Koc Holding A.s. · BIST:KCHOL

Koc Holding A.s — Investor Presentation (May 2015)

65 slides from Koc Holding A.s's investor presentation, May 2015

  1. Slide 1: Koç Holding: Turkey's Leading Investment Holding Company

    Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY creating one common legacy for 89 years Investor Presentation – May 2015

  2. Slide 2: A Leading Investment Holding Company

    A Leading Investment Holding Company KOÇ HOLDING: TURKEY’S LEADING INVESTMENT HOLDING COMPANY  Koç Group is Turkey’s largest industrial and services group in terms of revenues, exports, employees , taxes paid and market capitalization on the Borsa İstanbul. PROFITABLE AND HIGH GROWTH MODEL, FOCUSIN

  3. Slide 3: Koç Group History

    Koç Group History Today Turkey's largest industrial and services group 2006-08 Proactive disposals 2006 Koç Holding signs the UN Global Compact 2005-06 Acquisition of Tüpraş, Yapı Kredi Bank & Tansaş 2003 Third generation of Koç Family takes the reins 2001 Financial services consolidated under one r

  4. Slide 4: Strong Beneficiary of the Growth Potential in Turkey

    Strong Beneficiary of the Growth Potential in Turkey We have the right size to benefit from economies We continuously out-perform the growth rates of scale in Turkey 17 15 Combined Revenues / GDP* 8% 11 9 Total Exports / Turkey’s Exports* 9% 7 6 6 5 5 5 4 4 3 3 Total Market Cap. on Borsa İstanbul* 1

  5. Slide 5: One of the Few Companies in Turkey with Investment Grade

    One of the Few Companies in Turkey with Investment Grade Ratings* Outlook* Moody’s Baa3 Positive S&P BBB- Stable Moody’s Our Baa3 ratings are based on Koç Holding’s strong financial profile and investments in a balanced portfolio of mature and high-growth companies, which enable Koç to diversify its

  6. Slide 6: Best Positioned to Benefit once the Economy Normalizes

    Best Positioned to Benefit once the Economy Normalizes  Maturing democracy with a functioning market economy  Strategic location at the crossroads of continents, cultures and economies  Favorable demographics: 76.7 mn people; Median age at 29.7 vs. 41.5 in EU  Unsaturated domestic market as most

  7. Slide 7: Strong, Stable and Supportive Shareholder

    Strong, Stable and Supportive Shareholder Koç Family Temel Members  Koç Family has its own internal governance and Ticaret* 25.8% 42.6% investment vehicle, which provides stability and consistency Koç Pension  Koç Family mainly assumes Board level Fund responsibility 2.0%  Business run by highly

  8. Slide 8: Leadership Positions in Strategic and Lucrative Business Lines

    Leadership Positions in Strategic and Lucrative Business Lines Energy Automotive Consumer Durables Finance Automotive Main Companies Main companies Main Companies Main Companies Tüpraş* / Opet / Aygaz* / Entek Ford Otosan* / Tofaş* / Arçelik* Yapı Kredi Bankası* TürkTraktör* / Otokar* / Otokoç Domes

  9. Slide 9: Large Distribution Networks & Large Customer Database in Low Penetrated Sectors

    Large Distribution Networks & Large Customer Database in Low Penetrated Sectors with Strong Growth Potential Large customer database with around 44 million (approximately 15 mn CRM card holders with data sharing Large customer database permission) in different business segments together with strong

  10. Slide 10: Investment Focus on Sectoral Diversification

    Investment Focus on Sectoral Diversification to be Resilient to Different Risk Profiles (mn) TL895* TL2,435** TL32,885 Key Risks & Sensitivites Key Strengths 100 • Strong growth potential , esp. for large banks Domestic credit and interest • Profitability ROATE: 12.0% 15 Finance rate risk, regulatio

  11. Slide 11: Balanced Portfolio Between Defensive & Growth Assets

    Balanced Portfolio Between Defensive & Growth Assets Wealth preservation Bank on growth 55%  Yapı Kredi 45%  Tüpraş  Arçelik  Otokar  Otokoç  Aygaz  Entek  Opet  Koçtaş  Tofaş  Tat, Düzey  Ford Otosan  Demir Export  Türk Traktör  KoçFinansman  Setur  KoçSistem  Marinas  Divan High

