Dear Shareholders and Stakehoders,
Praise be to God Almighty that in 2021 we succeeded in maintaining the momentum of sustainable growth. Despite being faced with various challenges and dynamics throughout the year, WIKA BETON continues to realize its commitment to become a leading company in the field of Engineering, Production, and Installation (EPI) of the concrete industry in Southeast Asia.
With integrity and dedication, WIKA BETON succeeded in closing 2021 by taking strategic steps, innovating, and growing more significantly. This opportunity is also a valuable moment and an honor for me, on behalf of the Board of Directors, to present the 2021 WIKA BETON Annual Report.
Global and National Economic Development
Reflecting on global and national economic conditions in 2021, the world is experiencing interesting economic dynamics to study. Still interpreted together as the year of the pandemic, the continuation of the sad story 2020 when the Covid-19 pandemic hit the world still left an impact that was felt until the end of 2021.
In the January 2022 edition of the World Economic Outlook report, the International Monetary Fund (IMF) recorded world economic growth of 5.9 percent or increased significantly fom -3.1 percent in 2020 (year on year).
The decline in projections occurs in line with the gross domestic product (GDP) decrease in the third quarter of 2021 due to the spread of positive cases of the Delta variant worldwide. This condition was exacerbated by the emergence of a new variant of Omicron, which disrupted supply chains and suppressed economic activity, which began to recover in the fourth quarter of 2021.
The decline in growth projections occurred widely in both developed and developing countries. The two largest economies globally, namely the United States (US) and China, also received a downward revision for their growth outlook this year. The decline in US growth projections was driven by supply disruption issues marked by rising inflation which reached a record high in several decades. Consequently, consumption experienced a slowdown in the 3rd quarter which was also influenced by the increase in Covid-19 cases.
On the other hand, the presence of a new variant of Omicron and supply chain disruptions have again put pressure on economic activity, which began to recover in the fourth quarter of 2021, thus having implications for the economy next year. This crisis is predicted to have a prolonged impact or a lasting scarring effect on the economy and vulnerable groups, considering that the Omicron variant aggressively creates Covid-19 uncertainty.
The economic recovery and infrastructure projects that continue amid the Covid-19 pandemic also impact WIKA BETON’s performance. The year 2021 is also a momentum where WIKA BETON carved another achievements and positif performance.
Indonesia was also affected by the domino effect of global economic fluctuations. The Indonesian Central Statistics Agency (BPS) noted that the Indonesian economy in 2021 grew by 3.69 percent, higher than the achievement in 2020, which experienced a growth contraction of 2.07 percent.
Indonesia’s trade balance in December 2021 experienced a surplus of USD 1.02 billion. The profit was obtained from a reduction in exports by USD22.38 billion with an import value of USD21.36 billion. This record made Indonesia again enjoy a trade surplus for the 20th time in a row. However, the value declined again from the previous month’s trade balance surplus, which reached USD3.51 billion. Overall, the trade balance in 2021 experienced an abundance of USD 35.34 billion and was recorded as the highest trade balance surplus in the last five years.
Until the end of 2021, Indonesia managed to flatten the curve and recorded several significant achievements. Among them are state revenues, taxation performance, customs duties, and nontax state revenues (PNBP) which exceed the targets mandated by the 2021 State Budget Law. Not only that, Indonesia’s trade balance recorded a surplus for 19 consecutive months. The phenomenon of the supercycle commodity or spike in primary commodity prices due to an increase in global demand is a blessing in the country’s trade balance.
Regarding the construction industry, Fitch Solutions Country Risk & Industry Research stated that the significant growth in the construction sector this year was due to the implementation of the Covid-19 vaccination, the encouragement of the use of domestic products, as well as various supports in the infrastructure sector by the Government. In addition, the Government has also established a new Sovereign Wealth Fund (SWF) in Indonesia, namely the Indonesia Investment Authority (INA) or the Investment Management Agency (LPI). This institution will later facilitate more investment in infrastructure development by reducing legal uncertainty and opening up investment to foreign investors.
