Positioning
Despite facing unfavorable business conditions with increasing
Delivering
Sustainable
Performance
Our consistent efforts in implementing focused strategy covering
revenue management, capacity management, cost management,
increasing competitive advantage and investment management
has resulted positive performance, which are 10% increased
in revenue to Rp27.0 trillion, profit attributable to the
31.8
28.5
30.0
Towards
New
Performance Level
The capacity management implementation with the
support of new production facilities and strong distribution
networks, enabled us to pursue market growth dynamics in
all marketing areas with better efficiency level.
conservation in a structured and well-planned
Develop the
Surrounding
Community
Aligned with business progress, we have allocated the TJSL
program fund to Rp180.2 billion, disbursed the Partnership
fund of Rp88.2 billion, and Community Development
fund of Rp0.4 billion
We uphold strong commitment to take an active role in the effort
to improve the surrounding community welfares through the
Assuring
the Move
Into
Next Level
Assuring
the
Move
Continuing the grand plan to become the most reliable
cement company locally and regionally, Semen Indonesia
consistently realized several corporate actions that covering:
business development, competency enhancement of all
elements, improvement of surrounding communities’ life, and
environmental quality.
Cosnsitent business development implementation in an accountable efforts has
brought positive results - stronger positioning of the Company in the domestic
cement industry and improvement in the operational as well as financial
performances in the midst of challenging economic condition.
The realization of various competency enhancement programs also enabled the
Company’s employees to achieve excellent capability in the development of
production facility with global standard quality.
(in million Rupiah)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 2 0 1 4 2 0 13 2 0 12
Current assets 11,648,545 9,972,110 8,231,297
Investments in associates 146,980 127,510 102,828
Fixed assets 20,221,067 18,862,518 16,794,115
Intangible assets 1,103,697 1,158,475 1,003,033
Other non-current assets 1,194,377 672,271 447,811
Total Assets 34,314,666 30,792,884 26,579,084
Current liabilities 5,273,269 5,297,630 4,825,205
Non-current liabilities 4,038,945 3,691,278 3,589,024
Total Liabilities 9,312,214 8,988,908 8,414,229
Total Equity 25,002,452 21,803,976 18,164,855
Capital expenditures 2,968,145 2,707,065 3,407,903
Net working capital 6,375,276 4,674,480 3,406,092
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Revenue 26,987,035 24,501,241 19,598,248
Gross profit 11,598,604 10,944,094 9,297,581
Operating income 7,155,668 7,062,993 6,181,524
Profit for the year 5,573,577 5,354,299 4,926,640
Total comprehensive profit for the year 5,587,346 5,852,023 4,924,791
Profit attributable to equity holders of parent entity 5,565,858 5,370,247 4,847,252
Profit/loss attributable to non-controlling interest 7,720 (15,949) 79,388
Total 5,573,577 5,354,299 4,926,640
Total comprehensive profit attributable to equity holders of parent entity 5,576,106 5,716,494 4,845,403
Total comprehensive profit attributable to non-controlling interest 11,240 135,529 79,388
Total 5,587,346 5,852,023 4,924,791
EBITDA a) 8,303,439 8,099,042 6,869,077
Market capitalization 96,090,624 83,931,008 94,014,592
Weighted average issued shares (in thousand) 5,931,520 5,931,520 5,931,520
Basic earnings per share (Rp) 938 905 817
CONSOLIDATED FINANCIAL RATIO 2 0 1 4 2 0 13 2 0 12
Gross profit margin (%) 43.0 44.7 47.4
Operating income margin (%) 26.5 28.8 31.5
EBITDA margin (%) 30.8 33.1 35.0
EBITDA on interest ratio 21.7 23.8 65.5
Return on equity ratio (%) b) 23.2 25.7 27.9
Return on total assets ratio (%) 16.2 17.4 18.2
Current ratio (%) 220.9 188.2 170.6
Return on investment (%) 29.8 33.8 35.6
Liabilities on equity ratio c) 16.3 19.6 22.2
Liabilities on total assets (%) 11.4 13.3 14.5
Liabilities on capital ratio (%) 13.5 15.8 17.5
INDUSTRIAL FIELDS Unit 2 0 1 4 2 0 13 2 0 12
CEMENTS
Total Production Capacity Thousand tons 31,800 30,000 28,500
Production in Indonesia Thousand tons 26,435 25,559 22,846
Production Regionally Thousand tons 1,825 1,355
-Total Production 28,260 26,914 22,846
Sales in Indonesia Thousand tons 26,163 25,410 21,824
Sales Regionally Thousand tons 2,363 2,405 80
PACKAGING INDUSTRY
Sewn Kraft Production Sheets 320,225 -
-Sewn Woven Production Sheets 33,312,965 19,233,600 17,277,950
Pasted Kraft Production Sheets 229,542,343 199,458,456 187,109,916
Total Packaging Production Sheets 263,175,533 218,692,056 204,387,866
REAL ESTATES INDUSTRIAL
Sales Volume
Industrial Land Sale M2 40,429 109,736 215,693
Sales Volume
Land Lease M2 46,644 42,398 41,344
MINING
Mining Services
Limestones Tons 13,101,598 13,420,122 11,8113,856
Clay Mining Tons 3,375,135 3,631,518 3,186,909
Surface Miner Tons 1,337,112 739,538
-Sub total Tons 17,813,835 17,791,178 15,000,765
Other Mining Services
Cut and fill BCM 630,258 627,779 780,063
Other minings Tons 5,991,443 9,047,420 9,642,722
Heavy equipment rental Hour 83,542 144,158 229,319
Operational Highlights
2014 2013 2012
31.8
(million tons/year)
Production Capacity
(Design Capacity)
30.0 28.5
Production capacity in 2014 increased by
to
6.0
%
31.8
million tons
2014 2013 2012
(in %)
92.0 95.0
88.9
Utilization Level
2014 2013 2012
(in million tons)
Production Volume
26.922.8
28.3 Production volume in 2014 grew by
to
5.2
%
28,3
million tons
2014 2013 2012
(in million tons)
Sales Volume
27.821.9
28.5
8,099
6,869
8,303
24,501
19,598
2014 2013 2012
(Rp miliar)
Net Profit
(attributable to equity holders of parent entity )
5,3704,847
5,566
2014 2013 2012
(%)
Operating Expenses
Ratio
15.8 15.9
16.5
2014 2013 2012
(%)
55.3
52.6
57.0
Cost of Revenue
Ratio
2014 2013 2012
(%)
Return on Assets
Ratio (ROA)
17.4
18.2
16.2
2014 2013 2012 33.1
35.0
30.8
(%)
EBITDA Margin
Ratio
(%)
Return on Equity
Ratio (ROE)
2014 2013 2012 25.7
27.9
Event Highlights
First anniversary
celebration of PT Semen
Indonesia (Persero) Tbk.
