AKR Corporate Presentation 1st Half 2015 Results

Transcription

1 AKR Corporate Presentation 1st Half 2015 Results August

2 Agenda 1. Discussion on 1H 2015 performance 2. AKR strategies for sustainable growth 3. Long term growth opportunities Retail deregulation Java Integrated Industrial Port Estate (JIIPE) 4. Corporate Information & appendix 2

3 Overview of AKRA Company Description Founded in 1960s as chemicals trading business in Surabaya, PT AKR Corporindo Tbk ( AKRA ) today is one of Indonesia s leading distributors of basic chemicals and petroleum products. Provides comprehensive supply chain solutions through its extensive network. Largest national private distributor of petroleum products to industrial customers and operates retail stations across major islands. Listed in the Indonesian Stock Exchange in 1994 ; Well recognised for Good Corporate Governance with experienced management and controlling shareholders. Self Propelled Oil Barge Storage Tank & Trucks Retail Petrol Station 3

4 1H 2015: Key Messages 1. We have delivered stronger financial performance during 1H 15 continuing on Q1 15 performance. 2. Significant improvement in overall margins during the past 6 months; Petroleum volumes increased further. 3. Maintaining a strong capital structure; Improvement in balance sheet & working capital ratios. 4. Resilient business model delivering a sustainable return despite turbulent market conditions. 5. Downstream petroleum deregulation in Indonesia presents growth opportunities. 6. Long Term Growth presented by JIIPE : Project development on track Poised for qualitative growth with a recurring income model 4

5 President Director s statement on 1H 15 results It is very satisfying for me to report that despite Indonesia s economic growth slowing down, AKR reported a very strong performance. A 40% decline in oil prices year-on-year resulted in lower selling prices for petroleum distribution. AKR could offset this with a growth in petroleum volumes and maintaining/improving margins. Deregulation of petroleum downstream market in Indonesia has resulted in a significant change in market conditions both for industrial and retail consumers and our company is realigning to meet these opportunities said Haryanto. During the first half the Company recorded sale of industrial estate land of Rp128 billion from the hand over of the industrial estate land to its customers in Java Integrated Industrial Port Estate ( JIIPE ). Mr. Haryanto Adikoesoemo President Director PT AKR Corporindo Tbk The net profit of the Company for the 6 months ended 30th June 2015 was Rp 605 billion, a 61% increase from Rp 376 billion during the same period last year. The company reported improved margins with gross margin of 11.2%, operating margin of 7.7% and net margin of 5.9% 5

6 Net income growth 61% Income Highlights In b IDR 1H H 2014 % Revenue (9%) Gross profit % 11,2% 7,1% Operating profit % 7,7% 4,4% Net Income % 5,9% 3,3% EBITDA % 9,3% 5,7% ROA * 7,8% 5,1% ROE * 21,2% 15,3% * annualised b IDR +61% 605 b IDR 1H H H 2015 Highlights Record Growth in Net Profits 6 M 2015 compared to last year Volume growth of 24% in Petroleum sales offsets 40% yoy lower oil prices Significant margin growth. Overall expenses under control; 6

7 Segment wise Revenue 6M 2015 vs 6M 2014 Revenue by Segment In Billion IDR Petroleum Segment (in b IDR) 1H H 2014 Petroleum Basic Chemicals Logistic services & others Manufacturing Industrial estate 128 TOTAL REVENUE ,000 8,000 6,000 4,000 2,000 7,563 8,894 H1'15 H1'14 Industrial Estate Logistic & Others Manufacturing Basic Chemicals ,000 1,500 1,000 1,770 1, H1'15 H1' H1'15 H1' H1'15 H1' H1'15 H1'14 7

8 Quarterly Profit trends : Record Quarter Gross Profit Trend (Rp billion) Net Profit Trend (Rp billion) H Over 50% growth in operating profit and net profit compared to same quarter last year 8

9 Strong Balance Sheet In Rp bn 1H 2015 Highlights Healthy cash balance of over 1.2 trillion IDR Capex was 151 bidr in 1H 2015 Short term bank loan reduced by over 40% improving the gearing of company 9

