Indocement Tunggal Prakarsa Q3 2017 20171113
Slide 1 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement Fact Sheet
13 Kilns
19 mio ton annual
clinker capacity
24.5 mio ton annual
cement mill capacity
38 batching plants
5 mio m3 annual
RMC production
capacity
632 truck mixers
2.8 mio ton annual
aggregates
production capacity
Slide 2 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
18 distributors
18,500 retailers
172 warehouses
Highlight of Indonesia Macro Economic
UPSIDES:
Strong Reserves
Lower
Unemployment
Top performance equity
market in Asia
DOWNSIDES:
Increase Government
Debt due to Infra
Slide 3 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Stable against USD
challenged by current
lower lending rate, the
Fed rate, and US Tax cut
Slow Down
Export
Deficit in State Budget Prompts Government to Prioritize
Infrastructure Spending
Plan to Build 35,000 MW Power Plants to be Reviewed
Revenue
IDR Trillion
Expenditure
IDR Trillion
Actual as a % of Budget
Slide 4 - November 13, 2017
* Realized figures up to August 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 ResultsSource: LKPP, ESDM, Kontan Research
Deficit as a % of Revenue
Indonesian Cement Industry 2017 Landscape
Lafarge Indonesia
1.5 mio ton
0.2 mio ton (g)
Semen Bosowa
4.4 mio ton
3.0 mio ton (g)
Anhui Conch
4.5 mio ton
2.2 mio ton (g)
Indocement
24.9 mio ton
Semen Indonesia
7.2 mio ton
0.9 mio ton (g)
Semen Baturaja
2.2 mio ton
0.7 mio ton (g)
Merah Putih
4.9 mio ton
2.8 mio ton (g)
Siam Cement
1.8 mio ton
Semen Indonesia
7.4 mio ton
Semen Indonesia
15.2 mio ton
0.7 mio ton (g)
Semen Puger
0.5 mio ton
STAR
1.8 mio ton
Holcim Indonesia
12.1 mio ton
Jui Shin
1.8 mio ton
Slide 5 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Semen Kupang/Merah Putih
0.4 mio ton
Source: ASI and internal estimation
Total Cement Capacity in 2017 of 103.8* mio tons,
from 98.5 mio tons in 2016
* Total capacity in 2017 includes Finished Mills from Hao Han (0.6 mt), Semen
Jakarta (1.5 mt), and Sun Fook (0.6 mt)
(g) refers to grinding mill capacity
Oversupplied market in Indonesia:
Supply build-up in recent years, excluding export, 40 Mt overcapacity (FC2017)
Overcapacity of 40 Mt in FY2017f
Consumption per Capita kg/capita
Philippines
240
Indonesia
243
Thailand
443
Vietnam
611
Malaysia
751
Brunei
899
Singapore
1,380
Slide 6 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Demand growing at an assumed rate of
• 6.9% for 2017
• 5% - 6% for 2018
• 6% for 2019
• 7% for 2020 – 2023
• 5% for 2024 & 2025
Oversupplied market in Indonesia:
Supply build-up in recent years, including export, 35 Mt overcapacity (FC2017)
Export decreased during high domestic utilization and
increased during low domestic utilization
Slide 7 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Source: Asosiasi Semen Indonesia
Supply Side:
9 new players in the last 5 years and at least 1 more showed
interest in entering Indonesia market
9 new players in
2012-2016 with current
combined4 capacity of
~15 Mt
Timeline of cement new entrants commissioning year
Today
2012
2013
2014
2015
2016
2017
2018
2019
2020
SS
Planned commissioning year unknown1
1. Incoming capacity up to 2020: Semen Indonesia Aceh, Conch North Sulawesi, Conch South Sulawesi, and Semen Grobogan
Slide 8 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Regional shift of Demand:
Better Growth Outlook in Central & East Java and Sumatera
Indonesia:
61% , +6.6%
Market shares based on cement domestic sales (2016, 9M17)
Kalimantan:
67% , -5.8%
4.2Mt 2.9Mt
5.5Mt
13.5Mt 10.0Mt
27%
24%
11%
11%
8%
42%
43%
3.8Mt
15%
15%
26%
25%
42%
41%
7%
2%
24%
61.6Mt 47.4Mt
Sulawesi:
43% , -1.5%
1%
23%
11%
9%
62%
66%
41%
42%
33.4Mt 27.0Mt
Sumatera:
96% , +4.3%
16%
16%
35%
33%
38%
1.5Mt
37%
3.5Mt
2.7Mt
5%
5%
33%
34%
Source: Asosiasi Semen Indonesia
35%
Java:
51% , +11.3%
Western Java:
38% , +7.1%
Central Java:
174% , +16.4%
Slide 9 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
East Java
44% , +14.4%
1.1Mt
1%
1%
17%
14%
59%
51%
33%
Nusa
Tenggara
East Indonesia:
93% , -4.2%
Nusa Tenggara:
896% , +2.1%
NB: Data in Box: Utilization Rate and Growth Rates YoY per area for 9M17
Drivers of Cement demand:
Strong progress of heavy equipment order is another leading
indicator for cement demand
Cement demand improves in line with lower mortgage rate and positive trade balance
Weighted by relatively high Investment Loan
Mortgage
Rate %
% Demand
Growth
14.0%
20%
17.7%
12.0%
14.5%
10.0%
10.5%
10%
8.0%
6.0%
15%
6.2%
6.6%
5%
5.5%
3.3%
4.0%
3.5%
4.25%
0%
-0.6%
2.0%
0.0%
-5%
10
11
12
13
14
15
16
17
Investment Loan - State Banks (LHS)
BI Rate/BI 7-day RRR* (LHS), * valid from August 19, 2016
Cement Demand (RHS)
Slide 10 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
30.0
25.0
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
-20.0
% Demand
Growth
Support by positive trade balance
Bio USD
17.7%
14.5%
6.2%
6.6%
5.5%
3.3% 3.5%
2.4%
0.0%
2010 2011 2012 2013 2014 2015 2016 Q3 Q3
2016 2017
Non Oil and Gas (RHS)
Cement Demand (LHS)
Oil and Gas (RHS)
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
7 new infrastructure development in greater Jakarta to
create high bulk demand
6
1
7
Astra
Juishin
1.8mt
2
4
Holcim
