With the strength of the Company’s logistics infrastructure and disciplined risk management, we managed to achieve a consistent performance during 2020. AKR delivered a commendable performance in 2021, with strong Net Profit growth of 20% reaching Rp 1.112 Billion. Our achievement was also driven by consistent growth in the core business and increasing contributions from new businesses developed with partners. We also successfully managed operating expenses, working capital, and capital structure so our profitability margins improved. Our balance sheet and cashflow were remaining strong in 2020, our gearing ratio went down to 2%. To ensure business growth and sustainability,the company improves the implementation of Environment, Social,and Governance (ESG) aspect.We also continue to strive to increase our best contribution to support nation's economic growth accroding to our capacity.
Dear respected Shareholders and Stakeholders, I am proud to report that PT. AKR Corporindo Tbk. again delivered a very strong operational and financial performance in 2021. In the 2 years of COVID19, the Company’s Net Profit has increased cumulatively by 55%, with the Company recording a net profit growth of 20% in 2021 to reach Rp 1.11 Trillion. Through our disciplined efforts in managing our working capital, the Company also generated Rp3 trillion from our operating cash flow and achieved a low net debt to equity ratio of 2% by December 31, 2021.
2021 was the second year we had to live side by side with COVID-19. Even though the pandemic handling has been good, it was still a major challenge for the global economy.
The Indonesian government imposed restrictions on community activities several times to reduce the transmission rate of COVID-19. Businesses permitted to operate were divided into essential sector and critical sector categories. The Company, as a major player in the distribution of fuel and chemicals used for daily product production processes fell into the critical sector, as it must continue operating. Despite these conditions, a global economic recovery continued. Stimulus support, accelerated rollout of vaccinations, as well as pandemic control were carried out to protect population and accelerate the recovery process.
The global financial market responded positively to the more controlled pandemic and economic recovery. Based on developments to date, the IMF in its World Economic Outlook report in January 2022 stated that the global economy in 2021 grew by 5.9%, up from the previous year’s 3.1% contraction.
In Indonesia, the Government instigated many health improvement programs to tackle the COVID-19 pandemic, and stimulus policies to drive the economy. National economic growth continued to improve from the 2nd Quarter of 2021, supported by growth in almost all parts of Indonesia. Cumulatively, the Indonesian economy grew 3.69% in 2021. The largest economic improvement was seen in the 4th quarter of 2021. The return of global community activities increased world demand for energy products and commodities. However, product supplies had not fully recovered due to the pandemic, and this led to an increase in world commodity and oil prices.
Another challenge faced by the Company in 2021 was global supply chain disruption. This required the Company maintain its supplies by expanding its product supply sources and utilizing the Company’s Customer Relationship Management system.
2021 was also marked by rising oil and chemical prices. AKR’s proven business model allows the Company to pass on prices to customers while still increasing margins by increased efficiencies.
We delivered this positive performance despite the many challenges faced by the Company during the COVID-19 pandemic, and the disruptions to the global supply chain as countries reopened their economies. AKR continued to distribute basic chemicals and fuel, and provide optimal and uninterrupted logistics services to our customers across the Indonesian archipelago. To drive our business’s smooth operations we continue to innovate utilizing the Company’s IT platform.
The Company’s logistics supply chain advantages helped it satisfy the needs of industrial customers in Indonesia, and we saw double digit sales growth. This very strong trading and distribution performance is reflected in the Company’s revenue in this segment that grew by 46% to Rp23.7 trillion.
Despite the rising oil and chemical prices as well as geopolitical conditions causing price volatility, AKR delivered a positive performance. This is a testament to the resilience of the Company’s business model. This success is the result of the Company’s consistency in building core competencies, especially in the logistics & supply chain, and it is now recognized as a major private player in the distribution of energy & basic chemicals in Indonesia with a very broad customer base.
In 2021, the Company also recorded a strong performance in the industrial estate segment. JIIPE’s revenue grew 69% to Rp539 billion driven by increased land sales and lease agreements for the copper smelter project. The awarding of the Special Economic Zone (SEZ) status for the Technology and Manufacturing sector in 2021 makes JIIPE one of the most competitive and in-demand Industrial Estates for industrial businesses in Indonesia. With this status, JIIPE can offer attractive fiscal and non-fiscal incentives to domestic and foreign investors.
SEZ JIIPE Gresik was also named a National Strategic Object for Industry 4.0. The copper smelter and precious metal refinery will attract other metal, electronics, and chemical ecosystems industries, and will encourage the creation of an industry 4.0 ecosystem in the region. Supported by strong growth in all segments, the Company’s operating revenues increased by 45% to reach Rp25.7 trillion compared to the previous year’s Rp17.7 trillion.
The Company gross profit increased by 12% to reach Rp2.3 trillion compared to the previous year’s Rp2 trillion. The Company’s profit for the year in 2021 reached Rp1.1 trillion, an increase of 20% compared to the previous year’s Rp 925 billion, so that the basic earnings per share increased by 21% to Rp56.32. The Company generated Net Operating Cashflow of Rp2.945 billion. This is a significant achievement due to our strong earnings and diligent working capital management. This cash was used to reduced our debt, maintain our capital expenditure and pay dividends. As of Dec 31, 2021, our cash balance was Rp2.6 billion and net gearing was only 2%.
The Company recorded good asset growth of 26% to reach Rp23.6 trillion, and the Company’s equity also grew by 7% to Rp11.3 trillion.In 2021, the Company strengthened its commitment to the environmental, social and governance aspects in line with the Sustainable Development Goals (SDGs), and the world developments and climate change now and in the future.