10 Financial Ratios Highlight AKR s operational and financial highlights UOM June'15 Dec'2014 Profitability Gross margin % 11.2% 7.7% Operating margin % 7.7% 4.7% Net margin % 5.9% 3.6% Balance Sheet Ratios * Return On Asset % 7.8% 5.5% Return On Equity % 21.2% 15.0% Total asset turnover x Receivable period days Inventory period days Payable period days H 2015 Highlights All profitability ratios show significant growth Net gearing ratio improved from 0.6 at end of 2014 to 0.4 at end of 1H 2015 due to reduced shortterm bank loan. Leverage Current ratio x Asset / equity x Net gearing x *Annualised 10

11 Positive Operating Cash Flow In b IDR 1H H 2014 Receipts from customers Payment to suppliers & opex (10.738) (11.795) Operating cash flow Land acquisition & development related (547) (333) Interest income Interest expense (64) (56) Taxes (164) 252 Net cash flow from operating activities Capex net of residual sales (151) (368) Investment in associates (133) Investment by Minority 430 Others Net cash flow from investing activities 279 (501) Short term loans net of repayment (537) (560) Long term loans net of repayment 113 (146) MSOP Dividend (118) (58) Net cash flow from financing activities (440) (704) Effect of forex changes (107) 119 Net change in cash Beginning cash balance Ending cash balance

12 Maintaining a low gearing profile <1.0x Gearing ratio trend 0,5 0,4 0,5 0,9 0,8 0,7 0,9 0,6 0,5 0,4 3M'13 6M'13 9M'13 12M'13 3M'14 6M'14 9M'14 12M'14 3M'15 6M'15 Short term loans Bonds Long term loans in Rp Bn 1H 2015 Dec'2014 Short term loan Current maturities Total Short term loan in Rp Bn 1H 2015 Dec'2014 A Series maturing B Series maturing Total Bonds Total Debt in Rp Bn 1H 2015 Dec'2014 GROSS DEBT Less : Cash held NET DEBT Equity GEARING (x) 0,4 0,6 in Rp Bn 1H 2015 Dec'2014 JTT Others Total long term loan 1,

13 Resilient business model delivering sustainable long term value Existing Business Long term prospects Petroleum Distribution model with minimum risk Pass through mechanism based on MOPS+Markup Margins improving with cost efficiency Risk management through forex hedging Chemicals Supply basic raw material to Industrial customers Growth driven by Indonesian GDP Commision based business model stable margins Long term relationship with principals & customers Logistic & Mfg Third part logistic services for liquid/bulk JTT : Largest Independent storage terminal in Indonesia China river ports focussed on China s domestic growth Manufacturing segment to grow in line with consumer demand Retail Petroleum Increase retail outlets due to low penetration of petroleum stations in Indonesia Product strategy : Introduce new products like RON 90/92 Grow volumes in liberalised market CONSTANT IMPROVEMENT WITH STRONG STABILITY JIIPE Industrial & Port estate an integrated platform Significant value creation for shareholders through land sales Lowering logistic cost & providing competitive energy Sustainable Recurring income 13

14 Consolidated Profits : Track record of financial performance Sales & Revenues (Rp billion) Gross Profit (in billion) M M Net Profit (in billion) Earnings per share (Rp) 300** * M * M15 * Excluding extraordinary gain from divestment of Sorini **Annualised * 14

15 Interim Dividend of Rp100 per share declared on 29/7/2015 Year Cash Dividend Per Share Dividend Payout Above 30% Net Income (Rp billion) Total Dividend (Rp billion) Dividend Payout Ratio % % % ,293.4 * 1, % % % % ** - *Including extraordinary gain on divestment of Sorini **Interim Dividend The schedule of interim dividend distribution is as follows: No Activities Date 1 Cum Dividend in Regular and Negotiable Market August 7, Ex Dividend in Regular and Negotiable Market August 10, Cum Dividend in Cash Market August 12, Ex Dividend in Cash Market August 13, Recording Date for the Interim Dividend August 12, Payment of Interim Dividend August 21,

