Facing unfavorable market conditions as a
result of the global economic turmoil, the
Company implemented various business
strategies focused on performance
recovery. As a result, sales performance
decreased by 4% and net income
decreased by 12% from 2021, but still
higher than sales and net income in 2020.
Dear Honored Shareholders,
First of all, let us praise God Almighty
for all His blessings, gifts and mercy,
so that PT Industri Jamu Dan Farmasi
Sido Muncul Tbk (“Company”) was
able to get through 2022 with a strong
spirit to maintain growth. On behalf
of the Board of Directors, please
allow me to report a summary of
the Company’s performance for the
financial year ended December 31,
Global economy in 2022 was still
in uncertainty. While the world
was trying to recover from the
prolonged COVID-19 pandemic with
the emergence of Omicron variant,
the potential for a crisis loomed
again because of the Russia-Ukraine
Russia’s invasion of Ukraine since February 24, 2022
subjected Russia to various kinds of economic and
non-economic sanctions by Western countries. These
sanctions directly affected commodity, energy and food
prices since Russia and Ukraine play important roles in the
global food and energy supply chain.
Russia-Ukraine conflict and Western sanctions against
Russia created a new economic crisis. Supply chain
disruptions that caused food and energy commodity prices
to rise ultimately pushed global inflation to high levels. On
average, the global inflation rate in 2022 reached 8.8%,
much higher than 4.7% in 2021, and the highest since the
world financial sector crisis in 2008.
A number of central banks, including those in the United
States (US), Britain and the European Union (EU), made
efforts to contain inflation through tightening monetary
policy by raising benchmark interest rates, which in turn
put more pressure on the global economy. High inflation
due to commodity prices, rising interest rates and financial
market volatility caused world economic growth to slow
Domestically, Indonesia was still facing the COVID-19
pandemic with the emergence of rampant cases of
Omicron variant at the beginning of the year. However,
Indonesia was far better prepared in handling the Omicron
variant than the Delta variant. The characteristic of
Omicron is that it has milder symptoms so it doesn’t cause
overcrowding in health facilities. Community mobility is
not too disturbed either. Most people were more confident
about doing activities because they have received the
vaccine up to the third dose.
Change in the geopolitical order because of the RussiaUkraine conflict was certainly a major challenge for
the national economic recovery. Rising prices for food,
industrial raw materials and energy as a result of supply
chain disruptions and a potential spike in global inflation
put pressure on the domestic food, energy and financial
Since January 2022, the inflation rate has shown an
increasing trend until the end of the year in line with
rising world energy and food commodity prices, as well
as supply chain disruptions. The rapid increase in inflation
was mainly driven by rising prices for food, beverages, and
tobacco. As a result, several fast-moving consumer good
(FMCG) companies have started to raise their product
selling prices amid rising raw material prices.
On September 3, 2022, the government raised fuel prices
because the burden of fuel subsidies was increasing. The
increase in fuel prices had an impact, especially on the
price of basic commodities and transportation costs, thus
pushing the inflation rate to a high of 5.95% in September.
In the end, high inflation suppressed people’s purchasing
power. The increase in the price of basic commodities
has had a major impact, especially for the lower middle
class economic community. With relatively stagnant
incomes, people prioritize meeting basic needs such
as food, electricity, and transportation. This resulted in
a decrease in sales of non-primary products, including
health supplement products.
High inflation affected people’s purchasing power as well
as rising prices for imported raw material components had
an impact on declining sales performance in the second
quarter. The Company revised its performance targets and
changed its business strategy to focus on recovery in the
third and fourth quarters to mitigate further declines.
To encourage sales in domestic market, the Company
focused on marketing and promotional programs both
offline and online, which consumers experience directly,
such as trade promos, product bundling and discounts.
The Company increased sales on online channels by
optimizing social media as product marketing platform, so
that the marketed products could directly raise awareness
of the intended target market.
The Company utilizes digital platforms as one of the
strategies to reach young consumers who are familiar
with social media networks. The Company expands digital
marketing contents by collaborating with content creators
with the aim of educating Sido Muncul products and
increasing brand awareness among young people.