Non Cash Loan Facility
Cooperation in Litigation
settlement
Ground Breaking of
Indarung VI Padang
The first anniversary celebration of PT Semen Indonesia (Persero) Tbk. was marked by the inauguration of 5 strategic projects, namely Vertical Cement Mill in Tuban plant, Inauguration of Packing plant Banjarmasin, Launching Center of Engineering, E-Procurement, Launching of company communication implementation guidelines.
PT Semen Gresik, a subsidiary of PT Semen Indonesia (Persero) Tbk received the Non Cash Loan facility of Rp1.4 Trillion from Bank Mandiri for the construction of new cement plant in Rembang.
Semen Indonesia cooperated with Civil Attorney and dan State Administration of General Attorney in the litigation settlement of civil and state administration fields.
Semen Indonesia organized the Ground Breaking of Indarung VI plant construction in Padang. The plant with the investment of Rp3.25 Triliun is targeted to be operating in 2016.
21
17
26
January
March April May
Inauguration of Cement
Tonasa Unit V and PLTU
President Susilo Bambang Yudhoyono inaugurated Tonasa V Plant and power plant in Pangkep Regency, South Sulawesi. Tonasa V has the capacity of 3 million tons per year completed with 2 X 35 MW power plant, with an investment value of Rp3,5 Trillion.
19
FebruaryInauguration of Packing
Plant Banjarmasin
Semen Indonesia inaugurated the Packing Plant Banjarmasin with the capacity of 600 thousand tons per year, and investment value of Rp120 billion.
26
FebruariConstruction of
environmentally friendly
plant in Rembang
Inauguration of Subsidiary
in IT field
Syndicated loans from
Bank Mandiri, Standard
Chartered and SMBC
Semen Indonesia commenced the construction of environmentally friendly plant in Rembang with the capacity of 3 million tons per year and investment value of Rp4.4 trillion.
Semen Indonesia inaugurated a Subsidiary in IT field, namely PT Sinergi Informatika Semen Indonesia (SISI).
Semen Indonesia received
syndicated loans from Bank Mandiri, Standard Chartered and SMBC to refinancing the Thang Long Cement in Vietnam.
18
18
June
Signing of Cooperation
Agreement with JFE Japan
Semen Indonesia signed the cooperation agreement with JFE Japan for the construction of Waste Heat Recovery Power Generation (WHRPG) with the capacity of 30.6 MW.
15
JulyRamadhan Safary in
Rembang Regency
Inauguration of PT Semen
Gresik Head Office
Semen Indonesia held the Ramadhan Safary in Rembang Regency by contributing various social grants.
23
JulySemen Indonesia inaugurated the head office of Semen Gresik Tuban Regency, East Java.
08
AugustJune June
Packing Plant Mamuju
Waste processing plant
construction
UISI Establishment
Semen Indonesia Center of
The Champs (SICC)
Cash polling system
cooperation agreement
Semen Indonesia
Employee Union
Semen Indonesia signed the cooperation agreement for cash polling system with Bank Mandiri, BRI, BNI and CIMB Niaga.
Semen Indonesia through Semen Gresik Foundation commenced the construction of waste processing plant with the capacity of 240 tons per day in Gresik with the investment value of Rp13.5 billion.
Semen Indonesia inaugurated the Packing Plant Mamuju to strengthen its cement distribution in Sulawesi region.
Semen Indonesia has established the Universitas Internasional Semen Indonesia (UISI) in Gresik, which constitute the corporate responsibility towards education. Semen Indonesia not only developed
its potential in merely cement business, but also aimed to create excellent HR by the launching of Semen Indonesia Center of The Champs (SICC).
The management of Employee Union of Semen Indonesia was established for the period of 2014-2016.
09
28
29
15
19
August
September September October
August August
28
28
NovemberCSR Award 2014
Semen Indonesia Grup (SMI) received an award in Indonesian CSR Awards 2014 event, from CFCD (Corporate Forum of Community Development).
10
DecemberForbes Magazine Awards
Semen Indonesia received an award as one of top 50 companies with best performance in the event of best of the best from Forbes Magazine.
31
DecemberClosing of 2014 year end
performance
Organized the video conference of SI Grup which covering the plants of Semen Padang, Semen Gresik, Tuban, Tonasa and TLCC Vietnam to mark the last cement production in 2014.
15
OctoberWHRPG Ground Breaking
The Best Website awards
Ground Breaking of Waste Heat Recovery Power Generator (WHRPG) project in Tuban plant, with the capacity of 30.6 MW and scheduled to complete by the end of 2016. Semen Indonesia received the SOEs
Best Website awards as well as readers’ choice of favourite website for the construction sector, from Berita Satu version.
26
NovemberWarta Ekonomi Magazine
Awards
Semen Indonesia received the predicate of the Most Powerful and Valuable Company Category Cement (Basic Industry & Chemical), from Warta Ekonomi magazine.
October
Awards & Certifications
AWARDS 2014
On its achievements during 2014, the Company received 10 awards of various categories form the independent party, as follows:
Location/Date Awards
Jakarta 23 March IICD Top 50 Awards, Semen Indonesia was one of the companies with best corporate governance based on ASEAN Corporate Governance Scorecard.
Jakarta 10 June Semen Indonesia received The Best Listed Company Manufacturing Sector Basic and Best CEO 2014 from MNC Business due to the positive performances of financial, shares, and corporate governance.
Jakarta 13 June Indonesian Journalists Association (PWI) awarded the Golden Pen to the President Director of Semen Indonesia on his role to enhance the quality of Indonesian journalism.
Jakarta 18 June Semen Indonesia received the Best Green Industry Award 2014 for the category "Preservation of water resources, development of new energy, development of biodiversity, pioneering the prevention of pollution and development of integrated waste management.”
Jakarta 21 July Semen Indonesia received the Antara news CSR from Antara National News Agency (LKBN).
Jakarta 18 August Semen Indonesia received the Energi Pratama awards from the Ministry of Energy and Mineral Resources on the innovation of the renewable energy utilization.
Jakarta 19 August Semen Indonesia entered into and received the Forbes Global awards. Semen Indonesia was included in the 2.000 best companies in the world.
Jakarta 15 October Semen Indonesia received the best Website from Berita Satu in construction field of the reader’s favourite choice.
