In the Managing Director’s Report you will find a comprehensive summary of the company’s performance over a given period.
The risks and uncertainties in the global economy in 2023 had already been evident since the end of 2022. While there were indications of economic recovery, it was still slow and uneven. In addition to economic issues, the geopolitical conditions also showed high risks. Conflicts in Ukraine and Palestine, which showed no signs of ending, posed downside risks to economic growth prospects. However, amid the slowdown in global economy and the decline in prices of major export commodities, Indonesia managed to maintain relatively good economic resilience. The growth performance in 2023 reached 5.05%, although it slowed compared to 5.31% in 2022.
The Board of Commissioners understands the challenges in the domestic cement market. However, in the view of the Board of Commissioners, the Board of Directors made considerable efforts to maintain growth continuity, as reflected in the positive performance trends, both operationally and financially. These achievements are undoubtedly the result of the hard work of Board of Directors and all personnel of the Company, implementing strategic initiatives focused on four pillars: Operational Excellence, Sustainable Development, Process and Assets Optimization, as well as People & Leader. The Company continues to strive for effective and efficient operations by implementing various innovations to achieve operational excellence in every aspect of its operations.
The risks and uncertainties in the global economy in 2023 had already been evident since the end of 2022. While there were indications of economic recovery, it was still slow and uneven. In addition to economic issues, the geopolitical conditions also showed high risks. Conflicts in Ukraine and Palestine, which showed no signs of ending, posed downside risks to economic growth prospects. However, amid the slowdown in global economy and the decline in prices of major export commodities, Indonesia managed to maintain relatively good economic resilience. The growth performance in 2023 reached 5.05%, although it slowed compared to 5.31% in 2022.
The Board of Commissioners understands the challenges in the domestic cement market. However, in the view of the Board of Commissioners, the Board of Directors made considerable efforts to maintain growth continuity, as reflected in the positive performance trends, both operationally and financially. These achievements are undoubtedly the result of the hard work of Board of Directors and all personnel of the Company, implementing strategic initiatives focused on four pillars: Operational Excellence, Sustainable Development, Process and Assets Optimization, as well as People & Leader. The Company continues to strive for effective and efficient operations by implementing various innovations to achieve operational excellence in every aspect of its operations.
Performance Journey
Through synergy with SIG as the parent company and Taiheiyo Cement Corporation (TCC) as a strategic partner, SBI recorded sales volume of 13.86 million tons, 3.7% from 2022 where domestic sales down 2.3% and export sales up 18.5%. The Company recorded revenue of Rp12.37 trillion and net profit of Rp894.6 billion, growing by 0.9% and 6.6%, respectively, compared to 2022. The increase in net profit drove a 5.4% increase in the Company’s equity to Rp12.5 trillion, further strengthening the Company’s capital structure.
Business Strategy Initiative 2023
Board of Commissioners strongly supports the Company’s initiative to utilize Refuse-derived Fuel (RDF) as an alternative fuel. The utilization of RDF, which has been ongoing since 2020, not only serves as an efficient solution for fossil fuel consumption but also represents one of the decarbonization initiatives outlined in SBI’s 2030 Sustainability Road Map.
The Company’s leadership in waste processing into RDF is increasingly well-known. With government support, the Company established collaborations with several local governments and private entities to manage urban waste, which will be utilized as alternative fuel in the cement production process at the Company’s factories. It is expected that the use of RDF as a partial substitute for fossil fuels will also be adopted by other industries, thereby resulting in a more significant impact on reducing CO2 emissions to support Indonesia’s target of achieving net zero emissions by 2060.
One recognition of the Company’s initiative came from the Ministry of Environment and Forestry (KLHK), which invited the CEO of SBI to present on the cement industry’s support in addressing urban waste issues through RDF utilization with co-processing system at a talk show themed “Zero Waste and Zero Emission Goals on Municipal Solid Waste” at the Indonesia Pavilion COP28 UNFCCC UAE Dubai.
Another significant achievement deserving high appreciation is the success of all four of the Company’s plants in receiving the Green PROPER from KLHK. This achievement implied external recognition of the Company’s consistency in conducting ethical and responsible business towards the environment and society. The Board of Commissioners supports the Board of Directors’ commitment to realizing and implementing sustainable green industry.
