Company Update H1 2010 Results
July 2010 Forward Looking Statement
This presentation has been prepared for informational purposes only by PT Kalbe Farma Tbk. (“Kalbe” or the “Company”). This presentation has been prepared solely for use in connection with the release of June 30, 2010 unaudited results of the Company. The information contained in this presentation has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of their respective affiliates, and their respective commissioners, directors and employees, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Any decision to purchase or subscribe for securities of the Company should not be made on the basis of the information contained in this presentation. The presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. This presentation and its contents are confidential unless they are or become generally available as public information in accordance with prevailing laws and regulations (other than as a result of a disclosure by you) and must not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person. This presentation does not constitute a recommendation regarding the securities of the Company. This presentation, including the information and opinions contained herein, is provided as of the date of this presentation and is subject to change without notice, including change as a result of the issuance of June 30, 2010 unaudited results of the Company. This presentation includes "forward-looking statements". These statements contain the words "anticipate", "believe", "intend", estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans, objectives relating to the Company's products and services and anticipated product launches) are forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation. The Company expressly disclaims any obligation or reflection of any change in the Company's expectations with regard thereto, or any change in events, conditions or circumstances on which any statement is based. Market data and certain industry forecasts used in this presentation were obtained from market research, publicly available information and industry publications which have not been independently verified, and no representation is made as to the accuracy of such information.
2 Table of Contents
SECTION 1 Corporate Overview 4
SECTION 2 Market Overview 7
SECTION 3 Business Overview 12
SECTION 4 Financial Overview 38
SECTION 5 Corporate Action & Outlook in 2010 45
SECTION 6 Appendix 49
3 SECTION 1
Corporate Overview
Excellence in Execution4 Corporate Overview
Largest Publicly-Listed Pharmaceuticals Company in Southeast Asia
• Established in 1966 and headquartered in Jakarta • A public company since 1991 and listed in the Indonesia Stock Exchange • The largest publicly-listed pharmaceuticals company in Southeast Asia • Kalbe markets and sells its products in 6 major markets in Southeast Asia which in aggregate represent a population of almost 570 million •Sales contribution of Kalbe’s four main business segments as per 30 June 2010 income statement: • Prescription Pharmaceuticals 27% of revenues • Consumer Health 17% of revenues • Nutritionals 22% of revenues • Distribution and Packaging 34% of revenues • Over 10,000 employees and a marketing and sales force of 4,000 covering 80% of the Indonesian consumer health and 100% of the Indonesian prescription pharmaceuticals market
Excellence in Execution 5 Corporate Strategy
Kalbe has a long track record of sustainable growth
Inception and Entrepreneurial Enhanced Focus and Consolidation Regionalization Driven Expansion 1996–2005 2006–2015 1966–1995
1966 1977 1981 1985 1989 1991 1993 1994 1996 1997 2005 2006 2007 2009 1966: 1977: 1985: 1989: 1991: 1994: 2005: 2007: Company Dankos Lab Acquired Igar Jaya Kalbe Farma ♦ Entered Consolidation of ♦ Launch of new corporate logo as part founded Bintang and IPO energy drink Kalbe Group of transformation process Toedjoe & Dankos business ♦ Products enter every ASEAN countries IPOs ♦ EPM IPO 1996: 1997: (except Laos) Hexpharm ♦ Disposed of Disposed of Kalbe’s ♦ Opening of the Stem Cell and Cancer 1981: 50% of food remaining 50% ownership 1993: Institute Spin-off the business (PT in PT Bukit Manikam Sakti ♦ distribution ♦ Acquired Implementation of end-to-end supply Bukit Manikam to Arnotts chain management business to PT Sanghiang Sakti) to ♦ Disposed glass packaging ♦ Integrate information technology systems Enseval due to Perkasa and Arnotts division to Schott government consolidated ♦ Acquired Woods regulation nutritional 2006: Peppermint brand ♦ business to ♦ Expand regional footprint Sanghiang Acquired 80% of Saka ♦ Farma Build global brands and infrastructure Perkasa ♦ Scale through mergers and acquisitions ♦ Proprietary drug development 1000 ♦ Global partnerships and networks 10000