Jakarta 16 October Semen Indonesia received the Green Industry awards from the Ministry of Industry. Jakarta 17 October The President Director of Semen Indonesia, Dwi Soetjipto received CEO of the year
CERTIFICATIONS
ISO – 9001
: 2008
Quality Management Systems (Certification by SGS-UK, 2002-2015)
ISO – 14001
: 2004
Environmental Management Systems (Certification by SGS, 2010-2013)
OHSAS - 18001
: 2007
Occupational Health and Safety Management Systems (Certification by SGS-UK, 2012-2014)
SMK3
:
Occupational Health and Safety Management Systems (Certification by Sucofindo, 2014)
ISO/IEC - 17025
: 2008
Table of Contents
HIGHLIGHTS
12
Financial Highlights
13
Operational Highlights
16
Event Highlights
20
Awards & Certificates
22
TABLE OF CONTENTS
24
MANAGEMENT REPORTS
26
Message from the President
Commissioner
36
Report from the President Director
48
BUSINESS DEVELOPMENT
REPORT
57
Corporate Transformation
66
Regional Expansion
71
Domestic Expansion
75
Business Development Funds
78
COMPANY INFORMATION
80
Company’s Name
82
Vision and Mission
84
The Company at a Glance
86
Milestones
88
The Company Excellence
90
Organization Structure
92
Operational Region and
Distribution Map
94
Product Types and Supporting
Facilities
97
Office Address and Information
Access
98
Subsidiaries and Affilated
Companies
100
INFORMATION FOR INVESTORS
102
Share Performance Graphs
103
Share Highlights, Dividend Payout
and Share Listing Chronology
104
Shareholders Composition
108
Shareholding Structure
108
Share Ownership by the Board
of Commissioners and Board of
Directors
109
Dividend and Dividend Policy
110
Capital Market Condition and
Company’s Share Performance
112
Name of Capital Market Institutions
and Supporting Professions
114
OPERATIONAL REVIEW
116
Human Resources Management
128
Environmental Management
Quality Enhancement
139
Company’s Innovation
147
Information Technology and
Communication
158
Risks and Risk Management
170
MANAGEMENT DISCUSSION
AND ANALYSIS
172
Economy Overview, Industry
Overview and Business Prospects
180
Business Review
181
Cement Industry Business Segment
183
Production
187
Research and Development
190
Financial Performance Review
191
Consolidated Income Statements
198
Consolidated Financial Position
213
Work Plan Compared to
227
Conflicts of Interest Transactions
228
Material Transactions & Significant
Events
228
Regulations and Legislations
Amendment Relevant to and
Impacted the Company’s
Performance
230
Accounting Standards Changes
and Disclosures
230
Related Parties Transactions
233
Assets and Monetary Liability in
Foreign Exchange
234
CORPORATE GOVERNANCE
IMPLEMENTATION REPORT
236
Corporate Governance
Implementation Report
256
General Meeting of Shareholders
263
Board of Commissioners
275
Board of Directors
294
Committees of the Board of
Commissioners
306
Corporate Secretary
320
Internal Control and Monitoring
System
322
Internal Audit
331
Company’s Accountant
333
Risk Management Implementation
336
Code of Conduct and Corporate
Culture
352
CORPORATE SOCIAL
RESPONSIBILITY REPORT
354
Corporate Social Responsibility
Report
360
Corporate Social Responsibility on
the Environment
361
Employment, Occupational Health,
and Safety
366
Corporate Responsibility on Social
and Community
370
Corporate Responsibility on
Consumers
374
CORPORATE DATA
376
Board of Commissioners’ Profiles
379
Board of Directors’ Profiles
383
Additional Information –
Replacement of the Commissioners
and Directors
384
Audit Committee
385
Nomination & Remuneration
Committee
386
Strategy, Risk Management and
Investment Committee
387
Secretary of the Board of
Commissioners
388
Address of Subsidiaries and
Affiliated Companies
391
Information for Shareholders
392
Statements of Responsibility of the
Board of Commissioners and Board
of Directors
394
OJK References - ARA Criteria
2014
Reports
26
Message from the President Commissioner
The Board of Commissioners viewed that the Board of Directors, the
management, and all employees have met and undergone all challenges
exceptionally well. The decision to become the Strategic Holding was
also the right decision, believed to bring many advantages presently
and going forward.
“
Unfavourable business environment in 2014 resulted in the lowest demand for
cement within the past several years. This posed a challenge and at the same
time created new opportunities for Semen Indonesia’s growth. Being at the end
of transformation journey into becoming a strategic holding company amid a
difficult year was a trying moment. However, it was also a momentum for the
Company to reflect and harness the excellence of each OpCo – bringing them
as a unity to build a strong foundation for future growth.
Semen Indonesia has become stronger and more solid, ready to address
challenges, support this country’s development, and prepared to create growth
opportunities going forward.
Assalaamu’alaikum Wr. Wb.,
Distinguished Shareholders,
First of all we thank God for the blessings upon PT Semen Indonesia (Persero) Tbk. The Company is able to journey the challenging year of 2014 with exceptional results. The Company successfully laid out resilient fundament of growth to bolster up sustainable business development in the future.
Reviewing The Board of Directors’ Performance The Board of Commissioners observed several conditions that made 2014 as a challenging period – an era that particularly put Semen Indonesia to the test. Year of 2014 was marked with the political dynamic; although the national leadership succession took place peacefully and smoothly, the overall process that saw tough competition heated Indonesia’s political situation and dampened the investments in property industry.
At the same time, global economic condition remained unfavourable and this affected the level of national economic growth. Consequently, buying power drop and with Indonesia’s export slumped on the other hand, coupled with sizeable energy subsidy (for fuel and electricity), national trade balance deficit widened – weakening Rupiah exchange rate. Bank Indonesia mitigated the exchange rate depreciation and strove to maintain the level of inflation by increasing benchmark interest rate, which had the adverse consequence on infrastructure and physical development projects.
The macro situation contributed to declining demand of cement, while construction of new units by several players in the cement industry, including Semen Indonesia, completed and moved to commercialization phase in 2014. In effect, the competition between industry players heightened.
“
In the middle of this challenging situation, Semen Indonesia was in its last stage of transformation into becoming a Strategic Holding Company with four subsidiaries or Operating Companies (OpCo), namely PT Semen Gresik, PT Semen Padang, PT Semen Tonasa, and TLCC. With the transformation project going towards its completion while business environment was not favourable, Semen Indonesia faced unique challenges at the time.
The Board of Commissioners viewed that the Board of Directors, the management, and all employees have met and undergone all challenges exceptionally well. The decision to become the Strategic Holding was also the right decision, believed to bring many advantages presently and going forward.