  12. Slide 12: Further Diversification via Geographic Coverage: International Sales

    Further Diversification via Geographic Coverage: International Sales Continues To Grow Combined International Sales (US$ billion) 2009  2014 regional breakdown and percentages 14% CAGR 18.6 18.6 18.7 16.6 13.2 $0.6b  $0.7b $6.5b  $11.3b $1.7b  $4.2b 29.3% 6%  4% 68%  61% 18%  23% 9.6 27.6% 27

  13. Slide 13: Resilient & Improving Performance Despite Volatile Domestic Market

    Resilient & Improving Performance Despite Volatile Domestic Market 9.2 8.8 10.0 Turkey GDP Growth (%) 4.1 5.0 3.0 2.1 Source: TurkStat 0.0 2009 2010 2011 2012 2013 2014* -5.0 -4.8 CAGR: 14% 4.0 Net Profit 2.7 3.0 2.7 attributable to 2.1 2.3 Equity Holders of 2.0 1.7 1.4 the Parent 1.0 (TL billion) 0

  14. Slide 14: High Resilience Against Risks: Strong B/S & Cash Position

    High Resilience Against Risks Strong B/S & Cash Position Our net cash position enables us to be proactive Our combined net financial debt remains at 2.7 in new M&As times EBITDA* Koç Holding Stand-Alone Consolidated Net Debt / Cash Excl. Finance Net Cash Position 2014 1Q15 ~US$ -3.3bn ~US$ -4.0bn To

  15. Slide 15: Major Portfolio Companies Have Strong Current Ratios

    Major Portfolio Companies Have Strong Current Ratios Group’s(*) Current Ratio 31 December 2014 Total Current Assets: TL35.6 bn Total Current Liabilities: TL27.8 bn Current Ratio : 1.3 8,472 6,816 3,624 3,137 2,958 1,319 714 672 7 Current Assets (TL mn) 8,362 4,431 2,972 2,932 198 575 715 635 738 Cur

  16. Slide 16: Average Duration of Financial Debt is Lengthened by ~17 Months

    Average Duration of Financial Debt is Lengthened by ~17 Months 30 September 2012 31 December 2014 Combined Financial Debt Combined Financial Debt Average duration: ~22 months Average duration: ~39 months 1. Eurobond Transactions:  Koç Holding - US$ 750 mn, 7 yrs in April 13 (3.5% p.a. - coupon rate

  17. Slide 17: FX Position

    FX Position Koç Holding Stand-Alone FX Position 2014 1Q15 US$ + 72mn US$ +70mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 2014 1Q15 2014 1Q15 US$ -3.3bn US$ -3.0bn* US$ -1.5bn US$ -1.2bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş invento

  18. Slide 18: Adjusted Net FX Position / Equity Ratio Meets Policy Limits

    Adjusted Net FX Position / Equity Ratio Meets Policy Limits for Major Portfolio Companies 31 December 2014 Group’s Adjusted Net FX Position Group’s Adj. Net FX Position/Equity US$259 mn 2.3% 31 December 2014 72 10 Net FX Position (US$ mn) (Reported) -245 -5 0 -30 -688 -519 -2,903 72 54 14 35 18 34 N

  19. Slide 19: Active Player in M&As and Privatizations

    Active Player in M&As and Privatizations Opportunistic M&A strategy to consolidate leadership positions and reach optimal portfolio diversification Acquisitions ahead of 2008 Koç Holding Share: US$ 6.6 billion  51% for US$ 4,140mn  Consolidated as of January 2006  Through privatization  Turkey’s

  20. Slide 20: Profitable Disposals

    Profitable Disposals Divested Companies Sector Held Since Buyer Closing Date IT 2000 Vodafone 30 November 2011 Auto Supplies 1963 Continental A.G. 28 August 2008 Insurance 1974 Allianz SE 21 July 2008 2003 Heating & Ventilation (spin-off of Ada Metal 26 June 2008 Demirdöküm) Retailing 1975 BC Partne