5.8 mt
Indocement
18.4 mt
5
Pamoyanan future
quarry
Slide 11 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
3
Purwakarta
quarry
Multiplier effects after Infrastructure established:
Industrial Estates in Greater Jakarta
Conch
2.2 mt
Juishin
1.8mt
Merah Putih
6.3 mt
Holcim
5.8 mt
Indocement
18.4 mt
Est. of overall area of 16,500 ha
Est. cement consumption 230 kg per sqm
Jakarta, Banten, West Java demand:
2016: 16.2 mt
9M17: 12.7 mt
Siam
1.8 mt
Slide 12 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement‟s Strategies under Current Tight Competition:
Rebalance Portfolio and focus on home market
Java Presence Grows
• To reduce logistics
cost and to defend
market share at
home markets sales
are targeted
towards home
market
• Central Java is one
of the fastest
growing market
and underserved
(high utilization rate)
• Multiplier effects
across Java
generally, and
greater Jakarta
specifically are
observed since Q2
2017
Slide 13 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement‟s Strategies under Current Tight Competition:
More bulk sales focus - as Jakarta & West Java Projects started
Bag/Bulk sales composition Jan - Dec
In thousand tons
20,000
• High bulk volume in Jakarta
• Indocement benefits from
proximity to Jakarta & West
Java Projects
18,000
16,000
3,517
20%
3,931
21%
4,109
14,000
24%
3,860
24%
12,000
2,394
10,000
8,000
14,459
14,568
12,943
6,000
21%
2,917
24%
12,518
4,000
9,150
9,399
9M16
9M17
2,000
2013
2014
2015
Bag
•
•
•
2016
Bulk
Portion of bag sales is lower than bulk due to declining sales especially in outside Java
for Q3 2017
Composition of bag vs bulk sales in Q3 2017 is 76.0% vs. 24.0%
Indocement positions itself as a reliable partner for infrastructure projects providing
quality bulk cement and concrete at timely delivery
Slide 14 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement‟s Strategies under Current Tight Competition:
Continuous focus on cost control with disciplined
spending on promotional activities
Composition of Manufacturing Cost as %
Trend
Fixed Cost Control – IDR Bio
45.1%
1,400
+14.9%
40%
-11.0%
23.3%
40.6%
Raw Materials
509
-8.2%
11.1%
26.9%
26.0%
800
20.5%
20%
10.7%
10.3%
43.1%
Direct labor
9M16
Fuel and
Power
9M17
486
+2.4%
600
400
200
20.6%
Man.
Overhead
474
+3.1%
21.7%
9M15
•
•
•
•
•
1,200
1,000
30%
0%
1,600
1,466
50%
10%
1,800
1,685
1,597
-6.8%
Selling Expense
9M15
9M16
G&A Expense
9M17
Decrease in raw materials cost due to application of alternative materials.
Increase in coal price caused increase in fuel and power cost despite running the most efficient kilns.
Manufacturing Overhead portion decreases due to cost savings activities including repairs.
Cost savings from ramping up of P14 continued into Q3 2017.
Increase in SG&A relates to additional cost to support end user program and Rajawali promotion.
Slide 15 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Continue in Cost Leadership to maintain a decent margin
in 3Q 2017
New market entrants leading to higher competition and pricing pressure
but Indocement maintains better margin compared to peers
INTP Gross margin development
INTP EBITDA margin development
50.0%
40.0%
40.0%
34.5%
35.0%
34.9%
34.0%
30.0%
30.0%
20.0%
43.2%
41.4%
40.3%
40.0%
22.2%
21.0%
20.0%
15.0%
33.9%
29.6%
29.6%
27.9%
10.0%
10.0%
0.0%
23.0%
25.0%
44.5%
45.4%
Q1
43.8%
Q2
2015
Q3
2016
43.9%
Q4
2017
5.0%
0.0%
34.8%
34.2%
Q1
33.0%
Q2
2015
33.1%
Q3
2016
Q4
2017
Continuing competitive environment, Management focus in taking respective initiatives early on during
the year:
Operational Excellence program
Fixed cost reduction program
Managing efficient kiln utilization
Slide 16 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Financial Result
Consolidated Statement of Comprehensive Income
Description
Total Sales Volume (thousand tons)
Domestic Sales Volume (thousand tons)
Export Sales Volume (thousand tons)
Net Revenues
Cost of Revenues
Gross Profit
% of Net Revenues
Operating Expenses
Other Operating Income - Net
Operating Income
% of Net Revenues
EBITDA
% of Net Revenues
Finance Income - Net
Equity in Net Earnings of Associated Companies - Net
Income before Final Tax and Income Tax Expense
Final Tax
Income before Income Tax Expense
Income Tax Expense - Net
Income for the Period
Other Comprehensive Income (Loss) for the Period, Net of Tax
Total Comprehensive Income for the Period
9M 2017
Bio IDR
12,908
12,767
141
10,512.6
-6,888.0
3,624.6
34.5%
-2,170.7
10.7
1,464.5
13.9%
2,318.2
22.1%
316.5
7.4
1,788.3
-0.5
1,787.8
-381.3
1,406.5
1.9
1,408.3
9M 2016
Bio IDR
12,265
11,966
299
11,346.5
-6,619.9
4,726.6
41.7%
-1,940.6
3.3
2,789.3
24.6%
3,527.8
31.1%
373.8
16.0
3,179.1
-0.6
3,178.5
-30.9
3,147.6
-7.9
3,139.7
Variance
%
Bio IDR
642.1
5.2%
800.4
6.7%
-158.3
-52.9%
-834.0
-7.3%
-268.1
-4.1%
-1,102.1
-23.3%
-230.1
7.4
-1,324.8
-11.9%
227.5%
-47.5%
-1,209.7
-34.3%
-57.3
-8.6
-1,390.7
0.0
-1,390.7
-350.4
-1,741.1
9.7
-1,731.4
-15.3%
-53.8%
-43.7%
7.7%
-43.8%
1132.4%
-55.3%
123.6%
-55.1%
• Operating margin reduction from 24.6% to 13.9% contributed by lower revenues by -7.3% due to strong competition on weak demand
situation combined with higher cost of production (+4.1%) amidst soaring coal price.
