Slide 1: Koç Holding: Turkey's Leading Investment Holding Company
Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY creating one common legacy for 90 years Investor Presentation – March 2016
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
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
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**
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- Positive Moody’s Koç Holding's Baa3 issuer rating reflects the company's strong financial profile and balanced portfolio of investments in mature and high-growth companies, which have diversified
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: 78.7 mn people; Median age at 30 vs. 42.2 in EU Unsaturated domestic market as most o
Slide 7: Strong, Stable and Supportive Shareholder
Strong, Stable and Supportive Shareholder Koç Family has its own internal governance and Koç Family investment vehicle, which provides stability and Temel Members consistency Ticaret* 25.9% 42.6% Koç Family mainly assumes Board level responsibility Koç Pension Fund 2.0% Business run by highly
Slide 8: Leadership Positions in Strategic & Lucrative Business Lines
Leadership Positions in Strategic & Lucrative Business Lines as of year-end 2015 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* / Otok
Slide 9: Large Distribution Networks & Customer Database in Low Penetrated Sectors
Large Distribution Networks & Customer Database in Low Penetrated Sectors with Strong Growth Potential ~ 1,000 bank branches Largest distribution network ~ 11,000 dealers and after-sales services Large customer database of over 26 million Largest customer (16 mn with data sharing permission) i
Slide 10: Energy: Defensive business profile with significant growth prospects
ENERGY Defensive business profile with significant growth prospects Competitive Advantages Low Penetration Robust diesel demand in Turkey Final Energy Consumption mn tones 20 Strong and sustainable demand for per Head – TOE +4% +16% 18 +7% energy products with 2011-14 CAGR of 2.2 +6% 16 diesel at
Slide 11: Automotive: Well-positioned both domestically and globally
AUTOMOTIVE Well-positioned both domestically and globally Low Penetration Robust domestic demand Competitive Advantages Passenger car per ‘000 New plato in annual auto sales Low auto penetration levels in Turkey offering 613 1,200 Auto market average high growth prospects; Koç Group companies 1,00
Slide 12: White Goods: Truly global with strong brand awareness
WHITE GOODS Truly global with strong brand awareness Competitive Advantages Strength in Turkey with c. 50% market share Nearly 60% of revenues from international sales Rising market share in EU: Beko no 2 brand in EU (7th in 2008) Competitive cost structure with low cost manufacturing center
Slide 13: Banking: High growth prospects with a sound structure
BANKING Offers high growth prospects with a sound structure Competitive Advantages of Yapı Kredi Bank Underpenetrated market Loans + Deposits / GDP Mortgage loans / GDP 4th largest private bank in terms of asset size (%, 2015) (%, 2015) 229 Extensive branch network, no 2 among private banks 43 1
Slide 14: Investment Focus on Sectoral Diversification
Investment Focus on Sectoral Diversification to be Resilient to Different Risk Profiles (mn) TL 907* TL 3,389** TL 32,523 Key Risks & Sensitivites Key Strengths 100 • Strong growth potential , esp. for large banks Domestic credit and interest • Yapı Kredi has completed its physical 13 14 Finance inv
Slide 15: Balanced Portfolio Between Defensive & Growth Assets
Balanced Portfolio Between Defensive & Growth Assets Wealth preservation Bank on growth 59% Yapı Kredi 41% Tüpraş Arçelik Aygaz Otokoç Opet Otokar Tofaş Entek Ford Otosan Koçtaş TürkTraktör Tat, Düzey Demir Export KoçFinansman Setur KoçSistem Marinas Divan Highe
Slide 16: Geographical Diversification to be Resilient to Country-Specific Risks
