Displaying items by tag: Semen Indonesia

Indonesia: Semen Indonesia has detailed its plans for future exports of cement to North America. The Investor Daily newspaper has reported that the producer and subsidiary Solusi Bangun Indonesia will target 0.5 – 1Mt of cement exports to North America in 2021, according to president director Hendi Santoso. The export plans will be carried out in partnership with Japan-based Taiheiyo Cement, which already has a US market presence and owns a 15% stake in Solusi Bangun Indonesia. Hendi said that the move aims to ‘cushion’ the decline in domestic cement sales, down by 28% bulk and 13% bagged year-on-year in 2020. The company successfully exported cement to Australia, Bangladesh, China, Fiji and Sri Lanka in 2020.

President commissioner Rudi Antara said, "The Covid-19 outbreak still colours our lives. There is no other choice but to increase business efficiency and the top line outside of our main markets."

LafargeHolcim’s financial results for 2020 arrived this week, giving us data on many of the larger multinational cement producers. The Chinese ones are yet to release their results and some of the larger other ones such as CRH, Votorantim and InterCement are pending too. Yet, what we have so far gives a selective view on an unusual year. Revenue was down for most producers year-on-year in 2020 due to the effects of the coronavirus pandemic upon construction activity and demand for building materials. There were large regional differences between how countries implemented different lockdowns, how markets responded and how they bounced back afterwards. Generally, the financial effects of this were felt in the first half of 2020 with recovery in the second.

Graph 1: Sales revenue from selected cement producers in 2019 and 2020. Source: Company reports. Note: Figures calculated for Indian producers.

Graph 2: Cement sales volumes from selected cement producers in 2019 and 2020. Source: Company reports. Note: Figures calculated for Indian producers.

LafargeHolcim’s figure in Graph 1 above is a little misleading given that it has divested assets. Its like-for-like reduction in net sales was more like 6%, a similar figure to HeidelbergCement’s. Both experienced mixed results in North America and Europe but not terribly so. LafargeHolcim did relatively well in Latin America. HeidelbergCement found growth in its Africa-Eastern Mediterranean Basin region. It’s also worth noting the comparative leverage of each company: 1.4x for LafargeHolcim and 1.86x for HeidelbergCement. Both are slimming down but the latter’s ongoing divestment plan (see GCW 494) can be seen in the context of its debt to earnings ratio and the cash crisis that coronavirus threw up in 2020.

The contrast between these companies and Cemex and Buzzi Unicem is striking. Both of these benefitted from operations in the North America and parts of Europe. In Cemex’s case sales in Mexico and the US, made the difference despite falling sales elsewhere. Buzzi Unicem’s sales also held up in the US especially in the second half of the year. Europe was more mixed for both producers with growth reported in Germany but losses elsewhere.

The Indian producers tell a different story but one no less notable. Despite a near complete shutdown of production for around a month from late March 2020, the regional market largely recovered. As UltraTech Cement told it in January 2021, “Recovery from the Covid-19 led disruption of the economy has been rapid. This has been fuelled by quicker demand stabilisation, supply side restoration and greater cost efficiencies.” It added that rural residential housing had driven growth and that government-infrastructure projects had helped too. It expects pent-up urban demand to improve with the gradual return of the migrant workforce.

Unfortunately, Semen Indonesia, the leading Indonesian producer, suffered as the country’s production overcapacity was further hit by scaling back of government-based infrastructure projects as it tackled the health situation instead. Its solution has been to focus on export markets instead with new countries including Myanmar, Brunei Darussalam and Taiwan added in 2020 joining existing ones such as China, Australia and Bangladesh. The company’s total sales volumes may have fallen by 8% year-on-year to 40Mt in 2020 but sales outside of Indonesia, including exports, grew by 23% to 6.3Mt.

On a final note it’s sobering to see that the third largest seller of cement in this line-up was UltraTech Cement, a mainly regional producer. Regional in this sense though refers to India, the world’s second largest cement market. By installed production capacity it’s the fifth largest company in the world after CNBM, Anhui Conch, LafargeHolcim and HeidelbergCement. This move towards regionalisation among the large cement producers can also be seen in the large western-based multinationals as they are heading towards fewer but more selective locations. More on the world’s largest producer, China, when the producers start to releases their financial results towards the end of March 2021. Whatever 2021 brings, let’s hope it’s better than 2020.