800 8000 (IDRbn) 600 6000
400 4000 (USD mm) (USD 200 2000
0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 200 3 2004 2005 2006 2007 2008 2009
Sales USD Sales IDR
Excellence in Execution 6 SECTION 2
Market Overview
Excellence in Execution7 Indonesia’s Health Spending Trends
• Total expenditure on health averaged 2% Total Expenditure on Health as % of GDP of GDP over the 11 year period 1996-2006. 2.5 2.0
• The Government is planning to implement 1.5 the National Social Security System. 1.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Since 2004, the Government has Source: The World Bank implemented healthcare program for poor Share of Total Health Expenditure (%) 1996-2006 people through Asuransi Kesehatan 70 60
Masyarakat Miskin (Health Insurance for 50 Poor Population) or Askeskin program 40 30 and currently is replaced by Jaminan 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Kesehatan Masyarakat (Public Health public private out -of -pocket private Source: WHO National Health Accounts database, September 2008 Insurance Scheme for the Population) or Total Expenditure on Health as % of GDP Jamkesmas program. Indonesia 2.5 • In Q4 2009, the new Healthcare Law has Philippines 3.2 been approved and provides guideline for Malaysia 4.2 Government to increase the healthcare China 4.7 spending from 2% up to 5% of GDP. India 5.0 Vietnam 6.0
- 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Source: Daily Newspaper Suara Pembaruan , 29 March 2010
8 Pharmaceutical Market Breakdown
Market Splits Remain Stable
Total Market Trend 2005 – 2009 and Forecast 2010
OTC (Rp Bn) Ethical (Rp Bn)
38.0% 39.1% 42.3% 43.4% 43.4% 43.7%
62.0% 60.9% 57.7% 56.6% 56.6% 56.3%
2005 2006 2007 2008 2009 F2010 Ethical (Rp Bn) 14,622 14,033 14,837 16,969 19,225 21,142 Ethical Growth (%) 15.5 (4.0) 5.7 14.4 13.3 10.0 OTC (Rp Bn) 8,967 9,014 10,871 13,012 14,744 16,389 OTC Growth (%) 10.8 5.4 15.0 19.6 13.3 11.2 Total Market (Rp Bn) 23,589 23,047 25,708 29,981 33,969 37,531 Total Growth (%) 13.6 (2.3) 11.5 16.6 13.3 10.5
Source: IMS QPMU 4Q 09
9 Indonesian Pharmaceuticals Market
The Industry is Highly Fragmented With More Than 200 Pharmaceutical Players
Total Market (ITMA) Hospital (IHPA) Pharmacy (IPA) FY 2009 FY 2009 FY 2009
Dexa Medica Group Dexa Soho Dexa Novartis 5% Medica Group Group Medica Group Pfizer Group Soho Tempo 8% Pfizer Sanbe 3% 6% Group 4% Sanbe Group Group Group Sanofi Aventis 9% Kalbe 5% Sanofi Aventis 5% 4% 4% Kalbe 5% Pharos Kalbe Group Group Group Group Group 3% 3% Group Novartis 8% Soho 4% Bayer 10% 14% Group Sanbe Group Indo. 3% 8% 3% 3%
Others Others Others 63% 60% 60%
Total Market = Rp 34.0 Tn Total Market = Rp10.8 Tn Total Market = Rp 6.2 Tn
Source : IMS Health Prescription Pharmaceuticals FY 2009 (Ethical + OTC)
10 Recent Indonesian Pharmaceuticals Regulatory Price Caps on Key Generic Drugs Ministry of Health Decree No. HK.03.01/Menkes/146/I/2010 issued on 27 January 2010 • Replace the previous Ministry of Health Decree No. 302/Menkes/SK/III/2008. • The Indonesian Ministry of Health has set drug store selling price and retail price caps on 453 generics drugs. • Allow pharmaceutical company and pharmaceutical wholesaler to add 5% - 20% distribution cost to generic drug prices depending on the area of distribution sale. Mandatory Use of Generic Drugs in Government Healthcare Facilities Ministry of Health Decree No. HK.02.02/Menkes/068/I/2010 issued on 14 January 2010 • Physicians (including doctors, dentists, dental specialists and specialists) who serve in the government health service facilities shall prescribe generic drugs for all patients. • Physicians can write prescriptions to be taken at the pharmacy or outside of healthcare facilities if generic drugs are not available in the healthcare facilities. • Doctors at the hospital or healthcare facilities may approve the change of generic drugs with branded generic / prescription drugs if generic drugs are not yet available. Local Production Facilities Requirements Ministry of Health Regulation No. 1010/MENKES/PER/XI/2008 issued on 3 November 2008 • It prohibits foreign pharmaceutical companies from selling drugs in Indonesia unless they have local production facilities.