Performance Analysis of WIKA BETON 2021
The economic recovery and infrastructure projects that continue amid the Covid-19 pandemic also impact WIKA BETON’s performance. The year 2021 is also a momentum where WIKA BETON carved another achievements and positif performance.
Until December 2021, WIKA BETON realized a new contract worth Rp5.21 trillion. Some of the projects that became the most prominent contributor were the infrastructure sector at 67.93%, followed by projects in the property sector at 17.63%, then projects in the energy sector at 11.23%, and others from the industrial and mining industries, each contributing 2 .53% and 0.58%. These projects include the Jakarta-Bandung High-Speed Train, Manyar Nickel Smelter, Batang Integrated Industrial Estate, Signal, and Telecommunication Development for Double Tracks Between Mojokerto Railroad along with the Surabaya-Solo Cross, RKEF Nickel Smelter, Kediri International Airport, NCICD Coastal Safety Embankment, Serpong-Balaraja Toll Road, Bogowonto River Estuary Protection and Balikpapan RDMP.
The company still recorded a positive profit and cash flow from this performance. It is evident from the Consolidated Financial Statements for the year ended December 31, 2021. It recorded operating Revenues at Rp4.31 trillion, a decrease of 10.21% compared to the gains in 2020 of Rp4.80 trillion. Most of the Operating Revenues still came from the concrete segment with 84.81% of the overall operating income. In addition, The data recorded a profit for the Year of the Company at Rp81.43 billion, a decrease of 33.87% compared to the gain in 2020 of Rp123.15 billion.
On the other hand, as of December 31, 2021, the company’s total assets experienced an increase recorded at Rp8.93 trillion or an increase of 4.92% compared to the previous year of Rp8.51 trillion. Meanwhile, Total Equity in 2021 was recorded at Rp3.45 trillion, an increase of 1.69% compared to the last year of Rp3.39 trillion. The operating cash flow in 2021 was positive at Rp44.40 billion, so the company’s overall cash and cash equivalents increased by Rp196.67 billion or 12.75% compared to the previous year.
Strategic Policies And Strategies Taken
The Board of Directors oversees the performance in 2021 by implementing various strategic policies that encourage positive performance in this transition period. Each Board of Directors has its post in formulating strategic approaches to determine future steps. Through the mechanism of intensive meetings and discussions, the Board of Directors ensures that these strategic policies are relevant to the current conditions.
From the formulation process that has been carried out, the company has determined the 2021 Corporate Work and Budget Plan (RKAP), which contains a series of comprehensive strategies, plans, and operational and financial performance targets. Strategic steps that have been carefully and calculated are formulated into the 2021 Corporate Strategy.
One of the main strategies implemented is efficiency (cost reduction) in all fields. This effort was initiated by revamping more economical processes and accelerating digitalization and automation to reduce production costs. The company also encourages more selective marketing strategies, understands customers better, and speeds up the billing process.
To succeed in the management program related to efficiency, the company involves all WIKA BETON personnel to hone their capacity further and find breakthroughs. Through this effort, it is hoped that it can find more efficient operational processes and increasingly competitive products. The company also encourages HR capacity to support the business transformation carried out. The company has prepared special programs for millennial HR, organized to fill strategic positions in the future.
The year 2021 also marks an increasingly comprehensive digitalization era at WIKA BETON. The production process through the implementation of the Computer Control Machining System (CCMS), which has been running since the previous year, continues to be accelerated. By 2021, CCMS implementation has covered 80% of WIKA BETON’s factories in Java. Implementing this CCMS has proven to be very effective in controlling the production process. Not only in directing but also in optimizing the production process faster, quality is guaranteed and can be monitored at any time.
Comparison Between Target And Realization
Overall, the company’s achievement of the 2021 RKAP Revision reached 64.46%. This performance can be seen by realizing the New Contract target in 2021 of Rp5.21 trillion or 90.16% of the planned Rp5.78 trillion. The achievement of this contract was recognized, among others, by basing the strategy on efforts to create opportunities so that the company must move more actively to pick up existing business opportunities.
