In the Chief Commissioner’s Report, you will find information related to accountability and oversight of the company’s operations.
The domestic cement industry in 2022 encountered a decrease in demand by 4.8% to around 63 million tons when compared to the cement demand in 2021 which reached 66.2 million tons. Even though economic conditions began to improve, and construction and infrastructure development activities increased again, the decline in cement demand was influenced by various other factors such as low domestic market per capita, customer spending priorities in the retail sector, and unstable weather conditions.
Facing these challenges, SBI remains optimistic because the Company is supported by a strong synergy with SIG for marketing management, the availability of coal as the main energy source, as well as an integrated logistics network. “Building Resiliency Through Sustainability & Innovation” represents the Company’s commitment and consistency in relying on innovation and implementing sustainable principles as the fundamentals of the Company’s resilience to various challenges and changes, as well as providing sustainable benefits for shareholders and stakeholders
The domestic cement industry in 2022 encountered a decrease in demand by 4.8% to around 63 million tons when compared to the cement demand in 2021 which reached 66.2 million tons. Even though economic conditions began to improve, and construction and infrastructure development activities increased again, the decline in cement demand was influenced by various other factors such as low domestic market per capita, customer spending priorities in the retail sector, and unstable weather conditions.
Facing these challenges, SBI remains optimistic because the Company is supported by a strong synergy with SIG for marketing management, the availability of coal as the main energy source, as well as an integrated logistics network. “Building Resiliency Through Sustainability & Innovation” represents the Company’s commitment and consistency in relying on innovation and implementing sustainable principles as the fundamentals of the Company’s resilience to various challenges and changes, as well as providing sustainable benefits for shareholders and stakeholders
Company Performance in 2022
In a contracted market, SBI was able to show consistency in achieving positive performance, especially with the improvement of pandemic conditions. Total cement sales volume in 2022 was recorded at 13.14 million tonnes, with the majority of sales supported by domestic sales of 11.86 million tonnes and exports of 1.28 million tonnes. Finished concrete (RMX) rose 42% to 1.56 million m3, while aggregates fell 24% to 684 thousand tonnes. Although the total sales volume of cement and slag decreased, the synergy with SIG helped the Company record a 9.31% growth in revenue to Rp12.26 trillion in 2022, as well as a 17.65% increase in profit for the year to Rp839.27 billion.
This performance was followed by an increase in Equity, which grew by 5.81% to Rp11.85 trillion. The Company’s liabilities decreased by 7.42% to Rp9.53 trillion in 2022. Good financial performance in 2022 contributed greatly to the continued growth of the Company which can be seen from important indicators such as Loan to Total Asset Ratio to 0.44, Loan to Total Equity Ratio of 0.80, Asset Turnover Ratio of 0.57, Gross Profit Margin of 23.91%, Operating Profit Margin of 11.81% and Net Profit Margin of 6.84%.
The intense market competition and rising prices, especially of fuel, are an inevitable part of the tough challenges faced by the cement industry. The consistency of our positive performance, however, is a testament to the resilience of our resource optimisation efforts as well as innovations on various fronts. In addition, the positive performance in 2022 was also supported by the contribution of a 38% decrease in interest expense as a result of the restructuring of syndicated loans by accelerating payments. SBI also has efficiency potential from the Sustainability Linked Loan (SLL) facility, which supports SBI in accelerating its decarbonisation initiatives towards green industry and provides lower interest rates than conventional loans
Business Strategy Initiatives
The Company’s focus in 2022 was to maintain business sustainability through synergies with SIG to increase revenue, run efficient operations and drive innovation, as well as ensure the implementation of sustainability principles that have become the Company’s competitive advantage.
Post the implementation of the budget refocusing policy, especially in the infrastructure sector in 2020, the government resumed the realisation of national infrastructure projects that had been delayed in 2021 to 2022. In the 2022 State Budget (APBN), the infrastructure allocation is recorded at IDR365.8 trillion with a number of National Strategic Projects that are still ongoing, including the commencement of the National Capital Project (IKN). With such conditions, there is still a great opportunity for the Company to maximise the existing market in order to improve sales performance.
This is also supported by Indonesia’s economic growth which is projected to grow 5.3% in 2023 driven by the increase in domestic demand, both household consumption and investment.
Recognizing these potential opportunities, the Board of Directors and management then formulated four strategic focuses which include Operational Excellence, Sustainable Development, Process and Assets Optimization and People & Leader.
The Operational Excellence emphasized production and distribution cost efficiency through AFR optimization, slag production optimization, raw material and energy cost optimization, logistics optimization, and new mining business models. For the energy management efforts carried out specifically at the Cilacap Plant, the Company received the 2022 ASEAN Energy Award and was one of 10 awards received by Indonesia at the 40th ASEAN Minister on Energy Meeting (AMEM) and ASEAN Energy Business Forum in Cambodia.