16 Petroleum Distribution : Track record of delivering fuel to Industrial & Retail customers Segment Wise Breakdown 2015 Total Petroleum Revenues (Rp bn) Retail Distribution 15% Coal Mining Industry 30% General Market (including Industrial) 25% Power 12% Non-Coal Mining (incl. Gold mining, nickel etc) 18% Stable business model, effective risk management and stable margin Growth in 2015 is primarily driven by expanding customer base in industrial, mining and power sectors Volumes in 1H 15 recorded significant growth offsetting the decline in Petroleum price Indonesian government s policy to reduce subsidy and deregulation of downstream sector will further grow and encourage entry into the retail segments 16

17 Basic Chemicals Distribution : Commision based model Stable margins Principals Basic Chemicals Sales (Rp bn) Asahimas Chemicals Solvay USA Established and maintain long-term relationship with principals and customers Commission based business model: stable margins, profitable business Industries served include textile, pulp and paper, fertilizer, pharmaceutical, chemical, plywood, food, consumer goods etc Basic chemical products include caustic soda, soda ash, methanol, hydrochloric acid, PVC resin, sulfuric acid, sodium hypochlorite 17

18 Medium to Long Term Growth Opportunities 1. Petroleum Deregulation 2. JIIPE 18

19 Downstream petroleum deregulation in Indonesia 1980 s & onwards Imports Fuel subsidy (Rp. trillion) The reduction in subsidy this year will be used to boost infrastructure spending Declining production resulted in Indonesia importing a significant volume of refined product Consumption of refined petroleum due to growing economy and increase in motor vehicles Classification Gasoline (RON88/90/92) A. Subsidised fuel ---- B. Special fuel. C. General fuel. Subsidy Type Diesel (Solar/HSD) Kerosene In 2005 Indonesia deregulated the industrial fuel Historically Indonesia subsidised its fuel resulting in a huge part of budget consumed in subsidy A.Fixed price B.Fixed Subsidy C.Distribution compensation Source : MEMR,

20 AKR Retail : Roll out of petrol stations AKR is the only private company retained by the government to distribute subsidized fuel and has been allocated 645,000 KL consisting of 625,000 KL diesel (gas oil) and 20,000 KL gasoline (Mogas 88) for the year The company has allocation to add 38 petrol outlets during the year By the end of 2014, AKR has constructed 131 petrol stations that consists of 63 SPBKB (motorist) and 68 SPBN (fishery) outlets. Actively considering introduction of Gasoline (RON 90/92) at AKR Petrol stations Number of AKR Petrol Stations 31 Number of Petrol Stations to distribute Subsidized petroleum nationswide Region Java Sumatera Kalimantan Bali 2 2 Sulawesi Total

21 AKR Retail Petrol Stations Motorist Petrol Station Cempaka 1 Motorist Petrol Station - 2 AKR SPBN Fisherman s Petrol Station 21

22 Expansion of storage facilities & Infrastructure : To Support growth Storage tank capacity ( '000 KL) Storage tank capacity as on May Logistic Facilities Sea ports in Indonesia River ports in Indonesia River ports in China Total/Capacity 9 ports 6 ports 5 ports HUBS / SEA PORTS SEA PORTS RIVER PORTS Region (in 000 KL) Capacity as on May 15 Additional ( ) 2018 plan capacity Java & Bali Sumatera Storage Tanks Terminal 599,600 KL Kalimantan Self-Propelled Oil Barges & Vessels Warehouses Trucks Harbour Mobile Crane 12 units 25 units +/- 350 units 8 units Sulawesi Jakarta tank terminal (JTT) Total

23 Expansions PT Jakarta Tank Terminal ( JTT ) Jakarta Tank Terminal Tanjung Priok, Jakarta JTT Terminal Terminal Capacity Current Capacity Additional Planned Capacity Total KL 250,000 KL 200,000 KL 450,000 KL Capacity Utilisation 23

