Post on 13-Jan-2017
Striving to maximize value
Leading Towards the FutureLeading Towards the FutureLeading Towards the FutureMarch 2008March 2008
Striving to maximize value 1
AGENDA
I. Indonesia Cement Highlights
II. Corporate Profile
III. Financial Performance
IV. Strategic Initiatives
V. Appendix
Striving to maximize value 2
• Total Installed National Cap.:45.07 mn tons/year (EoY 07)
• Domestic utilization rate per Dec. 2007: 75.83%
Singapore
Kuala Lumpur
SGG*)
11
2233
44
55
66
77
88
99
Semen Andalas IndonesiaLhok Nga, Nanggroe Aceh D.Cap. 1.4 mn tons (under plant reconstruction)
Indocement Tunggal PerkasaJakartaCap. 15.65 mn tons
Semen TonasaPangkep, South SulawesiCap. 3.5 mn tons
Semen PadangIndarung, West SumateraCap. 5.4 mn tons
Holcim IndonesiaJakartaCap. 8.7 mn tons
Semen Bosowa MarosMaros, South SulawesiCap. 1.8 mn tons
Semen BaturajaPalembang, South SumateraCap. 1.25 mn tons
Semen GresikGresik/Tuban, East JavaCap. 8.2 mn tons
Semen KupangKupang, East Nusa TenggaraCap. 0.57 mn tons
1.1.
2.2.
3.3.
4.4.
5.5.
6.6.
7.7.
8.8.
9.9.
INDUSTRY STRUCTURE AND PLANTS LOCATION
*) Semen Gresik Group
*) Semen Gresik Group
Striving to maximize value 3
AGENDA
I. Indonesia Cement Highlights
II. Corporate Profile
III. Financial Performance
IV. Strategic Initiatives
V. Appendix
Striving to maximize value 4
SGG IS THE #1 CEMENT COMPANY IN INDONESIA
1999
2005
2007
2006
1998
1995
1991
1957 Founded August 1957 by the first
President of the Republic of Indonesia
Capacity: 250,000 tons per annum (“tpa”)
July 1991, Initial Public Offering—listed on the Jakarta Stock Exchange and Surabaya Stock Exchange
Government of Republic of Indonesia: 73%, Public: 27%
Capacity: 1.8mn tpa
EoY market cap: Rp 0.63tn
Cemex S.A. de C.V. ("Cemex") became a strategic partner by buying a 14% stake
GoI:51%, Public: 35%, Cemex: 14%
Capacity: 17.3mn tpa
EoY market cap: Rp 4.9tn
September 1999, Cemex upsized its stake to 26%
GoI: 51%, Public: 23%, Cemex: 26%
Capacity: 17.3mn tpa
EoY market cap: Rp 6.6tn
GoI: 51%, Public: 23%, Cemex: 26%
Capacity: 16.9mn tpa
EoY market cap: Rp 10.6tn
July 2006, Blue Valley Holdings PTE Ltd. (“Blue Valley”) bought Cemex’s24.9% stake in SGG
GoI: 51%, Public: 24%, Blue Valley: 25%
Capacity: 16.9mn tpa
EoY market cap: Rp 21.5tn
GoI: 51%, Public: 24%, Blue Valley: 25%
Capacity: 17.1mn tpa
EoY market cap: Rp 33.2tn
Rights Issue
Acquisition of Semen Padang and Semen Tonasa
GoI: 65%, Public: 35%
Capacity: 8.5mn tpa
EoY market cap: Rp 3.8tn
Striving to maximize value 5
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
SGG’s PRODUCTION FACILITIES ARE WELL SUPPORTED BY STRATEGICALLY LOCATED MARKETING AND DISTRIBUTION FACILITIES
TelukBayur
Sumatera
Kalimantan
SulawesiMaluku
Papua
LombokBaliJava
Batam
Ciwandan
Tanjung Priok Jakarta
Samarinda
Banjarmasin
Palu
Bitung
Ambon
Makassar
Biringkasi
BaliTabananDenpasar
Singarajan
DI YogyakartaLempuyangan
Janti
Central JavaTegal
PurwokertoKudus
MagelangSolo/PalurAlas TuwoMojopahit
Sayung
West JavaSerang
TangerangBogor
CibitungBandung
Tasik MalayaCirebon
Narogong
Belawan
Singapore
Kuala Lumpur
Tuban