• Active end user program initiated during beginning of the year support volume growth.
Slide 17 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Balance Sheet
Consolidated Statement of Financial Position
9M 2017
Bio IDR
11,883.7
15,569.8
2,527.6
798.8
24,127.2
27,453.6
Description
Current Assets
Non-Current Assets
Current Liabilities
Non-Current Liabilities
Equity
Total Assets = Total Liabilities + Equity
•
•
•
•
9M 2016
Bio IDR
12,816.3
15,168.6
1,767.1
739.8
25,477.9
27,984.9
Sep 17 vs Sep 16
Bio IDR
%
-932.5
-7.3%
401.2
2.6%
760.5
43.0%
59.0
8.0%
-1,350.8
-5.3%
-531.3
-1.9%
FY2016
Bio IDR
14,424.6
15,726.0
3,187.7
824.1
26,138.7
30,150.6
Outside dividend payment impact, inventories balance decreased due to stronger volume in 2nd half.
Inline with production, payable balance slightly higher.
Increase in Non-Current Assets compared to same period last year was mainly due to spending in capital
expenditures.
Dividend Payment history:
Dividend/Share *
Avg. Share Price
Dividend Yield
% Div. Payout
2013
2014
2015
2016
2017
450
21,604
2.1%
34.8%
900
23,390
3.8%
66.1%
1,350
21,159
6.4%
94.3%
415
18,225
2.3%
35.1%
929
17,127
5.4%
88.4%
* based on previous Fiscal Year Earnings
Slide 18 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement‟s Strategies under Current Tight Competition:
Shut Down Old Kilns and Run the most efficient kilns
Run P14 production (10,000 tpd) in full-swing in 2017 will help to
reduce further production cost by about USD 4-5 per ton
640
534
1,024
1,238
1,472
3,520
1,216
1,344
2,400
2,400
3,200
4,571
4,156
1,912
1,608
1,579
3,117
3,117
1999
P11
2000
P12
1,745
1,330
831
694
1975
1976
1979
1980
1983
1984
P1
P2
P3
P4 + P5
P6
P7 + P8
In „000 ton; top: clinker capacity, bottom: cement mill capacity
Slide 19 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
1991
P9
1996
P10
2016
P14
Indocement‟s Strategies under Current Tight Competition:
Lower Logistics Cost and Optimized Geographical Positioning
PontianakTerminal
Samarinda Terminal
Tarjun Factory
1 plant with
production capacity
of 2.6mt
Tj. Priok Terminal
Cigading Terminal
Citeureup Factory
10 plants with
production
capacity of 18.2mt
Palimanan Factory
Surabaya
Terminal
Sepanjang
Terminal
Lombok Terminal
2 plants with
production capacity
of 4.1mt
• Citeureup Factory is one of the largest integrated factory complexes in the world.
• State-of-art technology with some of the most efficient kilns in operation today.
• Current total capacity is 24.9 mt of cement.
• Cement distribution using train for some locations.
Slide 20 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
New Terminal Palembang - Progress Oct 2017
2 silos cement @ 5,000 ton
(total cap. 10,000 ton)
1 packer of 120 ton/hour
1 line of bulk loading
70 % (Civil & Mechanical)
Packing
house on
progress
Silo 1 & 2 foundations on
progress
system
1 warehouse: 1,458 M2
Truck scale cap. 80 ton
Area 3.2 Ha
1 jetty port
Operating Target Q1 2018
Infrastructure (pavement)
progress
Slide 21 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Pilings for
jetty
New Terminal Lampung – Progress Oct 2017
3 steel silos cement @ 4,000
ton (total cap. 12,000 ton)
1 packer of 180 ton/hour
1 line of bulk loading system
1 Truck scale cap. 100 ton
1 Warehouse 1,000 M2
Area 4.2 Ha
1 Jetty Port
Operating Target Q1 2019
Slide 22 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
40 % (Jetty Works)
Indocement‟s Strategies under Current Tight Competition:
Vertical Integration in Ready-Mix Concrete & Aggregates
Strengthening Ready-Mix Concrete business particularly high-grade quality in order to meet the increase
demand of infrastructure development in Indonesia.
