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Public Expose
Jakarta
July 29, 2024
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Forward-Looking and Cautionary Statements
• This presentation has been prepared by the management of PT Hanjaya Mandala Sampoerna Tbk. (“HMS”) solely for use in connection with the presentation to
public during the Public Expose and does not constitute or form part of an offer, solicitation, recommendation or invitation of any offer, to buy or subscribe for any
securities, nor should it or any part of it form the basis of, or be relied in any connection with, any contract or commitment whatsoever. Further, nothing in this
document should be construed as constituting legal, business, tax or financial advice.
• The information and opinions in this document are provided as at the date of this document (unless stated otherwise) and are subject to change without notice, its
accuracy is not guaranteed and it may not contain all material or relevant information concerning HMS or its subsidiaries. Neither HMS nor any of its affiliates,
advisors and representatives make any representation regarding, and assumes no responsibility or liability whatsoever (in negligence or otherwise) for, the
accuracy or completeness of, or any errors or omissions in, any information contained herein nor for any loss howsoever arising from any use of these materials.
• This presentation and related discussion may contain projection of future results and other forward-looking statements. These statements can be recognized by the
use of words such as "expects", "plans", "will", "estimates", "projects", "intends" or words of similar meaning. Achievement of projected results is subject to risks,
uncertainties and inaccurate assumptions, and HMS is identifying important factors that, individually or in the aggregate, could cause actual results to differ
materially from those contained in any forward-looking statements made by HMS.
• HMS’ business risks include: excise tax increases and discriminatory tax structures; increasing marketing and regulatory restrictions that could reduce our
competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of our products in certain markets or countries; health concerns
relating to the use of tobacco and other nicotine-containing products and exposure to environmental tobacco smoke; litigation related to tobacco use and
intellectual property; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and
conflicts; the impact and consequences of Russia's invasion of Ukraine; changes in adult smoker behavior; the impact of COVID-19 on HMS’ business; lost revenues
as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations,
and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost, availability, and quality of tobacco
and other agricultural products and raw materials, as well as components and materials for our electronic devices; and the integrity of its information systems and
effectiveness of its data privacy policies. HMS’ future profitability may also be adversely affected should it be unsuccessful in its attempts to produce and
commercialize reduced-risk products or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully introduce
new products, promote brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand
portfolio internally or through acquisitions and the development of strategic business relationships; if it is unable to attract and retain the best global talent,
including women or diverse candidates; or if it is unable to successfully integrate and realize the expected benefits from recent transactions and acquisitions.
Future results are also subject to the lower predictability of our reduced-risk product category's performance.
• HMS cautions that the foregoing list of important factors is not a complete discussion of all potential risks and uncertainties. HMS does not undertake to update
any forward-looking statement that it may make from time to time, except in the normal course of its public disclosure obligations.
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22 July 2024
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Agenda
External Environment
Sampoerna Business Performance,
Strategy and Initiatives
Sampoerna Untuk Indonesia
Wrap up
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Agenda
External Environment
Sampoerna Business Performance,
Strategy and Initiatives
Sampoerna Untuk Indonesia
Wrap up
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Steady economic growth in the shadow of weakening
purchasing power
Steady economy Consumer demand remains soft
5.2%
5.1%
5.0% 5.0% Consumer Confidence Index
4.9%
GDP
Year-on-Year
Growth
Q1'23 Q2 Q3 Q4 Q1'24 Q2
128
125 125
5.2% 124
123
123
4.0%
Inflation 2.9% 2.7% 2.8% 2.8%
Year-on-Year Jan Feb Mar Apr May Jun
2023 2024
Source: World Bank, Indonesia Economic Q1'23 Q2 Q3 Q4 Q1'24 Q2
Prospects, June 2024 Source: Biro Pusat Statistik Source: Bank Indonesia
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Tobacco industry is impacted by downtrading
Industry Tier Segment Areas with BV1 growth exceeded National
Share of Market (%) H1, 2024 vs. H1, 2023
East Indonesia
+6 pp
South Sumatra
61% 56% +7 pp
V1
BV1
▲ 5 pp
Greater Jakarta
39% 44% +7 pp
H1, 2023 2H 2023 H1, 2024
Source: Company estimates Source: Company estimates
Note:
“V1” stands for Volume Tax Tier 1 defined as annual production volume per cigarette category of more than 3 billion units (for Machine-made kretek or SKM and Machine-made White or SPM) and 2 billion units (for Hand-rolled Kretek or SKT) for total company and affiliated companies
“BV1 or Below-V1” stands for Below-Volume Tier 1 defined as annual production volume per cigarette category of less than 3 billion units (for Machine-made kretek or SKM and Machine-made White or SPM) and 2 billion units (for Hand-rolled Kretek or SKT) for total company and