Japan/Indonesia: Taiheiyo Cement says that its board has approved and concluded its deal with Semen Indonesia to buy a 15% stake in its subsidiary Solusi Bangun Indonesia (SBI) for around US$220m. As part of the agreement, SBI’s Tuban plant will increase its export capacity by building a new jetty and silos. It will then export 0.5Mt/yr of cement to Taiheiyo Cement’s subsidiary in the US. The Japanese cement producer said that is focusing on markets in South-East Asia as part of its sustainable business development strategy in response to projected long term declining cement demand in Japan.

Indonesia: Subhan has been appointed as the managing director of Semen Gresik. This follows his management of Semen Tonasa, another subsidiary of Semen Indonesia, from 2017 to 2020, according to the Antara news agency. Previously, he was the finance director of Semen Tonasa and head of its accounting department. He originally started working for the cement producer in 1998. Prior to this he worked for Humpus Group. Subhan holds degrees in accounting and management from the Hasanuddin University in Makassar.

Indonesia: Semen Indonesia subsidiary Semen Padang’s cement and clinker exports totalled 1.6Mt in 2020. Indonesia Government News has reported that the company said that it exported 0.2Mt of cement and 1.4Mt of clinker throughout the year. The main markets for its products were Bangladesh, China, Malaysia, Myanmar, the Philippines, Australia, the Maldives and Sri Lanka.

Semen Indonesia group senior export sales manager Fifit Abriyanto said, “There are two types of cement that we export, namely ordinary Portland cement (OPC) Type I grade 52.5N and OPC Type I grade 42.5N."

Indonesia/Japan: Taiheiyo Cement and Semen Indonesia have finalised a collaboration agreement with the aim of building a comprehensive partnership, including consultations on promotion and sale of cement and clinker. Taiheiyo Cement said, “The business alliance is for business collaboration and research and development of cement, resources, environment, building materials and more.”

In accordance with the agreement Taiheiyo Cement will buy shares in Semen Indonesia’s subsidiary Solusi Bangun Indonesia, formerly Holcim Indonesia. The deal is expected to be completed in early 2021. In April 2020 Taiheiyo Cement agreed to buy a 15% stake in Solusi Bangun Indonesia for between US$186m and US$232m.

Indonesia: Semen Indonesia has signed a memorandum of understanding with rail freight company Kereta Api Indonesia (KAI). Indonesia Government News has reported that the memorandum covers a planned increase in cooperation on rail-based transportation and medium and long-term land leases, the conduct of joint studies into railways and infrastructure and the development of other forms of potential cooperation.

President director Hendi Prio Santoso said, “This cooperation is a synergy to complement each other and provide the best results for both parties. Through the synergy that exists today, it is hoped that it can be more optimal in taking advantage of every opportunity, so that it can further contribute to the company, Badan Usaha Milik Negara (BUMN) and the Indonesian nation.” He added, “Today is the first step in a joint commitment. Hopefully, this cooperation can run smoothly and in accordance with our goals, expectations and planned target time.”

Indonesia: The La Tofi School of Corporate Social Responsibility (CSR) has named Semen Indonesia as the winner in three categories at the Nusantara CSR Awards 2020. Indonesia Government News has reported that the three categories are: Health and Economic Assistance for Emergency Management of Covid-19, Leaders Inspiring CSR Practices and Community Involvement in Handling Waste.

General manager of CSR Edy Saraya said that the Covid-19 outbreak requires “integrated countermeasures, including the involvement of all components of society.” He added, “Through the programme implemented, we hope to help prevent and control the spread of Covid-19 and to be able to accelerate the implementation of (health protocol) adaptation of new habits. Especially for those affected by the pandemic, it can improve the economy of the community and the environment around the operational area."

Australia/Indonesia: Semen Indonesia subsidiary Semen Padang says that it has dispatched a 25,000t batch of cement for Australia. Bisnis News Sumatra has reported that company is targeting total shipments of 1.58Mt to the country in 2020.

Senior manager of export sales Fifit Abriyanto said, “We are building connections with new customers. We already exported 35,000t of clinker to Bangladesh in September 2020.”

Indonesia: Semen Indonesia has said that it expects a 14% year-on-year decline in domestic cement demand to 50Mt in 2020 from 58Mt in 2019. The Jakarta Post newspaper has reported that the coronavirus outbreak was the primary cause of a 7.7% first-half decline in cement consumption to 27Mt from 29Mt.

Marketing and supply chain director Adi Munandir said, “Our projection is based on the delay in private construction projects and the government’s infrastructure development as a result of the Covid-19 crisis. This has caused demand to slump by 8.8% in July 2020, and we expect this slump to continue to the end of the year.” He noted the retail housing market as a potential sales boost, saying, “We saw an uptick in cement bag sales during the first half of 2020, as home renovations rose due to the pandemic.”