In terms of addressing the competition amid declining demands, the Board of Directors then carried out the maintenance program across all production facilities, a program that was previously delayed in order to spur the production and fulfil orders. Backed by strong brand equity of Semen Gresik, Semen Padang, and Semen Tonasa as well as new production facilities, the Company was able to meet demands and maintain its market share. Having a new role as Strategic Holding also allowed the Company to synergize the capabilities of each OpCo to supply cement and penetrate the potential markets in accordance with their production capacities.
In addition to ensuring sufficient cement supply, synergy also assured that maintenance programs could be carried out effectively and efficiently due to the closer cooperation in terms of spare part supply. This also secured the reliability of operations of other production units.
With strong synergy as its fuel, the Company was able to commence the construction project of new units – Rembang Plant in Central Java and Indarung VI Plant in Sumatera. Despite the challenges met during the development of the two plants, especially in Rembang, encouraging progress was visible and by the end of 2014 the two units were on track with the timeline.
Further, during that same year, the Board of Directors was also able to boost sales volume; the Company’s revenues grew and market share in Indonesia was maintained at 43.7%. Increase of costs due to the changing electricity and fuel prices was addressed by strengthening synergy in marketing and distribution.
The results were tangible; the increasing revenue and cost management initiatives generated 3.6% growth of the Company’s net income to Rp5.6 trillion. Earnings per share rose to Rp938 from Rp905, and EBITDA increased to Rp8.3 trillion from Rp8.1 trillion in the previous year.
The Board of Commissioners also noted that the net income in 2014 represented growth achieved in eight consecutive years.
In view of the accomplishments that the Company was able to attain amidst a difficult year, the Board of Commissioners commends the performance of the Board of Directors in the implementation of their operational responsibilities throughout 2014.
The progress and development that the Company achieved have been communicated to all stakeholders, especially investors in the capital market that responded positively as reflected from the Company’s share price movement. The Company’s shares was
The Board of Commissioners’ Supervisory and Advisory Responsibilities
The Board of Commissioners performed the supervisory duty throughout reporting year on the management policies and management as well as the operational mechanisms of the Company exercised by the Board of Directors. The Board of Commissioners also provided guidance to the Board of Directors. Aligned with our evaluation on the Board of Directors’ operational performance, the Board of Commissioners mandates the Board of Directors to continue exploring potentials and maximize the various benefits that the Company can gain from its Strategic Holding transformation.
In addition to the operational innovations, including four strategic focuses that covered revenue management, cost management, capacity management, and improving competitive advantage, the Board of Directors need to identify steps to optimize potential that came with its new role.
Further, with the Company’s enlarged operational coverage following TLCC acquisition, the Board of Commissioners expects that risk management can be improved and enhanced. Not only identifying and mitigating risks, risk management that applies the Enterprise Wide Risk Management (EWRM) approach should also recognize business opportunities and determine its scale of possibility.
The Board of Commissioners also supervised the Board of Directors’ performances in promoting synergy between OpCo, both in terms of product supply to certain markets, and in terms of managing the operational and distribution costs, which had been increased following the Company’s status as Strategic Holding, whereby business return was expected to improve.
Consistently, the Board of Commissioners monitor the Company’s performance against the Corporate Work and Budget Plan, capital expenditure, progress of strategic projects, and implementation of operational duties that the Board of Directors carried out through regular meetings, ad-hoc meetings, and field visits to project sites.
The Board of Commissioners have produced recommendations and solutions to address the challenges and difficulties faced by the Board of Directors, with respect to a number of grand projects that required the buy-in, and which were not included within the Board of Directors’ decision making authority.
Towards Better Corporate Governance Practices With the support from the Committees under the Board of Commissioners, the Board of Commissioners constantly provides a direction to the Board of Directors to enhance the quality of GCG practices through continuous and structured dissemination of all policies under GCG Manual, Code of Conduct, and corporate values. The Board of Commissioners appreciate the Board of Directors for completing the process of reviewing and redefining the stipulations in the Board Manual, Code of Conduct and associated policies to be in line with the current development.
The Board of Commissioners receives assistance from the Audit Committee; Strategy, Risk Management, and Investment Committee (SRMI); Nomination and Remuneration Committee (NRC); and Secretary to the Board of Commissioners. These units work full-time and with dedication to safeguard the efforts to improve the governance practices as well as ready to implement the supervisory and advisory duties.
In regards of its duties implementation, the Board of Commissioners viewed that the Committees have exercised their functions well, efficiently, and effectively. However, with growing business scale of the Company and increasing complexity of the challenges, the Board of Commissioners mandates for competency enhancement and to have greater support from all elements of the Committees under the Board of Commissioners.
Human Capital Development
The Board of Commissioners believes that the Company’s successful expansion program relied not only on capital and management capabilities, but also on the competence of human capital. Having larger business scale, more operational sites that reach across other countries, and the change of status as holding company, Semen Indonesia needs to step up the management and development of its human capital. Human capital development should be focused on not only skills, but also on growing mindset and changing perspectives of all employees.
With that in mind, the Board of Commissioners fully supports the initiatives of the Board of Directors that aim to change the mindset, enhance the competence, and bring out the human capital potentials of each OpCo.
The Board of Commissioners is committed to ensuring the mindset change of employees and the harmony of internal competencies will take place. The Board of Commissioners will also partake in the process in accordance with its authority, to see that all individuals in Semen Indonesia will be a single unity in the future, voicing dedication to move forward and support Indonesia’s development.
To assure the achievement of this aspiration, the Board of Commissioners promotes and oversees the implementation of Human Capital Master Plan (HCMP) that was designed in line with the Company’s change of corporate status. The Board of Commissioners is in support of the Board of Directors’ policies to apply the competency-based approach in managing the employees, both in terms of career progression and remuneration.
The Board of Commissioners also supports the inventive efforts from all employees of the Company, reflected by Semen Indonesia Award on Innovation (SIA) event that has been held for the fifth time.
Corporate Social Responsibility
The Board of Commissioners would like to provide a direction to the Board of Directors to improve the quality of corporate responsibility programs by initiating better coordination and, therefore to achieve better output of the Company’s various programs in the community and environmental development, as well as other responsibilities. With regards to the Company’s growing business scale, the Board of Commissioners recommends for the success story of CSR program in one site is reviewed and replicated in other locations, thereby ensuring that triple bottom line goal that upholds the harmony between Profit (economic goals), Planet (environmental goals), and
The Board of Commissioners highlights the management’s consistent efforts in environmental preservation through a variety of programs that are able to utilize wastes from other industry in the production process. In addition, the Board of Commissioners supports the Company’s involvement in the endeavours to mitigate global warming impacts through Clean Development Mechanism (CDM) program, and global scale CO2 emission reduction program that is planned to be realized through WHRPG unit in Tuban.