5,000
000m3
3,000
4,430
RMC Sales Volume
3,517
2,500
2,000
2,473
1,736
3,000
1,816
1,779
9M16
9M17
1,554
2,429
1,500
2,148
1,265
1,716
1,221
1,000
2,383
2,284
3,377
2,988
2,000
2,849
AGG Sales Volume
3,947
4,000
000 tons
800
630 683
1,000
930 956
0
500
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 9M16 9M17
Slide 23 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
2010
2011
2012
2013
2014
2015
2016
Indocement‟s Strategies under Current Tight Competition:
Product Differentiation by introducing new brand of
RAJAWALI as “fighting brand”
Through its existing distribution
channel, Rajawali was initially
launched on Oct 10, 2016 in
three cities in 2016. Currently
Rajawali is offered in 30 cities:
Jakarta, 15 cities in West Java, 6
Cities in Banten, and 8 Cities in
Central Java.
Slide 24 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Sticky, Strong & More
environmental cement
product!!!
Indocement‟s Strategies under Current Tight Competition:
SuperSlag Cement – The most environmental friendly product
Durable and Ecofriendly Product
S.No.
Embodied CO2 Emission for
Raw Material
CO2 Emission
(kg/Tonne)
% Reduction
Compared to
OPC Type I
•
1
OPC Type 1
768.55
---
2
15% Fly Ash + 85% OPC
703.04
8.52
3
Slag Cement: Low Heat
339.80
55.78
4
Slag Cement: General Purpose
351.18
54.31
Cradle to Gate
CO2 Emission
kg / m3
% Savings in CO2
Emission
FC 30 Concrete having 100% OPC
450.19
---
FC 30 concrete having 15% Fly Ash + 85%
OPC
436.98
2.93
FC 30 concrete having Slag Cement: Low
Heat
288.12
36
FC 30 concrete having Slag Cement:
General Purpose
292.43
Mix Type
Slide 25 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
35
Slag cement is a product of
consistent quality
Suitable for Mass Concrete
applications
No Thermal Cracks
Long-Term Durability:
Resistance to Water
Resistance to Salt /
Sulfate penetration into
the concrete
General purpose Slag
Cement is suitable for
marine environment
Saves natural resources
and lower Green House
emission
Long-term compressive
strength development due
to continued hydration
Indocement‟s Strategies under Current Tight Competition:
End-User Program to Boost Customer Loyalty in Weak Demand Period
Slide 26 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
source: www.sementigaroda.com
Outlook of Indonesian Cement Market
Market Condition
National cement consumption growth started to turn positive and expected to grow around 7% in
2017 (versus negative growth of -0.6% in 2016) and 5-6% in 2018
Consumption in 2018 will still be driven by infrastructure projects and some of commercial and
residential projects that have been launched in 2017. However, US policies to increase interest rate
and reduce corporate tax will somewhat affect Indonesia, i.e.: weakening exchange rate of IDR/USD
and possible IDR interest rate increase. In turn, such macroeconomic condition will weaken demand in
2018
Strong concrete and bulk cement demand anticipated in Sumatera, Greater Jakarta, Central, and East
Java in 2018 due to Government’s infrastructure projects and the multiplier effect projects.
Recent hike in coal price will curb the potential further drop in prices in near future and possible
consolidation. Coal price has slide back to $94 in October 2017 and remain considerably high coal
index price in 2018.
Over supply will continue in next few years -- We still expect the continuing tight competition among
19 brands from 15 players (from 9 brands and 9 players previously) especially in Jakarta and West
Java due to more players located in these areas will hinder the price to increase.
Slide 27 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement’s Action Plan
Run P14 production (10,000 tpd) in full-swing in 2018 will help to reduce further production cost by about
USD 3-4 per ton
Optimize product mix from 13 line of cement production will bring competitive
advantages of Indocement to introduce different types of cement (OPC, PCC,
PPC, TR Rapid, PCC Industry and future products- slag cement)
Indocement expansion in cement terminals in Sumatera and batching plants will be ready in 2018.
Clinker exports and domestic clinker sales will be done more during oversupply to abroad countries.
Strengthen our Pull demand in bagged cement segment for end-user customers through strong
Retail/ Distribution channel and will continue to enhance our brand image, TIGA RODA Cement
Using RAJAWALI brand as fighting brand to get some volume from customers, who perceive
cement as “commodity” product and in low-price cement segment - in competition with
2nd tier brands out of new players
Develop new business line of prefabricated affordable housing products “Rumah Pabrikasi
Indocement” through new subsidiary.
Keep expanding in RMC and aggregates as well as limestone sand business to enable Indocement
offering bundling package
Strong balance sheet with no gearing is an important winning factor in competition and
in future consolidation phase if happen in near future
Slide 28 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
42 Years Building Indonesia KOKOH
THANK YOU
Slide 29 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
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after reviewing existing data and research. Such statements involve known and unknown risks including factors such as: (i)Global macroeconomic
and geopolitical situations; (ii) Indonesia macroeconomic and geopolitical situation; (iii) Competition from incumbents and new players; (iii)
Changes in laws, regulation, taxation, or accounting standards or practices; (iv) Acquisitions, divestitures, and various business opportunities that
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For further information please contact
PT Indocement Tunggal Prakarsa Tbk.
Wisma Indocemen, 8th Floor
Jl. Jend. Sudirman Kav 70 - 71
Jakarta 12910, Indonesia
Phone : +62 21 2512121
e-mail: investor.relations@indocement.co.id.
©2017, PT Indocement Tunggal Prakarsa Tbk. All rights reserved.