The achievement of several key indicators of the company showed a significant increase compared to the target and realization of the previous year. The details of these achievements are as follows:
- New Contracts in 2021 amounting to Rp5.21 trillion achieved 90.16% of the 2021 RKAP Review target of Rp5.78 trillion. The new contract in 2021 comes from PT Wijaya Karya (Persero) Tbk of 18.82%, State Owned Enterprise of 18.04%, Government of 2.69% and Private companies of 60.45%
- Sales in 2021 amounted to Rp4.31 trillion, achieving 90.28% of the 2021 RKAP Review of Rp4.78 trillion.
- Gross profit of Rp225.42 billion, reaching 78.02% of the 2021 RKAP Review, Rp288.91 billion.
- Net profit of Rp81.43 billion, 64.45% of the 2021 RKAP Review, Rp126.33 billion.
Overall, in 2021 the company succeeded in realizing quite encouraging achievements. In terms of financial ratios, the company recorded a net profit margin of 1.89% of the 2021 RKAP Review target set, which was 2.64%. These achievements encourage the company to obtain a corporate health level of 70 with the title “HEALTH A,” based on the Decree of the Minister of SOEs No. KEP-100/MBU/2002 dated June 4, 2002, concerning Assessment of the Health Level of State-Owned Enterprises, above the target outlined in the 2021 RKAP of 70.5 with the title “HEALTH A.”
Constraints/Challenges Faced And Steps To Resolve
WIKA BETON realizes that the post-pandemic era will not immediately restore the conditions before the pandemic. So many changes are inevitable and present their challenges. WIKA BETON has made Covid-19 a mirror to transform the business for the better, especially from the HR aspect, which is the spearhead of the company’s business cycle. The company prepares its human resources to always be adaptive in dealing with the dynamics of business changes and its transformation roadmap. In addition to the ongoing pandemic, the industry faces a challenging era of volatility, uncertainty, complexity, and ambiguity (VUCA).
Another challenge comes from the uncertainty of conditions that lead to the non-achievement of contract turnover targets and factory efficiency. The company rolled out strategic policies to maintain performance at an optimal level to deal with this. The failure to achieve the target as proclaimed has become a motivation for the company to take a deeper look and further spur performance.
In 2021, the company was also faced with demands to present a business scheme that refers to sustainability. WIKA BETON has initiated a production policy that is more environmentally friendly through the Green Concrete program. This program includes the reuse of waste materials, the manufacture of concrete with more energy-efficient materials, production processes that are more environmentally friendly, and a Green Factory to make the WIKA BETON factory an ecologically conscious factory. WIKA BETON is aware that the environment is not a gift from our ancestors but our children and grandchildren.
Awards In 2021
Challenges are not an obstacle for WIKA BETON to always make achievements. All WIKA BETON personnel have jointly actualized their hard work and dedication, which has received appreciation from stakeholders. The awards won in 2021 are as follows:
- 1st Best Indonesia Good Corporate Governance (GCG) Award-VI-2021 organized by Economic Review Magazine.
- Public Relations Indonesia Award 2021 Most Popular Category in Print Media 2020 Sub-Category of BUMN Subsidiaries organized by Public Relations Indonesia.
- Best Tbk Company III in the Innovation and Technology Category organized by Top Business Magazine.
- Top CSR Awards 2021 #Star4 or “Excellent” level organized by Top Business Magazine.
- Top Leader on CSR Commitment 2021 to President Director Hadian Pramudita organized by Top Business Magazine.
- Bronze Winner in the category of BUMN Subsidiary “The Most Promising Company in Tactical Marketing” held by Marketeers Magazine.
- Second Mino Best Project Award held by the Road Engineering Association of Asia and Australasia.
- ESG Award 2021 with a rating of Commitment C ESG Award 2021 held by Berita Satu.
