14 06 09 Q1 Presentation Final sm
PT DSN Tbk Q1 ‘14 Results Update
PT Dharma Satya Nusantara Tb k Board of Dire ctors
DSNG Daily Share Price (rp /share ) & Trad ing Volume (share s)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
14-Jun-13
14-Se p -13
14-De c-13
14-Mar-14
From b ack le ft: Jose p h Te d jasukmana, De p uty Pre sid e nt Dire ctor; Ricky
Bud iarto, Dire ctor; FX Bud i Se tio Wib owo, Ind e p e nd e nt Dire ctor; Djojo
Boe ntoro, Pre sid e nt Dire ctor & CEO ; Timothe us Arifin C., Dire ctor; Efe nd i
Sulise tyo, Dire ctor; And rianto O e tomo, De p uty Pre sid e nt Dire ctor & CFO
DSNG Share Price vs. IDX & Ag ri Ind e x
1.8
DSNG
Share hold e rs
(%)
1.6
1.4
Ag ri
O e tomo Family
29.7
1.2
The od ore Rachmat & Family
27.4
1.0
Liana Salim Lim & Family
10.3
IDX
0.8
Sub ianto & Family
0.6
0.4
Commissione rs & Dire ctors
0.2
O the rs & Pub lic
0.0
14-Jun-13
14-Se p -13
14-De c-13
14-Mar-14
7.5
9.8
15.6
as of 31 De ce mb e r 2013
DSN’s primary businesses grow and process domestic
agricultural products for global consumption
he DSN Group was originally established as a wood products
manufacturer. We identified an opportunity to expand into the
plantation sector in 1997, building upon our established
relationships within the local communities. Both of these
business segments are showing growth, but the palm oil business
is growing, and will continue to grow, at a higher rate.
Palm oil accounted for 64% of total revenue in 2013, up from
59% in 2012, and 70% of Q1 2014 revenue driven by recently
higher CPO average selling prices.
Re ve nue
Q 1 '14
2013
2012
2011
2010
Palm O il
70%
64%
59%
55%
55%
Wood Prod ucts
30%
36%
41%
45%
45%
Crude Palm Oil
Palm Kernel
Palm Kernel Oil
Block Board
Engineered Doors
Engineered Floors
Our history of expansion has accelerated in
recent years, with the acquisition of eight new oil
palm estates since 2010.
We also took a controlling interest in Tanjung
Kreasi Parquet Industry, a manufacturer of
globally branded engineered flooring in 2012.
hese subsidiaries provide long-term
opportunities for expansion in both of our core
businesses.
O wne rship /
Ye ar
Control (%)
Acq uire d
DAN
DIN
SWA
PWP
100.00%
100.00%
100.00%
99.70%
1997
1997
2001
2004
O il p alm
O il p alm
O il p alm
O il p alm
p lantation
p lantation
p lantation
p lantation
PT De wata Sawit Nusantara
PT Dharma Intisawit Le stari
PT Ke ncana Alam Pe rmai
PT Karya Prima Ag ro Se jahte ra
DWT
DIL
KAP
KPS
99.90%
99.90%
99.50%
99.99%
2007
2009
2010
2011
O il p alm
O il p alm
O il p alm
O il p alm
p lantation
p lantation
p lantation
p lantation
PT Prima Sawit And alan
PT Dharma Pe rsad a Se jahte ra
PT Mand iri Ag rotama Le stari
PT Rimb a Utara
PSA
DPS
MAL
RUT
99.17%
99.17%
99.98%
99.90%
2010
2010
2012
2012
O il p alm p lantation
Land Bank
Land Bank
Land Bank
PT Putra Utama Le stari
PT Dharma Buana Le stari
PUL
DBL
99.80%
90.00%
2012
2013
Land Bank
Land Bank
Wood Prod ucts PT Tanjung Kre asi Parq ue t Ind ustry TKPI
PT Nityasa Id ola
NI
65.00%
92.50%
2012
1989
Eng ine e re d flooring
Timb e r p lantation
Ind ustry
Comp any
AKA
Palm O il
PT Dharma Ag rotama Nusantara
PT Dharma Intisawit Nug raha
PT Swakarsa Sinarse ntosa
PT Pilar Wanap e rsad a
2
Line of Busine ss
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our performance and long-term prospects consistently
demonstrate several key
ey investment themes
We saw growth across a broad range of metrics
for 2013. FFB production was up 22% despite
slow-downs across the sector. We expect this
trend to continue, supported by growth in
planted and mature hectares, output per hectare,
milling capacity and CPO sales in the years to
come.
ffb y-o-y
unplanted ha
he locations of our
estates and mills, as well
as our management
practices, allow us to
maintain a highly
competitive cost
position, with a 2013
cash cost per ton of
Rp3.76 million.
Our current unplanted
landbank includes 114,000
hectares spread across the
provinces of Kalimantan and
Papua, which we expect will
prove sufficient to support our
planting schedule for the next
seven to eight years.
Efficient:
cpo cash cost// t
We have received RSPO certification at three of
our five mills, and are in advanced stages of
certification for all remaining mills.
Environmental certification is also critical to the
global distribution of our wood products.
certified
Disciplined and consistent implementation of
appropriate agronomic practices allows DSN to
achieve industry-leading productivity in FFB
and CPO, with 6.4 tons of CPO per hectare
produced in 2013.
cpo/ ha
Q 1 2014 Re sults Up d ate
3
We began in palm oil in 1997 with the acquisition of 19,766
ha in East Kalimantan & have been expanding
p
g ever since
We are a fully integrated CPO producer, with 14
estates spanning 172,533 hectares, located across
Kalimantan and in Papua. Nine estates have
already been planted to some degree, with 6
estates already producing FFB.
In total, we have 58,755 hectares of nucleus
estates planted by the end of Q1, 2014, with an
additional 13,254 hectares of plasma. he areas
not yet planted provide us with an additional
114,000 hectares for future expansion in both
nucleus and plasma operations.
172,500
hectares
Given our recent acceleration in planting activity,
we exhibit a very young age profile for our planted
area. Of our total planted area, 45.8% is
considered Young Mature and 18.2% remains
Immature. While these proportions are likely to
decline somewhat, we expect nearly 60% of our
enlarged planted area to be either Immature or
Young Mature by 2016.
14
estates
5
CPO mills
hese estates are supported by 5 CPO mills with
an aggregate capacity of 2 million tons per year,
along with a newly completed Palm Kernel Oil
mill. As we look to keep pace with the
increasing productivity of our young estates,
additional CPO mills are currently under
development.
2,000,000
200 tons/day
tons/annum
PKO mill
4
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our estates are clustered across East, West and Central
Kalimantan, with planting to date concentrated in the East
Total & Plante d He ctare s b y Cluste r
Q 1 2014
Pap ua
North
Kalimantan
We st
Kalimantan
East
Ce ntral
Kalimantan
Kalimantan
0
10
20
Planted / Unplanted
Conve rsion of land rig hts status p rog re sse s in line with our
inte nd e d p lanting p rog ram. Mature e state s are HGU:
Land Rig hts Status
Land Are a ('0000 Ha)
Estate
Total
Plante d Availab le
-
HGU
Panitia
Ijin
B
Lokasi
DBL
16.7
16.7
DIL
8.0
1.6
6.3
SWA
16.9
15.3
1.6
DAN
10.0
9.0
1.0
40
50
60
= 5,000ha
In total, our nucleus estates incorporate 58,755
planted hectares, of which 48,038 are already
mature. Our most developed cluster, with 5
estates, is near the center of East Kalimantan,
while our next largest producing estate lies in
Central Kalimantan.
Our three largest estates, SWA, DAN and DIN
are fully comprised of mature trees, with limited
additional area available for new planting.
Subsequent expansion will increasingly focus on
Central and West Kalimantan, with Papua an
option still several years out.
DIN
9.8
8.7
1.0
DWT
13.6
9.9
3.7
KPS
6.2
4.7
1.5
MAL
15.0
-
15.0
RUT
12.7
-
12.7
KAP
14.9
0.8
14.1
PSA
10.6
0.3
10.4
DPS
6.1
0.0
6.1
PUL
17.0
-
17.0
PWP
15.2
8.4
6.8
172.5
58.8
113.8
Q 1 2014 Re sults Up d ate
30
38%
8%
54%
5
Our planting history has established a young age profile that
will continue to deliver productivity growth in coming years
DSN Planting History (‘000 ha)
Mid -Ye ar vs. Ye ar-End Stand ard
In 2011, the Comp any switche d from the common Ye ar-End Stand ard (YES) to a Mid Ye ar Stand ard (MYS) ap p roach to e stab lishing the ag e of our p lantations for accounting
p urp ose s.
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
In the YES ap p roach, all tre e s p lante d d uring a g ive n cale nd ar ye ar will b e consid e re d 1ye ar old at the close of that ye ar. O n ave rag e , howe ve r, the se tre e s will have b e e n in the
g round for roug hly 6 months.
With the MYS ap p roach, tre e s p lante d in H2 of the p re vious ye ar and H1 of the curre nt
ye ar will b e consid e re d 1-ye ar old at the close of the ye ar – a more accurate re fle ction
of the ave rag e amount of time the se tre e s have b e e n in the g round .
We have p re se nte d our p lanting history with an H1/H2 b re akd own, should you care to
re -ap p ly the YES ap p roach.
All of the d ata p re se nte d within our financial re p orts and this p re se ntation make use of
the MYS from 2011 to the p re se nt.
We added 5,800 hectares of nucleus in 2013, out of a total of 9,170 hectares
planted during the year. In Q1 2014, we have planted an additional 893
hectares of nucleus and 588 hectares of plasma.
We intend to maintain the current pace of nucleus expansion over the next
three years, with additional areas of 6,400, 7,000 and 7,700 hectares
respectively.
0
2
4
Planted / Planned
6
In total, our 58,755 hectares of planted nucleus were an average age of 7.6
years at the end of Q1 2014. his will drop to 7.0 years by year-end based
upon our proposed our planting schedule.
8
hrough 2016, our average age is expected to increase slowly to 7.5 years.
= 500 ha
MYS Conve rsion of Planting Sche d ule to Ag e Profile
Planting Sche d ule
Ye ar
FY
H1
1,151
-
1997
2,987
704
1998
725
441
1999
1,218
71
2000
508
428
2001
2,181
992
2002
-
-
2003
3,171
535
2004
3,278
664
2005
4,694
1,365
2006
3,589
1,231
1 231
2007
7,596
3,247
2008
4,971
1,243
1 243
2009
6,580
2,292
2010
4,289
995
2011
2,519
1,100
2012
2,607
1,378
1 378
2013
5,799
2,658
1996
Ag e Profile
H2
1,151
2,283
2 283
284
1,147
1 147
80
1,189
1 189
2 636
2,636
2,614
3,329
3 329
2,358
4,349
4 349
3,728
4,288
4 288
3,294
1,419
1 419
1,228
3,141
Total Ha
Ag e *
1,855
18
2,724
17
355
16
1,575
15
1,072
14
1,189
13
535
12
3,300
11
3,979
10
4,560
9
5,605
8
5,592
7
6,020
6
5,283
5
4,394
4
2,797
3
3,886
2
-
1
7.0
Years
by the end 2014
* As of ye ar-e nd 2014
6
PT Dharma Satya Nusantara Tb k (DSNG.JK)
42% of our planted area is classified as Young M ature, with
expected annual FFB yield growth of between 8% -100%
FFB Yie ld (t/ha)
35
Ag e Profile (‘000 ha)
Young
Mature
Immature
Prime Mature
14
O ld Mature
30
12
25
10
20
8
Class I
Class II
Class III
15
6
10
4
5
2
0
0
0
2
4
6
8
10
12
14
We typically evaluate our performance and productivity against
a set of external standards, based upon controlled growing
conditions over the lifecycle of an oil palm tree.
