INDONESIA’S CEMENT INDUSTRY: NOW and THE FUTURE
SMGR Corporate Presentation
Singapore
CEMENT INDUSTRY AT A GLANCE
2
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
DOMESTIC CAPACITY (2014
)
‘000 tons
ton ‘000
2013
2014F
2015F
2016F
2017F
Installed Capacity
68,000
71,500
82,200
97,800
100,800
Real Production
55,200
62,205
69,870
78,240
85,680
Consumption
58,580
62,095
65,820
69,770
73,956
Surplus/(deficit)
-3,380
110
4,050
8,470
11,724
Domestic Utilization
100%
100%
94%
89%
86%
Export
500
500
500
500
500
Domestic Consumption
Growth
5.5%
6%
6%
6%
6%
DOMESTIC DEMAND VS NATIONAL CAPACITY (2013
–
2017)
0
20.000
40.000
60.000
80.000
100.000
120.000
2013
2014F
2015F
2016F
2017F
No
Company
Targeted Plant
Location
Declared Capacity
(mn tons)
Prognose Design
Capacity (mn tons)
Investment
(US$ mn)
Remarks + Local Partner
1
Siam Cement (Thailand)
West Java
1.8
1.8
360
Greenfield, Sukabumi
- Pontianak
- West Papua
Various
- South Kalimantan
- East Kalimantan
- West Kalimantan
- West Papua
New Cement Capacity from Existing Players (2013
–
2017)
No
Company
Targeted Plant
Location
Declared Capacity
(mn tons)
Prognose Design Capacity
(mn tons)
Java, Sumatera,
Sulawesi
11.5
9.0
970
Source: Deutsche, Indonesia Cement Association
INDONESIA
’S
ECONOMY AND DOMESTIC CEMENT CONSUMPTION GROWTH
Source: Indonesian Cement Association & BPS Statistic
Growth
Domestic consumption (LHS)
GDP growth % (RHS)
(mio tons)
30,2
31,5
32,1
34,2
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2M2014
0,0%
10,0%
20,0%
0
Bagged Cement
Bulk Cement
Bag and Bulk cement consumption (million tons)
Source: Indonesia Cement Association and the Company’s data
Retail (residential) sector is the largest
consumer of cement in Indonesia
Bag
79%
Bulk
21%
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
Together We Build a Better Future
SOURCES : DIREKTORAT JENDERAL BINA MARGA
Infrastructure Project in Corridor #1 (Trans Sumatera)
Bakaheuni - Indralaya
Indralaya - Pekanbaru
Pekanbaru - Medan
Medan - Aceh
Development Phases:
Phase I (2015-2020)
- Bakauheni-Indralaya
- Pekanbaru-Medan
Phase II (2020-2025)
- Indralaya-Pekanbaru
- Medan-Banda Aceh
- Tebing Tinggi-Sibolga
Phase III (>2025)
- Pekanbaru-Padang
- Palembang-Bengkulu
SEMEN ANADALAS
SEMEN BATURAJA
SEMEN PADANG
PACKING PLANT
5
2
Lhokseumawe
3
Medan
4
Batam
5
Dumai
Grinding Plant Dumai
Grinding Plant Lampung
1
Grinding Plant Palembang
2
MARKET UPDATE
SMGR Corporate Presentation
MARKET AND MARKET SHARE BY GEOGRAPHY
Papua
Bali & N T
Sulawesi
Kalimantan
Population Distribution (2012)
Sumatera
Cement Distribution (2M2014)
Papua
Bali & N T
Sulawesi
Kalimantan
Population Distribution (2012)
Sumatera
Cement Distribution (FY 2013)
Domestic Market Share (FY-2013)
MARKET UPDATE - Cement Consumption 2M2014
*) Source: Indonesia Cement Association, un-audited figures
AREA
2M 2014
2M 2013
CHANGE (%)
Total Export
14,955
23,337
(35.9)
GRAND TOTAL
9.177,227
9,068,647
1.2
2M 2014
–
Domestic Consumption
(mio tons)
DESCRIPTION
2M-14
2M-13
CHANGE (%)
DOMESTIC
4,006,513
3,941,467
1.7
Semen Indonesia
2,124,645
2,038,679
4.2
Semen Padang
1,074,457
1,129,834
(4.9)
Semen Tonasa
807,411
772,954
4.5
EXPORT
14,955
14,537
2.9
GRAND TOTAL
4,021,468
3,956,004
1.7
Industry Sales Type (mio tons)
2M-14
2M-13
YoY Change
Bag
7.26 (79.4%)
7.24 (80.0%)
0.3%
Bulk
1.89 (20.6%)
1.81 (20.0%)
4.5%
2M 2014 - SMGR Sales Volume
(million tons)
SMGR Sales Type (mio tons)
2M-14
2M-13
YoY Change
Bag
3.05 (76.1%)
3.08 (78.1%)
1.0%
*) Source: Indonesia Cement Association, un-audited figures
FY 2013
–
Domestic Consumption
(mio tons)
DESCRIPTION
12M-13
12M-12
CHANGE
(%)
Industry Sales Type (mio tons)
FY-13
FY-12
YoY Change
Bag
45.7 (78.8%)
44.0 (80.3%)
3.7%
Bulk
12.2 (21.2%)
10.8 (19.7%)
13.6%
FY 2013 - SMGR Sales Volume
(million tons)
SMGR Sales Type (mio tons)
FY-13
FY-12
YoY Change
Bag
19.4 (76.4%)
17.6 (78.7%)
10.1%
Bulk
6.0 (23.6%)
4.7 (21.3%)
26.0%
COMPANY PROFILE
SMGR Corporate Presentation
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 19
th, 2012: IDR91.9tn
BRIEF HISTORY
0,0
5,0
10,0
15,0
20,0
25,0
30,0
1957
-
1970
-
1980
-
198419851986
-
1990
-
199519971998
-
20062007200820092010201120122013
SMGR CAPACITY BUILD-OUT (Mio TONS)
Pre-consolidated capacity
Post-consolidated capacity
_
_
_
_
_
_
SMGR IS THE #1 CEMENT COMPANY IN INDONESIA
•
Total Installed capacity: 30 million
tons (2013) including TLCC;
•
Market share of Semen Indonesia in
2013 was 44% based on sales volume
Public
The Government of the Republic of Indonesia
PT Semen Indonesia (Persero) Tbk.