Slide 30 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement Fact Sheet
13 Kilns
19 mio ton annual
clinker capacity
24.5 mio ton annual
cement mill capacity
38 batching plants
5 mio m3 annual
RMC production
capacity
632 truck mixers
2.8 mio ton annual
aggregates
production capacity
Slide 2 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
18 distributors
18,500 retailers
172 warehouses
Highlight of Indonesia Macro Economic
UPSIDES:
Strong Reserves
Lower
Unemployment
Top performance equity
market in Asia
DOWNSIDES:
Increase Government
Debt due to Infra
Slide 3 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Stable against USD
challenged by current
lower lending rate, the
Fed rate, and US Tax cut
Slow Down
Export
Deficit in State Budget Prompts Government to Prioritize
Infrastructure Spending
Plan to Build 35,000 MW Power Plants to be Reviewed
Revenue
IDR Trillion
Expenditure
IDR Trillion
Actual as a % of Budget
Slide 4 - November 13, 2017
* Realized figures up to August 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 ResultsSource: LKPP, ESDM, Kontan Research
Deficit as a % of Revenue
Indonesian Cement Industry 2017 Landscape
Lafarge Indonesia
1.5 mio ton
0.2 mio ton (g)
Semen Bosowa
4.4 mio ton
3.0 mio ton (g)
Anhui Conch
4.5 mio ton
2.2 mio ton (g)
Indocement
24.9 mio ton
Semen Indonesia
7.2 mio ton
0.9 mio ton (g)
Semen Baturaja
2.2 mio ton
0.7 mio ton (g)
Merah Putih
4.9 mio ton
2.8 mio ton (g)
Siam Cement
1.8 mio ton
Semen Indonesia
7.4 mio ton
Semen Indonesia
15.2 mio ton
0.7 mio ton (g)
Semen Puger
0.5 mio ton
STAR
1.8 mio ton
Holcim Indonesia
12.1 mio ton
Jui Shin
1.8 mio ton
Slide 5 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Semen Kupang/Merah Putih
0.4 mio ton
Source: ASI and internal estimation
Total Cement Capacity in 2017 of 103.8* mio tons,
from 98.5 mio tons in 2016
* Total capacity in 2017 includes Finished Mills from Hao Han (0.6 mt), Semen
Jakarta (1.5 mt), and Sun Fook (0.6 mt)
(g) refers to grinding mill capacity
Oversupplied market in Indonesia:
Supply build-up in recent years, excluding export, 40 Mt overcapacity (FC2017)
Overcapacity of 40 Mt in FY2017f
Consumption per Capita kg/capita
Philippines
240
Indonesia
243
Thailand
443
Vietnam
611
Malaysia
751
Brunei
899
Singapore
1,380
Slide 6 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Demand growing at an assumed rate of
• 6.9% for 2017
• 5% - 6% for 2018
• 6% for 2019
• 7% for 2020 – 2023
• 5% for 2024 & 2025
Oversupplied market in Indonesia:
Supply build-up in recent years, including export, 35 Mt overcapacity (FC2017)
Export decreased during high domestic utilization and
increased during low domestic utilization
Slide 7 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Source: Asosiasi Semen Indonesia
Supply Side:
9 new players in the last 5 years and at least 1 more showed
interest in entering Indonesia market
9 new players in
2012-2016 with current
combined4 capacity of
~15 Mt
Timeline of cement new entrants commissioning year
Today
2012
2013
2014
2015
2016
2017
2018
2019
2020
SS
Planned commissioning year unknown1
1. Incoming capacity up to 2020: Semen Indonesia Aceh, Conch North Sulawesi, Conch South Sulawesi, and Semen Grobogan
Slide 8 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Regional shift of Demand:
Better Growth Outlook in Central & East Java and Sumatera
Indonesia:
61% , +6.6%
Market shares based on cement domestic sales (2016, 9M17)
Kalimantan:
67% , -5.8%
4.2Mt 2.9Mt
5.5Mt
13.5Mt 10.0Mt
27%
24%
11%
11%
8%
42%
43%
3.8Mt
15%
15%
26%
25%
42%
41%
7%
2%
24%
61.6Mt 47.4Mt
Sulawesi:
43% , -1.5%
1%
23%
11%
9%
62%
66%
41%
42%
33.4Mt 27.0Mt
Sumatera:
96% , +4.3%
16%
16%
35%
33%
38%
1.5Mt
37%
3.5Mt
2.7Mt
5%
5%
33%
34%
Source: Asosiasi Semen Indonesia
35%
Java:
51% , +11.3%
Western Java:
38% , +7.1%
Central Java:
174% , +16.4%
Slide 9 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
East Java
44% , +14.4%
1.1Mt
1%
1%
17%
14%
59%
51%
33%
Nusa
Tenggara
East Indonesia:
93% , -4.2%
Nusa Tenggara:
896% , +2.1%
NB: Data in Box: Utilization Rate and Growth Rates YoY per area for 9M17
Drivers of Cement demand:
Strong progress of heavy equipment order is another leading
indicator for cement demand
Cement demand improves in line with lower mortgage rate and positive trade balance
Weighted by relatively high Investment Loan
Mortgage
Rate %
% Demand
Growth
14.0%
20%
17.7%
12.0%
14.5%
10.0%
10.5%
10%
8.0%
6.0%
15%
6.2%
6.6%
5%
5.5%
3.3%
4.0%
3.5%
4.25%
0%
-0.6%
2.0%
0.0%
-5%
10
11
12
13
14
15
16
17
Investment Loan - State Banks (LHS)
BI Rate/BI 7-day RRR* (LHS), * valid from August 19, 2016
Cement Demand (RHS)
Slide 10 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
30.0
25.0
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
-20.0
% Demand
Growth
Support by positive trade balance
Bio USD
17.7%
14.5%
6.2%
6.6%
5.5%
3.3% 3.5%
2.4%
0.0%
2010 2011 2012 2013 2014 2015 2016 Q3 Q3
2016 2017
Non Oil and Gas (RHS)
Cement Demand (LHS)
Oil and Gas (RHS)
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
7 new infrastructure development in greater Jakarta to
create high bulk demand
6
1
7
Astra
Juishin
1.8mt
2
4
Holcim
5.8 mt
Indocement
