

SGG

Total 38.1%

Total Capacity = 47. 22 mn tons

Sem en

Gresi k 21. 8%

Player 1 32. 4% Player 2

(10)

CONSISTENT REVENUE GROWTH WITH STRONG BALANCE SHEET

Revenue—last 5 years (

IDR bn)

Sales volumes—last 5 years (

mm t ons)

Cash balance

(IDR bn)

Total debt

(IDR bn)

4,995 5,613

6,933 8,163

8,948 _8,457 341

2003

2004 2005 2006 2007

9M

2008

Domest ic Sales Export Sales

CAGR (03—07)

10%

16%

12.0

13.3

14.3

15.0

15.2

12.4

2.3

2.1

1.8

0.8 2003

2004

2005

2006

2007

9M

2008

Domest ic

Expor t

(5%)

6%

CAGR (03—07)

Not e: Sales volumes include cement and clinker volumes

3, 304

1, 424

2, 939

1, 929

642

908 2003

2004

2005

2006

2007

9M

2008

2003

2004

2005

2006

2007

9M

2008

CAGR (03—

_{07) -39%}

(11)

SOLID PROFITABILITY INDICATORS

Return on asset

5.6%

7.7%

14.3% 17.5%

22.2% 18.6%

2003 2004

2005 2006

2007

9M

2008

Net margin

6.8% 8.4%

13.3% 14.8%

18.5% 20.4%

2003 2004 2005 2006 2007

9M

2008

Total assets turnover

81.5% 91.8%

107.9%118.0%119.9%109.9%

2003 2004 2005 2006 2007

9M

2008

:

Avg. total assets (IDR bn)

6,684 6,613 6,982

7,397 8,006

9,670

2003 2004

2005 2006 2007

9M

2008

Revenue (IDR bn)

5,450 6,068

7,532 8,728

9,601 8,798

2003

2004

2005

2006

2007

9M

2008

373 509

1,002 1,296

1,775 1,799

2003 2004 2005 2006 2007 9M 2008

Net profit (IDR bn)

:

(12)

SOLID PROFITABILITY INDICATORS

11.6% 14.6%

24.7% 26.0% 29.0% 23.9%

2003

2004

2005

2006

2007

9M

2008

Return on equity

EBITDA margin

25.4% 23.3% 26.5% 25.6% 29.7%

31.6%

2003

2004

2005

2006

2007

9M

2008

1,386 1,412

1,999

2,234

2,775

2,849

2003

2004

2005

2006

2007

9M

2008

(13)

SOLID CREDIT METRICS

0.8x

1.1x

0.05x

0.4x

0.09x

_0.03x

2003

2004

2005

2006

2007

9M

2008

Debt/ EBITDA

EBITDA/ int erest

12.6x

27.6x

207.6x

5.9x

3.4x

243.8x

2003

2004

2005

2006

2007

9M

2008

Debt/ capital

4%

20%

6%

_2.5%

35%

29%

2003

2004

2005

2006

2007

9M

2008

Debt/ equity

0.41x

0.54x

0.04x

0.24x

0.06x

_0.03x

2003

2004

2005

2006

2007

9M

(14)

AGENDA

I. Indonesian Cement Highlight s

II. Corporat e Prof ile

III. Financial Perf ormance

IV. St rategic Initiatives

(15)

PRODUCTION OPTIMIZATION PROGRAMMES

Total Total Cost

Prod. (Mio US$)

2007

SP

5.4 - Modify Indarung V Suspended Preheater for increasing capacity

- Completed in Q3 2007

ST

3.5 SG

8.2 Total

2008

SP

5.9 - Changing conventional separator with High Efficiency Separator in Indarung IV - Completed in Q4 2008

for increasing capacity

- Diversification Product

- Start in Q4 2008

- Modifiy sys tem track cement transport to silo in Indarung IV

- Completed di Q4 2008

ST

3.5 - Extend Calciner Tonasa IV for increasing capacity

- Completed Juli 2008

- Diversification Product

- Start di Q4 2008

SG

8.6 - Extend Calciner SLC Tuban 1, 2 & 3 di Q1 dan Q2 2008 for increasing

- Completed in the end of Q2 2008

capacity

- Diversification Product

- Start in Q4 2008

Total

9.37 2009

SP

6.1 - Installation Bin Material Additive for s upport diversification product

- Completed in Q2 2009

in Indarung II, III, & IV

ST

4.1 - Installation Roller Press di Tonasa IV for increasing capacity production

- Completed in Q2 2009

SG

8.8 Total

49.05 2010

SP

6.3 - Changing conventional separator with High Efficiency Separator

- Completed in Q4 2010

in Indarung II & III for increasing capacity

- Changing Pregrinding System in Indarung V for increasing capacity

- Completed in Q4 2010

ST

4.2 SG

8.8 - Upgrade Tuban 1, tie in Coal Mill for support capacity 9000TPD

- Completed in September 2010

- Install new Cooler kapasitas 9000 TPD in Tuban 1

Total

18.22 Remark

Activity

Year SG Group

(16)