In the Sustainable Development focus on ensuring responsible business activities, the Company makes efforts to create shared value through programs oriented towards community involvement and empowerment, compliance with Occupational Safety and Health (K3), the environment and so on. Furthermore, the Company encourages the realization of the entity as a role model for future generations in environmental management and plays a role in providing sustainable solutions through innovative products and services in addressing urban problems such as waste, flooding, poor air quality and climate.
SBI’s consistency in implementing the principles of sustainability and innovation in environmental protection and community empowerment programs has led SBI to achieve a Gold PROPER rating from the Ministry of Environment and Forestry for the Cilacap Plant. This Gold PROPER is the seventh time for the Cilacap Plant. In addition, the Narogong, Lhoknga and Tuban Plants received Green PROPER ratings. All four plants also received the 2022 Green Industry Award from the Ministry of Industry of the Republic of Indonesia.
Optimization of assets and business processes was implemented through increased digitalization and technological innovation. While continuing various initiatives to ensure the achievement of Manufacturing Excellence, in 2022 the Company also sought to create derivative product business opportunities by introducing MiniMix 2.0, a finished concrete fleet capable of reaching areas with narrow roads such as residential areas.
The Company’s achievements in 2022 cannot be separated from the role of competent and dedicated human resources. SBI continues the Innovation Champion program that facilitates employee contributions to improve the Company’s performance through innovative and sustainable ideas. In 2022, employee innovation projects from the Innovation Champion program have contributed to operational efficiency and the achievement of sustainable development targets set by the Company. SBI Innovation Champion winners were also able to show off by competing at the group level. At the SIG Group Innovation Awards (SIGGIA) 2022, 5 out of 58 innovation ideas from SBI managed to come out as winners, including two ideas won First Place for the respective categories of Breakthrough Raw Material Products and Plant Management, one idea won Second Place for the Office Quality Control Project category, and two ideas won Third Place in the respective categories of Breaktrough Management Plant and Plant Quality Control Cluster.
In addition to competing at the group level, SBI innovation ideas also participated in the National Quality and Productivity Work Meeting where 6 ideas were categorized as Gold and 1 idea was categorized as Silver. In addition, there were 3 innovation ideas that were netted in the international scale competition with 2 ideas in the Outstanding category and 1 idea in the Excellence category.
Prospects and Innovations in the Face of 2023 Business Challenges
Although global economic growth is still on a slowing trend, several aspects indicate that Indonesia’s economic growth in 2023 will remain strong, such as the increase in household consumption along with community mobility after the elimination of the PPKM policy, Religious Holiday celebration activities, and the continuation of the development agenda.
As the national economy begins to recover after the pandemic, it certainly provides optimism for plans to improve the Company’s business performance going forward. The existing business challenges are indeed unavoidable, therefore SBI chooses to create opportunities in facing them. People who currently want to own housing, road users, have a concern for sustainability. This is an opportunity for SBI. At SBI, the Company strengthens innovation based on sustainability principles, in order to provide development solutions that are resilient and environmentally friendly. Resilience is not only beneficial for business, but also an added value for society.
Aside from that, the industry’s countermeasures on market over supply against installed capacity can be well addressed by the Company with the strategic cooperation between SIG and TCC in the future. One of the realizations of the strategic cooperation between SBI and Taiheiyo Cement Corporation (TCC) which was carried out in 2022 is a jetty development project and type V cement production facility targeted to meet the needs of the export market.
Application of GCG Principles to Every Business Operation
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Change in the Composition of the Board of Directors
Through 31 December 2022, there was no change in the composition of the Board of Directors. Therefore, the composition of the Company’s Board of Directors is still the same as the provisions of the EGMS dated February 18, 2022 consisting of:
President Director: Lilik Unggul Raharjo, Director: Ony Suprihartono, Director: Soni Asrul Sani, Director: Yasuhide Abe.
Appreciation to All Related Parties
On behalf of the Board of Directors of the Company, I would like to sincerely thank all of our employees for their hard work, passion and dedication to SBI which resulted in the Company achieving business growth despite the challenges faced. I would also like to thank the Board of Commissioners and Shareholders for their trust in the Company and the Board of Directors.
The synergy between SBI and SIG has increased the Company’s capability in ensuring business continuity, to continue to provide solutions for the development of the country. Hence, the Board of Directors invites all levels of management and employees along with subsidiaries, to jointly unite steps and create better synergies to improve the Company’s performance. With a strong commitment, let us work together, building resilience to realize the future we want.