- Silver Winner in the 2021 SNI Award held by the National Standardization Body.
- Silver Winner in Technology Enhancement Category of BUMN and Tbk Company organized by BUMN Track.
- Top Digital Implementation #Level Stars four held by IT Works.
- Top Leader on Digital Implementation held by IT Works.
The year 2022 is an important time as a turning point for the national economic recovery from the impact of the COVID-19 pandemic. All countries, including Indonesia, are trying their best to respond with various handling policies. Vaccination distribution, which is expected to produce results soon, is essential in looking at the prospects for the world and domestic economies in 2022.
Bank Indonesia (BI) estimates that the global economy will grow positively in 2022. The global economic recovery is expected to continue amid the increase in the Omicron variant of the Covid-19, high inflationary pressure, and the normalization of the central bank’s monetary policy. The world economy is also predicted to grow more balanced. The United States (US) and China’s economic revival was also observed in Europe, Japan, to India. The performance of several indicators confirms it. These include the Purchasing Managers’ Index, consumer confidence, and strong retail sales.
In line with this optimism, the Ministry of Finance projects Indonesia’s economic growth in 2022 to be in the range of 5.2%- 5.8%. These assumptions consider various global and national economic dynamics, risks of uncertainty, and the potential for economic recovery in the next year. The Ministry of Finance also emphasized that this projection would be achievable if Covid-19 could continue to be controlled, banking intermediary functions could recover and support Bank Indonesia monetary policy and conducive OJK financial sector policies.
The year 2022 will be the foundation of consolidation and reform. Fiscal consolidation is aimed at healthy macro-fiscal to accelerate economic recovery and structural reforms. One of the government’s efforts is to encourage important sectors, including the infrastructure sector. This sector is still the backbone and one of the main drivers of the 2022 construction market. The construction value is estimated to reach Rp107.15 trillion. The government also relies on the private sector to develop, finance, and manage large infrastructure projects.
WIKA BETON also sees a brighter prospect in the coming year. This projection is mainly related to the government’s policy, which announced that the initial stage of IKN development would prioritize essential infrastructure development. The company is ready to participate in building IKN by targeting projects that have become the company’s expertise. Among them are smelter projects, road construction, industrial centers, and other economies.
WIKA BETON is ready to welcome any open potential, considering that the company’s developments have been carried out since previous years. One example is the development of ready mix services, which will undoubtedly support business development in 2022.
The company has expectations to achieve every target that has been proclaimed and stated in the RKAP. The company will concentrate more on approaching customers who offer a high turnover value while also focusing on maintaining cash flow. The company is optimistic that 2022 will be a turning point in implementing projects that have been delayed.
WIKA BETON believes that the resilience that has been formed from the ability to survive during difficult times in the previous year has become a strength for the company. With its expertise and established reputation, the company is ready to face 2022 with a more brilliant performance.
Overview Of The Implementation Of Good Corporate Governance
WIKA BETON always prioritizes good corporate governance (GCG) practices to create a management system that supports business success and accountability. In 2021, WIKA BETON will continue to implement fundamental principles related to the implementation of GCG principles, consisting of 5 (five) principles, namely Openness, Accountability, Responsibility, Independence, and Fairness.
In line with the 2019-2023 governance roadmap, the direction of GCG implementation and development in 2021 is in the Good Corporate Company phase with a focus on:
- Effective control of business operations, especially aspects of business risk;
- Updating the Board Manual, Code of Conduct, and Code of Corporate Governance;
- IT Governance; and
- Sustainable implementation of the ASEAN CG Scorecard
The commitment to improving the implementation of GCG is also stated to enhance the quality of information and governance through preparing the Annual Report. The Company believes that accurate information in the Annual Report is a form of reporting accountability to stakeholders and a manifestation of the commitment to ‘beyond governance’.
