Koc Holding A.s. · BIST:KCHOL

Koc Holding A.s — Investor Presentation (December 2018)

45 slides from Koc Holding A.s's investor presentation, December 2018

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

    Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY Investor Presentation – December 2018

  2. Slide 2: Koç Holding Overview

    Koç Holding Overview TURKEY’S LEADING INVESTMENT HOLDING COMPANY  Turkey’s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization Combined Revenues / GDP 7% PROFITABLE AND HIGH GROWTH MODEL FOCUSED ON SUSTAINABILITY  The only Turkish co

  3. Slide 3: Milestones

    Milestones Today Turkey's largest industrial and services group 2016 Ömer M. Koç becomes Chairman following the unexpected passing away of Mustafa V. Koç 2010s Extensive investments are initiated 2006-08 Major acquisitions (Tüpraş & Yapı Kredi) & Proactive disposals 2006 Koç Holding signs the UN Glo

  4. Slide 4: Strong, Stable and Supportive Shareholding Structure

    Strong, Stable and Supportive Shareholding Structure WORLD CLASS CORPORATE GOVERNANCE PRACTICES  Koç Family has its own internal governance and investment vehicle Temel Koç Family2 which provides stability in shareholder structure (Temel Ticaret) Ticaret1 20.64% 43.65%  Sustainability is key as th

  5. Slide 5: Positioned to Benefit from Turkey's Growth Potential

    Positioned to Benefit from Turkey’s Growth Potential Scale and Strategy Ensuring Strong Positioning Largest Industrial Group Largest Exporters in Largest R&D Investments in Turkey Turkey in Turkey 4 of the Top 10 4 of the Top 10 Largest Intellectual 3 of the Top 10 Companies Industrial Enterprises1

  6. Slide 6: Leading Positions in Strategic and Lucrative Business Lines

    Leading Positions in Strategic and Lucrative Business Lines Energy Automotive Consumer Durables Finance Other Sectors Automotive Main Companies Main Companies Main Companies Main Companies Main Companies Tüpraş1 / Aygaz1 Ford Otosan1 / Tofaş1 / Arçelik1 Yapı Kredi Bankası1 / Food: Tat Gıda1 / Retail

  7. Slide 7: Portfolio Structure (I/III)

    Portfolio Structure (I/III) Balanced Between Defensive & Growth Assets Defensive Assets Growth Assets 57% 43% Aygaz Arçelik Koçfinans Ford Otosan Yapı Kredi Otokoç Koçtaş Divan Otokar Opet Düzey Marinas Tüpraş Entek Setur Tofaş KoçSistem Tat Gıda TürkTraktör Higher dividends Higher growth Dividend P

  8. Slide 8: Portfolio Structure (II/III)

    Portfolio Structure (II/III) Sectorally Diversified -- Resilient vs Cyclicality Share in: Dividends Net Income NAV Key Risks & Sensitivities Key Strengths Automotive • Domestic growth potential Turkey and European demand (PC & CV Mfg) 34% 20% 28% (main drivers: GDP & int. rates) • Secured export con

  9. Slide 9: Portfolio Structure (III/III)

    Portfolio Structure (III/III) Geographically Diversified International Sales / Total (Combined) Regional Breakdown of International Sales (Combined-2017) 50% Including Tüpraş, c.50% of combined sales ($ 30bn) not sensitive to domestic economy 29.2% 30.0% 28.5% 22.1% $ 1.2bn $ 12.7bn $ 2.5bn 7% 70% 1

  10. Slide 10: Strong Positioning via Diversified Structure

    Strong Positioning via Diversified Structure Consolidated Net Income (TL mn) Dividend Income (TL mn) 2,484 3,832 3,827 1,228 1,291 1 9M17 9M18 2016 2017 9M18 1 Solid dividend flow supported by ~TL 35 bn of investments Sustainable performance leveraging on diversified structure over the last 5 years

  11. Slide 11: Disciplined Approach

    Disciplined Approach Strong US$ 1.8 bn gross cash → 83% in US$, 17% in TL US$ 1.5 bn total debt Cash Position (Solo) US$ +330 mn net cash Stable 2 eurobonds totaling US$ 1.5 bn → Mar’16: US$ 750 mn, 7yrs, 5.25% coupon; Apr’13: US$ 750, 7 yrs, 3.5% coupon Funding No repayment requirements until 2020