The Company also collaborates with social media
influencers, on Youtube, Instagram and Tik-Tok platforms.
Currently, the Company already has more than 100
contents with several influencers, with a total of more than
7 million views and good engagement rates on across
social media platforms.
To mitigate profitability pressure, the Company focused
on selling products with high margins and supported by
increased cost efficiency to maintain margins. Cost of
Good Sold (COGS) utilization was maintained as effectively
as possible, among others by seeking alternative suppliers,
especially for imported raw materials, which offered more
competitive prices without compromising quality.
In terms of distribution, the Company maintained and
ensured product visibility and availability, both at wholesale
and retail levels, and continued to increase the number of
distribution channels across Indonesia that reached of
156 thousand outlets by the end of 2022.
The Company focused on accelerating the execution of
export business initiatives, such as seeking opportunities
for new export destinations in countries in the African and
Asian regions. The company succeeded in intensifying
penetration into new export markets in ECOWAS countries
(Economic Community of West African Countries) such as
Ghana, Cameroon, and Kenya. In addition, the Company
introduced new products such as Tolak Angin Care for the
Malaysian market and ESTE EMJE for the Nigerian market,
Sido Muncul’s two main export markets.
In 2022, the Company launched 7 new products, namely
heatiness symptoms relief Alang Sari Cool, Balsam
Tolak Angin, RTD (ready-to-drink) Teh Tolak Angin, Jamu
Heritage Galian Singset, RTD Sido Muncul Vitamin
C1000+D3 & Zinc with 2 flavours: Lemon and Orange, as
well as SM Prosta health supplement. These new products
are the result of long research supported by thorough
market observations and studies to fill market niches and
opportunities for today’s societal needs. Contribution of
New Product Development (NPD) in 2022 reached 2% of
the Company’s total sales.
Role of Board of Directors in Formulating Strategies and Strategic Policies
The Board of Directors together with the management
team formulate business targets, budgets, strategies
and strategic policies prior the current year in the form
of a work plan and budget (RKA) based on an overview
of external and internal conditions. External conditions
include projections of economic growth, macroeconomic
indicators, social conditions, projected prices of main
raw materials as well as market conditions and business
competition. Meanwhile, internal conditions include the
readiness of human resources, production capacity, and
historical sales data.
Furthermore, the Board of Directors presents the RKA
to the Board of Commissioners in a joint meeting of the
Board of Directors and the Board of Commissioners.
The Board of Commissioners provides their views and
recommendations as well as their approval.
RKA serves as a guide for divisions and subsidiaries to
cascading performance targets, operational planning, and
work programs down to the lowest structure in the form of
key performance indicators (KPIs) that must be achieved
in the financial year.
Process Performed by Board of Directors to Ensure Strategy Implementation
The Board of Directors is involved in the development of
strategies and strategic policies, in providing direction for
strategy implementation in accordance with corporate
goals and targets, in monitoring and ensuring that
strategies are executed accordingly, and in evaluating the
results of strategy and policy implementation.
The strategies implemented by every business segment
are evaluated on a monthly, quarterly and annual basis. In
2022, the Board of Directors held 12 the Board of Direcrtors’
meetings, all of which were attended by the Board of
Commissioners. At the Board of Directors meeting, each
Director and/or related division presented a report on the
results of the follow-up to the decisions of the previous
meeting, performance achievements, problems faced
and market developments, including competitors. The
meeting resulted in strategic decisions to address gaps in
the achievement of monthly performance.
Market conditions that were not conducive since the
second quarter of 2022 as a result of the global economic
turmoil have affected the Company’s performance. A
decline in sales was inevitable, especially as a result of the
high inflation in 2022 which affects people’s purchasing
power, as well as an increase in the price of imported raw
material components. Normalization of demand from a
high base in 2021 caused by the spread of Delta variant
of COVID-19, was also one of the reasons for the sales
decreased in 2022.
The Company recorded net sales in 2022 of Rp3.87 trillion,
decreased by 3.9% compared to Rp4.02 trillion in 2021.
The decline in sales mainly occurred in Food & Beverage
segment, which down 8.5% from Rp1.19 trillion to Rp1.09
trillion. Meanwhile, Herbal Medicine & Supplements
segment down 2.2% from Rp2.69 trillion to Rp2.63 trillion.