  21. Slide 21: Focus on Large Investments with High Returns

    Focus on Large Investments with High Returns Ongoing investments to increase efficiency Opportunistic M&A activities in core business lines Combined Investments – TL bn  New manufacturing and R&D  Opportunistic projects for export markets buyouts in 7.6 with our JV partners international markets a

  22. Slide 22: Disciplined Investment Strategy

    Disciplined Investment Strategy Consolidate leading positions to benefit the most from the growth potential Exploit new growth opportunities Only consider very (Privatizations, secondary M&A opportunistic plays market as well as greenfield investments) www.koc.com.tr 22

  23. Slide 23: Systematic Investment Evaluation

    Systematic Investment Evaluation Strategy Main Investment Criteria  Standardized investment evaluation process for  IRR Criteria: risk adjusted cost of capital applied to investments that require Holding Evaluation calculate IRR threshold in different projects  Treating all investments on the sam

  24. Slide 24: Proactive Investor Relations Management

    Proactive Investor Relations Management We endeavor to maximize the value we create for our shareholders  Executive compensation based on economic profit and share performance  Proactive investor relations management  Cash dividend payout  Strong share performance Strong relative stock performan

  25. Slide 25: Main Goal: Maximizing Shareholder Value

    Main Goal: Maximizing Shareholder Value One of the few Turkish Companies which Links Executive Compensation to Share Performance Shareholder Value L-T Strategic Targets Economic Profit Market Cap to Maximize Future Shareholder Value Customer Technology Satisfaction Development Aggressive Sustainable

  26. Slide 26: Leading Positions in R&D and Technology Investments

    Leading Positions in R&D and Technology Investments Turkey’s largest intellectual property portfolio with more than: 7,100 trademarks 3,000 patent families 6,600 patents 700 industrial design registrations 4,200 Internet domain names 4 Koç Group companies ranked in the top 10 on the Turkish Koç Grou

  27. Slide 27: Leading Corporate Citizen

    Leading Corporate Citizen Vehbi Koç Foundation : Institutionalization for social development  Established in 1969 as Turkey’s first private foundation;  to make philanthropic endowments for the public good  to create sustainable and replicable projects and programs in education, healthcare, cultu

  28. Slide 28: Corporate Solutions for Social Advancement

    Corporate Solutions for Social Advancement Our projects’ commonalities are unity, synergy and leadership established through our companies, employees and dealers “For My Country” project Vocational Education: A Crucial Matter for  Grassroots initiative organized annually since the Nation 2006, to s

  29. Slide 29: Commitment to the Environment

    Commitment to the Environment Koç Group endeavors to preserve national and natural resources in the most efficient way and minimize or recycle waste at the source Koç Group companies With its efficiency projects, Koç Group made 3.06 million GJ invested TL220 million savings in energy consumption and

  30. Slide 30: Key Takeaways: Value Propositions

    Key Takeaways : Value Propositions Largest investment Robust top-line growth holding company in Leading positions in enabling the benefits of Turkey sectors with strong economies of scale Best proxy to growth potential Well-proven track record in the Turkish Strong commitment portfolio restructuring

  31. Slide 31: Operational Excellence and Leadership in Core Business Segments

    Operational Excellence and Leadership in Core Business Segments Slide # 32 Energy Sector Strongest Player in the Turkish Energy Sector 38 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 44 Consumer Durables Sector Strong Global Network 46 Finance Sector Focus on Lucrative Busin

  32. Slide 32: Why Energy Sector?

    Why Energy Sector? High growth potential Strong demand dynamics Final Energy Consumption per Head – Toe  Among the fastest growing energy markets in the world parallel to its economic growth 2.2  Growing domestic oil demand coupled with 1.1 insufficient diesel capacity  Offers a wide range of opp

  33. Slide 33: Tüpraş: Turkey's Sole Refining Company

    TÜPRAŞ Turkey’s Sole Refining Company  4 refineries with 28.1 MT total capacity 7th largest refinery in  One of the most complex refineries in the Europe and Mediterranean with Nelson Complexity of 7.25 (2015 28th largest in the world expectation: 9.5)  Among the most profitable refineries in Eur