We believe that the efforts demonstrate the Company’s commitment to preserve the environment hand in hand with other global citizens of the world.
Future Outlook and Projections
The Company’s success in journeying through the challenging 2014 and able to delivering exceptional performance illustrated the potential that the Company can harness from its status as Strategic Holding. With the status, the Company has many more opportunities to integrate competence and potential, including maximizing the benefits of having widely reputable brand equity, and present synergized operational pattern. The operational efficiency and synergy in many aspects, including raw material procurement, maintenance, distribution, and marketing, have proven to enable the Company in retaining market share despite of strong competition.
Looking at the national cement industry prospects, the Board of Commissioners predicts that the challenges will remain in the coming year, although Indonesia’s economy will continue to grow in the future. The infrastructure projects are expected to commence after being delayed due to licensing and the state’s lack of capacity to facilitate the development of certain projects, such as inter-region road, seaports, and electricity infrastructure.
Assuming the conservative economic growth, the Board of Commissioners forecasts that, in the short-term, the national cement demand will grow at around 6-7% and will gradually increase in the following years.
Nevertheless, the Board of Commissioners would like to remind that growth opportunities in the cement sector in the long-term would attract other players in the industry to invest in Indonesia and add the competition for the Company.
To that end, the Board of Commissioners expects the Board of Directors to consistently applies long-term strategic initiatives, among others by boosting the production capacity, securing energy, enhancing the corporate brand, meeting the consumer needs, and managing risks to ensure that the Company can benefit from the existing business opportunities and record sustainable performance growth.
The Board of Commissioners and the Committees will supervise the programs defined in the action plan under the Corporate Long-Term Plan document submitted by and agreed with the Board of Directors, and will be ready to provide insights and recommendations to ensure the realization of all plans.
Changes in the Composition of the Board of Commissioners
On 23 January 2015, in Extraordinary General Meeting Shareholders, Sony Subrata was appointed as Commissioner; we congratulate his appointment and welcome him as a new member of the Board of Commissioners.
Closing
We, the Board of Commissioners, would like to take this opportunity to thank God for the Company’s outstanding performance, enabled by the support and true dedication from the Board of Directors as well as all employees of PT Semen Indonesia (Persero) Tbk. We also would like to convey our appreciation to all stakeholders for their input, so that the Company can bring the best results for shareholders, the people, and the Government of Indonesia. May all of us be eternally bestowed with the, compassion, and blessings of God.
Jakarta, 23 March 2015
Wassalamu’alaikum WrWb. The AGMS also approved new members of the
Board of Commissioners; Marwanto Harjowiryono, Commissioner, Wahyu HIdayat, Commissioner, Muchamad Zaidun, Independent Commissioner, and Farid Prawiranegara, Independent Commissioner. We congratulate the new members, and welcome them to the Board of Commissioners of PT Semen Indonesia (Persero) Tbk.
At the time of the formulation of this report, the Board of Commissioners lost 1 of its member, Farid Prawiranegara, who passed away on 21 August 2014. We would like to express our deepest condolences to the family and we thank Farid Prawiranegara for his contribution as member of the Board of Commissioners, PT Semen Indonesia (Persero) Tbk.
The Company inaugurated and commenced the operation of a new plant, several
packing plant units, and grinding plant; officially started the construction of 2
new plants, and continued its programs as strategic holding company. Growth
of profit attributable to the equity holders of parent entity was posted at 3.6%
to Rp5.6 trillion and signified the Company’s excellent achievement. Semen
Indonesia also successfully improved the operational foundation through the
consolidation and synergy between OpCo in order to overcome the challenging
2014 as well as to provide stronger fundament for sustainable future growth
Dear Esteemed Shareholders,
First and foremost, on behalf of the Board of Directors, we thank the Lord for grace and blessings that have accompanied the Company in journeying the challenging year of 2014, and have enabled us to deliver sound achievements. The year 2014 was unfavourable for the Company’s business development. Nevertheless, the Company was able to withstand the obstacles during the same year, a testament to the resiliency of all individuals in PT Semen Indonesia (Persero) Tbk, as the leading player in Indonesia and regional cement industry.
National Economic Conditions in 2014
The global economic recovery was going at a slower pace than expected. In the United States, the country’s economy was showing fundamental improvements, and prompted the Government and the Fed to carry out quantitative easing program. On the other hand, Europe’s economy was stagnant, as in Asia, China, and Japan where growth have not improved, although India was progressing.
The sluggish economy in China, the world’s second largest economy, directly affected Indonesia’s primary commodity demand, especially palm oil, coal, and other mineral commodities.
This in turn impacted Indonesia’s trade balance. Trade balance deficit moved up following increase of fuel subsidy, as more vehicles enter Indonesian roads. Seeking to reallocate subsidy budget to capacity enhancement programs for the national production. The government then adjusted the subsidized fuel price as electricity subsidy was revoked. This contributed to inflation hike, reaching 8.36% higher than 4,5+1% at the beginning of the year. To countervail trade balance deficit and mitigate inflation rise, Bank Indonesia increased benchmark interest rate to 7.75%. This step was able to fend off foreign exchange depreciation to a stable rate at Rp12,440/USD from Rp12,189/USD.
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In addition to strong macro economic pressure, there were two national political agenda that marked a new milestone in Indonesian history in 2014; the legislative elections for the national and regional parliament DPR, DPD, and DPRD, as well as the elections for the succession of the nation leadership.
These conditions eventually weakened the purchasing power of the consumers, hampered growth of property and infrastructure businesses, and therefore hindered cement demand in Indonesia. Cement market growth in 2014 reached only 3.3% below 6% projection.
On the other hand, cement producers including the Company have concluded new production units in 2014 as well as their supporting facilities. In effect, as competition heightened, all players in the national cement industry realized the operational strategies to maintain business performance.
Strengthening Growth Foundation, Ensuring Optimum Performance
Considering macro economic condition and market competition, the Company had to address a number of fundamental issues. The Company improved the internal consolidation and synergy in terms of operations and strategic planning. The focus of the strategy was cost management, whereby innovative efforts were taken to control increasing production and distribution costs. In terms of energy cost, which is the main component in cement production, the Company also applied energy conservation program.
Addressing the declining trend of demand, the Company exerted to boost the operational efficiency, among others by decreasing the intensity of energy consumption, lower energy cost, aimed for efficient maintenance cost, and stepped up the distribution cost efficiency by construction packing plant to reach lower operational cost per ton.