Conversely, Pharmacy segment grew 4.3% from Rp137.15
billion to Rp143.05 billion.
Cost of goods sold decreased by 1.8% from Rp1.73 trillion
in 2021 to Rp1.70 trillion in line with the decline in sales
The decline in sales and the increase in raw material
prices caused gross profit to decrease by 5.4% from
Rp2.29 trillion to Rp2.16 trillion with a gross profit margin
decreased from 56.9% to 55.9%.
The company recorded a net income for the year of Rp1.10
trillion, down 12.4% from Rp1.26 trillion in the previous
year. Net income margin decreased from 31.4% to 28.6%.
Export performance remained positive and contributing
around 4% to total sales. Food & Beverages segment
recorded a solid sales trend in export market. The flagship
product for export market was Kuku Bima Ener-G! where
about 16% sales of Kuku Bima Ener-G! came from export
market with strong sales volume in Malaysia and Nigeria.
In 2022, average utilization of the Company’s production
capacity was 60%. The Company continued to expand
to increase capacity by building production facilities or
adding new machines, including:
New production facility for ready-to-drink (RTD)
products was operational in the third quarter of 2022
with RTD production capacity of 6 million bottles per
month for various 150 ml and 300 ml RTD product
Soft capsule production facility increased its capacity
to 5 million capsules per month. New engine arrived
in the fourth quarter of 2022 and is currently in
installation process. The new machine is scheduled
to be operational in the first quarter of 2023.
In order to improve energy efficiency and to support
sustainable development goals, the Company continues
to expand the use of solar panels and chiller absorbers
in production units. This efficiency program resulted in
savings of up to 16% in electricity costs. Solar panels have
been used since May 2022 with a contribution of 2% of the
Company’s total electricity consumption.
In October 2022, the Company and PLN agreed a purchase
of 100% electricity from renewable energy through
Renewable Energy Certificate (REC) scheme. The REC
is a market-based instrument which certifies that the
certificate holder uses one MWh (megawatt hour) of
electricity from renewable energy sources.
Hence, the Company affirmed its strong commitment
to sustainability. Overall, 86% of the Company’s total
electrical energy needs came from renewable energy,
namely biomass (61%), solar panels (2%) and REC (24%).
In addition, with the use of gas (CNG) as a substitute for
diesel as boiler fuel, the total environmentally friendly
energy sources used by the Company reached 97%.
Comparison of Achievements and Targets
Based on the achievement of 2021 performance, the
Company has set a target for sales and net income growth
in 2022 of 15% of the 2021 performance. However, in line
with the changing market conditions in the second quarter
of 2022, the Company revised its performance targets and
changed its business strategy to focus on recovery in the
third and fourth quarters to mitigate further declines.
The Company focused on quarterly performance, targeted
a recovery in the third quarter of 30% of sales and 50% on
net income compared to the second quarter.
The actual sales rose 37% with net income increased by
83% in the third quarter compared to the second quarter.
Meanwhile for the fourth quarter, the Company targeted
a 20% increase in sales and net income compared to the
third quarter by continuing the strong recovery. Actual
performance in the fourth quarter was above target, with
an increase of 25% in sales and 40% in net income after
tax compared to the third quarter of 2022.
Thus, on an annual basis, the 2022 performance
decreased by 4% in sales from 2021 but was still Rp530
billion higher compared to the 2020 performance. Net
income decreased by 12% from the previous year but was
Rp171 billion better than the 2020 achievement.
Based on Annual General Meeting of Shareholders
(AGMS) held on March 30, 2022, the Shareholders
approved to distribute cash dividends amounting to
Rp1,136,485,000,000 or Rp38 per share at a pay-out ratio
of 90% of the Company’s net profit for Financial Year
2021. All dividends were paid to shareholders through
distribution of cash interim dividends on August 27, 2021
and final dividends on April 28, 2021.
Global supply chain disruptions that triggered commodity
price hikes, pushed up the inflation rate, and caused the
depreciation of rupiah exchange rate against US dollar
have created volatility in raw material prices, especially
for the Food & Beverages segment. Approximately 20% of
raw material commodities were indirectly affected by the
increase in US dollar exchange rate.