  34. Slide 34: Residuum Upgrade Project (RUP) of Tüpraş

    Residuum Upgrade Project (RUP) of Tüpraş RUP is completed and will be full operational in 2Q15 with positive impacts in 2015 onwards Not only will RUP have a US$ 1 bn positive impact on the Turkish C/A balance, but also will bring significant improvement for Tüpraş in terms of Nelson complexity, cap

  35. Slide 35: Aygaz: Turkey's Undisputable Market Leader in LPG

    AYGAZ Turkey’s Undisputable Market Leader in LPG for more than 50 years  Generic brand in Turkey for LPG with 29% market share in total LPG market Leading LPG  43% market share in cyclinder LPG distributor of Turkey (2nd largest LPG market in  24% market share in autogas Europe)  Fully integrate

  36. Slide 36: Opet: Turkey's Fastest Growing Fuel Distribution Company

    OPET Turkey’s Fastest Growing Fuel Distribution Company  Fastest growing player of its sector while maintaining profitability Highest customer  Unrivaled leader in customer satisfaction in its sector for 9 & station 2nd in white consecutive years products in Turkey satisfaction  Retail and wholes

  37. Slide 37: Automotive Sector: A Global Manufacturing and Distribution Hub

    Automotive Sector A Global Manufacturing and Distribution Hub Dynamic market with high growth potential Well-supplied manufacturing hub Motorization Rate per ‘000 563  5th largest labor force in EU  Over 25.3 million young and well-educated professionals 173  High growth in labor productivity  S

  38. Slide 38: Koç Group in the Automotive Sector

    Koç Group in the Automotive Sector  Almost half of the Turkish manufacturing and export of motor vehicles are realized by Koç Companies High profitability  Present in high growth segments both in Turkey & in EU vis-a-vis global peers  Opportunities in new segments such as HCVs Highest quality and

  39. Slide 39: Ford Otosan: Turkey's Largest Installed Production Capacity

    FORD OTOSAN Turkey’s Largest Installed Production Capacity  50-50% JV with Ford – Ford’s center of excellence for heavy trucks and heavy duty diesel powertrains Largest R&D staff Highest Ford in the Turkish market share in  Export champion of Turkish Automotive Industry (62% of Turkey’s CV exports

  40. Slide 40: Ford Otosan: Major Investment Plan is Completed

    FORD OTOSAN Major Investment Plan is Completed US$ 1.4bn investment of Ford Otosan is finalized with its Investments of Ford Otosan capacity increase & complete new product portfolio US$ mn Ford Otosan expects in 2015 700 682  Market share gains in the domestic market 600 523  Rising exports on EU

  41. Slide 41: Tofaş: Defensive Portfolio via Take-or-pay Contracts

    TOFAŞ Defensive Portfolio via Take-or-pay Contracts  50-50% JV with Fiat  The only domestic manufacturer and exporter of both PCs & Among Fiat’s 3 main R&D LCVs centers globally  Extensive dealer and after-sales network  Owns the full intellectual and industrial property rights for Take-or-pay M

  42. Slide 42: Tofaş: Investing in New Models

    TOFAŞ Investing in New Models Tofaş entered a new investment phase in 2014 Investment of Tofaş Capex Period  Adaptation of New Doblo* is complete in 4Q14 Total Investment US$1.4 bn 2014-2016  US$1.04 bn investment to produce 1.3mn units of PCs: PC – Sedan US$520 mn will be complete in 4Q15 PC – Co

  43. Slide 43: Other Automotive Companies

    Other Automotive Companies TÜRK TRAKTÖR – Turkey’s Largest Farm Tractor Manufacturer  50-50% JV with Case New Holland Undisputable market leader  Utilising “flexible manufacturing system” in tractors, providing a high degree of flexibility with c. 50% share  Strong dealership network and reputabl

  44. Slide 44: Consumer Durables Sector: Low Penetration Levels and Strong Margins

    Consumer Durables Sector Low Penetration Levels and Strong Margins Underpenetrated segments and renewals drive Strong value proposition growth White Goods Penetration – % 92  Strong R&D focus and innovative products 70  Efficient and cost-effective outlet to multiple markets with over 1.5 billion

  45. Slide 45: Arçelik: Products and Services to Over 100 Countries

    ARÇELİK Provides Products and Services to Over 100 Countries Worldwide  Privileged position in Turkey with superior exclusive Turkey’s market leader in white dealer network (Extensive sales & after-sales network goods (50%), in Turkey) TVs and air-conditioners Manufacturing in low U.K.’s market lea

