Semen Indonesia looks forward to 4% FY22 expansion

Semen Indonesia expects to grow 3-5 per cent  YoY in FY22, up from two per cent in FY21 as the key market for bagged cement (mainly for home renovations and small home cluster developments) improves. In addition, the property stimulus by the Indonesian government and a high infrastructure budget in FY22 are expected to support sales. A further driver is the improved control of the COVID-19 pandemic.

The company’s sales strategy heavily focusses on the domestic market, which provides higher margins and a lower transportation costs. Semen Indonesia’s key markets are Java, which accounts for 53.2 per cent of sales, and is followed by Sumatra and Sulawesi, which account for shares of 21.7 and 9.9 per cent, respectively.

While not all cement companies are increasing their prices, Semen Indonesia intends to have a further increase following two 4-5 per cent price hikes in October and November 2021. The company balances its product price and domestic market share, currently at around 50 per cent, according to BNI Sekuritas.

To maintain its capacity utilisation rate, Semen Indonesia is optimising its export sales. As of the 9M21 its export sales advance by 14.8 per cent to 6.7Mt. This helped to lift capacity utilisation in FY21 to 70 per cent, significantly higher than the 58-67 per cent reported for the industry.