Every year, the achievement of WIKA BETON’s GCG score illustrates increasingly influential and optimal governance. The Company applies work culture and standards based on work ethics and works culture by work guidelines and applicable laws and regulations. The established work culture and ethics are principles that must be adhered to by all elements within the Company.
Through all existing GCG tools, the company is optimistic about realizing a better GCG implementation. The Corporate Governance performance assessment process that has been carried out covers various aspects of governance throughout 2021. Based on the evaluation on these aspects, the company managed to achieve a score of 88.48 with “Very Good” category.
Risk Management Implementation
To face the uncertainty and challenges, the company’s risk control is developed in a comprehensive, planned, and structured manner. The aim is to strengthen anticipatory steps and strengthen the company’s ability and resilience to risk (risk resilience). As the basis for implementing risk management on an international scale, the company’s risk management infrastructure is carried out by referring to the ISO 31000:2011 framework.
Mapping and identifying the risks it may face internally and externally is an essential first step. The results of the mapping and identification will then determine the appropriate, mature, and measurable anticipatory and mitigation measures. Risk identification considers the risk context, risk appetite, and the profile and risk limits that are owned to be further study material for management in determining and formulating mitigation strategies by achieving the company’s strategic objectives. Throughout 2021, the Risk Management Division has conducted a risk assessment and identified three risk profiles.
The development of a Risk Management System is an integral part of a long-term strategy that aims to identify all risks and manage risk positions by the company’s policies. In its implementation, the company ensures that the performance of risk management has been comprehensively integrated into business processes to become an effective early warning system in providing early information regarding the potential risks faced by the company.
In line with the principle of growing and developing together with all human resources, WIKA BETON manages its human resources and subsidiaries with the focus of “right man in the right place.” This principle carries the understanding that WIKA BETON wisely places its personnel to carry out functions that are by their respective capabilities. Planning for the quantity and quality of human resources and determining the duties and responsibilities of each position is adjusted to the needs of each current work unit, as well as business development carried out by the company.
Activities that support the improvement of the quality of human resources are carried out consistently and continuously. In 2021, the company is still faced with a pandemic condition that demands more attention to HR management. Adaptivity is the key to maintaining HR productivity to remain optimal even though there are adjustments in operational activities. To that end, the company enforces strict health protocols and implements the WFO and WFH work systems while still encouraging employee productivity.
WIKA BETON’s human resources have proven to adapt as competent characters continue to be honed from previous years. As a result, the company’s human resources have grown by possessing technical and non-technical skills in carrying out their work correctly and being agile in dealing with obstacles that arise from challenging times.
Currently, the construction industry must build innovative and efficient while prioritizing environmentally-friendly (make green). WIKA BETON realizes this and adapts the latest technology infrastructure to ensure targeted IT development.
IT acceleration in the Company begins with the implementation of Enterprise Resource Planning (ERP) which consists of Operating System (OS), Finance, and Human Capital Information System (HCIS). This ERP system marks the beginning of the digitization of WIKA BETON’s business processes, both from administrative work, which it initially did manually/analogously to become IT-based. Until now, the ERP system is still being used with continuous development tailored to the needs of the Company. As a work unit that is specifically responsible for implementing IT development programs and initiatives, the Company’s IT Team has also built a private cloud-based Wide Area Network (WAN) system that connects all work units to increase efficiency, optimize production, and simplify business processes.
In 2021, WIKA BETON will further sharpen its focus on IT management. In its implementation, the Company formed a steering committee to discuss the programs contained in the IT Roadmap. The development of IT in 2021 includes supply chain marketing information systems, accounting materials in factories, marketing tools that are starting to use virtual reality, augmented reality to present real promotional media and updates and provide a more intensive touch to customers.
Corporate Social Responsibility
WIKA BETON views that Corporate Social Responsibility (CSR) is an effort to realize sustainable development. 2021 still wrapped in an atmosphere of the pandemic period, which requires the Company to exert all measures to ensure the health and safety of all stakeholders. As has been determined through the Company’s CSR Roadmap for 2020-2023, the fulfillment of corporate responsibilities carries a holistic approach and framework by ISO 26000 and the Sustainable Development Goals (SDGs), which integrate interests in seeking profit that is balanced with interests in preserve the environment (planet) and prospers the community (people) supported by good corporate governance (governance).