11 SECTION 3
Business Overview Consolidated Sales Breakdown
Predominantly Serves Local Market
Sales Breakdown By Segment Sales Breakdown By Geographical H1 2010 H1 2010
Prescription Distribution & Export Pharmaceuticals Packaging 4% 34% 27%
Consumer Domestic Nutritionals Health 96% 22% 17% Total Sales = Rp 4,707 Bn Total Sales = Rp 4,707 Bn Figures based on Unaudited Financial Statements
13 Prescription Pharmaceuticals Division
Net Sales Performance
1,600 65.3% 65.7% 70.0% • Net sales grew by 16.4% to Rp 1,256 Bn in H1 2010. 1,400 60.0% • Growing faster than that of the pharmaceuticals 1,200 16.4% 1,256 50.0% industry. 1,000 1,079 • Improved gross profit margin from 65.3% in H1 40.0% 800 2009 to 65.7% in H1 2010. 30.0% • The largest medical representatives team in 600 Indonesia with more than 2,000 personnel. 20.0% 400
200 10.0%
- 0.0% H1 2009 H1 2010
Net Sales in Rp Bn Gross Profit Margin
Figures based on Unaudited Financial Statements
14 Prescription Pharmaceuticals Division
Leading in Indonesia Prescription Pharmaceuticals Market Share
Total Market (ITMA) Hospital (IHPA) Pharmacy (IPA) FY 2009 FY 2009 FY 2009 Dexa Pfizer Kalbe Medica Group Novartis Dexa Group Group Group Sanofi Aventis Pfizer 7% Pfizer Medica Group 7% 5% Sanbe 4% Group Group Sanbe Group Dexa 6% 9% 6% Sanofi Aventis 4%c Sanbe 4% Sanofi Aventis 9% Medica Group Interbat Kalbe 9% Group Group 4% Kalbe 7% 4% Group 4% Novartis Group Fahrenheit 11% Interbat Group 13% 3% 3% 3%
Others Others Pharos Others 59% 57% Group 59% 3%
Total Market = Rp 19.2 trillion Total Market = Rp 9.1 trillion Total Market = Rp 4.9 trillion
Source : IMS Health Prescription Pharmaceuticals FY 2009 (Ethical)
15 Prescription Pharmaceuticals Division
Comprehensive Product Range Targeted To All Income Groups
Sales Contribution By Number of Therapeutic Class Product Categories Products H1 2010 • General Anti-Infectives Licensed • Hospital Solutions Licensed • Oncology 82 Products Products • Blood and Blood Forming Organs 32% • Musculo-Skeletal System • Alimentary Tract and Metabolism • General Anti-Infectives • Central Nervous system Branded 249 • Musculo-Skeletal System Branded Generics • Cardiovascular System Generics Generics • Alimentary Tract and Metabolism 7% 61% • General Anti-Infectives • Alimentary Tract and Metabolism Generics 41 Total = Rp 1,256 Bn • Cardiovascular System • Central Nervous system
Key Licensors
16 Prescription Pharmaceuticals Division
New Production Facility
• New production facility in Cikarang:
• To be completed by October 2010. • Dedicated for generic drugs’ tablet production line.
Facility Upgrading
• Upgrading of intravenous facility site has been finalized in March, 2010. The facility has received the Certificate of Manufacturing from HSA (Health & Sciences Authority), Singapore.
17 Prescription Pharmaceuticals Division
Launching of several new products
NutriCan • A nutritional product (in milk powder form) for cancer patients, who suffer from malnutrition and deterioration of quality of life. • A new joint research product between Kalbe and FKUI scientists, together with Dharmais Cancer Hospital. • This product is part of Kalbe’s oncology product portfolio in providing holistic or comprehensive solutions to patients. Establishment of Ethical Customer Care • Kalbe established Ethical Customer Care as part to its Direct To Customer (DTC) marketing strategy implementation to maintain the market dominance. All DTC activities will be coordinated through Ethical Customer Care which shall improve quality of direct services to end-users. • Establishment of several communities dedicated to chronically ill patients, such as kidney failure patients, cancer patients and diabetic patients. • Educational and counseling programs for customers have been held regularly • Direct selling activities utilizing existing infrastructure.
18 Consumer Health Division
Strong Brand Equity with Leading Market Position
Market share of Kalbe’s top products as per Dec 2009 Therapeutic Class Kalbe’s Products Market Share by Volume Antacid Promag, Waisan 83.7% Anti Diarrhea Neo Entrostop 44.6% Cough Remedies Komix , Woods, Mextril , Mixadin 40.8% Cold Remedies Mixagrip Reg, Mixagrip FB, Procold 37.4% Multivitamin & Vitamin C Cerebrovit, Fatigon, Xon-Ce 45.4% Children Multivitamin Cerebrofort, Sakatonik ABC 20.7% Energy Drink ExtraJoss 31.0%
Source : AC Nielsen Dec 2009
19 Consumer Health Division
Net Sales Performance
• Consumer Health net sales was up 1,200 53.6% 55.3% 60.0% 3.6% to Rp 826 Bn in H1 2010 from 1,000 50.0% Rp 797 Bn in H1 2009. 3.6% 800 40.0% • Single digit sales growth rate was 797 826 600 30.0% mainly due to unstable sales Consumer Health Division
Leading Market Position
OTC Energy Drink FY 2009 FY 2009 (Unit)
Others Soho Pharos M-150 2% Group Group Sanbe 5% 9% 6% Tempo 4% Kratingdaeng Kuku Bima Group 8% 36% Kalbe 9% Konimex 4% Group Darya Varia 15% 3%
Others 50% Hemaviton 18%
Extra Joss 31%
Total Market = Rp 14.7 Tn Total Market (in volume) = 1.5 Bn Source : IMS Health ITMA OTC FY 2009 Source : AC Nielsen FY 2009
21 Consumer Health Division
Launching 7 New Products With Natural Ingredients
Fatigon Hydro An isotonic drink made from natural coconut water Mixagrip Pegal Linu A new herbal product called for analgesic and muscle relaxant in liquid sachet form Mensana A new herbal product called for reducing menstrual pain Entrostop – Anak A new herbal product for children with diarrheal problem Procold Promuno An effervescent supplement for influenza prevention E-Juss Grape, Mango and Orange Healthier energy drinks with extract fruit juices Tipco Fruit Juice A healthy drink made of fruits and vegetables
22 Consumer Health Division
More Direct to Consumer Activities – Brand Activation Campaign
23 Nutritionals Division
Complete Range of Nutritional Products • Catered to expecting & lactating mothers, babies, toddlers, children, tweens, teens and adults .