To achieve efficient energy cost, the Company maximized the performance of WHRPG unit that had commenced operations in Padang, maximized power plant operations in Tonasa, used low-calorie coal, and innovated to use the alternative energy sources to produce slag.
The Company’s strategy of improving the competitive advantage enabled the Company to maintain, even increased customer loyalty, and its ability to keep track with the increasing dynamics of cement industry. As the result, in 2014, the Company posted 2.6% growth of sales volume to 28.5 million tons from 27.8 million tons in 2013. The Company also covered 43.7% of national market share.
Further, the Company consistently implemented revenue management strategy to optimize revenue, focusing on key regions, developing potential market, and boosting synergy with the group. The Company successfully improved revenues by 10.1% to Rp27.0 trillion from Rp24.5 trillion in the previous year on the back of these strategies.
The stakeholders, including investors in the capital market, responded positively to the growth and development of the Company’s performance. This was illustrated by the Company’s share price movement, which stood at Rp16,200 per share at the end of 2014, grew 14.5% from the price at the closing trading day in 2013 at Rp14,150 per share.
Reinforcing Foundation for Sustainable Growth in the Future
Aside from posting 2014 performances, the Company also continually carries out various strategic initiatives as part of its commitment to reinforce the foundation for sustainable growth in the future. The strategic measures that are carried out and planned covering:
• Enhancing production capacity: developing new plant in Central Java and West Sumatera, construction of cement mill, quarry upgrading and extension.
• Improving distribution facilities by building packing plant in 3 potential markets
• Cost efficiency improvement: building WHRPG in Tuban with 30.6 MW capacity and encourages more use of Alternative Fuel Resources (AFR). • Strengthening supporting elements: carry out
HR competence and complete ICT enhancement program
• Continue programs post-transformation as Strategic Holding
The efforts around cost management initiative were also able to control the increase of production cost per ton. Despite the increase in energy costs, especially electricity tariff, cost of goods sold in 2014 rose only by 13.5% from 2013. Moreover, through efficiency programs, the Company successfully managed the growth of operating expense, maintaining operating expense ratio at 16.5% from 15.8% in the previous year. The Company’s EBITDA grew by 2.5% to Rp8.3 trillion compared to a previous year.
Overall, total profit attributable to the equity holders of parent entity stood at 3.6% growth to Rp5.6 trillion from Rp5.4 trillion in the previous year. Earnings per share attributable to the equity holders of parent entity was up by 3.6% from Rp938 to Rp905.
The operational results allowed the Company to manage strong fundament. ROE stood at 23.2% and ROA at 16.2%. Debt to Equity Ratio (DER) at the end of 2014 stood at 16.3% from 19.6% and liability to asset ratio stood at 11.4% from 13.3% in 2013, due to utilization of loans facility for expansion purposes. Although the position increased, the liability ratio remained sound and presented the Company’s strong financial capability to support the implementation of its development plans in the future.
The following presents brief overview on the Company’s operational performance, which signified positive results amid the market competition:
Description 2014 2013 Growth %
Cement Production Volume (million ton) 28.3 26.9 5.2%
Sales Volume (million ton) 28.5 27.8 2.6%
Revenues (Rp billion) 26,987 24,501 10.1%
Operating Income (Rp billion) 7,156 7,063 1.3%
EBITDA (Rp billion) 8,303 8,099 2.5%
On the back of various strategic steps that were successfully carried out in 2014 and will be continued going forward, the Company ensured that the foundation for its future growth is sound and strong. The Company also made sure that it would accomplish the Company’s vision as a leading, international cement company in South East Asia.
The Company was able to overcome challenges in 2014 and initiated a number of strategic measures as
part of its strategic program to bolster foundation for sustainable business growth in the future
Realizing Strategic Programs Post Corporate Transformation
The development of 2 new units in Rembang and Indarung, West Sumatera, are among the strategic programs following the corporate transformation project. Progress of physical construction is underway, however there are environmental and social issues in respect of unit development in Rembang that are currently under settlement.
The Company continued to convince the community on the compliance of the unit’s development with the environmental and social standards and policies. The Company applied sophisticated technology in the structure’s design and operations, ensuring that the unit will be environmentally friendly. With the approaches, explanation, and clarification, the Company expects that the unit’s construction project in Rembang will be completed as scheduled.
Meanwhile, to ensure the readiness of its human capital competency; ready to compete in the regional and global environment, the Company continued realizing various strategic initiatives. The goal is to capitalize all architectural capacities and innovative abilities in cement to serve as the Company’s features of excellence and backbone for business growth in the future.
Report from the President Director
Continuing Semen Indonesia Centre of the CHAMPS (SICC), the Company sharpens the functions of its pillars, covering Dynamic Learning, building Centre of Engineering, Centre of Research, and eventually establish Semen Indonesia International University.
Innovation
The Company has rolled-out innovative programs, which were part of the Company’s intellectual capital that differentiated competitive advantage in order to achieve sustainable growth. To nurture the spirit of innovation, the Company continuously explores creative ideas that are in line with the Company’s strategies and recognize selected innovators. In 2014, the Company organized the sixth Semen Indonesia Award on Innovation (SIAI), in which innovations were grouped into several key categories, among others raw material, technology and process, as well as management.
The Company implemented the innovative solutions captured from the competition into its operational activities to get better efficiency and enhance competitiveness. For its consistency in championing and introducing innovations to its operations, the Company attained Technology Pioneer award for the fourth time. The Company also received a number of other awards that recognized the Company as the front-runner of innovations, including innovations in the environment from the Ministry of Industry, and from the Ministry of Environment, which granted Green Proper award.
Enhancing the Quality of Corporate Governance Best Practice Implementation
Continuing its transformation into a holding company and a regional player in the cement industry, the Company carries out improvements on regulations and policies that guide the day-to-day operations. Committed to enhance the quality of corporate governance, the Company completed its review on regulations and policies concurrently with the commencement of relevant work programs.