To mitigate the impact on COGS, the Company tried to find
alternative suppliers that offer more competitive prices
without reducing quality. This effort included exploring
opportunities for direct imports from producers to cut
distribution channels and middleman costs. However,
the selling price adjustment policy could not be avoided.
Nevertheless, the Company looked for formula for a
reasonable selling price and did not burden consumers’
The Company carried out various initiatives such as
maintaining and ensuring product visibility and availability,
both at the wholesale and retail levels, continuing to
increase the number of distribution channels in remote
areas of Indonesia, and improving digital marketing and
online sales strategies so that consumers could more
easily get the products they needed.
Until now, Tolak Angin and Kuku Bima Ener-G! are still
the main products with a significant sales contribution.
However, this risks to make the Company’s sales
performance very dependent on these two main products.
Therefore the Company continues to launch new products
supported by strong digital marketing strategy.
In 2020, the Company launched 17 new products, in 2021
there were 16 new products, and in 2022 there were 7 new
products. As a result, in the last 2 years the contribution
of Kuku Bima Ener-G! in the Food & Beverages segment
decreased from around 70% to 50% because there were
other products that grew higher.
Global economy in 2023 will still face tough challenges
and even the threat of a recession is imminent. Several
factors will weigh on global economic growth, starting
from tight monetary policies in several countries, the
ongoing Russia-Ukraine conflict, high interest rates,
soaring inflation due to rising energy and food prices, the
threat of a recession, to slowing global trade.
In the midst of global economic turmoil, Indonesia’s
economy shows good prospects. Bank Indonesia predicts
that Indonesia’s economic growth in 2023 will remain
strong in the range of 4.5-5.3% and will increase to 4.7-5.5%
in 2024 supported by private consumption, investment and
continued positive export performance amidst slowing
global economic growth. Inflation is predicted to decline
and return to the target of 3.0 ± 1% in 2023 and 2.5 ± 1%
in 2024 in line with the controlled imported inflation with
stable Rupiah exchange rate as well as front-loaded, preemptive, and forward-looking monetary policy responses.
Based on the achievement of 2022 performance, in 2023,
the Company will continue the performance recovery
process. The Company has set a realistic target of sales
and net profit of 10% compared to 2022 achievement, with
various initiatives and strategies that have been planned
and will be executed quickly.
To seize existing opportunities, the Company will carry
out initiatives to build strong fundamentals, including
increasing production capacity, expanding distribution
networks to remote areas throughout the province,
expanding export markets, strengthening digital marketing
to reach new target consumers, especially the younger
generation. millennial and generation Z, and continue to
build strong and trusted brand equity and brand awareness
The Board of Directors, the Board of Commissioners
and all Company people are committed to implementing
Good Corporate Governance (GCG) principles in the
management of the Company in accordance with laws
and regulations and best practices.
The Company has a mechanism for monitoring and
evaluating the quality of GCG implementation, including
the Company’s compliance with the applicable laws and
regulations. This function is carried out by the Internal
Audit Unit to provide independent assurance on GCG
implementation by the management, as well as the
Board of Commissioners through the Audit Committee
that assists the Board of Commissioners in supervising
compliance with Code of Conduct, policies, the Company
Regulations, and the applicable laws and regulations.
The Company contiunes to encourage Sido Muncul people
to implement and elaborate the corporate values (SIDO
Values) with the highest standards in every business
process. To improve ethical standards and integrity, the
Company routinely conducts socialization to all Sido
Muncul personnel and related stakeholders regarding the
corporate policies in order to create a healthy, transparent,
productive, harmonious, respectful and mutually beneficial
There were no changes in composition of the Board of Directors in 2022.
On behalf of the Board of Directors, I would like to
thank the Shareholders for their support, the Board of
Commissioners for their supervision and advice which has
helped the Company head in the right direction towards
achieving its vision, and to all the Company’s employees
who have worked hard with dedication and integrity.
The Company expects to continue to optimally deliver
benefit to shareholders, employees, business partners,
customers, and the wider public.