Prospects and Innovations in Facing Business Challenges in 2024
The momentum of economic growth and business activities began to slow down in the second half of 2023. One of the triggering factors for economic slowdown was the perception of uncertainty risks ahead of the upcoming general elections, causing cautious behavior among economic actors considering possible changes in economic agendas and regulations. This wait-and-see position is expected to continue at least until the new government is elected. However, based on the potential of the domestic economy, Indonesia’s economy in 2024 is projected to still grow strongly at 5.2%.
Relatively stable inflation, the secondary impact of the 2024 elections on consumer and government consumption, as well as government policies in the property sector aimed at reducing housing backlogs will be driving factors for growth in 2024. In response to the ongoing global uncertainty, the government directed the 2024 state budget to mitigate external shocks and to accelerate inclusive and sustainable economic transformation.
With the aforementioned optimistic external condition, the Board of Commissioners considers that Board of Directors systematically and consistently implements business strategies to support organizational growth based on the concept of sustainable development. The cement industry still holds promising prospects for the future despite ongoing challenges. The Board of Commissioners hopes that the Board of Directors will be able to capitalize on opportunities in the market, including export markets, while remaining vigilant against potential risks and ensuring the Company’s strong fundamentals for sustainable business growth in the future.
Overview On Corporate Governance Implementation
Board of Commissioners consistently promotes the implementation of corporate governance in the Company through effective management system accompanied by continuous monitoring, evaluation, and improvement processes to maintain alignment with good corporate governance (GCG) implementation with the best practice and current changes.
The Board of Commissioners continuously reminds Board of Directors to strengthen GCG and operational integrity while paying attention to all processes and operational activities of the Company. In carrying out its supervisory function over the implementation of GCG practices, the Board of Commissioners is supported by the Audit Committee. The Audit Committee assists in reviewing the Company’s financial reports, the independence of public accountants, the adequacy of risk management and internal controls, as well as the Company’s compliance with the applicable laws and regulations.
Periodically, Board of Commissioners receives evaluations of the effectiveness of internal controls and risk management conducted by Audit Committee in collaboration with Internal Audit Division, Internal Control System (ICS) Function and Risk Management Function. The evaluation results and improvement recommendations are conveyed to the Board of Directors for follow-up. Based on these evaluation results, the Board of Commissioners assessed that, overall, GCG implementation in the Company is effective. This assessment is consistent with the results of 2023 GCG assessment based on ASEAN Corporate Governance Scorecard criteria issued by the Indonesian Institute for Corporate Directorship (IICD) with a score of 88.76 points, interpreted as “Good.”
Specifically, Board of Commissioners appreciates the success of the Company and its five subsidiaries, namely PT Solusi Bangun Andalas, PT Solusi Bangun Beton, PT Readymix Concrete Indonesia, PT Pendawa Lestari Perkasa, and PT SBI Bangun Nusantara, in obtaining ISO 37001:2016 Anti-Bribery Management System certification as a strong commitment from all levels of the Company to realizing a clean, integritydriven, and corruption-free corporation.
Changes In Composition Of Board Of Commissioners
Based on resolution of AGMS on May 31 2024, regarding changes in the management of the Company as follows:
1.Honorably discharge Lilik Unggul Raharjo from the position of President Director, Prijo Sambodo from the position of Chief Commissioner and Independent Commissioner, and Yoshifumi Taura from the position of Commissioner of the Company.
2.Approve the appointment of Asri Mukhtar as President Director, Prijo Sambodo as Chief Commissioner and Independent Commissioner, Yohanes Surya as Independent Commissioner, and Shinji Fukami as Commissioner.
Hence, composition of the Company’s Board of Commisioner on May 31, 2024, is as follows:
•President Commissioner and Independent Commissioner : Prijo Sambodo
•Commissioner : Herudi Kandau Nugroho
•Commissioner : Shinji Fukami
•Independent Commissioner : Yohanes Surya
Appreciation to All Related Parties
The Board of Commissioners extends our appreciation to all stakeholders of the Company for their support thus far. The Board of Commissioners also expresses gratitude to the Board of Directors, the management team and all members of the Company for their collective hard work towards the sustainability of the Company’s operations.
Every component of the Company has demonstrated dedication and diligence in exploring various initiatives to strengthen the Company’s foundation for future growth. May the Company continue to provide greater value and benefits to shareholders, employees, customers, business partners and all stakeholders in the future.