Expecting Lactating Baby Toddler Kid Tween Teen 25+ 35+ Clinical
24 Nutritionals Division
Relatively Low Milk per Capita Consumption
Milk per Capita Consumption (kg)
40 -2.2%
30
20 2.4% kg kg
10 -3.6% 2.9% 2.3% 1.6% 0 Indonesia Vietnam Philippines Thailand South Korea Malaysia 2006 2.27 2.69 1.45 14.24 35.61 8.03 2007 2.35 2.36 1.47 11.96 34.83 8.66 2008 2.47 2.77 1.28 14.14 35.74 7.86 2009 2.53 2.93 1.49 14.79 32.62 7.92 2010 2.57 2.95 1.54 15.64 32.7 8.06 2011 2.62 3.02 1.57 16.06 33.18 8.15
Source: FAPRI (Food & Agricultural Policy Research Institute) for whole milk powder, liquid milk and non fat dry milk categories 2006 – 2009 = Real Data; 2010 – 2011 = Projection
25 Nutritionals Division
Growth of Indonesian powder milk market driven primarily by price increase
By Volume (Kg ‘000) By Value (Rp Bn)
104,860 1.2% 9,210 3.5% 103,588 8,899
MAT Mar 09 MAT Mar 10 MAT Mar 09 MAT Mar 10
Source : AC Nielsen, MAT 2010
26 Nutritionals Division
Net Sales Performance
1,400 60.5% 60.0% 1,200 • Nutritionals Division net sales were up by 48.0% 50.0% 19.8% to Rp 1,039 Bn in H1 2010 from 1,000 19.8% 1,039 Rp 867 Bn in H1 2009. 40.0% 800 867 30.0% 600 • Improved gross profit margin to 60.5% in H1 2010 due to Rupiah strengthening and 20.0% 400 minimal skimmed milk powder price
200 10.0% increase.
- 0.0% H1 2009 H1 2010 Net Sales in Rp Bn Gross Profit Margin
Figures based on Unaudited Financial Statements
27 Nutritionals Division
Competing With Multi National Companies
Market Share Market Share of Kalbe Nutritionals Products FY 2009 In Its Category FY 2009 Mead Johnson Wyeth 4% Nutrifood Abbott Kalbe’s Products Market Share Fonterra 5% 3% 4% Others 6% 3% Diabetasol 70.9% Kalbe Nestle Nutritionals 30% Prenagen 52.4% 8% Milna 68.0% Morinaga BMT 9.2% Nutricia Morinaga Chil Mil 9.1% (Danone) 10% Sari Husada Entrasol 5.6% (Danone) Frisian Flag 16% Morinaga Chil Kid 5.3% Indonesia 11% Morinaga Chil School 1.8% Total Market = Rp 9.2 Tn Source : AC Nielsen, based on Value (Rp) Source : AC Nielsen, based on Value (Rp)
28 Nutritionals Division
More Direct to Consumer Activities – Brand Activation Campaign
29 Distribution & Packaging Division
The Most Extensive Distribution Network
Kalbe has the most extensive distribution network of any pharmaceutical company in Indonesia with 2 Regional Distribution Centers and 65 branches
30 Distribution & Packaging Division
Sales Composition
Distribution & Packaging Distribution & Packaging Sales Composition in H1 2009 (Unaudited) Sales Composition in H1 2010 (Unaudited)
3rd 3rd Parties Parties KF Group KF 48% 47% 52% Group 53%
Distribution Sales Packaging Sales Distribution Sales Packaging Sales H1 2009 (Unaudited) H1 2009 (Unaudited) H1 2010 (Unaudited) H1 2010 (Unaudited)
3rd 3rd KF KF Parties Parties Group 29% 28% Group 33% 34% 3rd KF KF 3rd Parties Group Group Parties 67% 71% 72% 66%
31 Distribution & Packaging Division Net Sales Performance
• Distribution & Packaging Division comprised of 35.4% 40.0% 2 publicly listed companies: 2,000 35.0% • PT Enseval Putera Megatrading Tbk (EPMT) in 29.8% distribution & logistics business with an ownership of 7.6% 30.0% 83.75%. 1,500 1,586 1,474 25.0% • PT Kageo Igar Jaya Tbk (IGAR) in packaging business with an ownership of 68.04%. 20.0% 1,000 • The net sales figures represent the net sales of 15.0% 3rd party principals.