  46. Slide 46: Why Finance Sector?

    Why Finance Sector? Low Penetration Levels, Providing an Opportunity for Rapid Growth Loans + Deposits / GDP – % (2014) Branches per million inhabitants Mortgage loans / GDP – % (2014) 226 434 42 127 20 144 7 EU-27 Turkey EU-27 Turkey Euro Area Poland Turkey Source: European Central Bank, BRSA, CBRT

  47. Slide 47: Yapı Kredi Bank: Market share gains with sustainable profitability

    YAPI KREDİ BANK Market share gains with sustainable profitability Strategic Guidelines Results Market Share Gains Loan Composition  Increasing «natural market 10.2% Loans Accelerating share» to 10% 27% 27% Retail 9.5% 10.0% Deposits Cards Growth  Remixing loan book 19% 14% towards more profitable

  48. Slide 48: Yapı Kredi Bank: Targeting above-sector growth

    YAPI KREDİ BANK Targeting above-sector growth 2015 Expectations 2014 2015E Banking Sector Loan growth 18% 17% Deposit growth 10% 15% NIM -20bps flat CoR flat flat NPL +20bps +20bps Yapı Kredi Bank Loan growth > Sector > Sector Deposit growth Aligned with loan growth Aligned with loan growth NIM grow

  49. Slide 49: Yapı Kredi Subsidiaries and Other Finance Companies

    Yapı Kredi Subsidiaries and Other Finance Companies YAPI KREDİ YAPI KREDİ YAPI KREDİ LEASING FACTORING ASSET MANAGEMENT  Leader with 18% share  Leader with 17% share  2nd in the market with 18% share YAPI KREDİ KOÇFİNANS INVEST  Turkey’s first consumer  3rd in in equity transaction finance comp

  50. Slide 50: Table of Contents

    Table of Contents Page 1. 1Q15 Earnings Review 51 2. 2014 & 2015 Macroeconomic Assumptions 61 3. Shareholder Structures 62 4. Disclaimer 63 5. Contacts 64 www.koc.com.tr 50

  51. Slide 51: Group's Overall Financial Performance

    Group’s Overall Financial Performance Consumer 1Q15 Change Over TL million Energy Automotive Finance Other Durables Total 1Q14 Total Combined Revenues * 11,988 7,544 2,960 4,697 2,163 29,353 -1% Combined Gross Profit 783 911 882 1,997 335 4,909 13% Combined Operating Profit ** 368 484 177 608 -55 1,

  52. Slide 52: Combined Revenues

    Combined Revenues Combined Revenues – TLmn Segmental Combined Revenues Breakdown – % -1% 29,602 29,353 Automotive 26% Durables 10% Energy 41% Finance 1Q14 1Q15 16% Other 7% Segment Contribution to Combined Revenues – TLmn -24% 15,866 11,988 +46% 7,544 +1% +25% +16% 5,163 4,697 3,772 2,938 2,960 2,16

  53. Slide 53: Combined Operating Profit

    Combined Operating Profit * Combined Operating Profit – TLmn Segmental Combined Operating Profit Breakdown – % +8% 1,583 Automotive 1,470 Energy 31% 23% Durables Other 11% -3% 1Q14 1Q15 Finance 38% Segment Contribution to Combined Operating Profit – TLmn +19% +28% 608 484 509 -5% 386 379 368 -12% 20

  54. Slide 54: Combined Net Income

    Combined Net Income Combined Net Income – TLmn Segmental Combined Net Income Breakdown – % 1,476 -13% Automotive 1,282 38% Energy 15% Other Durables -1% 10% 1Q14 1Q15 Finance 39% Segment Contribution to Combined Net Income – TLmn +25% -65% +16% 546 483 496 416 396 191 +19% -302% 110 130 8 -17 Energy

  55. Slide 55: Consolidated Net Income

    Consolidated Net Income Consolidated Net Income – TLmn Segmental Consolidated Net Income Breakdown – % 562 -18% Automotive 459 41% Energy 15% Other Durables -4% 11% 1Q14 1Q15 Finance 36% Segment Contribution to Consolidated Net Income – TLmn -66% +14% +23% 208 189 166 166 134 +17% -308% 71 45 53 9 -