24 Expansions continued Bitung Terminals Medan Additional Capacity 30,500 KL Current Capacity 11,100KL Additional Capacity 15,000 KL Total 26,100 KL Muara Teweh Surabaya Tanjung Perak Additional Capacity 10,000 KL Current Capacity 60,790 KL Additional Capacity Total 70,000 KL 130,790 KL 24

25 Java Integrated Industrial & Port Estate ( JIIPE ) 25

26 JIIPE : Delivering Logistic & Energy solutions KEY OBJECTIVES of JIIPE Contribute to lower logistic cost of Indonesia Provide competitive energy Support Indonesian companies to be global suppliers utilizing JIIPE s deep sea port Indonesia has highest logistics cost as % of GDP in South East Asia. Jokowi Widodo has asked all stakeholders in the seaport industry to apply an integrated shipping system and SEA TOLL across the archipelago to reduce logistics costs "If you build the port don t build the ones which are not significant in size, such as those that are hectares, because in reality what we need is ones that are of 200 hectares of port area plus industrial area of at least 2,000 hectares that are integrated and has port facility, power plant, an industrial area, so the distance between the industrial area and port will become close and very efficient, "Jokowi said. Source : Voaindonesia.com 26

27 JIIPE : Public-Private Partnership ( PPP ) PT AKR CORPORINDO Tbk A public listed company, leading in integrated logistic services and bulk chemical & energy distribution in Indonesia PT PELABUHAN INDONESIA III A state owned enterprise handling all the public ports in Central Java, East Java, Bali, South Kalimantan, Central Kalimantan and Nusa Tenggara 99.99% 96.84% PT USAHA ERA PRATAMA NUSANTARA Logistic services provider PT BERLIAN JASA TERMINAL INDONESIA Forwarding services provider at Tanjung Perak Port Surabaya 60% 40% 40% 60% 27

28 Strategic location with Inter model transportation facility : Master plan for JIIPE ZONING AREA Gresik MARK Z O N E AREA ( Ha ) PERCENTA GE (%) RESIDENTIAL ESTATE INDUSTRIAL ESTATE 1, Stage 1 SEA PORT ESTATE TOTAL 2, Jetty 28

29 Progress of Industrial Estate (BKMS) May 2012 : MOU signed with Pelindo III Dec 2012 : Issuance of AKR IDR Bonds ( A Series and B Series with tenor of 5 yrs & 7 yrs respectively) : Obtaining necessary licenses & Permits, Completion of Master plan by Nippon Koei : Acquistion of over 1000 Ha of land, Land upgrading & infrastructure development for stage I. First Tenant construction progress June-Dec 14: Launch of Marketing for Stage I Signing of Syndicated bank facility for Stage I 1H 2015 : Revenue recognized up to 30th June 2015 is Rp 128 billion : Complete development and land sales of Stage I (800 Ha) : Develop utilities and supporting infrastructure : Gas Fired / CFPP (Coal fired power plant) Rail terminal Water supply Waste management facility etc. 29

30 Progress of Port Estate (BMS) : Appointment of contractor (Van Oord) for land fill & seashore protection Sep 2014 : Stage 1 (70 Ha) reclamation completed Apr 2015 : Completion of 430mX14m port bridge & access road of 1050m May 2015 : Completion of 530mX14m Trestle & 250mX30m Jetty : Stage 2 & Stage 3 (~300 Ha) Trestle Develop energy terminals such as - Coal terminal - Gas terminal - General cargo terminal - Container terminal - conveyor system and piping system Jetty 30

31 Long Term Growth presented by JIIPE: Recurring Income Model Energy Gas (New) PT. EMS Structure Recurring Income (New) Energy & Recurring Income Joint Venture - Power Plant - Oil & Gas - Terminals - Water Supplies - Coal Terminals - Railway Depot - Port Operations Real Estate Sales Opportunity to enter into new business : Gas distribution Distribution of energy Distribution of raw materials Providing logistic solutions like warehousing Providing railway terminal related services Multipurpose Port terminals Providing other utilities Water supplies Waste water treatment Overall a Superior and Sustainable Return to Stakeholders 31