  12. Slide 12: Group's 9M18 Financial Performance

    Group’s 9M18 Financial Performance Consumer TL mn, 9M18 Energy Automotive Finance Other Total Durables Combined Revenues 1 111,704 46,355 22,126 30,424 9,555 220,164 y/y 57% 21% 30% 41% 21% 41% Combined Operating Profit2 8,119 3,954 1,484 4,578 4 18,138 y/y 63% 46% 26% 34% -96% 46% Combined Profit B

  13. Slide 13: Performance Constantly on an Inclining Trend amidst Volatility

    Performance Constantly on an Inclining Trend amidst Volatility 11.1% 8.5% 8.5% 7.4% 5.2% 6.1% 4.8% Turkey 3.2% GDP Growth -4.7% 4.9 3.6 3.5 2.7 2.7 Net Profit 2.1 2.3 1.4 1.7 (TL bn) 2,4841 Holding Dividend 1,228 1,291 Income 592 667 893 740 907 (TL mn) 189 329 2009 2010 2011 2012 2013 2014 2015 201

  14. Slide 14: Investments (I/III)

    Investments (I/III) Disciplined Strategy and Clear Evaluation Process Strategy  Standardized evaluation process for investments that require Holding Evaluation  All investments treated equally based on standard metrics Turkey Global and methods, facilitating informed decisions Consolidate Main Inv

  15. Slide 15: Investments (II/III)

    Investments (II/III) Focus on Scale and Returns Investments (Combined, TL bn) Growth Opportunities ~TL 35 bn Existing Businesses over the last 5 years with major capex cycle now finalised for main group companies Domestic & int’l growth opportunities across Energy different segments such as renewabl

  16. Slide 16: Investments (III/III)

    Investments (III/III) Track Record of Profitable Portfolio Rotation Date Company Sector Held Since Buyer / Seller Notes DISPOSALS Nov’11 Koç.net IT 2000 Vodafone Aug’08 Oltaş Auto Supplies 1963 Continental A.G. Jul’08 Koç-Allianz Insurance 1974 Allianz SE Jun’08 Demrad Heating & Ventilation 2003 Ada

  17. Slide 17: Ratings

    Ratings Above the Sovereign Standard & Poors Moody’s BB- Ba2 One notch above Turkey sovereign One notch above Turkey sovereign Stable Stable Stable Stable Positive Stable Negative Stable Negative Negative Stable Stable Positive Positive Positive Positive Stable Stable Negative Stable Negative BBB Ba

  18. Slide 18: Maximizing Shareholder Value

    Maximizing Shareholder Value Structure Ensuring Robust Performance Performance Based Executive Compensation System  Comprehensive executive compensation Shareholder Value system, one of few in Turkey also linked to share performance  Proactive investor relations management Relative L-T Strategic T

  19. Slide 19: 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, culture

  20. Slide 20: Initiatives for Social Advancement

    Initiatives 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 Since 2006: the Nation  >1 mn tree saplings planted in 7 ‘For My Country’ Sin

  21. Slide 21: Energy Sector

    Energy Sector Brent Crude Oil & LPG Prices Crack Margins Diesel Jet Fuel 15.7 15.2 14.6 14.4 13.9 14.5 13.8 13.4 12.4 12.4 12 12.3 13.1 11.2 539 65 10.7 11.2 13.3 9.9 10.5 10.2 10.5 10.8 9.4 64 515 8.9 9.5 9.2 55 7.9 7.3 7.7 8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 370 321 2015 2016 2017 2018 2015 2016 2017 2018 3

  22. Slide 22: Koç Group in the Energy Sector

    Koç Group in the Energy Sector Diversified and Synergetic Positioning Koç Positioning Coverage of Domestic Share of Turkey’s Fuel Demand Storage Capacity Largest refinery in Turkey Imports Others and 40% ~70% 30% the largest LPG ~60% distribution company Koç Koç Market Position / Share Turkey’s larg