500 10.0% • Distribution & Packaging net sales were up by
5.0% 7.6% from Rp 1,474 Bn in H1 2009 to Rp 1,586 Bn in H1 2010. - 0.0% H1 2009 H1 2010 • Gross profit margin was declining to 29.8% in H1 2010 due to: Net Sales in Rp Bn Gross Profit Margin Declining in distribution margin and raw material Figures based on Unaudited Financial Statements trading’s gross profit margin as the result of Rupiah strengthening against USD.
32 Distribution & Packaging Division
Major Third Party Principals by Category
Prescription Medical Instrument Fine Chemical Pharmaceuticals Consumer & Diagnostic Raw Materials
33 Distribution & Packaging Division
Medical Devices, a New Growth Driver
Medical Devices Net Sales (in Rp Bn) Raw Materials 5% Trading & Others Medical Devices Raw Material Trading 8% 673 714 581 502 CAGR 414 CAGR 315 310 233 42.3% 32.1%
FY 2006 FY 2007 FY 2008 FY 2009 FY 2006 FY 2007 FY 2008 FY 2009
Distribution & Logistics and Health Services 87% Total = Rp 4,410 Bn Figures based on EPMT H1 2010 Unaudited Financial Statements
34 Distribution & Packaging Division
Mitrasana Clinics
• A 100% owned by of EPMT. • Opening of Mitrasana Clinics as a one-stop service, includes family doctor, pharmacy, laboratory, and convenient store. • To date, Kalbe has opened 20 Mitrasana clinics in Jakarta and its Greater Area. • Offered in 2 business models, namely direct investment and collaboration / joint - operation models.
New Branch of Distribution Division
• Up to end of July 2010, Distribution Division has opened 1 new branch located in Kendari (Sulawesi). • Distribution Division also expanded its warehouse capacities at Bekasi and Pematang Siantar.
35 Marketing and Sales Infrastructure
The largest sales force for Pharma and Consumer Health in Indonesia
Prescription Distribution & Consumer Health Nutritionals Pharmaceuticals Packaging • Over 2,000 sales & • Over 2,000 medical • Approximately 1,000 • Over 1,000 marketing marketing personnel representatives marketing and sales personnel • Total of 4,000 force employees Infra- • 60 marketing branches structures throughout Indonesia • 42 branches & 23 at subsidiaries • 1,000 trucks • 500 motorcycles
Market coverage • Directly cover 150,000 • Market Coverage • 80% of consumer • 70% of GP market outlets throughout Indonesia health market covered • Indirectly covers over •100% of prescription • 90% of specialist market 1mm outlets or 80% of pharma market Indonesia covered Coverage • 100% of all hospitals total consumer health covered market • 100% pharmacy coverage
• Most developed • Largest marketing • Largest sales force in telemarketing team in Comments team in Indonesia Indonesia the nutritional sector
36 Manufacturing Infrastructure
Operates 12 GMP facilities comply with international standards
Products Bldg Facility Manufactured Area (m 2) Production Lines Licensees Certification 9 lines of Non Beta Lactam products ISO9001, ISO14001, Kalbe Farma 448 42,684 Astellas (tablet, capsule, cream, liquid oral, injection) OHSAS18001 ISO9001, ISO14001, Bintang Toedjoe 41 17,232 3 lines; effervescent, wderpo & liquid – OHSAS18001, HACCP
3 factories; Non Beta Lactam, Penicillin & ISO9001, ISO14001, Dankos Farma 189 14,905 Daiichi Cephalosporin lines OHSAS18001
6 lines (4 lines sachet, 1 line tin, 1 line mixed ISO9001, ISO14001, Sanghiang Perkasa 132 11,869 Morinaga sachet) HACCP , OHSAS18001
Saka Farma 67 7,000 Line Non Beta Lactam products penicillin & – –
3 lines; solid, liquid oral, and semi solid Hexpharm Jaya 143 3,400 – ISO9001 (Non Beta Lactam products) ISO9001, ISO14001, Fima 24 2,500 Large volume Parenteral Line Baxter OHSAS 18001
Kageo Igar Jaya 900 7,506 18 lines incl packaging printing & – –
Avesta 2,700 8,414 25 lines incl sliting, printing – ISO9001
Indogravure 2,714 6,477 10 lines incl printing – O9001 IS