The Company is highly dedicated to improve best practices implementation of GCG, as reflected by its initiative to complete the corporate governance soft structure and infrastructure. The Company has also been prepared to refine standard operating procedures in order to meet changes in the corporation’s structure. Several programs conducted to enhance the quality of GCG implementation in 2014 covered:
• Review and adjustment to Whistleblowing System Manual
• Improvement of Integrated Enterprise Wide Risk Management (IEWRM), which now allows all risk owners to identify, calculate, and mitigate main risks
• Review and adjustment to the Board Manual • Review and adjustment to the Company’s Code
of Conduct
Balancing Business Sustainability with Efforts to Bring a Better Living Quality for Future Generation
Business development activities carried out in Rembang and Padang follow this commitment. The Company has complied with all statutory procedures, including the formulation and presentation of Environmental Impact Analysis document (AMDAL), complemented with Environment Management and Monitoring document (UKL-UPL) to ensure the fulfilment of environmental preservation requirements. The Company took a further step to design and use the environmentally friendly mining and plant operations technologies. The Company is committed to replicate the success of environmental management efforts in Tuban, where the Company obtained GOLD PROPER award from the Ministry of Environment, as well as in other plants.
In addition, the Company is also consistently implementing efforts to enhance environmental quality, reflecting Semen Indonesia’s participation in climate change mitigation initiatives. Aside from replanting, the Company implements Clean Development Mechanism (CDM), which covers energy conservation through WHRPF operationalization and development, using biomass, applying AFR, and absorbing certain types of industrial wastes in producing slag.
With these efforts, the Company successfully lowered its CO2 emission and obtained Carbon Emission Reduction (CER) certificate as proof of recognition from the global community towards the tangible efforts that Semen Indonesia undertake to improve the environmental quality.
Illustrating its strong commitment to Corporate Social and Environmental Responsibilities (CSER), in 2014 the Company commenced with the implementation of its CSR blueprint, which translated CSER concept as an element that was not only mandatory for the Company, but moreover as a way for the Company to improve its reputation and ensure business continuity. The Company’s CSR four pillars program are:
• “SI Cerdas” (SI Smart) – focusing on competence building through educational programs
• “SI Prima” (SI Excellent) – a synergy with programs under Marketing and Research and Development.
• “SI Lestari” (SI Sustainable) – focusing on environmental programs
• “SI Peduli” (SI Care) – a host of social and economic programs
Under pillar “SI Cerdas”, the Company continued its workers’ certification program. Until 2014, around 4,000 workers have been certified. The Company also continued “KIRANA”, a program that shapes the character of young generation through singing and children’s song composition competition, held in 28 cities across Indonesia. KIRANA aims to stimulate song creation for children, nurturing the children of Indonesia with songs that are appropriate with their age development.
The Company also provided Information, Communication, and Technology (ICT) training for students in elementary, junior-high, and high school to raise IT-literacy among young generation around the Company. This program also serves as the Company’s platform to contribute to competence development and character building for teachers in order to improve education quality.
Through pillar “SI Lestari”, the Company stepped up its Waste to Zero program and developed Mangrove Centre Tuban as centre of learning and biodiversity protection development to preserve the habitat of various land and water organisms as well as to help recover coastal environment disrupted by abrasion and develop ecotourism. In addition, the Company develops part of ex-mining land into pilot plantation and living laboratory that will be valuable for learning and education purposes, raising environmental awareness of young generation.
The Company was also consistent in improving its Green Belt activities across all mining areas and realized replanting program in certain locations. These are environmental programs that are outside of programs with close association with the Company’s operations.
Meanwhile, through “SI Peduli” program, until 2014 the Company has worked with 30,067 partners who created jobs opportunity for 61,156 people and generated a turnover amounting to Rp1.71 trillion. The Company also distributed fund support for education, sports, arts, health, public facility, and disaster relief efforts in Indonesia. In Vietnam, the Company aided schools and provided medical treatment for students around the plant.
Projections and Strategy in 2015
The Company forecasted that Indonesia’s economy in the coming year would still be facing macro challenges. The domestic consumption and investments will still be the main contributors to Indonesia’s economic growth, while inflation and exchange rate volatility are predicted to keep benchmark interest rate at a high level. Although plans of infrastructure projects realization going forward are promising, their impacts to economic progress will not be immediate.
Economic growth projection clearly signals another challenging time for cement industry. Demand for growth will be limited, and expected to stay around 6-7%. The Company needs to put greater concern on maintaining its performance in terms of cost management and operational efficiency.
Today, the Company is in a better position to meet the growth of market demand. Maintenance and upgrading programs that are slated for completion next year will enhance the Company’s competitive advantage, which will be even stronger once the distribution infrastructure development, including packing plant construction project, are completed. This will allow the Company opportunity to win over the competition and fulfil the development opportunities.
To ensure the Company ability to secure competitiveness and at the same time deliver optimum performance, the Company will consistently implement strategic and critical initiatives with respect to: capacity growth, energy security, corporate image strengthening, meeting consumer demand, reinforcing supporting units and risk management as well as focusing management efforts on revenue, cost, capacity, competitive advantage improvement, and investment.
Changes in the Composition of the Board of Directors
During reporting year 2014, there were changes in the composition of the Board of Directors. Given the duty with a new responsibility by the Government as shareholder of Serie A shares, Dwi Soetjipto resigned as the Company’s President Director effective as of 28 November 2014. The Company appointed myself, Suparni, as Acting President Director until Extraordinary GMS is held in 2015.
Through Extraordinary General Meeting of Shareholders held on 23 January 2015, the meeting appointed me, Suparni, as President Director. My term of office is effective henceforth until GMS 2017 or in accordance with the prevailing regulations.
Closing
Hereby we conclude the operational performance overview for 2014. We would like to respectfully request the shareholders to approve the Annual Report and the Company’s management in 2014, to ratify the Financial Statements, and to acquit and discharge the Board of Directors and Board of Commissioners from their management and supervisory responsibilities during fiscal year 2014.
Finally, on behalf of the Company’s Board of Directors, we would like to thank and appreciate shareholders for their trust and support; to the Board of Commissioners, who constantly provides direction and guidance; and to the Company’s customers and partners for their support and cooperation.
We also acknowledge our Employees and thank them for their hard work, dedication, and contribution to the Company. All of those have enabled Semen Indonesia to achieve the outstanding results in 2014. We are optimistic that the efforts resulted from our solid work, as a team will boost the Company’s ability to benefit from promising growth potentials and to produce the best, sustainable performance in the future.
Gresik, 23 March 2015
SUPARNI
1. Suparni
President Director
2. Gatot Kustyadji
Director
3. Amat Pria Darma
Director
4. Ahyanizzaman
Director
5. Rizkan Chandra
Director
6. Johan Samudra
Business
Development
Report
57
Corporate Transformation
66
Regional Expansion
71
Domestic Expansion
The Company has formulated business strategy to ensure the creation
of growth acceleration, at the same time to assure the Company’s
sustainable growth. The business strategy was formulated to provide
optimum benefits for the Stakeholders and Shareholders by taking into
account the risks appetite level.