Summary Maturity Profile (Mid -Ye ar Stand ard ), in %
Mature
Immature
Young
Prime
O ld
Total
2010
43.0
38.3
18.7
-
57.0
2011
34.6
46.6
18.8
-
65.4
2012
26.3
49.5
24.2
-
73.7
2013
24.6
46.8
28.7
-
75.4
2014
25.2
41.9
32.9
-
74.8
2015
28.7
33.8
34.9
2.6
71.3
2016
30.7
28.3
35.2
5.8
69.3
2017
23.5
27.9
42.3
6.2
76.5
2018
15.1
29.7
47.0
8.2
84.9
2019
5.9
33.3
51.2
9.6
94.1
2020
-
35.6
53.3
11.1
100.0
Assuming no p lanting afte r 2016
DSN Maturity Classifications are not unive rsally share d , b ut b e st
re fle ct our e xp e rie nce to d ate :
Maturity Class
Immature
Young Mature
Prime Mature
O ld Mature
18
20
22
24
26
Ag e of Tre e s
= 500 ha
Ye ar-End
16
Ag e
(Yr)
Growth
(Avg )
0-3
4-8
9-18
19+
40%
-1%
-5%
Characte ristics
No Fruit
Rap id g rowth in FFB/O ER
Stab le p rod uctivity
Ste ad y d e cline
Q 1 2014 Re sults Up d ate
Stand ard FFB Yie ld b y tre e ag e and soil class
Tre e Ag e
FFB Yie ld b y Soil Typ e (tons/ha)
(Yr)
Class I
Class II
Class III
1
2
3
0.6
0.6
0.6
4
5
6
7
8
9.0
17.0
22.5
27.0
29.0
8.0
16.0
21.0
24.5
27.0
7.0
14.0
18.0
21.0
24.5
9
10
11
12
13
31.5
32.0
32.0
32.0
32.0
28.0
30.0
30.0
30.0
30.0
26.5
27.0
27.0
27.0
27.0
14
15
16
17
18
31.5
31.5
30.0
29.0
28.0
29.5
28.5
27.5
26.5
26.0
26.5
25.5
25.0
24.0
23.0
19
20
21
22
27.0
26.0
25.0
23.5
24.5
23.5
22.5
21.5
22.5
21.0
20.5
19.5
23
24
25
26
22.0
21.0
19.5
18.5
20.5
19.5
18.5
17.5
18.5
17.5
17.0
16.5
Source : Ind one sian Palm O il Re se arch Institute
7
Our target is to achieve lab standard FFB yields
yie
on a
o
commercial scale within each of our estates
26.4
tons/ ha
in 2013
For the full year, DSN produced 1,153 thousand tons FFB from
our nucleus plantations, with an additional 88 thousand tons
coming from plasma operations. In aggregate, FFB output
increased by 22% during the year.
In Q1 2014, our nucleus estates produced 279 thousand tons
FFB, up from 244 thousand tons in the previous year. his
aggregate increase of 14% comes from higher yields (up 3.7%)
and a larger mature area (up 10.1%).
We achieved an aggregate output of 26.4 tons per hectare (based
on the Mid-Year Standard) versus 25.5 tons in the preceding
year.
Plasma yields rose by 25.1% from the same period in 2013, with
mature areas growing by 26.2% and total output up by 57.9%.
Prod uction Pe rformance
Prod uct
Pe riod
FFB
Q 1 '14
Q 1 '13
('000 t, t/ha)
2013
2012
2011
2010
8
Nucle us
%Δ
Yie ld
279
244
14
-
5.8
5.6
1,153
977
738
536
18
32
38
-
26.4
25.5
22.4
19.8
Plasma
%Δ
Yie ld
25
16
61
-
3.8
3.1
88
43
3
0
104
1,184
-
17.5
10.9
4.4
-
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our planting schedule through 2016 implies an average
10% annual growth in FFB to 2 million tons in 2020
FFB Volume (mn t)
2.0
Class II
1.5
1.0
Class III
5
0.5
0.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
= DSN Annual Nucle us Yie ld
O ur young e state s consiste ntly out-p e rform stand ard yie ld s
Our five largest estates (DAN, DIN, SWA, PWP and DWT)
FFB Yie ld (t/ha, 2010-2013)
have been comfortably higher than the standard expected yields
Immature
Young Mature
over the past four years. DSN’s estates are generally a
35
combination of Class II and Class III type soils. We have neither
Class I soil (largely found in volcanic areas such as Sumatera) nor 30
Class IV soil. As a matter of policy, we do not plant in peat soil.
Our performance is driven by a disciplined approach to standard
agronomic practices, meticulously implemented across our
planted areas. hese range from selecting the best seeds, to
formulating multiple unique fertilizer blends, to the use of cover
crops to retain soil and natural predators to control mice and
caterpillars, thereby allowing us to minimize the use of harmful
pesticides.
Stand ard yie ld curve with p lanting throug h 2016
Mature Are a
Ye ar
'000 ha
% Δ Avg Ag e
Class II
Class III
%Δ
2010
26.7
7.5
20.9
18.5
2011
32.3
21%
7.7
21.5
19.0
3%
2012
38.4
19%
8.0
21.9
19.5
2%
2013
43.6
14%
8.4
22.8
20.3
4%
2014
48.0
10%
8.9
23.7
21.2
4%
2015
50.8
6%
9.6
24.9
22.3
5%
2016
54.7
8%
10.1
25.3
22.7
2%
2017
60.4
10%
10.4
25.0
22.5
-1%
2018
67.1
11%
10.7
24.6
22.2
-1%
2019
74.3
11%
10.9
24.3
21.8
-1%
2020
82.2
11%
11.2
24.1
21.6
-1%
Q 1 2014 Re sults Up d ate
25
20
15
10
5
0
FFB/ha b y Soil Typ e
Prime Mature
0
2
4
6
8
10
Ave rag e Ag e (mature ha only)
12
14
A standard yield curve derived from our plantation age profile,
rather than simply our average age, can establish more realistic
medium-term yield expectations.
hese standards suggest average yields could continue to increase
through 2016, barring external environmental factors. At the same
time, our mature plantation area will increase from 43,644 hectares
in 2013 to 54,721 hectares in 2016 (25.4%), with subsequent
annual growth rates of 10% or better through 2020, with over
82,000 mature hectares at that time.
9
Our most developed cluster - with 5 estates, 4 CPO M ills and
56,000 ha - is nearly the size of Singapore
M ill 6
DWT
M ill 2
M ill 3
KPS
DAN
DIN
M ill 7
SWA
M ill 4
M ill 1
Existing CPO M ills
Trans - East Kalimantan Road
Planned CPO M ills
81% of our planted area, in five estates, is located in a single
contiguous area in East Kalimantan. hese 47,700 planted
hectares encompass an area nearly the size of Singapore.
Four out of our five existing palm oil mills are located within
these estates, and we expect to complete the construction of two
additional palm oil mills in 2015.
Our mill capacity is designed to accommodate annual peak
output from the associated estates. As a result, mills servicing
rapidly developing estates (such as Mill 5 in PWP) will appear to
be underutilized, and may rely on significant external FFB
purchases.
he proximity of the palm oil mills to the fruit allows us to
establish an 8-hour standard for harvest-to-mill, resulting in
minimal spoilage of FFB and lower FFA. Our redundant
capacity also minimizes disruption due to maintenance.
he cluster approach allows us to achieve efficiencies in a number
of areas:
lower transportation costs
centralization of logistics, such as housing, schools, clinics and
security
maximum use of infrastructure (mills, roads, jetties and ports)
East Kalimantan cluste r e ncomp asse s 88% of our mature are a
CPO mill cap acity is d e sig ne d for p e ak p rod uction months
Estate
Cap acity Max Monthly
Ye ar
Location Estate
(Tons/Hour) Utilization*
RSPO
Mill 1
2002
E. Kal.
SWA
90
67%
Ce rtifie d
Mill 2
2009
E. Kal.
DAN
60
101%
Ce rtifie d
Mill 3
2010
E. Kal.
DIN
60
112%
Ce rtifie d
Mill 4
2011
E. Kal.
SWA
60
110%
Aud ite d
Mill 5
2011
C. Kal.
PWP
60
96%
Aud ite d
DIL
SWA
DAN
DIN
DWT
KPS
Mill 6
2015
E. Kal.
DWT
60
KAP
PSA
DPS
Mill 7
2015
E. Kal.
KPS
60
PWP
In Prog re ss
Total Cap acity
450
*2013
10
Land Are a (Ha)
Plante d
Mature
(Q 1 '14)
(2014)
Ave rag e Ag e (Yrs)
Yie ld
Total
Mature
2013
Are a
Are a*
(t/ha)
1,625
-
0.6
-
-
15,282
9,000
8,749
9,914
4,739
15,282
8,919
8,749
7,254
2,105
13.7
7.9
7.9
4.3
3.2
13.7
7.9
7.9
5.2
5.4
30.4
25.9
28.2
22.4
12.7
793
260
9
-
1.5
1.0
1.0
-
-
8,384
5,729
4.4
5.2
19.7
58,755
48,038
7.6
8.9
26.4
* As of ye ar-e nd 2014
PT Dharma Satya Nusantara Tb k (DSNG.JK)
O ur 5 mills achieved an aggregate O ER of 24.3% last year,
y
ld of 6.4
6 4 tons per mature hectare
resulting in a CPO yield
We processed a total of 1,381 thousand tons of FFB
in 2013, 90% of which was sourced from our own
nucleus or plasma estates.
External purchases increased by nearly 120% in
order to better utilize capacity at our newest Mill 5,
servicing the PWP estate.
For Q1 2014, we processed 374 thousand tons of
FFB, up 34.8% from Q1 2013. Of that total, 82%
was sourced from our nucleus and plasma
operations.
Prod uction Pe rformance - Estate s
Fre sh Fruit Bunche s (FFB) ('000 tons)
Ye ar
Q 1 '14
Q 1 '13
2013
2012
2011
2010
Prod uce d
279
244
1,153
977
738
536
Plasma
25
16
88
43
3
0
24.3
% OER
Purchase d Proce sse d
71
18
143
65
40
26
374
278
1,381
1,052
767
542
in 2013
In total, FFB processed and CPO produced each increased by 31%
in 2013, yielding a stable Oil Extraction Rate (OER) of 24.3%.
Palm Kernel production rose 21% to 43,000 tons in 2013. Sales
declined, however, to 12,000 tons as our newly commissioned Palm
Kernel Oil mill began to utilize this output directly.
Prod uction Pe rformance - Mills
Prod uct
Pe riod
CPO
Q 1 '14
Q 1 '13
('000t, O ER)
For Q1 2014, we achieved an OER of 23.6%, in line with the
previous year’s Q1 performance. Palm kernel production rose 24.3%
to 11 thousand tons, while PKO output reached 3.8 thousand tons,
up from 468 tons in 2013.
90% o f o ur CPO pro ductio n has
FFA levels belo w 3%. This “ Super
CPO ” can co mmand a premium
o f 1-4% versus standard CPO .
%Δ
Yie ld
88
66
35
-
23.6%
23.7%
336
257
189
134
31
36
41
-
24.3%
24.4%
24.6%
24.7%
Q 1 '14
Q 1 '13
11
9
24
-
2.9%
3.2%
2013
2012
2011
2010
43
36
24
16
21
50
50
-
3.1%
3.4%
3.1%
2.9%
Q 1 '14
Q 1 '13
3.8
0.5
703
-
41.9%
-
13.5
-
42.4%
2013
2012
2011
2010
In our first year of operation, our PKO mill produced 13,500 tons,
and generated sales of 9,400 tons of PKO.