18.4 mt
5
Pamoyanan future
quarry
Slide 11 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
3
Purwakarta
quarry
Multiplier effects after Infrastructure established:
Industrial Estates in Greater Jakarta
Conch
2.2 mt
Juishin
1.8mt
Merah Putih
6.3 mt
Holcim
5.8 mt
Indocement
18.4 mt
Est. of overall area of 16,500 ha
Est. cement consumption 230 kg per sqm
Jakarta, Banten, West Java demand:
2016: 16.2 mt
9M17: 12.7 mt
Siam
1.8 mt
Slide 12 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement‟s Strategies under Current Tight Competition:
Rebalance Portfolio and focus on home market
Java Presence Grows
• To reduce logistics
cost and to defend
market share at
home markets sales
are targeted
towards home
market
• Central Java is one
of the fastest
growing market
and underserved
(high utilization rate)
• Multiplier effects
across Java
generally, and
greater Jakarta
specifically are
observed since Q2
2017
Slide 13 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement‟s Strategies under Current Tight Competition:
More bulk sales focus - as Jakarta & West Java Projects started
Bag/Bulk sales composition Jan - Dec
In thousand tons
20,000
• High bulk volume in Jakarta
• Indocement benefits from
proximity to Jakarta & West
Java Projects
18,000
16,000
3,517
20%
3,931
21%
4,109
14,000
24%
3,860
24%
12,000
2,394
10,000
8,000
14,459
14,568
12,943
6,000
21%
2,917
24%
12,518
4,000
9,150
9,399
9M16
9M17
2,000
2013
2014
2015
Bag
•
•
•
2016
Bulk
Portion of bag sales is lower than bulk due to declining sales especially in outside Java
for Q3 2017
Composition of bag vs bulk sales in Q3 2017 is 76.0% vs. 24.0%
Indocement positions itself as a reliable partner for infrastructure projects providing
quality bulk cement and concrete at timely delivery
Slide 14 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement‟s Strategies under Current Tight Competition:
Continuous focus on cost control with disciplined
spending on promotional activities
Composition of Manufacturing Cost as %
Trend
Fixed Cost Control – IDR Bio
45.1%
1,400
+14.9%
40%
-11.0%
23.3%
40.6%
Raw Materials
509
-8.2%
11.1%
26.9%
26.0%
800
20.5%
20%
10.7%
10.3%
43.1%
Direct labor
9M16
Fuel and
Power
9M17
486
+2.4%
600
400
200
20.6%
Man.
Overhead
474
+3.1%
21.7%
9M15
•
•
•
•
•
1,200
1,000
30%
0%
1,600
1,466
50%
10%
1,800
1,685
1,597
-6.8%
Selling Expense
9M15
9M16
G&A Expense
9M17
Decrease in raw materials cost due to application of alternative materials.
Increase in coal price caused increase in fuel and power cost despite running the most efficient kilns.
Manufacturing Overhead portion decreases due to cost savings activities including repairs.
Cost savings from ramping up of P14 continued into Q3 2017.
Increase in SG&A relates to additional cost to support end user program and Rajawali promotion.
Slide 15 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Continue in Cost Leadership to maintain a decent margin
in 3Q 2017
New market entrants leading to higher competition and pricing pressure
but Indocement maintains better margin compared to peers
INTP Gross margin development
INTP EBITDA margin development
50.0%
40.0%
40.0%
34.5%
35.0%
34.9%
34.0%
30.0%
30.0%
20.0%
43.2%
41.4%
40.3%
40.0%
22.2%
21.0%
20.0%
15.0%
33.9%
29.6%
29.6%
27.9%
10.0%
10.0%
0.0%
23.0%
25.0%
44.5%
45.4%
Q1
43.8%
Q2
2015
Q3
2016
43.9%
Q4
2017
5.0%
0.0%
34.8%
34.2%
Q1
33.0%
Q2
2015
33.1%
Q3
2016
Q4
2017
Continuing competitive environment, Management focus in taking respective initiatives early on during
the year:
Operational Excellence program
Fixed cost reduction program
Managing efficient kiln utilization
Slide 16 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Financial Result
Consolidated Statement of Comprehensive Income
Description
Total Sales Volume (thousand tons)
Domestic Sales Volume (thousand tons)
Export Sales Volume (thousand tons)
Net Revenues
Cost of Revenues
Gross Profit
% of Net Revenues
Operating Expenses
Other Operating Income - Net
Operating Income
% of Net Revenues
EBITDA
% of Net Revenues
Finance Income - Net
Equity in Net Earnings of Associated Companies - Net
Income before Final Tax and Income Tax Expense
Final Tax
Income before Income Tax Expense
Income Tax Expense - Net
Income for the Period
Other Comprehensive Income (Loss) for the Period, Net of Tax
Total Comprehensive Income for the Period
9M 2017
Bio IDR
12,908
12,767
141
10,512.6
-6,888.0
3,624.6
34.5%
-2,170.7
10.7
1,464.5
13.9%
2,318.2
22.1%
316.5
7.4
1,788.3
-0.5
1,787.8
-381.3
1,406.5
1.9
1,408.3
9M 2016
Bio IDR
12,265
11,966
299
11,346.5
-6,619.9
4,726.6
41.7%
-1,940.6
3.3
2,789.3
24.6%
3,527.8
31.1%
373.8
16.0
3,179.1
-0.6
3,178.5
-30.9
3,147.6
-7.9
3,139.7
Variance
%
Bio IDR
642.1
5.2%
800.4
6.7%
-158.3
-52.9%
-834.0
-7.3%
-268.1
-4.1%
-1,102.1
-23.3%
-230.1
7.4
-1,324.8
-11.9%
227.5%
-47.5%
-1,209.7
-34.3%
-57.3
-8.6
-1,390.7
0.0
-1,390.7
-350.4
-1,741.1
9.7
-1,731.4
-15.3%
-53.8%
-43.7%
7.7%
-43.8%
1132.4%
-55.3%
123.6%
-55.1%
• Operating margin reduction from 24.6% to 13.9% contributed by lower revenues by -7.3% due to strong competition on weak demand
situation combined with higher cost of production (+4.1%) amidst soaring coal price.