  56. Slide 56: Combined Exports & International Sales

    Combined Exports & International Sales Combined Exports – US$mn Combined International Sales – US$mn -6% 4,217 -13% 3,457 3,254 3,668 1Q14 1Q15 1Q14 1Q15 www.koc.com.tr 56

  57. Slide 57: Combined Investments

    Combined Investments Combined Investments – TLmn Segmental Investments Breakdown – % +17% 1,615 1,381 Automotive 32% Energy 47% Durables 7% 1Q14 1Q15 Other Finance 2% 12% www.koc.com.tr 57

  58. Slide 58: Koç Holding Net Cash Position

    Koç Holding Net Cash Position Koç Holding Stand-Alone 31.03.2015 Net Cash Position Total Debt: ~US$ 0.76 bn Total Cash: ~US$ 1.43 bn Net Cash: ~US$ 674mn Consolidated Net Debt / Cash Excl. Finance 2014 1Q15 ~US$ -3.3bn ~US$ -4.0bn www.koc.com.tr 58

  59. Slide 59: FX Position

    FX Position Koç Holding Stand-Alone FX Position 2014 1Q15 US$ + 72mn US$ +70mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 2014 1Q15 2014 1Q15 US$ -3.3bn US$ -3.0bn* US$ -1.5bn US$ -1.2bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş invento

  60. Slide 60: Consolidated Main Financial Indicators

    Consolidated Main Financial Indicators € Mn* US$ Mn* TL Mn TL Mn Change Change 31.Mar.2015 31.Mar.2015 31.Mar.2015 31.Mar.2014 %, TL %, US$ Revenues 4,966 5,598 13,759 15,683 q -12 q -21 Gross Profit 692 780 1,916 1,792 p 7 q -4 Operating Profit 242 273 671 908 q -26 q -33 Profit Before Tax 140 157

  61. Slide 61: 2014 & 2015 Main Macroeconomic Assumptions

    2014 & 2015 Main Macroeconomic Assumptions 2014 2015 2015 Koç Holding Koç Holding Government GDP (TL billion) 1,755 1,943 1,945 GDP ($ billion) 802 830 850 Growth (GDP, %) 3.0 3.5 4.0 Inflation (CPI, year-end, %) 8.2 7.5 6.3 USD/TL (year-end) 2.33 2.40 --- USD/TL (average) 2.19 2.34 2.29 EUR/TL (yea

  62. Slide 62: Shareholder Structures as of March 2015

    Shareholder Structures as of March 2015 Koç Holding Koç Family: 68.51% Free Float: 22.35% Vehbi Koç Foundation: 7.15% Koç Pension Fund: 1.99% Consumer Energy Automotive Finance Other Durables Ford Otosan Arçelik Tat Gıda Tüpraş KH share: 38.46% Koç Financial Services SPV share: 51.00% KH share: 40.5

  63. Slide 63: Disclaimer

    Disclaimer This presentation does contain forward-looking statements that reflect the Company management’s current views with respect to certain future events based on the base-case assumptions. Although it is believed that the expectations reflected in these statements are reasonable, they may be a

  64. Slide 64: For Further Questions, Please Contact

    For Further Questions, Please Contact : investorrelations@koc.com.tr www.koc.com.tr Funda Güngör Akpınar, Coordinator Investor Relations fundag@koc.com.tr +90 216 531 0535 Gizem Bodur, Manager Investor Relations gizemb@koc.com.tr +90 216 531 0533 Neslihan Aycıl, Manager Investor Relations neslihana@

  65. Slide 65: Main Group Companies' Contacts

    Main Group Companies’ Contacts Arçelik Otokar Tüpraş Fatih Ebiçlioğlu, CFO Hüseyin Odabaş, AGM Finance Tuncay Önbilgin, Head of IR fatih.ebiclioglu@arcelik.com hodabas@otokar.com.tr tuncay.onbilgin@tupras.com.tr +90 212 314 3434 +90 264 229 2244 Ext. 6000 +90 262 316 3085 Doğan Korkmaz, Finance Dire

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