PK
('000 t, KER)
PKO
('000 t, PKO ER)
2013
Nucle us
*Nucle us O nly
Our CPO production quality remained exceptional
over the course of 2013, with aggregate Free Fatty
Acid (FFA) levels of just 2.65%.
FFA
Ye ar
Q 1 '14
Q 1 '13
2013
2012
2011
2010
Q 1 2014 Re sults Up d ate
(%)
2.87%
2.73%
2.65%
2.67%
2.55%
2.62%
In all, over 90% of our production could be
classified as Super CPO, with FFA levels below 3%.
his output services refiners’ higher-quality
products, and as such we receive a minimum of a
1.0% premium over spot prices for these sales.
Our remaining production achieves excellent
quality as well. he maximum monthly FFA level
from mills primarily processing our own
production, was just 3.06% in 2013.
11
Expanding domestic refining capacity, coupled with our
high-quality product, ensures robust demand for our CPO
DSN p lantations
DSN Ports
DSN custome rs
Re fine rie s
Our customers are primarily Indonesian CPO refineries located
in Kalimantan and Java, close to DSN’s operations.
Sale s Pe rformance
Regular customers include Smart, Wilmar, Kuala Lumpur
Kepong, Musim Mas and Dermaga Kencana Indonesia. We
expect Astra’s new refinery on Sulawesi Island to become a
customer in 2014 as well.
Volume
(k tons)
Our contracts are open tender, with SMART and Wilmar
typically offering better pricing - due to refinery location –and
terms than other buyers.
For Q1 2014, we sold 90 thousand tons of CPO, 22% higher
than the same period in 2013. Our average selling price of Rp8.8
million per ton was 40% above that in Q1 2013, and 24.6%
higher than the average for the full year.
Pe riod
CPO
PK
Sale s
%Δ
Sale s
%Δ
PKO
Q 1 '14
90
22
3
-63
7
Q 1 '13
73
-
7
-
-
2013
336
33
16
-55
9
2012
253
33
35
61
-
2011
190
40
21
24
-
2010
135
-
17
-
-
Re ve nue
Q 1 '14
786
71
14
-14
69
(rp b n)
Q 1 '13
458
-
17
-
-
2013
2,369
29
42
-63
66
2012
1,840
30
115
24
-
2011
1,411
57
93
63
-
2010
901
-
57
-
-
Ind one sian CPO trad ing at a p re mium to Malaysia since mid -2013
ASP
Q 1 '14
8.78
40
5.59
134
10.30
(rp mn/t)
Q 1 '13
6.26
-
2.39
-
-
900
2013
7.05
-3
2.70
-19
7.07
850
2012
7.29
-2
3.33
-23
-
2011
7.44
12
4.32
31
-
2010
6.66
-
3.29
-
-
1,000
2nd Month Malaysia CPO Contract (US$/t)
950
2nd Month Ind one sia CPO Contract (US$/t)
800
750
700
650
600
Jun-12
12
Se p -12
De c-12
Mar-13
Jun-13
Se p -13
De c-13
Mar-14
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our cash cost of sales for CPO declined 11% in 2013,
partially offsetting the broadly lower ASPs
Our cash cost in 2013 declined to Rp3.76 million per ton of
CPO sold, a drop of 11.3% from 2012.
Cost of Sale s
CPO Sale s ('000 t)
2013
336.2
135.3
288.7
336.0
244.7
326.7
274.3
224.3
193.7
166.1
227.4
161.1
107.2
210.8
FFB Purchase d
Milling
294.1
99.5
179.1
65.1
69.0
33.6
30.1
39.4
Total cash cost
1,263.0
1,069.5
689.7
548.6
Cash Cost/Ton
3.76
4.23
3.64
4.05
We purchase compound fertilizer – comprised of potash,
nitrogen, and phosphate – under annual contracts with fourmonthly delivery. Our unit costs per ton ranged from $525 to
$570 in 2013. New contracts covering our entire 2014 supply
have already been concluded at prices between $320 and $425
per ton.
Fe rtilize r
Lab or
O the rs
Labor accounts for nearly 27% of the total cash cost of sales.
2010
189.7
Cash Cost of Sale s (IDR b n)
Labor costs were up 22.5% for the year on the back of an
expanded workforce as well as modest adjustments in wages.
2011
252.5
Absolute fertilizer costs fell by nearly 12%, despite an increase
in planted and mature hectares, and account for roughly 23% of
total cash costs.
Purchases of external FFB – both plasma and unrelated estates were up 64%. his was due to the rapid increase in plasma
productivity with increasing maturity of the estates, as well as
higher external purchases in support of Mill 5 operations.
2012
% of total
2013
2012
2011
2010
Fe rtilize r
Lab or
O the rs
22.9%
26.6%
19.4%
30.5%
25.6%
21.0%
28.1%
24.1%
33.0%
29.4%
19.5%
38.4%
FFB Purchase d
Milling
23.3%
7.9%
16.7%
6.1%
10.0%
4.9%
5.5%
7.2%
3.8
million rp/ t
in 2013
Q 1 2014 Re sults Up d ate
13
We offer a Build-Operate-Transfer model for our plasma
program & currently manage over 75% of plasma hectarage
Our strong relationships with our plasma holders
is one critical element in the success of DSN’s
palm oil activities, generally fostering easier
acquisition of land, facilitating title conversion,
and minimizing the prospect of local disturbances
or social unrest.
26
Our BoT model has resulted in higher FFB yields
for plasma estates, and thereby higher revenues
for our plasma cooperatives. DSN still benefits
from the ~50% milling margin and gains
assurance that the loans to plasma holders can be
repaid.
5% of total FFB revenues are retained by DSN as
a management fee. Of the remainder, 30% is paid
to the plasma holder, while 70% services bank
loans and funds extended by DSN for upkeep and
maintenance of the estate prior to breaking even.
DSN typically funds the development of plasma
estates through bank loans with repayment
schedules comprising a 4-year grace period and 6year repayment.
%
plasma to nucleus
We had planted 13,254 hectares of plasma by the
end of Q1 2014. In total, 6,371 hectares had
reached maturity and produced 24,512 tons of
FFB in Q1 2014.
by
y the end of 2014
An amb itious p lanting sche d ule will re sult in p lasma are as totaling 26% of our
nucle us he ctarag e b y the e nd of 2014
Plasma %
Ye ar
Planting Sche d ule ('000 ha)
of Nucle us
Plasma
2008
6%
2.0
2009
6%
0.7
2010
8%
2011
Plante d Are a ('000 ha)
Total
Plasma
Nucle us
Total
3.7
5.7
2.0
35.5
37.6
6.5
7.2
2.7
42.1
44.8
0.9
4.1
5.0
3.6
46.2
49.8
9%
1.0
2.6
3.6
4.6
50.9
55.5
2012
17%
2.2
2.6
4.8
8.8
52.1
60.8
2013
22%
3.4
5.8
9.2
12.7
57.9
70.5
2014E
26%
4.2
6.4
10.6
16.9
64.2
81.1
2015E
29%
3.7
7.0
10.7
20.6
71.2
91.8
2016E
29%
2.3
7.7
10.0
22.9
78.9
101.8
14
Nucle us
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our commitment to social and environmental responsibility
is integral to the sustainability of our operations
Corporate Social Responsibility
Environmental Responsibility
DSN is committed to a wide range of CSR programs, and we
continuously engage and support the communities within which
we operate.
We and our subsidiaries involved in the palm oil business are
members of the Roundtable on Sustainable Palm Oil (RSPO),
and strive to comply with global RSPO and the Indonesian
Sustainable Palm Oil (“ISPO”) principles.
We maintain active partnerships with more than 20 cooperatives
of smallholders near our plantations to manage a total of 12,666
ha of planted area under our Plasma Program. his program helps
increase the productivity of our plasma by leveraging on DSN’s
expertise in plantation operations.
We exclusively employ local contractors and cooperatives for all of
our transportation, construction, and other non-core services. We
have been instrumental in fostering the development of these
small businesses and rely on them to the extent that we do not
own any trucks for the transport of FFB to our mills.
We continue to promote literacy by making education accessible
through the establishment of schools in our plantation areas as
well as community learning centers in the surrounding villages
with the help of the University of Sanata Dharma.
We have also provided free medical services to all our employees
and our local communities since we started operations, with a
network of clinics across our estates.
We have received RSPO certification for our SWA, DAN and
DIN palm oil plantations along with their respective mills, and
have completed the RSPO and ISPO audit process in December
2013 for all our mills and their respective estates. We expect to
receive the remaining RSPO certifications by this year.
We are also committed to protecting our environment. We have
set aside 6,600 hectares of land, or an area roughly equivalent to
10% of our total planted area, for conservation purposes.
We comply with various domestic and international
environmental standards in our wood products manufacturing
processes, and seek to ensure that all the logs and sawn timber
purchased for our operations are produced from sustainable forest
resources.
We were awarded the Certification of Legal Wood certifying our
use of legally sourced logs and have also obtained the Forest
Stewardship Council (FSC) Chain-of-Custody and Program for
the Endorsement of Forest Certification (PEFC) certifications.
Our successful implementation of these and other CSR programs We meet the Conformité Européenne (CE) labeling standards for
has resulted in no demonstrations or operational disturbances over products exported to Europe and have received certifications from
the California Air Resources Board (CARB) and the Japanese
the last 3 years by the local population or NGOs.
Agricultural Standard ( JAS).
Q 1 2014 Re sults Up d ate
15
DSN is also a leading wood products manufacturer with
reputable brand names &long-standing client relationships
DSN is the fourth largest wood products manufacturer in
Indonesia, producing panels, engineered floors and doors.
We have initiated a move into higher value, higher margin
products through the recent acquisition of TKPI, which
specializes in engineered flooring.
We continue to leverage on our long standing relationships with
customers to across the world to leverage this new business
initiative.
Our diverse exposure to customers in different segments and
geographies has protected us to from adverse economic impacts
as we maintain and grow our wood products business.
Sale s Volum
me
Q -o-Q
Q 1 '14
Q 1 '13
58
65
-11.3%
245
10
304
15
253
-32.7%
20.5%
52
1,073
4,318
3,595
20.1%
3,974
1,284
347
976
295
31.5%
17.8%
1,059
314
Pane l ('000 m3)
Eng ine e re d Prod ucts
Doors ('000 Pcs)
Flooring ('000 m2)
%Δ
FY2013
Ave rag e Se lling Price ('000 Rp )
Pane ls (p e r m3)
Eng ine e re d Prod ucts
Doors (p e r p c)
Flooring (p e r m2)
Top 10 Ind ustrial and Comme rcial Custome rs
Custome r Name
Typ e
Prod ucts
S.A. Shahab & Comp any Pte Ltd
Sumitomo Fore stry Comp any Ltd .
Vintag e Hard wood Flooring
Jiang su Skyrun Arse r Co., Ltd
Asia Trad ing , Inc
Associate d Lumb e r & Trad ing , Ltd
PKF Glob al
Plyq ue t Holzimp ort
Te ka Kore a Co., Ltd
Be ijing Te ka Holy Eag le Corp oration
Trad e r
Trad e r
Distrib utor
Trad e r
Trad e r
Trad e r
Trad e r
Distrib utor
Distrib utor
Distrib utor
Pane ls
Pane ls
Eng ine e re d
Pane ls
Pane ls
Pane ls
Eng ine e re d
Eng ine e re d
Eng ine e re d
Eng ine e re d
Re lationship Ge og rap hy
Flooring
Doors
Flooring
Flooring
Flooring
11 ye ars
8 ye ars
9 ye ars
3 ye ars
7 ye ars
5 Ye ars
15 ye ars
17 ye ars
12 ye ars
11 ye ars
Mid d le East
Jap an
Canad a
China
Jap an
Jap an
UK
Europ e
South Kore a
China
450,000
m3/annum panel capacity
4,000,000
m2/annum
flooring capacity
16
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our capital expenditures in 2013 totaled Rp663 billion,
primarily for new planting & the construction of mills
Palm Oil
As our plantations mature, we expect to implement a planting
schedule sufficient to maintain a favorable long-term maturity
profile. In general, our cost to maturity for new planting is
roughly $5,000 to $5,500 per hectare.