affiliated companies
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..and illicit cigarettes have increased almost 50% since 2020
Illicit Cigarettes
(%)
6.9%
5.5%
4.9%
2020 2022 2023
Source: CNBC Indonesia, Rokok Ilegal Masih Menghantui RI (23 December 2023) 9
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… impacted by double-digit excise tax increases beyond inflation
4x
ET Increase vs. Inflation
17%
11%
7%
4%
3%
3% Inflation
Excise Tax Increase*
2017-2019 2020-2022 2023-2024
Pre-Pandemic Pandemic Latest Period
Note: *excise tax increase reflects the estimated weighted average industry figure. Figures reflect average of the period
Source: Central Bureau of Statistics for Inflation
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..and widening excise tax gap between Volume Tier 1 (V1) and
Below Volume Tier 1 (BV1) segments
Excise Tax Rate SKM Industry Tier Segment
(IDR/stick) Share of Market (%)
Pre-Pandemic Pandemic Pre-Pandemic Pandemic
1,231 V1
82%
75%
485 2.5x 64%
vs. 2017
56% V1
746 BV1
44% BV1
2.5x
285 vs. 2017
530 36%
195
25% Machine-made BV1:
335
18% 2.9x
2017 2018 2019 2020 2021 2022 2023 2024 2017 2018 2019 2020 2021 2022 2023 1H'24
Source: Ministry of Finance Regulations on Tobacco Excise Tax Rate Source: Company estimates
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Agenda
External Environment
Sampoerna Business Performance,
Strategy and Initiatives
Sampoerna Untuk Indonesia
Wrap up
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Sampoerna #1 player in the Indonesian tobacco industry with
27% share of market in H1 2024; however performance was
unfavorably impacted by industry dynamics
H1, 2024 Variance Year-on-Year
Volume 39.9 -3%
(Billion units)
Net Revenues 57.8 +3.0%
(IDR Trillion)
Net Profit 3.3 -11.6%
(IDR Trillion)
Taxes* 40.0 -8.2%
(IDR Trillion)
Source: PT HM Sampoerna Tbk. Consolidated Financial Results for the six month period ended June 2024. Note: *reflect total tobacco taxes and corporate income tax 13
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Key strategy and initiatives to drive growth
Multi-category with solid portfolio across segment and continuous innovation
• Gaining share of segment in V1
- Leading in machine-made kretek low tar (SKM LT) and machine-made white
(SPM) cigarette segments
- Expanding in machine-made kretek high tar (SKM HT) cigarette segment
- Growing labor-intensive hand-rolled kretek (SKT) cigarette segment
• Accelerating our smoke-free product journey
Strong route to market powered by digital
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Leading in SKM LT and SPM segments
Driving equity in machine-made portfolio
Campaign Activation
Portfolio
New Product
Launch
June 2024
These material are not intended for marketing or commercial communication 15
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Expanding in SKM HT segment
Campaign Activation
These material are not intended for marketing or commercial communication 16
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Growing labor-intensive SKT segment
Leading in SKT with our heritage brand
These material are not intended for marketing or commercial communication 17
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Growing labor-intensive SKT segment
Portfolio Campaign
New SKT products Q2’24
These material are not intended for marketing or commercial communication 18
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Delivering smoke-free products
growth through innovation and
expansion
• Expanded commercialization to targeted areas in
new cities
• Over 150,000 estimated IQOS legal age users (18+)
• Strong underlying momentum in Urban Jakarta
Share of Market in Urban Jakarta
4.5%
3.3% 3.5% 3.4%
2.7%
1.8%
Q1 Q2 Q3 Q4 Q1 Q2
2023 2024
Source: Company estimates. Note: Urban Jakarta represents West, Central and South Jakarta
which include an estimated 1.5 million Legal Age Nicotine Users
Note: IQOS legal age users (18+) as of Q1’2024 These material are not intended for marketing or commercial communication 19
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Our Smoke-free Products journey : Terea with Clove
New offerings (Feb’24) (May’24)
These material are not intended for marketing or commercial communication 20
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Partners with
hundreds of local
entrepreneurs
These material are not intended for marketing or commercial communication 21
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Strong route to market engines for multicategory, powered by
digital ecosystem, with capable and energized commercial forces
Digitalization Smoke-free
Products Affiliator
AI-powered
ordering system
Capable and Energized Commercial Forces as the Foundation
Legend: GT stands for General Trade ; KA stands for Key Accounts 22
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Agenda
External Environment
Sampoerna Business Performance,
Strategy and Initiatives
Sampoerna Untuk Indonesia
Wrap up
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One of the public listed companies with biggest employees in Indonesia
Multiplier effect to hundreds of thousand employment through our indirect employment
Note: total employees direct and indirect of over 90,000 as of June 2024; direct employees of 20,578 (PT HM Sampoerna Tbk. Financial Statements for the period ended June 2024)
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Sustainability at the core of Sampoerna
Environmental Social Governance
• Energy efficiency and emission reduction • Sales, marketing, and adult consumers • Business integrity
• Water management communications • Sustainable supply chain management
• Waste management • Product innovation for better alternative • Respect for human rights
• Socioeconomic well-being in our supply
chain and communities