Surabaya
Cement Plant
Packing Plant
Port
Warehouse
East JavaMargomulyo
Tanjung WangiBangkalanSwabina
Aleh
Pelabuhan Tuban
Pelabuhan Gresik
Installed Cap.:5.4 mn tons
Installed Cap.:8.2 mn tons
Installed Cap.:3.5 mn tons
Striving to maximize value 6
Others
8.1%
Player 2
19.3%
Player 1
34.7%
Semen
Gresik
18.2%
Semen
Padang
11.9%
Semen
Tonasa
7.8%
CAPACITY SHARE — 2007CAPACITY SHARE — 2007
Semen
Tonasa
8.6%
Others
10.2%
Semen
Padang
14.2%
Semen
Gresik
21.6%
Player 1
30.9%
Player 2
14.6%
Total = 45.07 mn tons
SGGTotal 37.9%
SGGTotal 44.4%
MARKET LEADER IN TERMS OF REVENUE AND CAPACITY SHARE
Highest revenue/available capacity among peers Leading market share for the past several years
Total = 34.2 mn tons
DOMESTIC MARKET SHARE — 2007DOMESTIC MARKET SHARE — 2007
Source: Research reports, management plan
Striving to maximize value 7
SEMEN GRESIK’S STOCK PRICE HAS CONTINUED TO PERFORM
Volume (per 10,000)Price (Rp/share)
JCI (Jakarta Composite Index) is rebased to Semen Gresik share priceNote: US$1= IDR 9,393 as per Dec. 28, 2007; Semen Gresik prices adjusted to stock split
Key market data IDR USD
Current share price 5,600 0.60
52 week high 6,200 0.66
52 week low 3,500 0.37
Market cap (EoY 07) 33,217bn 3,536mm
Stock SplitStock Split
US Subprime crisis
US Subprime crisis
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Jan-07 Feb-07 Mar-07 May-07 Jun-07 Jul-07 Sep-07 Oct-07 Dec-07 Jan-08
0
500
1,000
1,500
2,000
2,500
3,000
3,500
SMGR JCI
Feb-08Feb-08
Striving to maximize value 8
AGENDA
I. Indonesia Cement Highlights
II. Corporate Profile
III. Financial Performance
IV. Strategic Initiatives
V. Appendix
Striving to maximize value 9
FINANCIAL HIGHLIGHTS
19%
7%
47%
20%
27%
21%
15%
CAGR
6,627
8,515
1,775
2,855
2,397
4,001
9,601
2007
5,500
7,496
1,296
2,234
1,779
3,328
8,728
2006
20.56,6275,5004,4673,6423,334Total Equity
13.68,5157,4967,2986,6666,559Total assets
37.01,7751,2961,002509373Net profit
27.82,8552,2341,9991,4121,386EBITDA
34.72,3971,7791,539965929Operating profit
20.24,0013,3282,8922,0611,893Gross Profit
10.09,6018,7287,5326,0685,450Revenue
Change (%)20072006200520042003(Rp billions)
KEY FINANCIAL HIGHLIGHTS
Striving to maximize value 10
OVER THE YEARS, SGG HAS EXPERIENCED ROBUST EARNINGS GROWTH …OVER THE YEARS, SGG HAS EXPERIENCED ROBUST EARNINGS GROWTH …
5,172 5,4506,068
7,5328,728
9,601
2002 2003 2004 2005 2006 2007
• Net Revenues (Bn Rp)
2,397
1,7791,539
980929
749
2002 2003 2004 2005 2006 2007
• Operating Income (Bn Rp)
2,855
2,2341,999
1,4121,386
1,186
2002 2003 2004 2005 2006 2007
• EBITDA (Bn Rp)
1,775
1,296
1,002
509
373
151
2002 2003 2004 2005 2006 2007
• Net Income (Bn Rp)
26.7923.5622.43
13.97
11.17
4.86
2002 2003 2004 2005 2006 2007
• Return on Equity (%)
27.0934.80
61.80
81.30
95.00
117.20
2002 2003 2004 2005 2006 2007
• Debt to Equity Ratio (%)
Striving to maximize value 11
….RESULTING IN RISING PROFITS AND IMPROVING MARGINS
2,892
3,328
1,9991,893
2,061
4,001
2,855
2,234
1,4121,386
373509
1,296
1,775
1,002
-250
500
1,250
2,000
2,750
3,500
4,250
2003 2004 2005 2006 2007
Gross profit EBITDA Net income
