Message from the President Director

Reports of Directors

Dear respected Shareholders and Stakeholders  We give thanks to Almighty God for his grace and blessings that enabled PT AKR Corporindo Tbk management to once again deliver an excellent performance. Despite the challenging economic conditions, the Company recorded a solid performance and delivered sustainable growth. Once again, this reflects the resillience of the Company’s business model during the many economic dynamics.

ECONOMIC OUTLOOK 2022

The global economy has passed through several dynamic situations since the Covid 19 pandemic. In 2022, global economic growth continued to slow down, triggered by the Russia – Ukraine conflict that started at the beginning of the year, altering expectations of research and financial institutions globally. One of the main impacts of the Russia-Ukraine conflict was energy scarcity, especially oil and gas, so prices surged in early to mid-2022 and led to increasing global inflation. 

Despite these conditions, the Indonesian economy demonstrated solid growth reaching 5.3% in 2022. Indonesia’s economic growth was mainly driven by domestic consumption and excellent export performance. Indonesia’s trade balance in 2022 recorded a significant surplus of USD54.46 billion, the highest ever recorded.

However, the domestic inflation rate jumped significantly to 5.5% from 1.9% in 2021. An increase in VAT, and an increase in subsidized fuel prices were factors that pushed up inflation. 

In response to this, Bank Indonesia adopted a policy to gradually increase the benchmark interest rate, the BI 7 Days Repo Rate, to 5.5% by the end of 2022. This policy resulted in a slowdown in lending at the end of 2022. 

Despite these dynamics, the company fully commited in providing value to all stakeholders with discipline and prudent manner in conducting business model and financial management.

STRATEGIC CHALLENGES AND POLICIES

The company believes necessary challenges will lead to great opportunities. As an end-to-end supply chain logistics company that facilitates trade and commerce through its infrastructure and intensive marketing, AKR’s position is critical during supply chain disruptions. The fluctuations in oil prices during the year were well managed due to AKR’s business model, where prices are passed on to customers. The Company’s working capital and net open position were also well maintained, so they could generate a positive financial performance.

The company has established strong relationships with local and international suppliers, securing deliverables of fuel and chemical products to customers, even during supply shortages that occurred in the first half of 2022. Furthermore, through improvement of information technology platform, AKR can monitor its inventory positions in real-time manner, enabling the company to distribute  products to customers on time and on demand

In the retail fuel business, the Company continued to expand the number of bp AKR stations improving the economic level. By the end of 2022, there were 120 AKR retail stations spread across Java, Sumatra, and Kalimantan areas and 36 bp AKR stations around Greater Jakarta, Surabaya, Gresik, Malang, and toll road rest areas. In 2022, bp AKR also added high octane premium fuel – The Ultimate, which has the ability to clean the vehicle’s combustion chamber to make them more efficient.

In the industrial estate segment, the Company continued to promote JIIPE as a world-class integrated industrial estate that provides several benefits to the industry. By being designated as a Special Economic Zone (SEZ), the Companies in JIIPE Gresik SEZ can take advantage of the fiscal and nonfiscal facilities. JIIPE Gresik SEZ is championing industrial growth and supporting downstream programs in Indonesia.

Performance of AKR During 2022

The Company recorded a very encouraging performance in 2022, and exceeded management’s expectations, which necessitated revision of the initial budget. The Company realized a 2022 net profit of Rp2,403 billion higher than revised budget, an increase of 116% above the 2021 net profit of Rp1,112 billion.

The 2022 revenue growth that reached Rp47,540 billion, was driven by strong performances across all AKR business segments. Trading and distribution revenue grew 89% yoy to Rp44,698 biillion, due to volume growth and higher average selling prices. In this segment, the Company recorded a gross profit growth of 86% to reach Rp3,444 billion. The logistics and manufacturing segment also recorded double-digit revenue growth of 16% to reach Rp1,693 billion.

The Company’s performance was also accelerated by land sales in the JIIPE industrial estate segment where in 2022 land sales recorded 44.5 hectares, exceeding the 2022 target of 40 hectares, and higher than land sales in 2021 of 14 hectares. The increase in revenue contribution from the industrial estate is a sign of the Company’s success in monetizing its long-term investments in JIIPE. With additional revenue of Rp172 billion from land leases for smelter projects in the JIIPE Industrial Estate, and Rp47 billion in revenue from utilities, the JIIPE industrial estate total sales amounted to Rp1,149 billion in 2022. Gross profit from the industrial estate in 2022 also increased by 65% yoy to Rp543 billion.

AKR consistently generated strong cash flow in 2022 with an EBITDA of Rp3,539 billion, so with good working capital management the Company could reduce overall loans. In 2022, the Company’s assets grew by 16% to Rp27,188 billion, and equity increased to Rp13,155 billion from Rp11,299 billion in 2021. The Company’s return on assets (ROA) and return on equity (ROE) also increased to 8.8% and 21.9% respectively, indicating that the Company’s ability to generate profits is improving. The Company is now in a net cash position and has received a rating upgrade from a leading rating agency, PEFINDO Indonesia, who upgraded the Corporate and Corporate Bonds ratings to id AA with a stable outlook.

Business Prospects

The IMF predicts the global economy will slow down to 2.9% in 2023. The continuing geopolitical conflict between Russia and Ukraine, high inflation, and the increasing of interest rate will be challenges for the global economy in 2023.

In response to these conditions, the Company will remain focused on carrying out its business development in line with the business model followed by the Company to date. With the improving economic conditions, the Company has seen a positive signal that there will be an increase in demand from customers in 2023.

The Company sees opportunities from the Government’s initiative to promote downstream and industrialization. The mineral downstream program in Indonesia opens up massive opportunities for the fuel and basic chemicals segment, The Company will supply products needed by metal processing and refining facilities.

The Company will optimize its JIIPE Gresik SEZ marketing as it brings many advantages to encourage the creation of an effective and efficient downstream ecosystem. JIIPE with its status as a SEZ also offers many advantages for tenants in terms of efficiency in logistics and utility costs, and the fiscal and non-fiscal incentives provided.

The largest single-track copper smelter project in Indonesia built at JIIPE will attract industries related to copper products and their derivatives and will become part of the industrial processing ecosystem, including opening up industrial development opportunities related to clean energy and electric vehicles. 

Environmental, Social, and Governance

Dividend Policy

The Company also continuously delivers the best value to all its shareholders. The Company consistently distributes dividends to shareholders every year with a payout ratio of above 30%. In 2022, based on an Annual GMS Resolution dated April 28, 2022, the Company distributed cash dividends of Rp572,377,918,400.00, or 51.5% of the Profit for the Year Attributable to Equity Holders of the Parent Entity.In addition, with the approval of the EGMS held on January 14, 2022 the Company carried out a 1:5 stock split initiative to expand the Company’s retail investor base. This corporate action received a good response from the capital market, and the number of AKRA investors increased by 35% as of December 31, 2022.

Change in the Composition of the Board of Directors

In 2022, 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

Appreciation

The Board of Directors would like to express its highest appreciation to our customers for their trust, loyalty and support, which supported the Company in delivering a very proud performance in 2022. The Board of Directors would also like to thank our employees who have worked hard in the face of the dynamic conditions of 2022.

The Board of Directors would also like to express its thanks the Board of Commissioners for their support and guidance, which greatly assisted management in achieving our targets. We would also like to thank all our stakeholders, including OJK and the Indonesia Stock Exchange.

Finally, the Board of Directors is committed to always providing sustainable value and upholding the rights of its shareholders and stakeholders, in line with the Company’s values and GCG principles.