Kalbe Morinaga 19 33,733 1 wet – drier line, 1 canline, 2 sachet lines Morinaga ISO9001, ISO22000
Orange Kalbe Ltd – 5,000 2 lines: tablet and cream – NAFDAC (local FDA)
37 SECTION 4
Financial Overview
38 Consolidated Sales
1st Half 2010 Strong Performance
Net Sales (in Rp Bn)
H1 2009 H1 2010 11.6% 4,707 4,217
7.6% 16.4% 19.8% 1,474 1,586 1,256 3.6% 1,079 1,039 797 826 867
Prescription Consumer Health Nutritionals Distribution & Consolidation Pharmaceuticals Packaging
Figures based on Unaudited Financial Statements
39 Strong Financial Performance
Improved Gross Profit Margin & Controlled Operating Expenses
Gross Profit Margin Operating Expenses to Net Sales Ratios
Total Opr. Expenses Margin 1.6% 32.5% 32.8% 0.3% 0.8% 0.8% 50.7% 49.1% 5.7% 5.6% Research & Development
General & Administrative 26.4% 26.1% Selling
H1 2009 H1 2010 H1 2009 H1 2010 Figures based on Unaudited Financial Statements Figures based on Unaudited Financial Statements • Gross Profit Margin increased by 1.6% due • Operating Expenses to Net Sales Ratio was up by to Rupiah strengthening and controlled 0.3% due to: production expense through: Launching of new products Lean manufacturing Strategic sourcing
40 Strong Financial Performance
Margins Improvement
Operating Profit Margin Net Income Margin
17.8% 700 12.2% 14.0% 1,000 16.6% 18.0% 600 12.0% 15.0% 9.5% 800 20.0% 838 500 572 10.0% 12.0% 43.5% 600 698 400 8.0% 399
41 Strong Financial Performance
High Growth Earnings per Share
1200 70 61 Earnings per Share has grown by 48.8% 60 1000 48.8% Y-o-Y driven by several factors:
50 • Profit Before Tax increased by 26.9% 800 41 842 40 • Lower tax rate 600 663 • Corporate income tax rate is reduced from 28% 572 30 to 25% starting 2010 400 399 20 • Acquisition of additional 25.45% PT Enseval
200 Putera Megatrading Tbk and PT Saka Farma 10 Laboratories in August 2009
0 0 • Minority interests in net earnings of subsidiaries H1 2009 H1 2010 down by Rp 41 Bn Figures based on Unaudited Financial Statements • Treasury Shares Income Before Tax in Rp Bn • Total number of treasury stocks increased Net Income in Rp Bn by 0.9% Y-o-Y EPS
42 Solid Financial Position
Rp 1.3 Trillion of Net Cash Position
Total Debt and Gearing Ratio Cash & Net Cash Balance
43.7% 45.0%
1,000 40.0% 1,974 35.0% 800 1,562 30.0% 1,471 1,322 1,370 1,312 600 25.0% 1,020 15.5% 20.0% 400 12.6% 11.2% 15.0% 9.3% 604 7.9% 10.0% 200 405 3.4% 379 340 311 5.0% 159 0 0.0%
Total Debt in Rp Bn Gearing Ratio
43 Working Capital Management
Cautiously Managed
H1 2009 H1 2010 (Unaudited) (Unaudited) ∆ Change Kalbe’s days of inventory was Days of Account Receivable 46 52 6 up by 1 day to 137 days Days of Inventory 136 137 1 Days of Account Payable 45 46 1 Net Operating Cycle 137 143 6 Net Operating Cycle has been increased by 6 days from 137 days in H1 2009 to 143 days in H1 2010
30 June 2009 30 June 2010
(Unaudited) (Unaudited)% Change
CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers 4,494,105,314,481 5,032,729,922,591 12.0% End-to-end supply chain 24.1% Cash paid to suppliers and employees (3,642,060,145,285) (4,521,082,717,030) management would be Cash provided by operations 852,045,169,196511,647,205,561-40.0% continuously to be managed to Receipts of claims for income tax refund 18,063,308,335 24,189,636,536 33.9% overcome any fluctuation in 52.3% Payments of income taxes (181,905,542,128) (276,963,207,461) inventory Net Cash Provided by Operating Activities 688,202,935,403258,873,634,636-62.4%
44 SECTION 5
Corporate Actions & Outlook in 2010
45 Corporate Actions in 2010
Joint Venture Company in the Philippines
Kalbe has formed a 50-50 percent joint venture firm, Asiawide Kalbe Philippines, Inc . with ARC Holdings Inc., a Philippines' Corporation, to market ready-to-drink ExtraJoss in returnable glass bottle (RGB) in the Philippines.