  23. Slide 23: Tüpraş

    Tüpraş Turkey’s Largest Refinery (TL thousands) 9M17 9M18 y/y  7th largest refinery in Europe and 26th largest globally Sales Volume (k, tons) 24.2 22.3 -8%  Wide range of crude oil processing capacity (28.1 MT via 4 well-positioned Domestic 19.3 19.6 2% refineries) Exports 4.9 2.7 -45%  One of t

  24. Slide 24: Aygaz

    Aygaz Market Leader in LPG for more than 55 years (TL thousands) 9M17 9M18 y/y  Generic brand in Turkey for LPG with 28% market share in Sales Volume (k, tons) 1,640 1,553 -5% total LPG market Auto 591 571 -3% ‐ 24% market share in autogas Cylinder 258 243 -6% ‐ 41% market share in cylinder LPG Who

  25. Slide 25: Other Energy Companies

    Other Energy Companies Opet Station Numbers White Product Market Share  Second biggest distribution company by volume Opet Position #2  Unrivalled leader in customer satisfaction in its sector for 10 years 1,605 17.9% 17.9%  1.1 million m3 storage capacity via 5 terminals 1,553 443 455  21 stati

  26. Slide 26: Automotive Sector

    Automotive Sector Competitive Advantages Domestic Market Dynamics Sales (‘000) Production (‘000)  5th largest auto manufacturing hub in Europe; 14th largest globally with a production capacity of c. 2 million units 1,696 1,486  Underpenetrated domestic market with ongoing growth 1,359 1,011 1,008

  27. Slide 27: Koç Group in the Automotive Sector

    Koç Group in the Automotive Sector Undisputed Leader in Turkey Koç Positioning  Widest sales and after-sales network Production  Highly skilled and experienced workforce Koç  Highest number of R&D employees in Turkish automotive Leading positions 45% and ongoing  Long-standing JV partnerships St

  28. Slide 28: Ford Otosan

    Ford Otosan Turkey’s Leader in Commercial Vehicles with Strong R&D Power  Europe’s largest commercial vehicle manufacturer; 80% share in Ford (TL thousands) 9M17 9M18 y/y Europe’s Transit family sales Total Unit Sales (000 k)1 286 291 2%  Strong positioning in Ford universe: Domestic 74.4 52.5 -29

  29. Slide 29: Tofaş

    Tofaş Defensive Portfolio with Take-or-Pay Contracts (TL thousands) 9M17 9M18 y/y  Only company which produces both passenger and commercial vehicles Total Unit Sales (000 k) 287 244 -15% with the largest production capacity in Turkey Domestic 80.6 51.4 -36%  Intellectual and industrial property r

  30. Slide 30: TürkTraktör

    TürkTraktör Largest Tractor Manufacturer in Turkey (TL thousands) 9M17 9M18 y/y  Market leader for the last 11 consecutive years. Covers c. 70% of total Tractor Unit Sales (000 k) 36.6 25.5 -31% Turkish tractor production, 90% of total exports Domestic 27.4 15.1 -45%  Largest tractor producer with

  31. Slide 31: Other Automotive Companies

    Other Automotive Companies Otokar - Largest private sector defense company in Turkey  Turkish Armed Forces’ leading supplier and exporter of land platforms (TL thousands) 9M17 9M18 y/y  Products with Otokar IP rights used on 5 continents and >60 countries Revenues 1,370 809 -41%  Market leader in

  32. Slide 32: Consumer Durables Sector

    Consumer Durables Sector Competitive Advantages Domestic Market Dynamics Sales (mn) Production (mn)  Efficient and cost-effective production hub for multiple 28.4 markets 26.2 8.5 24.6 7.5 21.9 22.6  Solid domestic market growth potential driven by favourable 6.6 7.1 demographics, lower penetratio

  33. Slide 33: Arçelik (I/II)

    Arçelik (I/II) Truly Global with Sales to Over 100 Countries Worldwide (TL thousands) 9M17 9M18 y/y  Domestic leader (50% m. share in white goods & ACs; c. 25% in TVs) Revenues 15,135 19,490 29% Domestic 6,222 6,581 6%  Leading positions in key international markets. Beko as the flagship Exports 8

  34. Slide 34: Arçelik (II/II)

    Arçelik (II/II) Strong Growth Trends Utilising Organic and Inorganic Opportunities Initiatives / Developments Growth Strategy Overview  May’17: Agreement to create a JV with Voltas (part of the Tata Organic Group) in India with equity of $ 100mn. A refrigerator production facility will open by YE18