5-5.5k/ha
$
cost to maturity
We also plan to match the increased FFB production over time
with appropriate increases in CPO processing capacity. A new
mill is required for every 10,000 additional mature hectares.
We expect to complete construction of two new palm oil mills
with total capacity of 720,000 tons / annum in 2015.
he cost of each 60 ton/hour mill, which is comprised of two
lines of 30 ton/hour capacity is approximately US$18 million.
Cap ital Exp e nd iture s
2013
2012
2011
2010
Immature Plantations
335
294
353
224
Construction in Prog re ss
182
482
282
128
O the rs
146
131
308
133
Total
663
907
942
485
(Doe s not includ e cap italize d inte re st or loans/ad vance s to p lasma)
Wood Products
For wood products, we have sufficient capacity
to meet our current growth plans. We intend to
more than double production volume in
engineered flooring from 1.1 million m2 in 2012
to 2.6 million m2 by 2015, while our plant
currently has capacity to produce up to 4 million
m2.
We will be optimizing our wood products
efficiency by relocating and consolidating our
operations in Surabaya and Gresik to a new
panel products processing plant in Lumajang by
2015. his is closer to our satellite plants and
will reduce our transportations costs
18
$
mn
for each 60 ton/hour mill
Q 1 2014 Re sults Up d ate
17
In total, DSN generated revenue of Rp3,842 billion in 2013,
TDA growing by 33% and EBITDA margins of 23%
with EBITDA
Rp
888
bn
EBITDA
in 2013
Q 1 2014
Total (IDR b n)
Q 1 '14
2013
2012
2011
2010
Re ve nue
EBITDA
EBITDA Marg in
Ne t Profit
Ne t Marg in
1,238
270
21.8%
151
12.2%
3,842
888
23.1%
216
5.6%
3,411
666
19.5%
252
7.4%
2,778
665
24.0%
374
13.5%
1,751
297
17.0%
162
9.3%
Loan Facilitie s
IDR Bn
US$ MM
Working Cap ital
Inve stme nt
Finance Le ase s
370
1,678
3
35
38
2
Total
2,051
74
Inte re st Rate Rang e
P alm O il
Low
2.75%
2.00%
Re ve nue
EBITDA
EBITDA Marg in
Profit Be fore Tax
PBT Marg in
Hig h 10.65%
5.75%
869
259
29.8%
208
23.9%
2,478
885
35.7%
517
20.9%
1,997
614
30.8%
416
20.9%
1,524
652
42.8%
547
35.9%
971
307
31.7%
260
26.8%
Total De b t
2,899
Ne t De b t
2,429
Eq uity
1,830
EBITDA
Wood Prod ucts
Re ve nue
EBITDA
EBITDA Marg in
Profit Be fore Tax
PBT Marg in
270
Financial Ratios:
369
30
8.2%
28
7.6%
1,364
73
5.4%
(80)
-5.9%
1,414
123
8.7%
33
2.3%
1,254
63
5.0%
12
0.9%
780
26
3.3%
(5)
-0.6%
De b t/Eq uity
1.6
Ne t De b t/Eq uity
1.3
Ne t De b t/EBITDA
2.3
The d e cline in Ne t Profit in 2013, d e sp ite sig nificant incre ase s in re ve nue and EBITDA, is larg e ly d ue to the imp act of
ye ar-e nd d e p re ciation of the rup iah ag ainst the d ollar. The mark-to-marke t of our $70 million FX loans outstand ing
re sulte d in an unre alize d FX loss of Rp 172 b illion.
Note : Annual Financial State me nts are aud ite d b y Sid d harta & Wijaja, Re g iste re d Pub lic Accountants, and a Me mb e r Firm of KPMG
Inte rnational.
18
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Q 1 2014 Summary Financials
Total Consolid ate d (IDR b n)
Re ve nue
% g rowth
Gross Profit
% marg in
O p e rating Profit
% marg in
EBITDA
% marg in
Ne t Profit
% marg in
Fore x g ain (loss) from financing
Ad juste d Profit
% marg in
Total Palm O il (IDR b n)
Re ve nue
% g rowth
Gross Profit
% marg in
O p e rating Profit
% marg in
EBITDA
% marg in
Profit Be fore Tax
% marg in
Fore x g ain (loss) from financing
Ad juste d PBT
% marg in
Total Wood Prod ucts (IDR b n)
Re ve nue
% g rowth
Gross Profit
% marg in
O p e rating Profit
% marg in
EBITDA
% marg in
Profit Be fore Tax
% marg in
Fore x g ain (loss) from financing
Ad juste d PBT
% marg in
Financial Positions
Total d e b t
Ne t d e b t
Total Asse t
Total Eq uity
Total d e b t / e q uity
Ne t d e b t / e q uity
Ne t d e b t / EBITDA
Q 1-2014
Q 1-2013
1,238
54.9%
799
341
27.5%
205
16.6%
270
21.8%
151
12.2%
55
96
7.8%
191
23.8%
81
10.1%
132
16.5%
27
3.3%
(3)
30
3.8%
Q 1-2014
Q 1-2013
869
83.0%
475
290
33.4%
209
24.1%
259
29.8%
208
23.9%
27
181
20.8%
155
32.7%
91
19.1%
128
26.9%
66
13.9%
(2)
68
14.4%
Q 1-2014
Q 1-2013
369
13.9%
324
51
13.7%
16
4.4%
30
8.2%
28
7.6%
21
7
2.0%
36
11.0%
5
1.5%
18
5.7%
(3)
-1.1%
(1)
(3)
-0.9%
Q oQ Δ%
78.7%
153.4%
105.0%
464.7%
220.3%
Q oQ Δ%
87.0%
130.3%
103.2%
214.2%
165.2%
Q oQ Δ%
42.6%
245.9%
65.6%
na
na
2013
2012
3,842
12.6%
1,190
31.0%
657
17.1%
888
23.1%
216
5.6%
(184)
400
10.4%
3,411
22.8%
961
28.2%
494
14.5%
666
19.5%
252
7.4%
(34)
287
8.4%
2013
2012
2,478
24.1%
1,046
42.2%
707
28.5%
885
35.7%
517
20.9%
(91)
608
24.5%
1,997
31.0%
820
41.1%
496
24.8%
614
30.8%
416
20.9%
(13)
429
21.5%
2013
2012
1,364
-3.5%
144
10.5%
20
1.5%
73
5.4%
(80)
-5.9%
(68)
(12)
-0.9%
1,414
12.7%
141
10.0%
70
4.9%
123
8.7%
33
2.3%
(13)
46
3.2%
YoY Δ%
23.8%
32.9%
33.2%
-14.6%
39.5%
YoY Δ%
27.6%
42.6%
44.0%
24.1%
41.7%
YoY Δ%
2.0%
-71.1%
-40.4%
-345.9%
-127.4%
Q 1-2014
Q oQ Δ%
2013
2012
YoY Δ%
2,899
2,429
6,118
1,830
1.6x
1.3x
2.3x
-2.1%
-1.8%
3.3%
9.0%
2,961
2,474
5,921
1,679
1.8x
1.5x
2.8x
2,733
2,195
5,141
1,406
1.9x
1.6x
3.3x
8.4%
12.7%
15.2%
19.4%
Note : Annual Financial State me nts are aud ite d b y Sid d harta & Wijaja, Re g iste re d Pub lic Accountants, and a Me mb e r Firm of KPMG
Inte rnational.
Q 1 2014 Re sults Up d ate
19
Q1 2014 Operations Summary
P alm O il Summary
Q 1-2014
Q 1-2013
Q oQ Δ%
2013
2012
YoY Δ%
Plantations
FFB Prod uction (t)
303,231
259,762
16.7%
1,240,818
1,019,923
FFB nucle us (t)
278,719
244,235
14.1%
1,152,611
976,711
21.7%
18.0%
FFB p lasma (t)
24,512
15,527
57.9%
88,207
43,212
104.1%
Mills
FFB Proce sse d (t)
373,813
277,500
34.7%
1,380,528
1,052,490
31.2%
CPO Prod uction (t)
88,385
65,644
34.6%
335,730
256,971
30.6%
PK Prod uction (t)
10,988
8,838
24.3%
43,277
35,716
21.2%
3,760
468
703.4%
13,482
FFB Yie ld - nucle us (t/ha)
5.8
5.6
3.6%
26.4
25.5
3.7%
FFB Yie ld - p lasma (t/ha)
3.8
3.1
24.9%
17.5
10.9
60.6%
PKO Prod uction (t)
CPO O ER (%)
-
-
23.6%
23.7%
-0.1%
24.3%
24.4%
-0.4%
KER (%)
2.9%
3.2%
-8.9%
3.1%
3.4%
-7.6%
FFA (%)
2.87%
2.73%
5.1%
2.65%
2.67%
-0.7%
Sales Volume (tons)
CPO
89,554
73,266
22.2%
336,240
252,536
33.1%
PK
2,533
6,924
-63.4%
15,622
34,589
-54.8%
PKO
6,701
-
na
9,400
-
CPO
8.78
6.26
40.3%
7.05
7.29
-3.3%
PK
5.59
2.39
134.3%
2.70
3.33
-18.7%
na
7.07
-
-
-
Average Selling Price (IDR mn/ton)
PKO
10.31
Mature Land (ha)
Nucle us
48,038
43,644
10.1%
43,644
38,361
13.8%
6,371
5,047
26.2%
5,047
3,972
27.1%
54,409
48,691
11.7%
48,691
42,333
15.0%
Q 1-2014
Q 1-2013
Q oQ Δ%
Pane l (m3)
58,019
65,391
-11.3%
244,642
334,512
-26.9%
Eng ine e re d d oors (p cs)
10,273
15,258
-32.7%
51,989
91,102
-42.9%
Eng ine e re d floors (m2)
304,252
252,578
20.5%
1,073,412
1,166,657
-8.0%
Pane l (m3)
4.32
3.60
20.1%
3.97
3.10
28.1%
Eng ine e re d d oors (p cs)
1.28
0.98
31.5%
1.06
0.69
53.6%
Eng ine e re d floors (m2)
0.35
0.29
17.8%
0.31
0.27
14.8%
Plasma
Total
Wood Prod ucts Summary
2013
2012
YoY Δ%
Sales Volume
Average Selling Price (IDR mn)
DISCLAIMER: This p re se ntation may contain forward -looking state me nts that involve risks and unce rtaintie s. Actual future p e rformance , outcome s and re sults may d iffe r
mate rially from those e xp re sse d in forward -looking state me nts as a re sult of a numb e r of risks, unce rtaintie s and assump tions. Althoug h the Comp any b e lie ve s that such forward looking state me nts are b ase d on re asonab le assump tions, it can g ive no assurance that such e xp e ctations will b e me t. You are cautione d not to p lace und ue re liance on the se
forward looking state me nts, which are b ase d on the curre nt vie w of the manag e me nt on future e ve nts.
Unle ss othe rwise state d , the Comp any is the source for all d ata containe d in this p re se ntation. Such d ata is p rovid e d as at the d ate of this p re se ntation and is sub je ct to chang e
without notice . No re liance may b e p lace d for any p urp ose s whatsoe ve r on the information containe d in this p re se ntation, or any othe r mate rial d iscusse d at the p re se ntation, or
on the comp le te ne ss, accuracy or fairne ss the re of.