Disposal of 1,500,000 Treasury Shares Kalbe sold 1,500,000 Treasury Shares or 0.19% of the total Treasury Shares through Indonesian Stock Exchange. The sales is to ensure 40% free float so that Kalbe’scorporate income tax rate will be reduced by 5%. Kalbe still has remaining 780,990,000 Treasury Shares.
Divestment of Packaging Division – PT Kageo Igar Jaya Tbk Kalbe signed Conditional Sale and Purchase Agreement with PT Kingsford Holdings in relation to the sale and transfer of 610,058,500 shares of Kalbe in Kageo Igar. With the divestment of its packaging business, Kalbe can focus more on core business, namely, production, marketing and distribution of health products or health services.
46 Achievements in 2010
Awards in Early 2010
• The 2010 Best Company for Cigarettes, Pharmaceutical and Households Needs Sector in Investor Awards , from Investor Magazine.
• The 2010 Indonesian Most Admired Company Award in Pharmaceutical Category in IMAC Award , from Business Week and Frontier.
47 Outlook 2010
“8 to ALL”
1. Continue the implementation of the Productivity – Innovation – Cash flow (PIC) Program to all business units 2. Enhance business portfolio through new products and business developments 3. Expand business territory through collaboration 4. Implement Direct-to-Customer (D2C) Program 5. Continue the implementation of aligned supply-chain program 6. Strengthen domestic distribution coverage and logistics 7. Develop people competence and leadership 8. Build knowledge capital for sustainability
Updated Earnings Guidance 2010
1. Sales Growth 13% - 15% (assuming no packaging division disposal in 2010) 2. Operating Profit Margin 17.5% - 18.5% 3. Earnings per Share Rp 130 – Rp 140, representing a growth of 34% - 44%
48 SECTION 6
Appendix Financial Information YTD June 2010 (Unaudited)
49 Unaudited Financial Statement YTD 06 2010
Consolidated Balance Sheets
30 June 2009 30 June 2010 (Unaudited) (Unaudited) % Change ASSETS CURRENT ASSETS Cash and Cash Equivalents 1,974,275,116,531 1,470,837,047,302 -25.5% Short-term Investments 33,803,068,876 15,397,699,321 -54.4% Trade Receivables 1,078,243,842,741 1,353,480,752,250 25.5% Other Receivables 85,010,092,768 87,086,908,556 2.4% Inventories 1,626,889,217,662 1,764,829,085,611 8.5% Other Current Assets 212,687,155,034 336,292,112,097 58.1% TOTAL CURRENT ASSETS 5,010,908,493,612 5,027,923,605,137 0.3% TOTAL NON CURRENT ASSETS 1,517,724,748,645 1,848,229,507,235 21.8% TOTAL ASSETS 6,528,633,242,257 6,876,153,112,372 5.3%
50 Unaudited Financial Statement YTD 06 2010
Consolidated Balance Sheets
30 June 2009 30 June 2010 (Unaudited) (Unaudited) % Change LIABILITIES CURRENT LIABILITIES Short-term Loans 600,610,032,426 157,500,587,090 -73.8% Trade Payables 535,294,069,403 586,401,834,838 9.5% Other Payables 50,638,147,450 149,280,765,262 194.8% Dividend Payables 27,208,134,991 246,488,108,491 Accrued Expenses 354,460,531,113 344,818,661,907 -2.7% Tax Payable 172,910,443,479 130,206,442,106 -24.7% Current Portion Long-term Debts : Due to related parties 2,935,335,968 882,265,375 -69.9% Obligations Under Capital Leases 345,377,833 305,541,814 -11.5% TOTAL CURRENT LIABILITIES 1,744,402,072,663 1,615,884,206,883 -7.4% TOTAL NON CURRENT LIABILITIES 112,575,850,429 117,528,698,403 4.4% TOTAL LIABILITIES 1,856,977,923,092 1,733,412,905,286 -6.7% NEGATIVE GOODWILL 284,546,809 240,316,759 -15.5% MINORITY INTEREST 765,250,004,879 492,736,466,365 -35.6% SHAREHOLDERS' EQUITY Capital stock Issued and fully paid - 10,156,014,422 shares 50 7,800,721,100 507,800,721,100 0.0% Additional paid-in capital 2,640,000,000 4,441,133,136 68.2% Retained earnings 4,116,238,888,817 4,867,261,153,562 18.2% Treasury stocks (677,268,275,671) (687,283,369,009) 1.5% Others (43,290,566,769) (42,456,214,827) -1.9% SHAREHOLDER'S EQUITY NET 3,906,120,767,477 4,649,763,423,962 19.0% TOTAL LIABILITIES & SHAREHOLDER'S EQUITY 6,528,633,2 42,257 6,876,153,112,372 5.3%
51 Unaudited Financial Statement YTD 06 2010
Consolidated Statements of Income