We are very optimistic about 2022, as we see a positive outlook for all of our business lines, and subsequently we will continue to uphold the prudential principle for our cash management and our balance sheet.
The Company’s view is that trading and distribution demand is strengthening. Indonesia’s mining and plantation sectors continue to grow rapidly so we will see an increasing demand for fuel products, and the demand for basic chemicals is also expected to strengthen during 2022; The value addition will encourage growth in demand for energy and basic chemicals. We will strive to optimize every opportunity in order to contribute to the Company’s business growth.
In addition, the downstream program is also a potential market for the JIIPE area, especially with copper smelter with a capacity of 1.7mn tons of copper per year build in JIIPE. This project is expected to attract other industry players, especially in the copper derivative industry to also build factories at JIIPE.
We will also continue to expand our retail fuel business through bp AKR gas stations. This market is still wide open and promises great potential for continued development. We plan to build up to 350 outlets in Indonesia, with the bp AKR gas stations being developed as a one stop service that offers EURO 4
standard fuel. To achieve targets, AKR will instigate the following strategies in 2022:
1. Maintain fuel and chemical products distribution with disciplined risk management
2. Market the JIIPE Gresik SEZ as an eco industrial park in the right location for the development of 4.0 industry
3. Continue AKR’s expansion as a one stop service station that offers quality fuel
4. Review the sustainability policies implementation and develop a sustainability house
AKR believe that the ESG aspects are
the vital for
achieving sustainable business growth.Throughout 2021, the Company implemented number of ESG initiatives
achievements that were recoginized by stakeholders and third parties. For the environmental aspect, in 2021 the
Company carried out
an electricity solar panels pilot project in the JIIPE area by installing them on the
roof of the JIIPE building,
and integrating them into the power plant, as an energy reserve.
In 2021, the Company also signed a
with PT Bayu Buana Gemilang (BBG), a
company engaged in trading and distribution of natural gas, and established a new limited liability company called PT Berkah Buana Energi (BBE). This company will manage and develop a gas distribution network in the JIIPE SEZ using pipelines directly from the gas source to the customers.
For the social aspect, we will maintain our commitment to upholding gender equality. This can be seen in the Company’s Board of Directors composition, where there are 3 (three) female Directors out of a total of 7 (seven) members. In addition, females hold many of our top executive positions. Female representation at senior and middle manage-ment level is 31%. During 2021, the Company also provided a lot of assistance for handling the COVID-19 pandemic, including medical equipment assistance to several hospitals in the form PCR kits, Personal Protective Equipment (PPE) and other equipment, so the hospitals can protect their health workers. Internally, in 2021, AKR carried out weekly antigen swab tests for all of our employees before entering the office and terminal. This helped monitor the health of each employee and prevented the virus spreading within AKR.
In addition, we are still committed to improving the quality of education in Indonesia. In 2021, AKR provided education assistance by providing scholarships for both AKR employees and the subsidiaries’ employees. CSR funds was disbursed by the Company in 2021 increased by 27% to reach Rp28.6 billion (2.5% of Net Profit). The company’s CSR covers aspects of education, health, social assistance, and community development.
For the governance aspect, the Company continues to improve the quality of its implementation of good corporate governance (GCG) principles. One of the Company’s GCG implementation developments carried out in 2021 was in the Whistleblowing System (WBS), where we added 2 more reporting channels via email and WhatsApp to the current 1 website channel. By having more diverse channels, it is hoped it will be easier for people to submit their reports.
Management has continued to improve the quality of AKR’s GCG implementation by opening more internal and external communication channels. Internally, the Company through the internal audit team actively distributes risk management implementation surveys to the stakeholders to raise awareness of the current environmental changes. Through the People Development department, AKR also monitors the implementation of Company values by integrating them into performance evaluations.Through the corporate secretary department, the Company also conducts cross-departmental training to increase awareness of ESG aspects.
To improve the GCG quality we apply international GCG standards, in this case the ASEAN Corporate Governance
Scorecard that we have used since 2014. The Company regularly assesses the quality of GCG implementation
in accordance with these standards, and based on the assessment results, there is a trend of increasing quality.
Increasing shareholder value is one of our major focuses, and we are committed to paying optimal dividends above 30% to our shareholders, distributed twice a year. On April28, 2021, following the Annual GMS decision, the shareholders decided to distribute cash dividends of Rp 572,377,918,400 (Rp29/share) or 51.5% of the net profit attributable to owners of the parent entity for the fiscal year 2021. In 2021, the Company distributed an interim dividend of Rp12/ share.
In 2021, the Company’s Board of Directors composition did not change, and remained as follows:
President Director : Haryanto Adikoesoemo
Director : Jimmy Tandyo
Director : Bambang Soetiono Soedijanto
Director : Mery Sofi
Director : Suresh Vembu
Director : Nery Polim
Director : Termurti Tiban
On this auspicious occasion, on behalf of the Board of Directors, we would like to express our appreciation and gratitude to all our employees who have worked diligently to enable the Company to achieve this proud performance. The Board of Directors would also like to thank the Board of Commissioners for providing very meaningful direction and advice for the development of the Company.
To our shareholders, customers and stake-holders, the Board of Directors would also like to express its gratitude for the trust given. We are committed to continuing the Company’s management in accordance with the prevailing laws and regulations, and to achieving sustainable business growth to provide added value for all our stakeholders.