The information in this p re se ntation has not b e e n ind e p e nd e ntly ve rifie d . No re p re se ntation, warranty, e xp re ss or imp lie d , is mad e as to, and no re liance should b e p lace d on, the
fairne ss, accuracy, comp le te ne ss or corre ctne ss of the information and op inions in this p re se ntation. None of the Comp any or any of its ag e nts or ad vise rs, or any of the ir
re sp e ctive affiliate s, ad vise rs or re p re se ntative s, und e rtake to up d ate or re vise any forward -looking state me nts, whe the r as a re sult of ne w information, future e ve nts or othe rwise
and none of the m shall have any liab ility (in ne g lig e nce or othe rwise ) for any loss howsoe ve r arising from any use of this p re se ntation or its conte nts or othe rwise arising in
conne ction with this p re se ntation.
This p re se ntation also contains ce rtain statistical d ata and analyse s which have b e e n p re p are d b y the Comp any and /or othe r source s. Nume rous assump tions we re use d in
p re p aring the Statistical Information, which assump tions may or may not ap p e ar he re in. As such, no assurance can b e g ive n as to the Statistical Informations accuracy,
ap p rop riate ne ss or comp le te ne ss in any p articular conte xt, nor as to whe the r the Statistical Information and /or the assump tions up on which the y are b ase d re fle ct p re se nt marke t
cond itions or future marke t p e rformance .
20
PT Dharma Satya Nusantara Tb k (DSNG.JK)
PT Dharma Satya Nusantara Tb k Board of Dire ctors
DSNG Daily Share Price (rp /share ) & Trad ing Volume (share s)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
14-Jun-13
14-Se p -13
14-De c-13
14-Mar-14
From b ack le ft: Jose p h Te d jasukmana, De p uty Pre sid e nt Dire ctor; Ricky
Bud iarto, Dire ctor; FX Bud i Se tio Wib owo, Ind e p e nd e nt Dire ctor; Djojo
Boe ntoro, Pre sid e nt Dire ctor & CEO ; Timothe us Arifin C., Dire ctor; Efe nd i
Sulise tyo, Dire ctor; And rianto O e tomo, De p uty Pre sid e nt Dire ctor & CFO
DSNG Share Price vs. IDX & Ag ri Ind e x
1.8
DSNG
Share hold e rs
(%)
1.6
1.4
Ag ri
O e tomo Family
29.7
1.2
The od ore Rachmat & Family
27.4
1.0
Liana Salim Lim & Family
10.3
IDX
0.8
Sub ianto & Family
0.6
0.4
Commissione rs & Dire ctors
0.2
O the rs & Pub lic
0.0
14-Jun-13
14-Se p -13
14-De c-13
14-Mar-14
7.5
9.8
15.6
as of 31 De ce mb e r 2013
DSN’s primary businesses grow and process domestic
agricultural products for global consumption
he DSN Group was originally established as a wood products
manufacturer. We identified an opportunity to expand into the
plantation sector in 1997, building upon our established
relationships within the local communities. Both of these
business segments are showing growth, but the palm oil business
is growing, and will continue to grow, at a higher rate.
Palm oil accounted for 64% of total revenue in 2013, up from
59% in 2012, and 70% of Q1 2014 revenue driven by recently
higher CPO average selling prices.
Re ve nue
Q 1 '14
2013
2012
2011
2010
Palm O il
70%
64%
59%
55%
55%
Wood Prod ucts
30%
36%
41%
45%
45%
Crude Palm Oil
Palm Kernel
Palm Kernel Oil
Block Board
Engineered Doors
Engineered Floors
Our history of expansion has accelerated in
recent years, with the acquisition of eight new oil
palm estates since 2010.
We also took a controlling interest in Tanjung
Kreasi Parquet Industry, a manufacturer of
globally branded engineered flooring in 2012.
hese subsidiaries provide long-term
opportunities for expansion in both of our core
businesses.
O wne rship /
Ye ar
Control (%)
Acq uire d
DAN
DIN
SWA
PWP
100.00%
100.00%
100.00%
99.70%
1997
1997
2001
2004
O il p alm
O il p alm
O il p alm
O il p alm
p lantation
p lantation
p lantation
p lantation
PT De wata Sawit Nusantara
PT Dharma Intisawit Le stari
PT Ke ncana Alam Pe rmai
PT Karya Prima Ag ro Se jahte ra
DWT
DIL
KAP
KPS
99.90%
99.90%
99.50%
99.99%
2007
2009
2010
2011
O il p alm
O il p alm
O il p alm
O il p alm
p lantation
p lantation
p lantation
p lantation
PT Prima Sawit And alan
PT Dharma Pe rsad a Se jahte ra
PT Mand iri Ag rotama Le stari
PT Rimb a Utara
PSA
DPS
MAL
RUT
99.17%
99.17%
99.98%
99.90%
2010
2010
2012
2012
O il p alm p lantation
Land Bank
Land Bank
Land Bank
PT Putra Utama Le stari
PT Dharma Buana Le stari
PUL
DBL
99.80%
90.00%
2012
2013
Land Bank
Land Bank
Wood Prod ucts PT Tanjung Kre asi Parq ue t Ind ustry TKPI
PT Nityasa Id ola
NI
65.00%
92.50%
2012
1989
Eng ine e re d flooring
Timb e r p lantation
Ind ustry
Comp any
AKA
Palm O il
PT Dharma Ag rotama Nusantara
PT Dharma Intisawit Nug raha
PT Swakarsa Sinarse ntosa
PT Pilar Wanap e rsad a
2
Line of Busine ss
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our performance and long-term prospects consistently
demonstrate several key
ey investment themes
We saw growth across a broad range of metrics
for 2013. FFB production was up 22% despite
slow-downs across the sector. We expect this
trend to continue, supported by growth in
planted and mature hectares, output per hectare,
milling capacity and CPO sales in the years to
come.
ffb y-o-y
unplanted ha
he locations of our
estates and mills, as well
as our management
practices, allow us to
maintain a highly
competitive cost
position, with a 2013
cash cost per ton of
Rp3.76 million.
Our current unplanted
landbank includes 114,000
hectares spread across the
provinces of Kalimantan and
Papua, which we expect will
prove sufficient to support our
planting schedule for the next
seven to eight years.
Efficient:
cpo cash cost// t
We have received RSPO certification at three of
our five mills, and are in advanced stages of
certification for all remaining mills.
Environmental certification is also critical to the
global distribution of our wood products.
certified
Disciplined and consistent implementation of
appropriate agronomic practices allows DSN to
achieve industry-leading productivity in FFB
and CPO, with 6.4 tons of CPO per hectare
produced in 2013.
cpo/ ha
Q 1 2014 Re sults Up d ate
3
We began in palm oil in 1997 with the acquisition of 19,766
ha in East Kalimantan & have been expanding
p
g ever since
We are a fully integrated CPO producer, with 14
estates spanning 172,533 hectares, located across
Kalimantan and in Papua. Nine estates have
already been planted to some degree, with 6
estates already producing FFB.
In total, we have 58,755 hectares of nucleus
estates planted by the end of Q1, 2014, with an
additional 13,254 hectares of plasma. he areas
not yet planted provide us with an additional
114,000 hectares for future expansion in both
nucleus and plasma operations.
172,500
hectares
Given our recent acceleration in planting activity,
we exhibit a very young age profile for our planted
area. Of our total planted area, 45.8% is
considered Young Mature and 18.2% remains
Immature. While these proportions are likely to
decline somewhat, we expect nearly 60% of our
enlarged planted area to be either Immature or
Young Mature by 2016.
14
estates
5
CPO mills
hese estates are supported by 5 CPO mills with
an aggregate capacity of 2 million tons per year,
along with a newly completed Palm Kernel Oil
mill. As we look to keep pace with the
increasing productivity of our young estates,
additional CPO mills are currently under
development.
2,000,000
200 tons/day
tons/annum
PKO mill
4
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our estates are clustered across East, West and Central
Kalimantan, with planting to date concentrated in the East
Total & Plante d He ctare s b y Cluste r
Q 1 2014
Pap ua
North
Kalimantan
We st
Kalimantan
East
Ce ntral
Kalimantan
Kalimantan
0
10
20
Planted / Unplanted
Conve rsion of land rig hts status p rog re sse s in line with our
inte nd e d p lanting p rog ram. Mature e state s are HGU:
Land Rig hts Status
Land Are a ('0000 Ha)
Estate
Total
Plante d Availab le
-
HGU
Panitia
Ijin
B
Lokasi
DBL
16.7
16.7
DIL
8.0
1.6
6.3
SWA
16.9
15.3
1.6
DAN
10.0
9.0
1.0
40
50
60
= 5,000ha
In total, our nucleus estates incorporate 58,755
planted hectares, of which 48,038 are already
mature. Our most developed cluster, with 5
estates, is near the center of East Kalimantan,
while our next largest producing estate lies in
Central Kalimantan.
Our three largest estates, SWA, DAN and DIN
are fully comprised of mature trees, with limited
additional area available for new planting.
Subsequent expansion will increasingly focus on
Central and West Kalimantan, with Papua an
option still several years out.
DIN
9.8
8.7
1.0
DWT
13.6
9.9
3.7
KPS
6.2
4.7
1.5
MAL
15.0
-
15.0
RUT
12.7
-
12.7
KAP
14.9
0.8
14.1
PSA
10.6
0.3
10.4
DPS
6.1
0.0
6.1
PUL
17.0
-
17.0
PWP
15.2
8.4
6.8
172.5
58.8
113.8
Q 1 2014 Re sults Up d ate
30
38%
8%
54%
5
Our planting history has established a young age profile that
will continue to deliver productivity growth in coming years
DSN Planting History (‘000 ha)
Mid -Ye ar vs. Ye ar-End Stand ard
In 2011, the Comp any switche d from the common Ye ar-End Stand ard (YES) to a Mid Ye ar Stand ard (MYS) ap p roach to e stab lishing the ag e of our p lantations for accounting
p urp ose s.
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
In the YES ap p roach, all tre e s p lante d d uring a g ive n cale nd ar ye ar will b e consid e re d 1ye ar old at the close of that ye ar. O n ave rag e , howe ve r, the se tre e s will have b e e n in the
g round for roug hly 6 months.
With the MYS ap p roach, tre e s p lante d in H2 of the p re vious ye ar and H1 of the curre nt
ye ar will b e consid e re d 1-ye ar old at the close of the ye ar – a more accurate re fle ction
of the ave rag e amount of time the se tre e s have b e e n in the g round .
We have p re se nte d our p lanting history with an H1/H2 b re akd own, should you care to
re -ap p ly the YES ap p roach.
All of the d ata p re se nte d within our financial re p orts and this p re se ntation make use of
the MYS from 2011 to the p re se nt.
We added 5,800 hectares of nucleus in 2013, out of a total of 9,170 hectares
planted during the year. In Q1 2014, we have planted an additional 893
hectares of nucleus and 588 hectares of plasma.
We intend to maintain the current pace of nucleus expansion over the next
three years, with additional areas of 6,400, 7,000 and 7,700 hectares
respectively.
0
2
4
Planted / Planned
6
In total, our 58,755 hectares of planted nucleus were an average age of 7.6
years at the end of Q1 2014. his will drop to 7.0 years by year-end based
upon our proposed our planting schedule.
8
hrough 2016, our average age is expected to increase slowly to 7.5 years.