Geographical Diversification to be Resilient to Country-Specific Risks Combined International Sales (US$ billion) 2015 regional breakdown & percentages 18.6 18.6 18.7 16.6 15.7 13.2 29.2% 28.6% $0.95 bn $10.5bn $2.4 bn 9.6 27.6% 27.6% 6% 67% 15% 25.3% 25.2% 22.1% $1.6 bn 10% $0.15 bn 1% $0.1bn 2009
Slide 17: Proven Resilience & Improving Performance Despite Volatile Domestic Market
Proven Resilience & Improving Performance Despite Volatile Domestic Market 9.2 8.8 10.0 Turkey GDP Growth (%) 4.2 3.5 5.0 2.9 2.1 Source: TurkStat 0.0 2009 2010 2011 2012 2013 2014 2015* -5.0 -4.8 Net Profit 4.0 3.6 attributable to 2.7 2.7 3.0 2.1 2.3 Equity Holders of 1.7 2.0 1.4 the Parent 1.0 (TL
Slide 18: High Resilience Against Risks: Strong B/S & Cash Position
High Resilience Against Risks Strong B/S & Cash Position Our net cash position enables us to be proactive Our combined net financial debt stands at 1.5 in new M&As times EBITDA Koç Holding Stand-Alone Consolidated Net Debt / Cash Excl. Finance Net Cash Position 9M15 2015 ~US$ -4.4bn ~US$ -3.8bn Tota
Slide 19: Major Portfolio Companies Have Strong Current Ratios
Major Portfolio Companies Have Strong Current Ratios Group’s(*) Current Ratio 31 December 2015 Total Current Assets: TL42.4 bn Total Current Liabilities: TL30.7 bn Current Ratio : 1.4 9,406 8,558 4,488 4,031 4,032 1,025 1,020 1,374 1 Current Assets (TL mn) 8,759 5,236 3,824 3,351 375 847 785 854 220
Slide 20: Average Duration of Financial Debt is 34 Months
Average Duration of Financial Debt is 34 Months 30 September 2012 31 December 2015 Combined Financial Debt* Combined Financial Debt* Average duration: ~22 months Average duration: ~34 months 1. Selected Long-Term Financing : Tofaş - EUR 250 mn, 7 yrs amortizing with international commercial banks
Slide 21: FX Position
FX Position Koç Holding Stand-Alone FX Position 9M15 2015 US$ + 46mn US$ +40mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 9M15 2015 9M15 2015 US$ -2.8bn US$ -2.6bn* US$ -1.2bn US$ -1.1bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş invento
Slide 22: Adjusted Net FX Position / Equity Ratio Meets Policy Limits
Adjusted Net FX Position / Equity Ratio Meets Policy Limits for Major Portfolio Companies 31 December 2015 Group’s Adjusted Net FX Position Group’s Adj. Net FX Position/Equity US$157 mn 1.5% 31 December 2015 40 0 2 10 Net FX Position (US$ mn) (Reported) -2 -19 -605 -771 -2,545 40 0 17 14 2 34 58 Net
Slide 23: 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
Slide 24: 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
Slide 25: 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 6.8 marke
Slide 26: Disciplined Investment Strategy
Disciplined Investment Strategy Existing Consolidate leading Expand globally in businesses positions to benefit the sectors we are already most from the growth present or/and adjacent potential sectors New Exploit new growth business opportunities Only consider very (Privatizations, secondary M&A op
Slide 27: 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
Slide 28: 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
Slide 29: 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
Slide 30: 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
Slide 31: 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
Slide 32: 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
Slide 33: 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 With practices in water management, over 83 Koç Group companies million m³ of water was reused in production, invested TL 228 million and
Slide 34: 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
Slide 35: Operational Excellence and Leadership in Core Business Segments
Operational Excellence and Leadership in Core Business Segments Slide # 36 Energy Sector Strongest Player in the Turkish Energy Sector 41 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 48 Consumer Durables Sector Strong Global Network 50 Finance Sector Focus on Lucrative Busin
Slide 36: Why Energy Sector?