PROFITABILITY TREND (Rp Bn)PROFITABILITY TREND (Rp Bn)
CAGR(03-07)
20%
21%
47%
PROFIT MARGINS—LAST 5 YEARSPROFIT MARGINS—LAST 5 YEARS
41.7%38.1%
38.4%34.0%
34.7%
25.1%
23.0%26.3%
25.5% 29.7%
13.3%
14.8%18.5%
8.4%
6.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
2003 2004 2005 2006 2007
Gross margin EBITDA margin Net margin
Striving to maximize value 12
Source: I/B/E/S mean estimatesNote: Actual numbers are reported number on the year of announcement
SUSTAINABLE EPS GROWTH VS. ANALYST ESTIMATESSUSTAINABLE EPS GROWTH VS. ANALYST ESTIMATES
SGG HAS BEEN ABLE TO OUTPERFORM MARKET EXPECTATIONS
ACTUAL EPS CAGR (2002-2006) 48%
590514
743
1,206
2,147
255
628
858
1,689
2,184
0
500
1,000
1,500
2,000
2,500
2002 2003 2004 2005 2006
Consensus analyst EPS forecasts Actual EPS(IDR BN)
Striving to maximize value 13
AGENDA
I. Indonesian Cement Highlights
II. Corporate Profile
III. Financial Performance
IV. Strategic Initiatives
V. Appendix
Striving to maximize value 14
SGG 5-YEAR CORPORATE STRATEGY
ProductProduct development Product Diversification
Capacity & Energy Management
Debottlenecking / Optimization
New Plant
Power Plant
New Plant
Power Plant
Debottlenecking / Optimization
Organization Capital Corporate restructuring Subsidiaries & Affiliates restructuring
Effective holding
Information Capital Information & Communication Technology System Management
Industry landscape scenario
Brand equity strengthening
Customer value proposition
Competitive advantage
2006 2007 2008 2009 2010 Onwards
Consolidating leadership position
Efficiency
Synergy
Human Capital Human Resource Competencies
2011
Intense competition (Potential) New entrants
2012
Brand
Initiatives
Optimization period
Striving to maximize value 15
Revenue management
Cost management
Capacity management
Increasingcompetitive advantage
Maintain market share
Increase operating margin
Market share optimization Margin optimization
Raw material Maintenance costs Yield
improvement Energy supply
alternatives
Raw material Maintenance
costs Yield/utilization
Maximize utilization
Capacity optimization
Capacity expansion
Corporate restructuring Human resource competencies Management Information Systems (MIS)
Profitability
And
Sustainable growth
ACTIVITYACTIVITY NEAR TERM INITIATIVESNEAR TERM INITIATIVES LONG TERM INITIATIVESLONG TERM INITIATIVES ULTIMATE OBJECTIVEULTIMATE OBJECTIVE
LONG TERM PROFITABILITY AND SUSTAINABLE GROWTH
Striving to maximize value 16
CURRENT PRODUCT MOVEMENT CROSS-BAGGING INITIATIVECURRENT PRODUCT MOVEMENT CROSS-BAGGING INITIATIVE
The cross bagging initiative will result in a different movement of product to the market without changing the final brand leading to
Lesser time to market
Logistics cost savings
Cost savings in transportation, packaging, inventory and raw material procurement through increased coordination among the various units; potential to reduce transportation costs
1
COORDINATED GROUP NEGOTIATIONSCOORDINATED GROUP NEGOTIATIONS2
In the past target markets were served predominantly by one of three companies–but overlap markets exist in Java, Bali and Kalimantan leading to high transportation costs in those areas