= 500 ha
MYS Conve rsion of Planting Sche d ule to Ag e Profile
Planting Sche d ule
Ye ar
FY
H1
1,151
-
1997
2,987
704
1998
725
441
1999
1,218
71
2000
508
428
2001
2,181
992
2002
-
-
2003
3,171
535
2004
3,278
664
2005
4,694
1,365
2006
3,589
1,231
1 231
2007
7,596
3,247
2008
4,971
1,243
1 243
2009
6,580
2,292
2010
4,289
995
2011
2,519
1,100
2012
2,607
1,378
1 378
2013
5,799
2,658
1996
Ag e Profile
H2
1,151
2,283
2 283
284
1,147
1 147
80
1,189
1 189
2 636
2,636
2,614
3,329
3 329
2,358
4,349
4 349
3,728
4,288
4 288
3,294
1,419
1 419
1,228
3,141
Total Ha
Ag e *
1,855
18
2,724
17
355
16
1,575
15
1,072
14
1,189
13
535
12
3,300
11
3,979
10
4,560
9
5,605
8
5,592
7
6,020
6
5,283
5
4,394
4
2,797
3
3,886
2
-
1
7.0
Years
by the end 2014
* As of ye ar-e nd 2014
6
PT Dharma Satya Nusantara Tb k (DSNG.JK)
42% of our planted area is classified as Young M ature, with
expected annual FFB yield growth of between 8% -100%
FFB Yie ld (t/ha)
35
Ag e Profile (‘000 ha)
Young
Mature
Immature
Prime Mature
14
O ld Mature
30
12
25
10
20
8
Class I
Class II
Class III
15
6
10
4
5
2
0
0
0
2
4
6
8
10
12
14
We typically evaluate our performance and productivity against
a set of external standards, based upon controlled growing
conditions over the lifecycle of an oil palm tree.
Summary Maturity Profile (Mid -Ye ar Stand ard ), in %
Mature
Immature
Young
Prime
O ld
Total
2010
43.0
38.3
18.7
-
57.0
2011
34.6
46.6
18.8
-
65.4
2012
26.3
49.5
24.2
-
73.7
2013
24.6
46.8
28.7
-
75.4
2014
25.2
41.9
32.9
-
74.8
2015
28.7
33.8
34.9
2.6
71.3
2016
30.7
28.3
35.2
5.8
69.3
2017
23.5
27.9
42.3
6.2
76.5
2018
15.1
29.7
47.0
8.2
84.9
2019
5.9
33.3
51.2
9.6
94.1
2020
-
35.6
53.3
11.1
100.0
Assuming no p lanting afte r 2016
DSN Maturity Classifications are not unive rsally share d , b ut b e st
re fle ct our e xp e rie nce to d ate :
Maturity Class
Immature
Young Mature
Prime Mature
O ld Mature
18
20
22
24
26
Ag e of Tre e s
= 500 ha
Ye ar-End
16
Ag e
(Yr)
Growth
(Avg )
0-3
4-8
9-18
19+
40%
-1%
-5%
Characte ristics
No Fruit
Rap id g rowth in FFB/O ER
Stab le p rod uctivity
Ste ad y d e cline
Q 1 2014 Re sults Up d ate
Stand ard FFB Yie ld b y tre e ag e and soil class
Tre e Ag e
FFB Yie ld b y Soil Typ e (tons/ha)
(Yr)
Class I
Class II
Class III
1
2
3
0.6
0.6
0.6
4
5
6
7
8
9.0
17.0
22.5
27.0
29.0
8.0
16.0
21.0
24.5
27.0
7.0
14.0
18.0
21.0
24.5
9
10
11
12
13
31.5
32.0
32.0
32.0
32.0
28.0
30.0
30.0
30.0
30.0
26.5
27.0
27.0
27.0
27.0
14
15
16
17
18
31.5
31.5
30.0
29.0
28.0
29.5
28.5
27.5
26.5
26.0
26.5
25.5
25.0
24.0
23.0
19
20
21
22
27.0
26.0
25.0
23.5
24.5
23.5
22.5
21.5
22.5
21.0
20.5
19.5
23
24
25
26
22.0
21.0
19.5
18.5
20.5
19.5
18.5
17.5
18.5
17.5
17.0
16.5
Source : Ind one sian Palm O il Re se arch Institute
7
Our target is to achieve lab standard FFB yields
yie
on a
o
commercial scale within each of our estates
26.4
tons/ ha
in 2013
For the full year, DSN produced 1,153 thousand tons FFB from
our nucleus plantations, with an additional 88 thousand tons
coming from plasma operations. In aggregate, FFB output
increased by 22% during the year.
In Q1 2014, our nucleus estates produced 279 thousand tons
FFB, up from 244 thousand tons in the previous year. his
aggregate increase of 14% comes from higher yields (up 3.7%)
and a larger mature area (up 10.1%).
We achieved an aggregate output of 26.4 tons per hectare (based
on the Mid-Year Standard) versus 25.5 tons in the preceding
year.
Plasma yields rose by 25.1% from the same period in 2013, with
mature areas growing by 26.2% and total output up by 57.9%.
Prod uction Pe rformance
Prod uct
Pe riod
FFB
Q 1 '14
Q 1 '13
('000 t, t/ha)
2013
2012
2011
2010
8
Nucle us
%Δ
Yie ld
279
244
14
-
5.8
5.6
1,153
977
738
536
18
32
38
-
26.4
25.5
22.4
19.8
Plasma
%Δ
Yie ld
25
16
61
-
3.8
3.1
88
43
3
0
104
1,184
-
17.5
10.9
4.4
-
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our planting schedule through 2016 implies an average
10% annual growth in FFB to 2 million tons in 2020
FFB Volume (mn t)
2.0
Class II
1.5
1.0
Class III
5
0.5
0.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
= DSN Annual Nucle us Yie ld
O ur young e state s consiste ntly out-p e rform stand ard yie ld s
Our five largest estates (DAN, DIN, SWA, PWP and DWT)
FFB Yie ld (t/ha, 2010-2013)
have been comfortably higher than the standard expected yields
Immature
Young Mature
over the past four years. DSN’s estates are generally a
35
combination of Class II and Class III type soils. We have neither
Class I soil (largely found in volcanic areas such as Sumatera) nor 30
Class IV soil. As a matter of policy, we do not plant in peat soil.
Our performance is driven by a disciplined approach to standard
agronomic practices, meticulously implemented across our
planted areas. hese range from selecting the best seeds, to
formulating multiple unique fertilizer blends, to the use of cover
crops to retain soil and natural predators to control mice and
caterpillars, thereby allowing us to minimize the use of harmful
pesticides.
Stand ard yie ld curve with p lanting throug h 2016
Mature Are a
Ye ar
'000 ha
% Δ Avg Ag e
Class II
Class III
%Δ
2010
26.7
7.5
20.9
18.5
2011
32.3
21%
7.7
21.5
19.0
3%
2012
38.4
19%
8.0
21.9
19.5
2%
2013
43.6
14%
8.4
22.8
20.3
4%
2014
48.0
10%
8.9
23.7
21.2
4%
2015
50.8
6%
9.6
24.9
22.3
5%
2016
54.7
8%
10.1
25.3
22.7
2%
2017
60.4
10%
10.4
25.0
22.5
-1%
2018
67.1
11%
10.7
24.6
22.2
-1%
2019
74.3
11%
10.9
24.3
21.8
-1%
2020
82.2
11%
11.2
24.1
21.6
-1%
Q 1 2014 Re sults Up d ate
25
20
15
10
5
0
FFB/ha b y Soil Typ e
Prime Mature
0
2
4
6
8
10
Ave rag e Ag e (mature ha only)
12
14
A standard yield curve derived from our plantation age profile,
rather than simply our average age, can establish more realistic
medium-term yield expectations.
hese standards suggest average yields could continue to increase
through 2016, barring external environmental factors. At the same
time, our mature plantation area will increase from 43,644 hectares
in 2013 to 54,721 hectares in 2016 (25.4%), with subsequent
annual growth rates of 10% or better through 2020, with over
82,000 mature hectares at that time.
9
Our most developed cluster - with 5 estates, 4 CPO M ills and
56,000 ha - is nearly the size of Singapore
M ill 6
DWT
M ill 2
M ill 3
KPS
DAN
DIN
M ill 7
SWA
M ill 4
M ill 1
Existing CPO M ills
Trans - East Kalimantan Road
Planned CPO M ills
81% of our planted area, in five estates, is located in a single
contiguous area in East Kalimantan. hese 47,700 planted
hectares encompass an area nearly the size of Singapore.
Four out of our five existing palm oil mills are located within
these estates, and we expect to complete the construction of two
additional palm oil mills in 2015.
Our mill capacity is designed to accommodate annual peak
output from the associated estates. As a result, mills servicing
rapidly developing estates (such as Mill 5 in PWP) will appear to
be underutilized, and may rely on significant external FFB
purchases.
he proximity of the palm oil mills to the fruit allows us to
establish an 8-hour standard for harvest-to-mill, resulting in
minimal spoilage of FFB and lower FFA. Our redundant
capacity also minimizes disruption due to maintenance.
he cluster approach allows us to achieve efficiencies in a number
of areas:
lower transportation costs
centralization of logistics, such as housing, schools, clinics and
security
maximum use of infrastructure (mills, roads, jetties and ports)
East Kalimantan cluste r e ncomp asse s 88% of our mature are a
CPO mill cap acity is d e sig ne d for p e ak p rod uction months
Estate
Cap acity Max Monthly
Ye ar
Location Estate
(Tons/Hour) Utilization*
RSPO
Mill 1
2002
E. Kal.
SWA
90
67%
Ce rtifie d
Mill 2
2009
E. Kal.
DAN
60
101%
Ce rtifie d
Mill 3
2010
E. Kal.
DIN
60
112%
Ce rtifie d
Mill 4
2011
E. Kal.
SWA
60
110%
Aud ite d
Mill 5
2011
C. Kal.
PWP
60
96%
Aud ite d
DIL
SWA
DAN
DIN
DWT
KPS
Mill 6
2015
E. Kal.
DWT
60
KAP
PSA
DPS
Mill 7
2015
E. Kal.
KPS
60
PWP
In Prog re ss
Total Cap acity
450
*2013
10
Land Are a (Ha)
Plante d
Mature
(Q 1 '14)
(2014)
Ave rag e Ag e (Yrs)
Yie ld
Total
Mature
2013
Are a
Are a*
(t/ha)
1,625
-
0.6
-
-
15,282
9,000
8,749
9,914
4,739
15,282
8,919
8,749
7,254
2,105
13.7
7.9
7.9
4.3
3.2
13.7
7.9
7.9
5.2
5.4
30.4
25.9
28.2
22.4
12.7
793
260
9
-
1.5
1.0
1.0
-
-
8,384
5,729
4.4
5.2
19.7
58,755
48,038
7.6
8.9
26.4
* As of ye ar-e nd 2014
PT Dharma Satya Nusantara Tb k (DSNG.JK)
O ur 5 mills achieved an aggregate O ER of 24.3% last year,
y
ld of 6.4
6 4 tons per mature hectare
resulting in a CPO yield
We processed a total of 1,381 thousand tons of FFB
in 2013, 90% of which was sourced from our own
nucleus or plasma estates.
External purchases increased by nearly 120% in
order to better utilize capacity at our newest Mill 5,
servicing the PWP estate.
For Q1 2014, we processed 374 thousand tons of
FFB, up 34.8% from Q1 2013. Of that total, 82%
was sourced from our nucleus and plasma
operations.
Prod uction Pe rformance - Estate s
Fre sh Fruit Bunche s (FFB) ('000 tons)
Ye ar
Q 1 '14
Q 1 '13
2013
2012
2011
2010
Prod uce d
279
244
1,153
977
738
536
Plasma
25
16
88
43
3
0
24.3
% OER
Purchase d Proce sse d
71
18
143
65
40
26
374
278
1,381
1,052
767
542
in 2013
In total, FFB processed and CPO produced each increased by 31%
in 2013, yielding a stable Oil Extraction Rate (OER) of 24.3%.
Palm Kernel production rose 21% to 43,000 tons in 2013. Sales
declined, however, to 12,000 tons as our newly commissioned Palm
Kernel Oil mill began to utilize this output directly.