• Active end user program initiated during beginning of the year support volume growth.
Slide 17 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Balance Sheet
Consolidated Statement of Financial Position
9M 2017
Bio IDR
11,883.7
15,569.8
2,527.6
798.8
24,127.2
27,453.6
Description
Current Assets
Non-Current Assets
Current Liabilities
Non-Current Liabilities
Equity
Total Assets = Total Liabilities + Equity
•
•
•
•
9M 2016
Bio IDR
12,816.3
15,168.6
1,767.1
739.8
25,477.9
27,984.9
Sep 17 vs Sep 16
Bio IDR
%
-932.5
-7.3%
401.2
2.6%
760.5
43.0%
59.0
8.0%
-1,350.8
-5.3%
-531.3
-1.9%
FY2016
Bio IDR
14,424.6
15,726.0
3,187.7
824.1
26,138.7
30,150.6
Outside dividend payment impact, inventories balance decreased due to stronger volume in 2nd half.
Inline with production, payable balance slightly higher.
Increase in Non-Current Assets compared to same period last year was mainly due to spending in capital
expenditures.
Dividend Payment history:
Dividend/Share *
Avg. Share Price
Dividend Yield
% Div. Payout
2013
2014
2015
2016
2017
450
21,604
2.1%
34.8%
900
23,390
3.8%
66.1%
1,350
21,159
6.4%
94.3%
415
18,225
2.3%
35.1%
929
17,127
5.4%
88.4%
* based on previous Fiscal Year Earnings
Slide 18 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement‟s Strategies under Current Tight Competition:
Shut Down Old Kilns and Run the most efficient kilns
Run P14 production (10,000 tpd) in full-swing in 2017 will help to
reduce further production cost by about USD 4-5 per ton
640
534
1,024
1,238
1,472
3,520
1,216
1,344
2,400
2,400
3,200
4,571
4,156
1,912
1,608
1,579
3,117
3,117
1999
P11
2000
P12
1,745
1,330
831
694
1975
1976
1979
1980
1983
1984
P1
P2
P3
P4 + P5
P6
P7 + P8
In „000 ton; top: clinker capacity, bottom: cement mill capacity
Slide 19 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
1991
P9
1996
P10
2016
P14
Indocement‟s Strategies under Current Tight Competition:
Lower Logistics Cost and Optimized Geographical Positioning
PontianakTerminal
Samarinda Terminal
Tarjun Factory
1 plant with
production capacity
of 2.6mt
Tj. Priok Terminal
Cigading Terminal
Citeureup Factory
10 plants with
production
capacity of 18.2mt
Palimanan Factory
Surabaya
Terminal
Sepanjang
Terminal
Lombok Terminal
2 plants with
production capacity
of 4.1mt
• Citeureup Factory is one of the largest integrated factory complexes in the world.
• State-of-art technology with some of the most efficient kilns in operation today.
• Current total capacity is 24.9 mt of cement.
• Cement distribution using train for some locations.
Slide 20 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
New Terminal Palembang - Progress Oct 2017
2 silos cement @ 5,000 ton
(total cap. 10,000 ton)
1 packer of 120 ton/hour
1 line of bulk loading
70 % (Civil & Mechanical)
Packing
house on
progress
Silo 1 & 2 foundations on
progress
system
1 warehouse: 1,458 M2
Truck scale cap. 80 ton
Area 3.2 Ha
1 jetty port
Operating Target Q1 2018
Infrastructure (pavement)
progress
Slide 21 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Pilings for
jetty
New Terminal Lampung – Progress Oct 2017
3 steel silos cement @ 4,000
ton (total cap. 12,000 ton)
1 packer of 180 ton/hour
1 line of bulk loading system
1 Truck scale cap. 100 ton
1 Warehouse 1,000 M2
Area 4.2 Ha
1 Jetty Port
Operating Target Q1 2019
Slide 22 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
40 % (Jetty Works)
Indocement‟s Strategies under Current Tight Competition:
Vertical Integration in Ready-Mix Concrete & Aggregates
Strengthening Ready-Mix Concrete business particularly high-grade quality in order to meet the increase
demand of infrastructure development in Indonesia.
5,000
000m3
3,000
4,430
RMC Sales Volume
3,517
2,500
2,000
2,473
1,736
3,000
1,816
1,779
9M16
9M17
1,554
2,429
1,500
2,148
1,265
1,716
1,221
1,000
2,383
2,284
3,377
2,988
2,000
2,849
AGG Sales Volume
3,947
4,000
000 tons
800
630 683
1,000
930 956
0
500
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 9M16 9M17
Slide 23 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
2010
2011
2012
2013
2014
2015
2016
Indocement‟s Strategies under Current Tight Competition:
Product Differentiation by introducing new brand of
RAJAWALI as “fighting brand”
Through its existing distribution
channel, Rajawali was initially
launched on Oct 10, 2016 in
three cities in 2016. Currently
Rajawali is offered in 30 cities:
Jakarta, 15 cities in West Java, 6
Cities in Banten, and 8 Cities in
Central Java.