16. 9

17.1

18.0

19.0 2. 4

1. 1

2. 1

19.3

7.0

9.0

11.0

13.0

15.0

17.0

19.0 2007

2008

2009

2010

Incremental production

from/de-bottlenecking/optimization plans

Installed base production

Production est imates (mm t ons)

PRODUCTION OPTIMIZATION

(17)

10. PROJECTION DOMESTIC PRODUCTION DEVELOPMENT (Mio Ton)

Base production

New production

PROJECTION PRODUCTION DEVELOPMENT (Mio Ton)

19. 7

23. 1

23. 8

24. 3

19.3

19.3 19. 3

19. 3

8.2 _8.6

8.8

5.0

4.5

2.8

0.4

5.4

5.9 6. 1

6.3 4. 2

4. 1

3.5

3.5 2007

2008

2009

2010

2011

2012

2013

2014

SG

SGG

SP

ST

17. 3

18. 0

(18)

CURRENT PRODUCT MOVEMENT

CROSS-BAGGING INITIATIVE

CURRENT PRODUCT MOVEMENT

CROSS-BAGGING INITIATIVE

The cross bagging init iat ive will result in a dif f erent movement of product t o

t he market wit hout changing t he f inal brand leading t o

n

Lesser t ime t o market

n

Logist ics cost savings

Cost savings i n t ransport at ion, packaging, invent ory and raw mat erial

procurement t hrough increased coordinat ion among t he various unit s;

pot ent ial t o reduce t ransport at ion cost s

1 COORDINATED GROUP NEGOTIATIONS

COORDINATED GROUP NEGOTIATIONS

2 In t he past t arget market s

were served predominant ly by

one of t hree companies–but

overl ap market s exist in Java,

Bali and Kalimant an leading

t o high t r ansport at ion cost s in

t hose areas

(19)

SUMMARY OF PROJECTS UPDATE

1, 309

(2)

TOTAL CAPEX

380 Corporate restructuring, ICT,

Optimization, HRD,

Replacement, et c

Investment

(US$ mn)

Others Proj ect

1. 63

171

(2)

105 Sub Total

1. 60

Pangkep

(1)

Completed

Power Plants

Location

151. 6

758

(2)

5. 0

Sub Total

138 US$/ Tons

Construction

Investment

(US$ mn)

Capacity

(mn tons)

New Plants

Location

(1) Given t he economic headwinds, t he management of t he Company t akes an init iat ive t o put t he Power Plant proj ect under review. In

t he event of t his power plant proj ect being resumed, t he Company would have 2 opt ions, eit her being carried out int ernally or being

out sourced.

(20)

CAPEX PLANNING SUMMARY (2008 – 2014)

Uses of funds

K e y i t e m s ( U S$ m m )

D e b t i ssu a n c e 7 5 3

I n t e r n a l c a sh f l o w s 5 5 5

T o t a l c a p e x 1 , 3 0 8

Sources of funds

Ke y it e m s ( U S$ m m )

Detailed capex schedule (US$ mm)

49

2008

2009

2010

2011

2012

2013

2014

Cor p. r est r . (IT & HRD)

Pow er plant s (under r eview )

Capac it y exp.

Ot her s

Replacement

Opt imizat ion

2014

Capex Need in USD & IDR

USD 610 mn

IDR 6, 725 bn

USD 610 mn

(21)

AGENDA

I. Indonesian Cement Highlight s

II. Corporat e Prof ile

III. Financial Perf ormance

IV. St rat egic Init iat ives

(22)

FOCUS ON COST & REVENUES MANAGEMENT

Jan

Feb

Mar

Apr

Mei

Jun

Jul

Agt

Sept

Okt

Nop

Des

2008

2007

2006

Maint aining 2008 COGS/ ton level not

higher than 2008 inflation rate

SGG domestic average selling price – Rp/ ton

(23)

Source: Indonesian Cement Associat ion

INDONESIA HAS EXPERIENCED SOLID ECONOMIC AND DOMESTIC CEMENT

CONSUMPTION GROWTH

Growth:

Source: Indonesian Cement Associat ion

Construction growth

Domestic consumption

GDP growth %

(mio tons)

DOMESTIC CEMENT CONSUMPTION, CEMENT GROWTH, GDP GROWTH AND CONSTRUCTION GROWTH IN INDONESIA

27. 2

20 02

2003

2004

2005

2006

2007

10M08

0. 0%

(24)

n

SGG has highest overal l capacit y

n

The ut ilizat ion rat es are t he best in

t he local i ndust ry

n

Wide geogr aphical cover age t hrough

dispersed f act ories

COMPARISON WITH PEERS

(Cement Product ion – 9M2008)