Prod uction Pe rformance - Mills
Prod uct
Pe riod
CPO
Q 1 '14
Q 1 '13
('000t, O ER)
For Q1 2014, we achieved an OER of 23.6%, in line with the
previous year’s Q1 performance. Palm kernel production rose 24.3%
to 11 thousand tons, while PKO output reached 3.8 thousand tons,
up from 468 tons in 2013.
90% o f o ur CPO pro ductio n has
FFA levels belo w 3%. This “ Super
CPO ” can co mmand a premium
o f 1-4% versus standard CPO .
%Δ
Yie ld
88
66
35
-
23.6%
23.7%
336
257
189
134
31
36
41
-
24.3%
24.4%
24.6%
24.7%
Q 1 '14
Q 1 '13
11
9
24
-
2.9%
3.2%
2013
2012
2011
2010
43
36
24
16
21
50
50
-
3.1%
3.4%
3.1%
2.9%
Q 1 '14
Q 1 '13
3.8
0.5
703
-
41.9%
-
13.5
-
42.4%
2013
2012
2011
2010
In our first year of operation, our PKO mill produced 13,500 tons,
and generated sales of 9,400 tons of PKO.
PK
('000 t, KER)
PKO
('000 t, PKO ER)
2013
Nucle us
*Nucle us O nly
Our CPO production quality remained exceptional
over the course of 2013, with aggregate Free Fatty
Acid (FFA) levels of just 2.65%.
FFA
Ye ar
Q 1 '14
Q 1 '13
2013
2012
2011
2010
Q 1 2014 Re sults Up d ate
(%)
2.87%
2.73%
2.65%
2.67%
2.55%
2.62%
In all, over 90% of our production could be
classified as Super CPO, with FFA levels below 3%.
his output services refiners’ higher-quality
products, and as such we receive a minimum of a
1.0% premium over spot prices for these sales.
Our remaining production achieves excellent
quality as well. he maximum monthly FFA level
from mills primarily processing our own
production, was just 3.06% in 2013.
11
Expanding domestic refining capacity, coupled with our
high-quality product, ensures robust demand for our CPO
DSN p lantations
DSN Ports
DSN custome rs
Re fine rie s
Our customers are primarily Indonesian CPO refineries located
in Kalimantan and Java, close to DSN’s operations.
Sale s Pe rformance
Regular customers include Smart, Wilmar, Kuala Lumpur
Kepong, Musim Mas and Dermaga Kencana Indonesia. We
expect Astra’s new refinery on Sulawesi Island to become a
customer in 2014 as well.
Volume
(k tons)
Our contracts are open tender, with SMART and Wilmar
typically offering better pricing - due to refinery location –and
terms than other buyers.
For Q1 2014, we sold 90 thousand tons of CPO, 22% higher
than the same period in 2013. Our average selling price of Rp8.8
million per ton was 40% above that in Q1 2013, and 24.6%
higher than the average for the full year.
Pe riod
CPO
PK
Sale s
%Δ
Sale s
%Δ
PKO
Q 1 '14
90
22
3
-63
7
Q 1 '13
73
-
7
-
-
2013
336
33
16
-55
9
2012
253
33
35
61
-
2011
190
40
21
24
-
2010
135
-
17
-
-
Re ve nue
Q 1 '14
786
71
14
-14
69
(rp b n)
Q 1 '13
458
-
17
-
-
2013
2,369
29
42
-63
66
2012
1,840
30
115
24
-
2011
1,411
57
93
63
-
2010
901
-
57
-
-
Ind one sian CPO trad ing at a p re mium to Malaysia since mid -2013
ASP
Q 1 '14
8.78
40
5.59
134
10.30
(rp mn/t)
Q 1 '13
6.26
-
2.39
-
-
900
2013
7.05
-3
2.70
-19
7.07
850
2012
7.29
-2
3.33
-23
-
2011
7.44
12
4.32
31
-
2010
6.66
-
3.29
-
-
1,000
2nd Month Malaysia CPO Contract (US$/t)
950
2nd Month Ind one sia CPO Contract (US$/t)
800
750
700
650
600
Jun-12
12
Se p -12
De c-12
Mar-13
Jun-13
Se p -13
De c-13
Mar-14
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our cash cost of sales for CPO declined 11% in 2013,
partially offsetting the broadly lower ASPs
Our cash cost in 2013 declined to Rp3.76 million per ton of
CPO sold, a drop of 11.3% from 2012.
Cost of Sale s
CPO Sale s ('000 t)
2013
336.2
135.3
288.7
336.0
244.7
326.7
274.3
224.3
193.7
166.1
227.4
161.1
107.2
210.8
FFB Purchase d
Milling
294.1
99.5
179.1
65.1
69.0
33.6
30.1
39.4
Total cash cost
1,263.0
1,069.5
689.7
548.6
Cash Cost/Ton
3.76
4.23
3.64
4.05
We purchase compound fertilizer – comprised of potash,
nitrogen, and phosphate – under annual contracts with fourmonthly delivery. Our unit costs per ton ranged from $525 to
$570 in 2013. New contracts covering our entire 2014 supply
have already been concluded at prices between $320 and $425
per ton.
Fe rtilize r
Lab or
O the rs
Labor accounts for nearly 27% of the total cash cost of sales.
2010
189.7
Cash Cost of Sale s (IDR b n)
Labor costs were up 22.5% for the year on the back of an
expanded workforce as well as modest adjustments in wages.
2011
252.5
Absolute fertilizer costs fell by nearly 12%, despite an increase
in planted and mature hectares, and account for roughly 23% of
total cash costs.
Purchases of external FFB – both plasma and unrelated estates were up 64%. his was due to the rapid increase in plasma
productivity with increasing maturity of the estates, as well as
higher external purchases in support of Mill 5 operations.
2012
% of total
2013
2012
2011
2010
Fe rtilize r
Lab or
O the rs
22.9%
26.6%
19.4%
30.5%
25.6%
21.0%
28.1%
24.1%
33.0%
29.4%
19.5%
38.4%
FFB Purchase d
Milling
23.3%
7.9%
16.7%
6.1%
10.0%
4.9%
5.5%
7.2%
3.8
million rp/ t
in 2013
Q 1 2014 Re sults Up d ate
13
We offer a Build-Operate-Transfer model for our plasma
program & currently manage over 75% of plasma hectarage
Our strong relationships with our plasma holders
is one critical element in the success of DSN’s
palm oil activities, generally fostering easier
acquisition of land, facilitating title conversion,
and minimizing the prospect of local disturbances
or social unrest.
26
Our BoT model has resulted in higher FFB yields
for plasma estates, and thereby higher revenues
for our plasma cooperatives. DSN still benefits
from the ~50% milling margin and gains
assurance that the loans to plasma holders can be
repaid.
5% of total FFB revenues are retained by DSN as
a management fee. Of the remainder, 30% is paid
to the plasma holder, while 70% services bank
loans and funds extended by DSN for upkeep and
maintenance of the estate prior to breaking even.
DSN typically funds the development of plasma
estates through bank loans with repayment
schedules comprising a 4-year grace period and 6year repayment.
%
plasma to nucleus
We had planted 13,254 hectares of plasma by the
end of Q1 2014. In total, 6,371 hectares had
reached maturity and produced 24,512 tons of
FFB in Q1 2014.
by
y the end of 2014
An amb itious p lanting sche d ule will re sult in p lasma are as totaling 26% of our
nucle us he ctarag e b y the e nd of 2014
Plasma %
Ye ar
Planting Sche d ule ('000 ha)
of Nucle us
Plasma
2008
6%
2.0
2009
6%
0.7
2010
8%
2011
Plante d Are a ('000 ha)
Total
Plasma
Nucle us
Total
3.7
5.7
2.0
35.5
37.6
6.5
7.2
2.7
42.1
44.8
0.9
4.1
5.0
3.6
46.2
49.8
9%
1.0
2.6
3.6
4.6
50.9
55.5
2012
17%
2.2
2.6
4.8
8.8
52.1
60.8
2013
22%
3.4
5.8
9.2
12.7
57.9
70.5
2014E
26%
4.2
6.4
10.6
16.9
64.2
81.1
2015E
29%
3.7
7.0
10.7
20.6
71.2
91.8
2016E
29%
2.3
7.7
10.0
22.9
78.9
101.8
14
Nucle us
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our commitment to social and environmental responsibility
is integral to the sustainability of our operations
Corporate Social Responsibility
Environmental Responsibility
DSN is committed to a wide range of CSR programs, and we
continuously engage and support the communities within which
we operate.
We and our subsidiaries involved in the palm oil business are
members of the Roundtable on Sustainable Palm Oil (RSPO),
and strive to comply with global RSPO and the Indonesian
Sustainable Palm Oil (“ISPO”) principles.
We maintain active partnerships with more than 20 cooperatives
of smallholders near our plantations to manage a total of 12,666
ha of planted area under our Plasma Program. his program helps
increase the productivity of our plasma by leveraging on DSN’s
expertise in plantation operations.
We exclusively employ local contractors and cooperatives for all of
our transportation, construction, and other non-core services. We
have been instrumental in fostering the development of these
small businesses and rely on them to the extent that we do not
own any trucks for the transport of FFB to our mills.
We continue to promote literacy by making education accessible
through the establishment of schools in our plantation areas as
well as community learning centers in the surrounding villages
with the help of the University of Sanata Dharma.
We have also provided free medical services to all our employees
and our local communities since we started operations, with a
network of clinics across our estates.
We have received RSPO certification for our SWA, DAN and
DIN palm oil plantations along with their respective mills, and
have completed the RSPO and ISPO audit process in December
2013 for all our mills and their respective estates. We expect to
receive the remaining RSPO certifications by this year.
We are also committed to protecting our environment. We have
set aside 6,600 hectares of land, or an area roughly equivalent to
10% of our total planted area, for conservation purposes.
We comply with various domestic and international
environmental standards in our wood products manufacturing
processes, and seek to ensure that all the logs and sawn timber
purchased for our operations are produced from sustainable forest
resources.
We were awarded the Certification of Legal Wood certifying our
use of legally sourced logs and have also obtained the Forest
Stewardship Council (FSC) Chain-of-Custody and Program for
the Endorsement of Forest Certification (PEFC) certifications.
Our successful implementation of these and other CSR programs We meet the Conformité Européenne (CE) labeling standards for
has resulted in no demonstrations or operational disturbances over products exported to Europe and have received certifications from
the California Air Resources Board (CARB) and the Japanese
the last 3 years by the local population or NGOs.
Agricultural Standard ( JAS).
Q 1 2014 Re sults Up d ate
15
DSN is also a leading wood products manufacturer with
reputable brand names &long-standing client relationships
DSN is the fourth largest wood products manufacturer in
Indonesia, producing panels, engineered floors and doors.
We have initiated a move into higher value, higher margin
products through the recent acquisition of TKPI, which
specializes in engineered flooring.
We continue to leverage on our long standing relationships with
customers to across the world to leverage this new business
initiative.
Our diverse exposure to customers in different segments and
geographies has protected us to from adverse economic impacts
as we maintain and grow our wood products business.
Sale s Volum
me
Q -o-Q
Q 1 '14
Q 1 '13
58
65
-11.3%
245
10
304
15
253
-32.7%
20.5%
52
1,073
4,318
3,595
20.1%
3,974
1,284
347
976
295
31.5%
17.8%
1,059
314
Pane l ('000 m3)
Eng ine e re d Prod ucts
Doors ('000 Pcs)
Flooring ('000 m2)
%Δ
FY2013
Ave rag e Se lling Price ('000 Rp )
Pane ls (p e r m3)
Eng ine e re d Prod ucts
Doors (p e r p c)
Flooring (p e r m2)
Top 10 Ind ustrial and Comme rcial Custome rs
Custome r Name
Typ e
Prod ucts
S.A. Shahab & Comp any Pte Ltd
Sumitomo Fore stry Comp any Ltd .