SEVERAL OPERATIONAL IMPROVEMENTS
Striving to maximize value 17
16.9 16.9 16.9 16.9
1.516.9 17.117.7
0.80.2
18.4
15.0
16.0
17.0
18.0
19.0
2006 2007 2008 2009
Installed base capacityIncremental capacity from de-bottlenecking/optimization plans
4
3
to set up captive power supply
Rationale for controlling of power vs. current supply
The Company needs reliable and cost effective energy/ power supply
Expected to lead to lower operating costs and minimize loss of production capacity
Captive power supply are estimated to provide significant cost savings
CAPACITY ESTIMATES (MILLION TONS) CAPACITY ESTIMATES (MILLION TONS)
SET UP POWER SUPPLY TO CONTROL ENERGY COSTSSET UP POWER SUPPLY TO CONTROL ENERGY COSTS
CAPACITY OPTIMIZATION PROGRAMS
Striving to maximize value 18
17.1 17.7 18.4 18.4 18.4 18.4 18.4 18.4
1.84.0 4.8 5.0
2007 2008 2009 2010 2011 2012 2013 2014
DOMESTIC CAPACITY BUILD-OUT (MILLION TONS)DOMESTIC CAPACITY BUILD-OUT (MILLION TONS)
Base capacity New capacity Current capacity of SGG is in line with our target to maintain leading market share position
To strengthen this position we are constructing new cement plants (2 x 2.5 mio tons of cement) to expand capacity to meet domestic and export demand
Plants are targeted to come online starting 2011
Additional capacity will help diversify market base, both domestic and export market
17.117.7
18.4 18.4
20.2
22.423.2
GREENFIELD/BROWNFIELD PROJECTS
DOMESTIC CAPACITY EXPANSIONDOMESTIC CAPACITY EXPANSION
23.4
Striving to maximize value 19
SUMARY OF SMGR’s PROJECTS IN 5-YEAR DOWN THE ROADS
1.401,790573410Sub Total
1.3730:7030020112008962 x 35New Plant - Sulawesi
1.5730:70300201120081102 x 35New Plant – Java
1.4330:7015020112008501 x 35Pangkep
1.3930:70490201120081463 x 35Indarung
1.3230:70550201120081712 x 65Tuban
Internal : Ext.CompletedStart
InvestmentUS$ mn/MW
FundingCoal Requirement(‘000 tons)
ConstructionInvestment(US$ mn)
Capacity (MW)
Power Plants Location
1346705.0Sub Total
12630 : 70201120083152.5Sulawesi
14230 : 70201220083552.5Java
Internal : Ext.CompletedStart
Investment US$/Tons
FundingConstructionInvestment(US$ mn)
Capacity(mn tons)
New Plants Location
Striving to maximize value 20
AGENDA
I. Indonesian Cement Highlights
II. Corporate Profile
III. Financial Performance
IV. Strategic Initiatives
V. Appendix
Striving to maximize value 21
30.7 30.733.2 33.9 33.0
35.1
27.2 27.530.2 31.5 32.1
34.2
5.6%
4.7%5.1%
5.4%
4.4%
6.3%
-5.0
5.0
15.0
25.0
35.0
45.0
55.0
65.0
2002 2003 2004 2005 2006 FY 2007 (E)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Source: Indonesian Cement Association, *) Courtesy of Bahana Research Institute (P)
Cement ProductionDomestic consumption GDP growth %
(mio tons)
*)*)
Growth:
5.8%
Growth:
1.1%Growth:
9.7%Growth:
4.2%Growth:
1.8% Growth:
6.6%
INDONESIA HAS EXPERIENCED SOLID ECONOMIC AND DOMESTIC CEMENT CONSUMPTION GROWTH
GDP GROWTH AND CEMENT PRODUCTION & DOMESTIC CONSUMPTION IN INDONESIAGDP GROWTH AND CEMENT PRODUCTION & DOMESTIC CONSUMPTION IN INDONESIA
Striving to maximize value 22