Why Energy Sector? High growth potential Strong demand dynamics Final Energy Consumption per Head – TOE 2.2 Among the fastest growing energy markets in the world parallel to its economic growth Growing domestic oil demand coupled with 1.1 insufficient diesel capacity Offers a wide range of opp
Slide 37: 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 and globally with Nelson 28th largest in the world Complexity of 9.5 Among the most profitable refineries in Europe and the
Slide 38: Residuum Upgrade Project (RUP) of Tüpraş
Residuum Upgrade Project (RUP) of Tüpraş RUP is completed as of June 2015 and all units are working at full capacity: Not only will RUP have a US$ 1bn positive impact on the Turkish C/A balance, but also will bring significant improvement for Tüpraş in terms of Nelson complexity, capacity utilizatio
Slide 39: 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 Leading LPG distributor of in total LPG market* Turkey 42% market share in cyclinder LPG (5th largest LPG market in Europe, 3rd largest autogas market in the world) 25%
Slide 40: 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
Slide 41: Automotive Sector: A Global Manufacturing and Distribution Hub
Automotive Sector A Global Manufacturing and Distribution Hub Dynamic market with high growth potential Strong domestic demand Passenger car per ‘000 A new plato of annual auto sales 613 1,200 Auto market average 1,000 857 800 632 336 600 1,101 183 911 893 400 793 818 807 634 576 527 200 0 Western E
Slide 42: 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 Present in high growth segments both in Turkey & in EU Highest quality and safety Largest distribution network of production among the Highly skilled and exp
Slide 43: 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 (65% of Turkey’s CV exports
Slide 44: 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 capacity increase & complete new product portfolio Investments of Ford Otosan US$ mn Ford Otosan achieved in 2015 700 682 Market share gains in the domestic market 600 523 Rising exports on E
Slide 45: Tofaş: Defensive Portfolio via Take-or-pay Contracts
TOFAŞ Defensive Portfolio via Take-or-pay Contracts 50-50% JV with Fiat Chrysler Automobiles The only domestic manufacturer and exporter of both PCs & LCVs Among Fiat’s 3 main R&D Extensive dealer and after-sales network centers globally Owns the full intellectual and industrial property rig
Slide 46: 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 and its export to Total Investment US$1.4 bn 2014-2016 US & Canada markets has already started in 4Q14 PC – Sedan US$520 mn completed in 4Q15 US$ 1.04bn
Slide 47: Other Automotive Companies
Other Automotive Companies TÜRK TRAKTÖR – Turkey’s Largest Farm Tractor Manufacturer 50-50% JV with Case New Holland Undisputable market Utilising “flexible manufacturing system” in tractors, providing a high degree leader of flexibility with c. 50% share Strong dealership network and reputabl
Slide 48: Consumer Durables Sector: Low Penetration Levels and Strong Margins
Consumer Durables Sector Low Penetration Levels and Strong Margins Underpenetrated segments, renewals, rapid Rising domestic demand household formation & urbanization drive growth White Goods Penetration – % Turkish White Goods market : New plato of annual sales Refrigerator Washing machine Dishwash
Slide 49: Arçelik: Products and Services Worldwide
ARÇELİK Provides Products and Services to Over 100 Countries Worldwide Privileged position in Turkey with superior exclusive dealer Turkey’s market leader in white network (Extensive sales & after-sales network) goods (c. 50%), Highest level of brand recognition in Turkey TVs and air-conditioner
Slide 50: Why Finance Sector?
Why Finance Sector? Low Penetration Levels, Providing an Opportunity for Rapid Growth Loans + Deposits / GDP – % (2015) Branches per million inhabitants Mortgage loans / GDP – % (2015) 229 402 43 139 21 145 7 EU-27 Turkey EU-27 Turkey Euro Area Poland Turkey Source: European Central Bank, BRSA, CBRT
Slide 51: Yapı Kredi Bank: Market share gains with sustainable profitability
YAPI KREDİ BANK Market share gains with sustainable profitability Phase 1 complete: Invest (2014 & 2015) Phase 2: Harvest +77 new branches to 1,000 Invest +1.2 million Investments complete & +2,661 headcount to 19,345 customers Acquire acquired in Continued pace of +1,299 ATMs to 4,332 Customers
Slide 52: 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 20% share Leader with 18% share 2nd in the market with 18% share YAPI KREDİ KOÇFİNANS INVEST Turkey’s first consumer finance 2nd in in equity transaction comp
