Jakarta, August 5, 2024 – The cement industry continues to grapple with significant challenges amidst a landscape marked by global volatility. The first half of 2024 saw a convergence of factors—including escalating Middle Eastern conflicts, stringent global monetary policies, and fluctuated coal prices—that placed substantial pressure on the sector.

Domestically, the cement market stagnated, influenced by a downturn in manufacturing and construction activities. This was further exacerbated by the 2024 Presidential Election and the Eid al-Fitr 1445 H celebrations, coupled with persistent oversupply issues. The Indonesian Cement Association (ASI) had projected a 3% growth in domestic cement consumption for 2024, but the first half of the year only saw a year-over year increase of 1.4%.

Similarly, the domestic cement market in Vietnam has not shown signs of recovery following the COVID-19 pandemic. Construction and property activities remain limited due to strict government policies. Consequently, domestic cement consumption in Vietnam decreased by 3% compared to the first half of 2023. The export market has also weakened due to the global economic slowdown, which has reduced demand for cement and exerted downward pressure on selling prices.

Overall, the Company's revenue for the first half of 2024 was IDR 4.2 trillion, marking a 4% year-over-year decrease. This decline was primarily attributed to weakened performance in the Indonesian and Vietnamese cement sectors, although positive results were reported from other subsidiaries. The other subsidiaries, with the largest contributor being the cement downstream business of ready-mix and precast, have recorded a 15% sales growth and 8% EBITDA growth year-over-year. The Company will look for more opportunities to grow its business in the building and material industry.

The Company also stands out for its unwavering commitment to sustainability. In a significant move, the Company has begun operating electric vehicle trucks to replace diesel-fueled vehicles across its plant and quarry mining operations since April 2024. This initiative marks a major step in reducing its carbon footprint and enhancing environmental responsibility.

In addition to this groundbreaking initiative, the Company’s Bayah plant has been recognized for its continuous efforts in sustainability. In May 2024, the plant was honoured with the Continuing Progress in Climate Action – Special Recognition Award by the World Cement Association. This accolade acknowledges the plant’s significant contributions to climate action and its ongoing efforts to reduce CO2 emissions.

Company Outlook for the Second Half of 2024

Looking ahead, the domestic cement market is expected for strong growth in the latter half of 2024. This anticipated recovery is bolstered by the acceleration of the mega project for the development of the Indonesian Capital City (IKN). The Government’s continued emphasis on inclusive infrastructure development across Indonesia is set to enhance supply chain effectiveness, improve accessibility, and address logistical disparities.

Furthermore, a potential reduction in interest rates in the United States could stabilize the rupiah, providing Bank Indonesia with the opportunity to lower its policy rate. Such changes are likely to positively impact the property sector, facilitating a faster recovery.

These favorable conditions are anticipated to stimulate domestic cement demand and alleviate pricing pressures, which should contribute to an improved performance for the Company in the latter half of 2024.

In parallel, expanding the downstream cement business is becoming increasingly important as a new growth avenue for the Company. The Company also remains committed to advancing sustainability practices, striving to set a benchmark in the cement industry for environmental responsibility and innovation.

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