SGG has highest overall capacity
The utilization rates are the best in
the local industry
Wide geographical coverage through
dispersed factories
COMPARISON WITH PEERS (Cement Production – 2007)COMPARISON WITH PEERS (Cement Production – 2007)
Semen Gresik (SG)
Semen Padang (SP)
Semen Tonasa (ST)
Company name Location Capacity (mm ton) Utilization*) (%)
Semen Gresik Gresik & Tuban, East Java 8.2
Semen Padang Indarung, West Sumatera 5.4
Semen Tonasa Pangkep, South Sulawesi 3.5
SGG – Total Capacity Padang, Gresik/Tuban, Pangkep 17.1 89%
Player 1 Citeureup (W-Java), Tarjun (South Kalimantan)15.65
Player 2 Narogong, Cilacap, Central Java 8.70
Others NA 3.62
Industry 45.07 76%
MARKET DINAMICS
KEY HIGHLIGHTSKEY HIGHLIGHTS
*) Domestic UtilizationSource: Indonesia Cement Association
67%
57%96%
90%
90%
84%
Striving to maximize value 23
SGG’s BRANDS LEAD INDONESIA’s TOP MARKETS
Source: Indonesia Cement Association
SGG ’s brands are well-recognized throughout Indonesia Dominant market position in Indonesia’s top three markets which comprise 88% of total
domestic consumption Strong brand loyalty allows Semen Gresik to dominate East Java with 73% market share
Market share by major market FY2007
SumateraSulawesi
JavaSulawesi total: 2.07mn tons
Indocement 12.7%
Semen Bosowa 19.4%
SGG 67.9%
SGG 49.1%Semen Andalas
17.4%
Indocement 15.3%
Other 18.2%
SGG 37.3%Holcim 22%
Indocement 39.3%
Other 1.4%
Java total: 19.66mn tons
Sumatera total: 8.04mn tonsKalimantan total: 1.98mn tons
Indocement 28.6%
Semen Bosowa 4.1%
SGG 61%
Holcim 6.3%
Striving to maximize value 24
SGG HAS STRONGER CREDIT METRICS VS. ITS PEERS
0.1x
0.5x
1.1x
0.2x
2.0x
1.3x
2002 2003 2004 2005 2006 2007
DEBT/EBITDADEBT/EBITDA
DEBT/EQUITY DEBT/EQUITY
0.5x
0.7x
0.1x
0.4x
0.2x0.0x
2002 2003 2004 2005 2006 2007
Source: Company financials, based on book values of debt and equityRegional peers include Anhui Conch, CNBM, Ambuja Cements, ACC, Grasim, Indocement, Holcim Indonesia, Siam Cement, Siam City Cement, Taiwan Cement, Asia Cement Corp, Lafarge Malayan
Regional peer median (2006): 1.9x
Regional peer median (2006): 0.7x
0.00
1.00
2.00
3.00
4.00
5.00
6.00
Tim
es
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Rp
Bill
ion
Equity 3,111 3,333 3,642 4,467 5,500 6,585Market Cap 4,834 4,656 10,973 10,558 21,531 33,217Ratio 1.60 1.40 3.00 2.40 3.90 5.00
2002 2003 2004 2005 2006 2007
PRICE TO BOOK VALUE (2002 – 2007)PRICE TO BOOK VALUE (2002 – 2007)
6%
20%
4%
35%29%
2003 2004 2005 2006 2007
DEBT/CAPITALDEBT/CAPITAL
Striving to maximize value 25
Main Office:Main Building of Semen Gresik
Jln. Veteran Gresik 61122 – IndonesiaPhone: (62-31) 3981731 -2, 3981745
Fax: (62-31) 3983209, 3972264
Representative Office:Graha Irama Building, 11th Floor,Jln. HR Rasuna Said, Kuningan, Jakarta 12950 – IndonesiaPhone: (62-21) 5261174 – 5Fax : (62-21) 5261176
www.semengresik.com
T h a n k y o uT h a n k y o uDISCLAIMER
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
any investments you should make your own independent assessment and seek your own professional financial and legal advice.