Slide 53: Table of Contents
Table of Contents Page 1. 2015 Earnings Review 54 2. Shareholder Structures 65 3. Disclaimer 66 4. Contacts 67 www.koc.com.tr 53
Slide 54: Group's Overall Financial Performance
Group’s Overall Financial Performance Consumer FY15 Change Over TL million Energy Automotive Finance Other Durables Total FY14 Total Combined Revenues * 62,397 35,868 14,652 21,515 9,880 144,311 8% Combined Gross Profit 5,723 4,466 4,601 9,189 1,691 25,670 34% Combined Operating Profit ** 3,842 2,45
Slide 55: Combined Revenues
Combined Revenues Combined Revenues – TLmn Segmental Combined Revenues Breakdown – % +8% 144,311 133,467 Automotive 25% Energy Consumer 43% Durables 10% Finance 2014 2015 15% Other 7% Segment Contribution to Combined Revenues – TLmn -9% 68,343 62,397 +34% 35,868 +13% +28% +16% 26,829 21,515 14,652 1
Slide 56: Combined Operating Profit
Combined Operating Profit * Combined Operating Profit – TLmn Segmental Combined Operating Profit Breakdown – % +71% Energy 11,035 35% Automotive 6,440 22% Other 2% Consumer Durables 2014 2015 Finance 10% 31% Segment Contribution to Combined Operating Profit – TLmn +499% 3,842 +11% +46% 3,382 3,045 2
Slide 57: Combined Net Income
Combined Net Income Combined Net Income – TLmn Segmental Combined Net Income Breakdown – % +34% 8,889 Energy Automotive 6,642 8,710* 30% 23% +37% 6,340* Other Consumer 6% Durables 10% 2014 2015 Finance 31% Segment Contribution to Combined Net Income – TLmn +85% +12% 2,671 +33% 2,754 2,465 +76% 2,083
Slide 58: Consolidated Net Income
Consolidated Net Income Consolidated Net Income – TLmn Segmental Consolidated Net Income Breakdown – % +32% 3,568 Energy Automotive 2,710 30% +39% 3,389* 24% 2,435* Consumer Other Durables 11% 10% 2014 2015 Finance 26% Segment Contribution to Consolidated Net Income – TLmn +11% +79% +32% 1,060 +72%
Slide 59: Combined Exports & International Sales
Combined Exports & International Sales Combined Exports – US$mn Combined International Sales – US$mn 14,917 -10% 18,680 -16% 13,375 15,701 2014 2015 2014 2015 www.koc.com.tr 59
Slide 60: Combined Investments
Combined Investments Combined Investments – TLmn Segmental Investments Breakdown – % 7,614 -11% Automotive 6,808 46% Consumer Durables Energy 10% 30% 2014 2015 Other Finance 5% 9% www.koc.com.tr 60
Slide 61: Koç Holding Net Cash Position
Koç Holding Net Cash Position Koç Holding Stand-Alone 31.12.2015 Net Cash Position Total Debt: ~US$ 0.75 bn Total Cash: ~US$ 1.49 bn Net Cash: ~US$ 735mn Consolidated Net Debt / Cash Excl. Finance 9M15 2015 ~US$ -4.4bn ~US$ -3.8bn www.koc.com.tr 61
Slide 62: SPV Debt
SPV Debt Initial Loan Amount US$ 1.8 billion Remaining Debt as of year-end 2015 TL 644 million April 2017 * Maturity of the Debt (to be paid in two equal installments) * As the required debt servicing in EYAŞ is low, dividend distribution to Koç Holding might start as early as 2016. www.koc.com.tr 6
Slide 63: FX Position
FX Position Koç Holding Stand-Alone FX Position 9M15 2015 US$ + 46mn US$ +40mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 9M15 2015 9M15 2015 US$ -2.8bn US$ -2.6bn* US$ -1.2bn US$ -1.1bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş invento
Slide 64: Consolidated Main Financial Indicators
Consolidated Main Financial Indicators € Mn* US$ Mn* TL Mn TL Mn Change Change 31.Dec.2015 31.Dec.2015 31.Dec.2015 31.Dec.2014 %, TL %, US$ Revenues 23,024 25,548 69,492 68,622 p 1 q -19 Gross Profit 3,795 4,211 11,454 7,512 p 52 p 23 Operating Profit 2,212 2,455 6,677 3,222 p 107 p 67 Profit Before
Slide 65: Shareholder Structures as of 31 December 2015
Shareholder Structures as of 31 December 2015 Koç Holding Koç Family: 68.51% Free Float: 22.24% Vehbi Koç Foundation: 7.26% Koç Pension Fund: 1.99% Consumer Energy Automotive Finance Other Durables Tüpraş Ford Otosan Arçelik Tat Gıda SPV share: 51.00% KH share: 38.46% Koç Financial Services KH share
Slide 66: 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
Slide 67: For Further Questions, Please Contact
For Further Questions, Please Contact : www.koc.com.tr IR Application investorrelations@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 Relat
Slide 68: Main Group Companies' Contacts
Main Group Companies’ Contacts Arçelik Otokar Tüpraş Hande Sarıdal, Finance Director Hüseyin Odabaş, AGM Finance Tuncay Önbilgin, Head of IR hande.saridal@arcelik.com hodabas@otokar.com.tr tuncay.onbilgin@tupras.com.tr +90 212 314 3185 +90 264 229 2244 Ext. 6000 +90 262 316 3085 Doğan Seçkinler, Fin