COMPARISON WITH PEERS

(Cement Product ion – 9M2008)

Semen Gresik (SG)

Semen Padang (SP)

Semen Tonasa (ST)

Company name Location Capacity (mm t on) Utilization*)_(%)

Semen Gresik

Gresik & Tuban, East Java

8. 6

Semen Padang

Indarung, West Sumat era

5. 9

Semen Tonasa

Pangkep, Sout h Sulawesi

3. 5

SGG – Total Capacit y

_{Padang, Gresik/ Tuban, Pangkep}

18. 0

92%

Player 1

Cit eureup (W-Java) , Tarj un (Sout h Kalimant an) 17. 70

Player 2

Narogong, Cilacap, Cent ral Java

7. 90

Ot hers

NA

3. 62

Industry

47. 22

81%

MARKET DINAMICS

KEY HIGHLIGHTS

*)_{Domest ic Ut ilizat ion}

70%

69%

100%

96%

87%

(25)

§

Distribution warehouses in all areas of Java, Bali, Sumatra, Kalimantan, Sulawesi and Irian

§

15 large packing plants

§

Nationwide distribution network

§

Operate 4 special sea ports: Padang, Tuban, Gresik, Biringkassi

§

Total installed cap. EoY 2007: 17.1 mn tons and 9M 2008: 18.0 mn tons

SGG’ s PRODUCTION FACILITIES ARE WELL SUPPORTED BY STRATEGICALLY

LOCATED MARKETING AND DISTRIBUTION FACILITIES

Teluk

Tanj ung Priok _{Jakart a}

Samarinda

Banj armasin

Palu

Bit ung

Ambon Singaraj an

DI Yogyakarta

Lempuyangan Jant i

Central Java

Tegal Purwokert o

Kudus Magelang Solo/ Palur Alas Tuwo Moj opahit Sayung

West Java

Serang Tanger ang

Bogor Cibit ung Bandung Tasik Malaya

Cirebon Narogong Belawan

Singapore Kuala Lumpur

Tuban

Surabaya

Cement Plant

Packing Plant

Port

Warehouse

East Java

Margomulyo Tanj ung Wangi

Bangkalan Swabina Aleh

Pelabuhan Tuban

Pelabuhan Gresik

Installed Cap.:

5.8 mn tons

Installed Cap.:

8.3 mn tons

(26)

SHARES BUYBACK

The Company has commenced Rp1 t rillion share buyback progr am since Oct ober 13, 2008. The Company

believes t hat t he curr ent st ock price does not ref lect i t s st rong f inancial perf ormance. In management

opinion, t he Company has a st rong cash and hence t his share buyback pr ogram will not der ail t he Company’ s

overall st rat egic proj ect s whi ch is now underway.

Buyback Report

825, 479. 11

174, 520, 89

1, 000, 000. 00

61, 945 , 500. 00

20%

13 Oct – 12 Dec

2008

Residual amount of

buyback budget

(Rp million)

Total amount of

buyback

(Rp million)

Total amount of

buyback budget

(Rp million)

Total buyback

act ual (shares)

Total

maximum

buyback

(% of paid in

(27)

*) Adj ust ed t o st ock split 1: 10 on August 2007 Source: I/ B/ E/ S mean est imat es

Not e: Act ual numbers are report ed number on t he year of announcement

SUSTAINABLE EPS GROWTH VS. ANALYST ESTIMATES

*)

SUSTAINABLE EPS GROWTH VS. ANALYST ESTIMATES

*)

SGG HAS BEEN ABLE TO OUTPERFORM MARKET EXPECTATIONS

ACT

UAL

EPS

CA

GR

(20

02-

200 7):

6 9%

5 9

51. 4

7 4 . 3

1 2 1

2 1 5

2 8 3

26

63 8 6

1 6 9

2 1 8

2 9 9

0

50 1 0 0

1 5 0

2 0 0

2 5 0

3 0 0

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

Consensus analyst EPS forecasts

Actual EPS

(28)

Main Office:

Main Building of Semen Gresik

Jln. Veteran Gresik 61122 – Indonesia

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

Fax: (62-31) 3983209, 3972264

Representative Office:

Graha Irama Building, 11

th

_Floor,

Jln. HR Rasuna Said, Kuningan, Jakarta 12950 – Indonesia

Phone : (62-21) 5261174 – 5

Fax

: (62-21) 5261176

www.semengresik.com

T h a n k y o u

DISCLAIMER

The information contained in this report has been taken from sources which we deem reliable. However, none of PT Semen Gresik (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 Gresik (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 Gresik (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 mission there from which might otherwise arise is hereby expresses disclaimed.

The information contained in this report is not be taken as any recommendation made by PT Semen Gresik (Persero) Tbk or any other person to enter into any agreement with regard to any investment mentioned in this document. This report is prepared for general circulation. It does not have regard to the specific person who may receive this report. In considering