• Healthy and fair working environment
Inauguration 10,550 ground-mounted solar panels in
Sukorejo Plant, 2023
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Youth Smoking
Prevention Program
Providing information and material
on preventing access to tobacco
and nicotine products to children
covering
1.5 million
retail partners and points of sales across
Indonesia
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Partnership with Tobacco and Clove Farmers with Good
Agricultural Practice (GAP) Standards
Child labor prevention, promoting safety in farm, waste bank, forest compensation
>22,000 farmers 27
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New SKT facilities in 2024 adding thousands of employment
+5 Partnership with Local Entrepreneurs +2 Owned SKT Facilities
(as of June 2024) (+1 facility in H1, 2024, +1 facility in H2, 2024*)
Java Island
Total Employees >90,000
~90% in SKT facilities
(direct and indirect)
*PT HM Sampoerna Tbk.’s announcement November 2023
Note: total employees as of June 2024; direct employees of 20,578 (PT HM Sampoerna Tbk. Financial Statements for the period ended June 2024) 28
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Continuously supporting MSMEs for Indonesia
>250,000 >6,300
SRC Stores Mitra SRC
Sampoerna Retail Community
Impact for Indonesia
IDR 236
Trillion/year 11.36%
SRC Store Revenue of GDP Retail Sector1)
Impact on Local business
+42% Stores 77% Stores have
additional
90% Stores have
implemented
revenue businesses digitalization
Impact on Community
MSME product
revenue at SRC IDR 5.65
Trillion/year 51% Stores have
absorbed
“Pojok Lokal” 40% higher vs. non-SRC stores employment
Source: SRC Impact for Indonesia (2023) from Kompas Gramedia (KG) Media’s Research. Note: 1) GDP Retail Sector (Wholesale and Retail Trade, Non-Cars and Bicycles) in 2022:
IDR2,077.43 Trillion
SETC
>72,000 >100 Cities/ regencies
Training participants Training coverage
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Note: MSME stands for Micro, Small and Medium Enterprises
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Investment in Smoke-free
Products Facilities
January 2023
Inaugurated the smoke-free products
production facility in Karawang, West Java
for domestic and export market
Q3 2023
R&D Laboratory facilities specifically for
smoke-free products, creating highly
specialized skilled employments
Total investment in smoke-free products
~USD 300 million
(up to 2023)
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Substantial footprint across the value chain and continuous
investments in Indonesia inline with country’s priority to enhance downstreaming
Period as of June 2024
Owned Facilities 6 hand-rolled facilities (SKT)
2 machine-made facilities (SKM)
1 Smoke-free products facility and R&D laboratory
Partnership with
Local Entrepreneurs 43
>90,000 Employees ~USD 6.4 billion ~30
(Direct* & Indirect) Total Investment Export Destination
(2005 – 2023)
*Note: direct employees 20,578 (PT HM Sampoerna Tbk. Financial Statements Q2’2024)
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We are recognized through awards and certifications
CORPORATE MSME PEOPLE
Linkedin Top Company The Best Social Value Program in Traditional Retail Shop Equal Salary Certified
Fortune 100 Best Indonesia Company with MSMEs Development Program Top Employer Award 2024
Indonesia Corporate Reputation Awards 2023 Korporasi Peduli Kapasitas dan Mutu UMKM HR Excellence Award
Most Valuable Company 2023 (Times Indonesia) Best Impact in Local Empowerment of the Year (Mata Lokal)
Indonesia Living Legend Awards 2024
Perusahaan Rokok Terbaik (Bisnis Indonesia)
INNOVATION COMMERCIAL, BRAND & DIGITAL ENVIRONMENT
The Value Creation Awards Indonesia Top Digital PR Award 2024 Waste4Change Award
ASEAN Enterprise Innovation Award Sales Team Team Champions 2023 (SWA) East Java Governor Award (Environment Report)
Anugerah Bapeten Indonesia Customer Experience Champions 2023 (SWA)
Best Digital Campaign: Entrepreneurship (Mata Lokal)
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Agenda
External Environment
Sampoerna Business Performance,
Strategy and Initiatives
Sampoerna Untuk Indonesia
Wrap up
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Ensure sustainability of legal tobacco industry
Alignment with government’s agenda to support optimalization of state revenue from excise while
ensuring the protection of employment, the sustainability of legal tobacco industry players, and
promote innovation in the industry
• Multi-year excise tax policy with moderate excise tax increase based on clear economic
parameters (such as inflation rate) and considering adult consumers purchasing power
• Continue current policy direction to safeguard the labor intensive SKT segment
• Address continuous downtrading trend to ensure optimum excise revenue and sustainability
across tobacco players
• Excise policy based on risk-profile to promote innovation in tobacco industry
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Strong fundamentals for long term value in
Indonesia
• Respected Company with 111 years of presence
• Retaining leadership in Indonesia tobacco industry
• Multi-category with solid portfolio across segment and continuous
innovation
• Strong route to market and substantial footprint
Under ‘Sampoerna Untuk Indonesia’, we will continue to thrive with
sustainability at the core of our business, creating value for the
betterment of Indonesia
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Public Expose
Jakarta
July 29, 2024
Names mentioned 4 people and organisations named in the text · linked when the evidence is strong
unresolved
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Bank Indonesia
p.7
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Ministry of Finance Regulations
p.11
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