- Social Responsibility in the Environmental Sector
As a company that produces raw materials for infrastructure development, WIKA BETON presents products that contribute significantly to economic growth and empower the Indonesian population. In practice, the company realizes that the company’s business activities have direct and indirect impacts on the environment. For this reason, the company prioritizes a high level of prudence in every process related to environmental protection and safety.
An integrated environmental management system is a commitment implemented by the company to guarantee that the business carried out does not potentially damage the environment in its operations. Its implementation refers to the Sustainable Development Goals and Law no. 32 of 2009 concerning Environmental Protection and Management (PPLH). In addition, the company also fulfills the environmental monitoring and management documents required for each project to be carried out, such as Environmental Impact Analysis (AMDAL) documents, Environmental Management Efforts, and Environmental Monitoring Efforts (UKL-UPL). In addition, the company enriches its compliance with the environment by continuously implementing environmental quality standards and licensing the use of natural resources.
With the diversity of the company’s business activities, the raw materials used are highly dependent on each type of business activity. The characteristics of the company’s business in the production of precast concrete make material management an aspect that needs careful attention. Due to conducive cooperation with business partners, the company can monitor the quality and specifications of the materials obtained. The company can also achieve consistency to balance its interests in producing the best concrete products with quality material specifications without compromising environmental considerations.
- Social Responsibility in the Field of Employment, Occupational Safety, and Health
Even amid a pandemic that restricts movement, the company encourages its employees to improve competence. The realization of employee competency development costs in 2021 was recorded at Rp1,710,155,646. This amount increased by 124% from 2020 of Rp778,593,014 or 98% of the set budget of Rp1,741,822,400. The limitations during the pandemic do not reduce the company’s commitment to increase the competency level of HR in supporting the development of the company’s operations and business while increasing the level of personal competence of each employee.
- Social Responsibility in the Field of Community Social Development
The company implements a Strategic Corporate Social Responsibility Policy based on Law no. 40 of 2007 concerning Limited Liability Companies, ISO 26000, and the Sustainable Development Goals. Through the Corporate Social Responsibility program, WIKA BETON seeks to realize its contributions and benefits through relevant programs that have added value for the surrounding community. Until the end of 2021, the company recognized a cost of Rp1.86 billion to carry out these CSR programs and activities.
Changes In Board Of Directors Composition
On this occasion, we would like to convey that in 2021 there has been a change in the composition of the members of the Company’s Board of Directors based on the resolutions of the Annual General Meeting of Shareholders as outlined in Deed Number 48 dated May 28, 2021.
As of December 31, 2021, the composition of the Board of Directors of WIKA BETON is as follows:
- President Director: Hadian Pramudita
- Marketing and Development Director: Kuntjara
- Director of Finance, Human Capital and Risk Management: Imam Sudiyono
- Director of Operations & Supply Chain Management: Taufik Dwi Wibowo
- Director of Engineering and Production: Sidiq Purnomo
On behalf of the Board of Directors, I would like to express my gratitude and appreciation to PT Wijaya Karya (Persero) Tbk as a Holding Company, the Board of Commissioners, business partners, and other stakeholders for their continued support and trust. The company dedicates all achievements and awards received in 2021 to stakeholders, the energy that is our strength in transforming and advancing ourselves for the better. We are grateful for all the support, trust, input, and positive contributions each individual gives.
I also extend my deep appreciation to the employees who have dedicated themselves tirelessly. WIKA BETON’s track record frames the company’s entire performance in terms of resilience, safety, discipline, creativity, and agility. All of them are the result of the hard work of the company’s people, who work hand in hand as a resilient entity, united by common aspirations, and driven by a great desire to provide the best.
On behalf of the Board of Directors,