32 Company Information 32

33 Shareholders with track record of delivering returns Majority Shareholders Source: Financial Times Shareholders per July 31, 2015 Shares Ownership PT Arthakencana Rayatama 2,302,390, % Management 28,270, % Public 1,582,976, % Total 3,913,637, % Soegiarto Adikoesoemo Chairman & Founder Haryanto Adikoesoemo President & Group CEO 33

34 Well Recognized for Corporate Governance 1 st Rank Annual Report Awards 2014 for category Private Nonfinancial Listed Asia s Best CEO: Haryanto Adikoesoemo Asia s Best CFO Suresh Vembu Best Investor Relations: PT AKR Corporindo Tbk by Corporate Governance Asia Excellence Recognitions Awards 2015 AKR Corporindo received Bisnis Indonesia Award 2015 under the category of Best Company operating in trade services and investment sectors Asia s Icon on Corporate Governance 2014 by Corporate Governance Asia AKR's Corporate Secretary, Harryati Utami, received Best Company Secretary Award at 2nd Asian Company Secretary Award of The Year 2014 held by Corporate Governance Asia on December 10, 2014 in Hong Kong. 34

35 Appendix 35

36 Overview of Indonesia s Petroleum Sector : Increasing consumption production not keeping pace ,2 Indonesian Oil reserves In 000 million bbl 4,7 3,7 3, Indonesian refinery capacity In 000 bbl/day Indonesian Crude production & Oil products consumption In 000 bbl/day Source : BP Statistical review of World energy 2014 Production Consumption 36

37 Recent Development in Downstream Petroleum Sector Impact of Subsidy Removal Prior to the subsidy cut, the consumption breakdown between subsidized and non-subsidized fuel was 60% / 40% respectively out of 78 million KL total consumption. This proportion has shifted to 22% / 78% post-removal of subsidy since RON88 is no longer subsidized by the government. Based on the 2015 revised state budget, the total expenditures for fuel subsidy has been revised to Rp 65 trillion from the original Rp 276 trillion since the fuel subsidy is now only applicable to diesel fixed at Rp 1,000/litre. All the downstream petroleum players are on the level playing field. Pricing Mechanism Under Jokowi s new fixed-subsidy system, the prices of Mogas and Diesel are no longer capped, but instead are evaluated and adjusted every month in accordance with fluctuations in the exchange rate and global oil prices. Therefore, despite petroleum movement and depreciation of Rupiah, the price of premium will remain at Rp7.400/litre New Products Indonesian government has not adjusted the pump prices Pertamina has introduced new product Pertalite in selected areas and targets movement of 30% of retail customers from RON88 to RON90/91 65,2 Petroleum Downstream Market (million KL) 71,4 75,0 77,3 78,5 79,9 27,0 29,7 30,0 31,0 32,0 38,2 41,7 45,0 46,3 46,5 62,0 17, Subsidized Non-subsidized Estimate Figure of Non-subsidized for FY

38 Research Analyst Consensus on AKRA No Brokerage House Research Analyst Recommendation Target Price (Rp/Share) 1. Macquarie Securities Lyall Taylor Neutral Morgan Stanley Wee-Kiat Tan Overweight Citi Research Salman Ali Neutral Credit Suisse Ari Jahja Neutral Deutsche Bank Nicholas Nugroho Buy UOB Kay Hian Securities Franky Kumendong Buy Samuel Sekuritas Indonesia Todd Showalter Buy CIMB Securities Erindra Krisnawan Add Maybank Kim Eng Isnaputra Iskandar Buy Trimegah Sekuritas Willinoy Sitorus Buy PT Valbury Asia Securities Budi Rustanto Buy Panin Sekuritas Fajar Indra Buy Bahana Securities Arandi Nugraha Buy MNC Securities Victoria Venny Buy

39 Investor Relation Contacts V. Suresh Director/Group CFO T: E: Erik Budiman Head of Investor Relations T: ext 303 E: PT AKR Corporindo Tbk Wisma AKR Lantai 8 Jl. Panjang No. 5 Kebon Jeruk Jakarta Barat Indonesia 39