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Business Development Report
Anticipating the recovery of cement demand in Indonesia and regional
markets through the construction of new production facility, production
supporting facility as well as distribution facility, followed by the long term
business implementation, which had been properly designed to create a long
term quality sustainable growth
The Company has formulated business stratety to ensure the creation of growth acceleration as well as to assure the Company’s sustainable growth. The business strategy was formulated to provide optimum benefits for the Stakeholders and Shareholders by taking into account the risks appetite level.
The following are brief descriptions of all strategic initiatives implemented by the Company.
LONG TERM STRATEGIC PLAN
The Company forecasted sustainable growth of cement demand in the future based on at least the
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To anticipate growth potential of this increasing cement consumption, the Company has stipulated six important issues as the foundation of sustainable growth, as follows:
1. Capacity Growth 2. Energy Reservation
3. Consumers Requirements Fulfillment 4. Corporate Image Enhancement 5. Capability to Maintain Growth 6. Controlling Major Risks
1. Capacity Growth
The Company strives to increase its production capacity, both through organic or anorganic strategy. The organic strategy is implemented through the additional capacity in existing plants. One of the implementation was the operating of vertical cement mill in Dumai, with 0.9 million tons capacity. The organic strategy is also implemented by the construction of new plant in subsidiaries, construction of Indarung VI Plant in West Sumatra, and Rembang Plant in Central Java.
The total production capacity in the Group at the end of 2014 will reach 31.8 million tons cement per annum, and it’s expected to reach 55 million tons per annum by 2020.
2. Energy Reservation
The Company has conducted and continued to evaluate the energy reservation to ensure coal supply reserve and to maintain the balance between electricity supply from the third party with the Company’s owned power plants.
To reserve coal requirements, the Company held long term procurement contract that periodically reviewed, both by subsidiary, PT SGG Energi Prima or other third parties.
First, the tremendous amount of Indonesian population followed by high growth constituted a significant potential to boost the cement demand improvement.
Second, the Government’s commitment to add infrastructure expenditures, in which among others by diverting part of fuel subsidy to infrastructure sector in order to support the development of connectivity between economic centres in Indonesia, thereby will increase the cement demand.
Third, below average of cement consumption per capita in Indonesia compared to the Asia’s average consumption per capita, will provide growth opportunity for cement demand in the future.
Fourth, Indonesia’ long term economic prospects will continue to grow despite the sluggish economic condition in 2013 and 2014. Although several of key nations have experienced economic slowdown, Indonesia’s economic growth is relatively remain high. This condition will boost the growth of cement demand.
Fifth, Indonesia remains an investment destinations both in the industrial sectors as well as in basic infrastructure development, which will generate economic potential in all regions, thereby will increase cement demand.
In order to reserve energy supply by utilizing the hot gas residual, the Company has begun the construction of WHRPG project in Tuban with 30,6 MW capacity. In addition to procure energy through hot gas residual, WHRPG will also provide benefits by reducing the electricity cost and reduce the usage of electricity through PT PLN (Persero).
To reserve the energy supply, the Company constantly equipped the new plant with its owned power plant with vast capacity. Among others is the construction of 2 x 35 MW power plant in Tonasa V Plant in Pangkep Regency, South Sulawesi, the biggest power plant constructed integratedly with cement industry.
The Company also increased the alternative fuels portion to reduce the cost of fossil-based energy expenditure, at the same time to ensure the manifestation of environmental sustainability.
3. Consumers Requirements Fulfillment
The objective of consumers requirements fulfillment is to maintain cement market share in Indonesia and Regionally. The Company sets three strategy in this effort, which are to ensure cement availability in every market segment, the Company’s products becoming the customer’s main choice, and product diversification to meet the consumers’ needs.
To assure the adequacy of cement in every market segment, the Company continues to expand its distribution networks by accumulating the sales partners up to 361 partners throughout Indonesia. To ensure cement supply to reach every
region, the Company has built 24 packing plants across Indonesia and Vietnam. The Company strives to manage the distribution facility of every existing production unit, thus to achieve reliable supplies and optimum distribution cost through OpCo synergy.
The Company realized the importance of brand equity enhancement through marketing programs that will support the sales, such as the development of communities program and effective marketing communication, with the objectives to make the Company’s products as the customers’ first choice. To respond to the customers’ complaint, the Company prepared contact service and if necessary will delegate mobile laboratory to directly visit the customers’ location.
The Company also developed products diversification, such as ready mix concretes, precasts, as well as building materials through the Company’s subsidiary, PT SGG Prima Beton.
The Company has implemented innovation on several cement products and its derivatives with high quality, in order to meet the consumers’ needs. One of the innovation is product with rapid strength concretes and pervious concretes.
4. Corporate Image Enhancement
One of the Company’s growth pillar is the development of environmental and social management. Thus the objective of the Company’s image enhancement was focused on the two aspects.
Tinjauan Kinerja
In environmental management, the Company is committed in the implementation of CO2
reduction program, industrial waste utilization usage of Alternative Fuel Resources, as well as hot gas residual utilization.
The Company also continues to implementing its sustainable Corporate Social and Environmental Responsibility by building conducive plants environment as well as building corporate image in the public.
5. Capability to Maintain Growth
To propel business growth, the Company has refined all of its supporting infrastructures to become a direct catalyst in accelerating business growth, which covering the organization governance, quality improvement on information technology and communication, and human resources (HR) management. The refinement was conducted in an integrated manner in all the Company’s group environment.
6. Major Risks Control
Prudence principles become the basis in the Company’s business operations. The Company improved its risk management through monitoring and mitigation on all major risks, thereby it’s able to maximize every potential in enhancing the performance.
From all the formulated strategy frameworks, the Company confident in aligning the implementation into a short term activity through five strategy management focus, which are revenue management, cost management, capacity management, increasing competitive advantage and investment management. The objective is to support growth acceleration within the next 10 year and coming years.
STRATEGY MANAGEMENT FOCUS
To boost growth acceleration, the Company aligned its long term strategy implementation into short term activity through five strategy management focus, which are revenue management, cost management, capacity management, increasing advantage and investment management.
Revenue Management
This strategy is closely linked with the Company’s marketing activities. With the revenue management strategy, the Company conducted the revenue potential management by mapping the distribution patterns and marketing strategy, with the concentration on products sales primarily to the regions with optimum operating income margin, yet remain to take new market opportunities in other potential regions.
Cost Management
With this strategy, the Company strives to focus on cost efficiency efforts through the management of raw materials, packaging, energy, maintenance, distribution patterns and transportation methods, thus the Company’s products will gain maximum competitive edge.
Capacity Management