30 June 2009 (Unaudited) 30 June 2010 (Unaudited) % Change NET SALES 4,217,477,571,977 4,706,809,589,746 11.6% COGS 2,147,467,560,903 2,322,776,297,551 8.2% % to NS 50.9% 49.3% -1.6% GROSS PROFIT 2,070,010,011,074 2,384,033,292,195 15.2% % to NS 49.1% 50.7% 1.6% OPERATING EXPENSES Selling 1,100,326,766,843 1,243,522,338,380 13.0% % to NS 26.1% 26.4% 0.3% General & Administrative 238,664,373,644 263,035,220,444 10.2% % to NS 5.7% 5.6% -0.1% Research & Development 32,620,212,210 39,270,128,610 20.4% % to NS 0.8% 0.8% 0.1% TOTAL OPERATING EXPENSES 1,371,611,352,697 1,545,827,687,434 12.7% % to NS 32.5% 32.8% 0.3% OPERATING PROFIT 698,398,658,377 838,205,604,761 20.0% % to NS 16.6% 17.8% 1.2% OTHER INCOME, NET (34,952,804,261) 3,535,154,506 -110.1% % to NS -0.8% 0.1% 0.9% INCOME TAX EXPENSE, NET (194,303,211,962) (239,883,215,086) 23.5% % to NS -4.6% -5.1% -0.5% MINORITY INTERESTS (70,433,463,373) (29,520,175,169) -58.1% % to NS -1.7% -0.6% 1.0% NET INCOME 398,709,178,781 572,337,369,012 43.5% % to NS 9.5% 12.2% 2.7% EPS 41 61 48.8%
52 Unaudited Financial Statement YTD 06 2010
Consolidated Statements of Cash Flows
30 June 2009 30 June 2010 (Unaudited) (Unaudited) % Change CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers 4,494,105,314,481 5,032,729,922,591 12.0% Cash paid to suppliers and employees (3,642,060,145,285) (4,521,082,717,030) 24.1% Cash provided by operations 852,045,169,196 511,647,205,561 -40.0%
Receipts of claims for income tax refund 18,063,308,335 24,189,636,536 33.9% Payments of income taxes (181,905,542,128) (276,963,207,461) 52.3% Net Cash Provided by Operating Activities 688,202,935,403 258,873,634,636 -62.4%
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of short-term investments and time deposits 390,000,605,519 55,424,490,000 -85.8% Interest income received 38,664,150,952 23,886,807,575 -38.2% Proceeds from sales of property and equipment 11,577,106,914 17,927,427,975 54.9% Acquisitions of property, plant and equipment (129,227,524,838) (214,514,493,721) 66.0% Placements in short-term investments and time deposits (299,055,085,796) (8,225,929,215) -97.2% Payments from other investing activities, net (1,341,134,579) (2,792,907,915) 108.2% Net Cash Provided by (Used in) Investing Activities 10,618,118,172 (128,294,605,301) -1308.3%
53 Unaudited Financial Statement YTD 06 2010
Consolidated Statements of Cash Flows
31 June 2009 31 June 2010 (Unaudited) (Unaudited) % Change CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of short-term investments and time deposits 390,000,605,519 55,424,490,000 -85.8% Interest income received 38,664,150,952 23,886,807,575 -38.2% Proceeds from sales of property and equipment 11,577 ,106,914 17,927,427,975 54.9% Acquisitions of property, plant and equipment (129,2 27,524,838) (214,514,493,721) 66.0% Placements in short-term investments and time deposits (299,055,085,796) (8,225,929,215) -97.2% Payments from other investing activities, net (1,341,134,579) (2,792,907,915) 108.2% Net Cash Provided by (Used in) Investing Activities 10,618,118,172 (128,294,605,301) -1308.3%
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from bank loans 1,074,104,109,722 356,303,693,418 -66.8% Proceeds from sale of treasury stock - 3,121,157,136 Buyback of shares Company (104,168,289,068) - -100.0% Subsidiaries (3,589,202,418) (1,215,290,983) -66.1% Payments of bank loans (918,487,603,055) (538,312,395,687) -41.4% Payments of cash dividends Subsidiaries (2,363,567,743) (7,835,622,000) Payments of interest expense (32,075,171,769) (7,608,921,510) -76.3% Proceeds from other financing activities, net 10,636,607,376 (2,834,366,957) -126.6% Net Cash Provided by (Used in) Financing Activities 24,056,883,045 (198,381,746,583) -924.6% NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT 72 2,877,936,620 (67,802,717,248) 109.4% Net Effect of Changes in Foreign Exchange Rates of Foreign Currency Denominated Cash and Cash Equivalents (70,400,445,388) (24,024,412,858) -65.9% CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,321,7 97,625,299 1,562,664,177,408 18.2% CASH AND CASH EQUIVALENTS AT END OF YEAR 1,974,275,116 ,531 1,470,837,047,302 -25.5% 54 THANK YOU
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