Vintag e Hard wood Flooring
Jiang su Skyrun Arse r Co., Ltd
Asia Trad ing , Inc
Associate d Lumb e r & Trad ing , Ltd
PKF Glob al
Plyq ue t Holzimp ort
Te ka Kore a Co., Ltd
Be ijing Te ka Holy Eag le Corp oration
Trad e r
Trad e r
Distrib utor
Trad e r
Trad e r
Trad e r
Trad e r
Distrib utor
Distrib utor
Distrib utor
Pane ls
Pane ls
Eng ine e re d
Pane ls
Pane ls
Pane ls
Eng ine e re d
Eng ine e re d
Eng ine e re d
Eng ine e re d
Re lationship Ge og rap hy
Flooring
Doors
Flooring
Flooring
Flooring
11 ye ars
8 ye ars
9 ye ars
3 ye ars
7 ye ars
5 Ye ars
15 ye ars
17 ye ars
12 ye ars
11 ye ars
Mid d le East
Jap an
Canad a
China
Jap an
Jap an
UK
Europ e
South Kore a
China
450,000
m3/annum panel capacity
4,000,000
m2/annum
flooring capacity
16
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Our capital expenditures in 2013 totaled Rp663 billion,
primarily for new planting & the construction of mills
Palm Oil
As our plantations mature, we expect to implement a planting
schedule sufficient to maintain a favorable long-term maturity
profile. In general, our cost to maturity for new planting is
roughly $5,000 to $5,500 per hectare.
5-5.5k/ha
$
cost to maturity
We also plan to match the increased FFB production over time
with appropriate increases in CPO processing capacity. A new
mill is required for every 10,000 additional mature hectares.
We expect to complete construction of two new palm oil mills
with total capacity of 720,000 tons / annum in 2015.
he cost of each 60 ton/hour mill, which is comprised of two
lines of 30 ton/hour capacity is approximately US$18 million.
Cap ital Exp e nd iture s
2013
2012
2011
2010
Immature Plantations
335
294
353
224
Construction in Prog re ss
182
482
282
128
O the rs
146
131
308
133
Total
663
907
942
485
(Doe s not includ e cap italize d inte re st or loans/ad vance s to p lasma)
Wood Products
For wood products, we have sufficient capacity
to meet our current growth plans. We intend to
more than double production volume in
engineered flooring from 1.1 million m2 in 2012
to 2.6 million m2 by 2015, while our plant
currently has capacity to produce up to 4 million
m2.
We will be optimizing our wood products
efficiency by relocating and consolidating our
operations in Surabaya and Gresik to a new
panel products processing plant in Lumajang by
2015. his is closer to our satellite plants and
will reduce our transportations costs
18
$
mn
for each 60 ton/hour mill
Q 1 2014 Re sults Up d ate
17
In total, DSN generated revenue of Rp3,842 billion in 2013,
TDA growing by 33% and EBITDA margins of 23%
with EBITDA
Rp
888
bn
EBITDA
in 2013
Q 1 2014
Total (IDR b n)
Q 1 '14
2013
2012
2011
2010
Re ve nue
EBITDA
EBITDA Marg in
Ne t Profit
Ne t Marg in
1,238
270
21.8%
151
12.2%
3,842
888
23.1%
216
5.6%
3,411
666
19.5%
252
7.4%
2,778
665
24.0%
374
13.5%
1,751
297
17.0%
162
9.3%
Loan Facilitie s
IDR Bn
US$ MM
Working Cap ital
Inve stme nt
Finance Le ase s
370
1,678
3
35
38
2
Total
2,051
74
Inte re st Rate Rang e
P alm O il
Low
2.75%
2.00%
Re ve nue
EBITDA
EBITDA Marg in
Profit Be fore Tax
PBT Marg in
Hig h 10.65%
5.75%
869
259
29.8%
208
23.9%
2,478
885
35.7%
517
20.9%
1,997
614
30.8%
416
20.9%
1,524
652
42.8%
547
35.9%
971
307
31.7%
260
26.8%
Total De b t
2,899
Ne t De b t
2,429
Eq uity
1,830
EBITDA
Wood Prod ucts
Re ve nue
EBITDA
EBITDA Marg in
Profit Be fore Tax
PBT Marg in
270
Financial Ratios:
369
30
8.2%
28
7.6%
1,364
73
5.4%
(80)
-5.9%
1,414
123
8.7%
33
2.3%
1,254
63
5.0%
12
0.9%
780
26
3.3%
(5)
-0.6%
De b t/Eq uity
1.6
Ne t De b t/Eq uity
1.3
Ne t De b t/EBITDA
2.3
The d e cline in Ne t Profit in 2013, d e sp ite sig nificant incre ase s in re ve nue and EBITDA, is larg e ly d ue to the imp act of
ye ar-e nd d e p re ciation of the rup iah ag ainst the d ollar. The mark-to-marke t of our $70 million FX loans outstand ing
re sulte d in an unre alize d FX loss of Rp 172 b illion.
Note : Annual Financial State me nts are aud ite d b y Sid d harta & Wijaja, Re g iste re d Pub lic Accountants, and a Me mb e r Firm of KPMG
Inte rnational.
18
PT Dharma Satya Nusantara Tb k (DSNG.JK)
Q 1 2014 Summary Financials
Total Consolid ate d (IDR b n)
Re ve nue
% g rowth
Gross Profit
% marg in
O p e rating Profit
% marg in
EBITDA
% marg in
Ne t Profit
% marg in
Fore x g ain (loss) from financing
Ad juste d Profit
% marg in
Total Palm O il (IDR b n)
Re ve nue
% g rowth
Gross Profit
% marg in
O p e rating Profit
% marg in
EBITDA
% marg in
Profit Be fore Tax
% marg in
Fore x g ain (loss) from financing
Ad juste d PBT
% marg in
Total Wood Prod ucts (IDR b n)
Re ve nue
% g rowth
Gross Profit
% marg in
O p e rating Profit
% marg in
EBITDA
% marg in
Profit Be fore Tax
% marg in
Fore x g ain (loss) from financing
Ad juste d PBT
% marg in
Financial Positions
Total d e b t
Ne t d e b t
Total Asse t
Total Eq uity
Total d e b t / e q uity
Ne t d e b t / e q uity
Ne t d e b t / EBITDA
Q 1-2014
Q 1-2013
1,238
54.9%
799
341
27.5%
205
16.6%
270
21.8%
151
12.2%
55
96
7.8%
191
23.8%
81
10.1%
132
16.5%
27
3.3%
(3)
30
3.8%
Q 1-2014
Q 1-2013
869
83.0%
475
290
33.4%
209
24.1%
259
29.8%
208
23.9%
27
181
20.8%
155
32.7%
91
19.1%
128
26.9%
66
13.9%
(2)
68
14.4%
Q 1-2014
Q 1-2013
369
13.9%
324
51
13.7%
16
4.4%
30
8.2%
28
7.6%
21
7
2.0%
36
11.0%
5
1.5%
18
5.7%
(3)
-1.1%
(1)
(3)
-0.9%
Q oQ Δ%
78.7%
153.4%
105.0%
464.7%
220.3%
Q oQ Δ%
87.0%
130.3%
103.2%
214.2%
165.2%
Q oQ Δ%
42.6%
245.9%
65.6%
na
na
2013
2012
3,842
12.6%
1,190
31.0%
657
17.1%
888
23.1%
216
5.6%
(184)
400
10.4%
3,411
22.8%
961
28.2%
494
14.5%
666
19.5%
252
7.4%
(34)
287
8.4%
2013
2012
2,478
24.1%
1,046
42.2%
707
28.5%
885
35.7%
517
20.9%
(91)
608
24.5%
1,997
31.0%
820
41.1%
496
24.8%
614
30.8%
416
20.9%
(13)
429
21.5%
2013
2012
1,364
-3.5%
144
10.5%
20
1.5%
73
5.4%
(80)
-5.9%
(68)
(12)
-0.9%
1,414
12.7%
141
10.0%
70
4.9%
123
8.7%
33
2.3%
(13)
46
3.2%
YoY Δ%
23.8%
32.9%
33.2%
-14.6%
39.5%
YoY Δ%
27.6%
42.6%
44.0%
24.1%
41.7%
YoY Δ%
2.0%
-71.1%
-40.4%
-345.9%
-127.4%
Q 1-2014
Q oQ Δ%
2013
2012
YoY Δ%
2,899
2,429
6,118
1,830
1.6x
1.3x
2.3x
-2.1%
-1.8%
3.3%
9.0%
2,961
2,474
5,921
1,679
1.8x
1.5x
2.8x
2,733
2,195
5,141
1,406
1.9x
1.6x
3.3x
8.4%
12.7%
15.2%
19.4%
Note : Annual Financial State me nts are aud ite d b y Sid d harta & Wijaja, Re g iste re d Pub lic Accountants, and a Me mb e r Firm of KPMG
Inte rnational.
Q 1 2014 Re sults Up d ate
19
Q1 2014 Operations Summary
P alm O il Summary
Q 1-2014
Q 1-2013
Q oQ Δ%
2013
2012
YoY Δ%
Plantations
FFB Prod uction (t)
303,231
259,762
16.7%
1,240,818
1,019,923
FFB nucle us (t)
278,719
244,235
14.1%
1,152,611
976,711
21.7%
18.0%
FFB p lasma (t)
24,512
15,527
57.9%
88,207
43,212
104.1%
Mills
FFB Proce sse d (t)
373,813
277,500
34.7%
1,380,528
1,052,490
31.2%
CPO Prod uction (t)
88,385
65,644
34.6%
335,730
256,971
30.6%
PK Prod uction (t)
10,988
8,838
24.3%
43,277
35,716
21.2%
3,760
468
703.4%
13,482
FFB Yie ld - nucle us (t/ha)
5.8
5.6
3.6%
26.4
25.5
3.7%
FFB Yie ld - p lasma (t/ha)
3.8
3.1
24.9%
17.5
10.9
60.6%
PKO Prod uction (t)
CPO O ER (%)
-
-
23.6%
23.7%
-0.1%
24.3%
24.4%
-0.4%
KER (%)
2.9%
3.2%
-8.9%
3.1%
3.4%
-7.6%
FFA (%)
2.87%
2.73%
5.1%
2.65%
2.67%
-0.7%
Sales Volume (tons)
CPO
89,554
73,266
22.2%
336,240
252,536
33.1%
PK
2,533
6,924
-63.4%
15,622
34,589
-54.8%
PKO
6,701
-
na
9,400
-
CPO
8.78
6.26
40.3%
7.05
7.29
-3.3%
PK
5.59
2.39
134.3%
2.70
3.33
-18.7%
na
7.07
-
-
-
Average Selling Price (IDR mn/ton)
PKO
10.31
Mature Land (ha)
Nucle us
48,038
43,644
10.1%
43,644
38,361
13.8%
6,371
5,047
26.2%
5,047
3,972
27.1%
54,409
48,691
11.7%
48,691
42,333
15.0%
Q 1-2014
Q 1-2013
Q oQ Δ%
Pane l (m3)
58,019
65,391
-11.3%
244,642
334,512
-26.9%
Eng ine e re d d oors (p cs)
10,273
15,258
-32.7%
51,989
91,102
-42.9%
Eng ine e re d floors (m2)
304,252
252,578
20.5%
1,073,412
1,166,657
-8.0%
Pane l (m3)
4.32
3.60
20.1%
3.97
3.10
28.1%
Eng ine e re d d oors (p cs)
1.28
0.98
31.5%
1.06
0.69
53.6%
Eng ine e re d floors (m2)
0.35
0.29
17.8%
0.31
0.27
14.8%
Plasma
Total
Wood Prod ucts Summary
2013
2012
YoY Δ%
Sales Volume
Average Selling Price (IDR mn)
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20
PT Dharma Satya Nusantara Tb k (DSNG.JK)