  35. Slide 35: Finance Sector

    Finance Sector Low Penetration Levels Providing an Opportunity for Rapid Growth Loans + Deposits / GDP Branches per million inhabitants Mortgages / GDP 223% 353 43% 120% 26% 136 6% EU-28 Turkey EU-28 Turkey EU-28 Poland Turkey Source: European Central Bank, BRSA, CBRT Figures as of YE2017, Branches

  36. Slide 36: Yapı Kredi Bank: Sustained Profitability

    Yapı Kredi Bank Sustained Profitability Sustained Profitability Strong Operational Performance Net Income (TL mn) ROATE Cost/Income2 CoR 15.4% Revenues +44% Excluding Costs +13% IRS m-t-m1 (vs. 25% CPI) 31% 3,586 23 bps 14.0% 14.3% 41% 2,735 33% 2.09% 1.08% 1.88% 9M17 9M18 9M17 9M18 9M17 9M18 9M17 9

  37. Slide 37: Other Main Companies

    Other Main Companies Sector • Production of tomato products, dairy products and pasta. #1 in tomato products, pasteurized milk and premium pasta Tat Food • KH distribution company Düzey performs logistics for Tat Gıda products as well as some external leading brands • Strong focus on end-to-end effi

  38. Slide 38: Annex

    Annex www.koc.com.tr 38

  39. Slide 39: Unlisted Companies

    Unlisted Companies 1H18 Koç Hol di ng Revenues Opera ting Profi t1 EBITDA Book Va l ue (SHE) TL mn Di rect Sha re 2017 2018 2017 2018 2017 2018 2017 2018 Arçel i k LG Kl i ma 5.00% 415 670 15 50 19 57 263 296 Bi l kom 69.94% 790 1,271 29 37 29 38 72 86 Düzey 31.15% 796 869 5 -5 6 -3 64 18 Entek 49.6

  40. Slide 40: Summary Combined Financials by Segment

    Summary Combined Financials by Segment Energy Segment Automotive Segment Consumer Durables Segment Finance Segment Share in Share in Share in Share in Share in Share in Share in Share in Combined Consolidated Combined Consolidated Combined Consolidated Combined Consolidated Operating Profit1 Net Inc

  41. Slide 41: Consolidated Net Income

    Consolidated Net Income 1 1 Consolidated Net Income (TL mn) Normalized Normalized +16% -2% y/y -41% +28% -20% +31% +81% 0% 3,832 106 3,827 255 306 - 611 - 60 9M17 Energy Auto Cons. Durables Finance Other 9M18 9M17 9M18 Other Other 3.4% 6.2% Energy Finance 22.9% 26.2% Energy Finance 38.8% 34.2% Auto

  42. Slide 42: Shareholding Structures

    Shareholding Structures Koç Holding Koç Family: 64.3%1 Free Float: 26.5% Vehbi Koç Foundation: 7.3% Koç Pension Fund: 2% Consumer Energy Automotive Finance Other Durables Tüpraş Ford Otosan Arçelik Tat Gıda SPV: 51% KH: 38% Koç Financial Services KH: 41% KH: 44% Free float: 49% Ford: 41% KH: 42% Oth

  43. Slide 43: 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

  44. Slide 44: Koç Holding Contacts

    Koç Holding Contacts investorrelations@koc.com.tr www.koc.com.tr IR Application Gülsevin Tunçay, Coordinator Investor Relations gulsevint@koc.com.tr +90 216 531 0428 Gizem Poyraz, Manager Investor Relations gizemb@koc.com.tr +90 216 531 0533 Neslihan Aycıl, Manager Investor Relations neslihana@koc.c

  45. Slide 45: Main Group Companies' Contacts

    Main Group Companies’ Contacts Arçelik Otokar Tüpraş Hande Sarıdal, Finance Director Doğan Seçkinler, Finance Manager Aslı Gülçur, Head of Strategic Planning hande.saridal@arcelik.com dseckinler@otokar.com.tr asli.gulcur@tupras.com.tr +90 212 314 3185 +90 264 229 2244 Ext. 6300 +90 262 316 3087 Orku

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