PT Semen Padang
PT Semen Tonasa
OWNERSHIP STRUCTURE
1¹ As of Jan, 2014
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%
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
4. Swadaya Graha Contractor & 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
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
22 location
Sea Port
11 location
Kiln
1 unit
Cement
Mill
1 unit
Kiln
4 unit
Cement
Mill
6 unit
Kiln
4 unit
Cement
Mill
9 unit
Grinding
Plant
1 unit Cement
Mill
Kiln
4 unit
Cement
Mill
6 unit
Grinding
Plant
3 unit Cement
Mill
FINANCIAL UPDATE
SMGR Corporate Presentation
EBITDA
(Rp billion)
NET INCOME
(Rp billion)
EBITDA Margin
(%)
2007
2008
2009
2010
2011
2012
5,402
EBITDA
(Rp billion)
NET INCOME
(Rp billion)
EBITDA Margin
(%)
2007
2008
2009
2010
2011
2012
5,402
2007
2008
2009
2010
2011
2012
FINANCIAL SUMMARY: FY2012 RESULTS
EBITDA (Rp billion)
NET INCOME (Rp billion)
EBITDA Margin (%)
9M-09
9M-10
9M-11
9M-12
9M-13
32.5%
34.5%
32.8%
34.6%
33.6%
NET INCOME Margin (%)
Description
(Rpbn)
9M-2012
9M-2013
Change
(%)
2,408
2,522
2,761
3,389
9M09
9M10
9M11
9M2012 9M2013
9M-09
9M-10
9M-11
9M-12
9M-13
9M09
9M10
9M11
9M12
9M13
Ratio (%)
Formula
2012
9M
2013
9M
Ebitda margin
Ebitda / Revenue
34.6
33.6
Interest coverage (x)
Ebitda / Interest
expense
262.5
25.15
*) Total debt calculated from interest bearing debt
Cash balance (IDR bn)
Total debt (IDR bn)
2,650
3,905
3,682
3,317
3,846
5,283
2008
2009
2010
2011
2012
9M2013
4,012
3,850
251
199
686
1,871
2008
2009
2010
2011
2012
9M2013
* Include short term investment
Debt/EBITDA
Return on Assets
0.06x
2.00x
0.35x
0.04x
0.14x
0.56x
2008
2009
2010
2011
2012
The projected adjusted debt/EBITDA of 2.0x to
maintain rating level from Moody’s Investors
Service.
18.2%
24.0%
25.8%
23.5%
20.1%
2008
2009
2010
2011
2012
50%
50%
55%
50%
50%
45%
45%
2007
2008
2009
2010
2011
2012
2013
Average: 50%
SMGR DIVIDEND PAY OUT RATIO IN THE LAST 7 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
REGULAR DIVIDEND PAYMENTS WITH ATTRACTIVE YIELD
887,7
1.261,7
1.829,5 1.816,7
1.962,7
2.181,3
Total Dividend Payout
STRATEGIC PROJECTS
SMGR Corporate Presentation
SMGR LONG TERM STRATEGIC FOCUS
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
CEMENT PLANTS PROJECTS
Tuban’s ie
Pyroprocessing Tonasa V
Jetty Extension Area
Tu
ban
Tona
sa
Tona
sa
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
INSTALLED CAPACITY (Mio Ton)
17,1
18
19
19
20,2
25,3
30
31,8
33,3
39,3
40,8
UP GRADING CAPACITY PLAN
Year
Plant
Design Capacity
(mio tons)
Est. Time
Operation
Location
2013
New Cement Mill
1.5
Q3
Tuban
2014
New Cement Mill
0.9
Q3
Dumai
Cement Mill
0.4
Q2
Gresik Plant B
2015
New Cement Mill
1.5
Q3
Tonasa
2015
New Cement Plant
3.0
Q4
Indarung
2016
New Cement Plant
3.0
Q2
Rembang
CONCLUSION: WHY SMGR?
SMGR Corporate Presentation
Outstanding
structure and
financial
policies
Robust cash flow
generation
Outstanding business performance
–
Leading cement player in Indonesia with over 43.8% market share based on
sales volume for 10M-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 DRIVE
S
Gresik Office: Semen Indonesia 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) 5261176
www.semenindonesia.com
IMPORTANT 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 IN CONNECTION 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 IN THIS PRESENTATION IS BEING PRESENTED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED OR REDISTRIBUTED TO ANY OTHER PERSON, IN WHOLE OR IN PART.
This presentation includes forward-looking statements, which are based on current expectations and forecast about future events. Such statements involve known / unknown risks uncertainties and 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.