Slide 24 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Sticky, Strong & More
environmental cement
product!!!
Indocement‟s Strategies under Current Tight Competition:
SuperSlag Cement – The most environmental friendly product
Durable and Ecofriendly Product
S.No.
Embodied CO2 Emission for
Raw Material
CO2 Emission
(kg/Tonne)
% Reduction
Compared to
OPC Type I
•
1
OPC Type 1
768.55
---
2
15% Fly Ash + 85% OPC
703.04
8.52
3
Slag Cement: Low Heat
339.80
55.78
4
Slag Cement: General Purpose
351.18
54.31
Cradle to Gate
CO2 Emission
kg / m3
% Savings in CO2
Emission
FC 30 Concrete having 100% OPC
450.19
---
FC 30 concrete having 15% Fly Ash + 85%
OPC
436.98
2.93
FC 30 concrete having Slag Cement: Low
Heat
288.12
36
FC 30 concrete having Slag Cement:
General Purpose
292.43
Mix Type
Slide 25 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
35
Slag cement is a product of
consistent quality
Suitable for Mass Concrete
applications
No Thermal Cracks
Long-Term Durability:
Resistance to Water
Resistance to Salt /
Sulfate penetration into
the concrete
General purpose Slag
Cement is suitable for
marine environment
Saves natural resources
and lower Green House
emission
Long-term compressive
strength development due
to continued hydration
Indocement‟s Strategies under Current Tight Competition:
End-User Program to Boost Customer Loyalty in Weak Demand Period
Slide 26 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
source: www.sementigaroda.com
Outlook of Indonesian Cement Market
Market Condition
National cement consumption growth started to turn positive and expected to grow around 7% in
2017 (versus negative growth of -0.6% in 2016) and 5-6% in 2018
Consumption in 2018 will still be driven by infrastructure projects and some of commercial and
residential projects that have been launched in 2017. However, US policies to increase interest rate
and reduce corporate tax will somewhat affect Indonesia, i.e.: weakening exchange rate of IDR/USD
and possible IDR interest rate increase. In turn, such macroeconomic condition will weaken demand in
2018
Strong concrete and bulk cement demand anticipated in Sumatera, Greater Jakarta, Central, and East
Java in 2018 due to Government’s infrastructure projects and the multiplier effect projects.
Recent hike in coal price will curb the potential further drop in prices in near future and possible
consolidation. Coal price has slide back to $94 in October 2017 and remain considerably high coal
index price in 2018.
Over supply will continue in next few years -- We still expect the continuing tight competition among
19 brands from 15 players (from 9 brands and 9 players previously) especially in Jakarta and West
Java due to more players located in these areas will hinder the price to increase.
Slide 27 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Indocement’s Action Plan
Run P14 production (10,000 tpd) in full-swing in 2018 will help to reduce further production cost by about
USD 3-4 per ton
Optimize product mix from 13 line of cement production will bring competitive
advantages of Indocement to introduce different types of cement (OPC, PCC,
PPC, TR Rapid, PCC Industry and future products- slag cement)
Indocement expansion in cement terminals in Sumatera and batching plants will be ready in 2018.
Clinker exports and domestic clinker sales will be done more during oversupply to abroad countries.
Strengthen our Pull demand in bagged cement segment for end-user customers through strong
Retail/ Distribution channel and will continue to enhance our brand image, TIGA RODA Cement
Using RAJAWALI brand as fighting brand to get some volume from customers, who perceive
cement as “commodity” product and in low-price cement segment - in competition with
2nd tier brands out of new players
Develop new business line of prefabricated affordable housing products “Rumah Pabrikasi
Indocement” through new subsidiary.
Keep expanding in RMC and aggregates as well as limestone sand business to enable Indocement
offering bundling package
Strong balance sheet with no gearing is an important winning factor in competition and
in future consolidation phase if happen in near future
Slide 28 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
42 Years Building Indonesia KOKOH
THANK YOU
Slide 29 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results
Important Notice
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This presentation contains general information which provided without any representations or warranties, express or implied and does not
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commitment, or investment decision whatsoever.
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Forward-Looking Statements
This presentation includes forward-looking statements, which are based on the expectation or forecast about future events, formed by Indocement
after reviewing existing data and research. Such statements involve known and unknown risks including factors such as: (i)Global macroeconomic
and geopolitical situations; (ii) Indonesia macroeconomic and geopolitical situation; (iii) Competition from incumbents and new players; (iii)
Changes in laws, regulation, taxation, or accounting standards or practices; (iv) Acquisitions, divestitures, and various business opportunities that
we may pursue; (v)Force majeure; (vi)Labor unrest or other similar situations; (vii)Outcome of pending or threatened litigation
Indocement does not give assurance that such outcome will be attained. If you have any specific questions about any legal, financial or tax matter,
you should consult your lawyer/financial/tax Consultant or other professional legal services provider.
For further information please contact
PT Indocement Tunggal Prakarsa Tbk.
Wisma Indocemen, 8th Floor
Jl. Jend. Sudirman Kav 70 - 71
Jakarta 12910, Indonesia
Phone : +62 21 2512121
e-mail: investor.relations@indocement.co.id.
©2017, PT Indocement Tunggal Prakarsa Tbk. All rights reserved.
Slide 30 - November 13, 2017
Indocement Tunggal Prakarsa Tbk Q3 2017 Results