Slide 1: Koç Holding Investor Presentation
Koç Holding Investor Presentation September 2006
Slide 2: Contents
Contents Company Overview and Highlights P2 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 3: Contents
Contents Company Overview and Highlights P3 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 4: The Only Turkish Company in Fortune 500
The Only Turkish Company in Fortune 500 Deep rooted and Dynamic P4 US$bn 2005 2004 YoY ∆ Total Revenues* Combined Revenues / GDP* 9% 31.2 28.3 10% (Combined) Koç Exports / Turkey’s Exports* 8% Koç Group Share in ISE Market Cap.** 17% Total Revenues* 18.1 16.6 9% (Consolidated) *As of year-end 2005 I
Slide 5: Contents
Contents Company Overview and Highlights P5 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 6: Strategic Planning and Aggressive Targeting
Strategic Planning and Aggressive Targeting Optimized Resource Allocation P6 Vision To become one of the leading companies in Europe through rapid and profitable growth Strategic Targets Register 14% p.a. real growth in total revenues on average Generate positive economic profit Portfolio Theme To b
Slide 7: Exposure in the Main Driving Sectors of the Turkish Economy
Exposure in the Main Driving Sectors of the Turkish Economy Initiatives to Create New Value Chains P7 Automotive Consumer Durables Retailing Finance Energy Total Revenues*:US$4.2bn Total Revenues*:US$4.7bn Total Revenues*:US$2.7bn Total Revenues*:US$1.8bn Total Revenues*:US$3.5bn** • 47% of total mo
Slide 8: Contents
Contents Company Overview and Highlights P8 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 9: Sustainable Revenue Streams with Potential & Dedication for Growth
Sustainable Revenue Streams with Potential & Dedication for Growth Koç Holding outperformed the target growth rates continuously for the last three years Total Revenues* – Combined (US$bn) Total Revenues* – Consolidated (US$bn) P9 CAGR : 46% CAGR : 49% 2002-2006 2002-2006 33.5 48.1 85% 54% 10% 31.2
Slide 10: Becoming even Stronger with the Latest Acquisitions
Becoming even Stronger with the Latest Acquisitions Moving from 358th place into the first 200 in Fortune 500 by year-end 2006 P10 2004 2006F Total Assets $14.2 bn $37.4 bn Combined Revenues $28.3 bn $48.1 bn Consolidated Revenues $16.6 bn $33.5 bn Retail Retail Other Energy 4% 2% 6% 10% Auto Combin
Slide 11: Robust & Credible Domestic Growth Strategy
Robust & Credible Domestic Growth Strategy Investments in Sectors with Low Penetration Rates and Long-term Growth Potential P11 Automotive Consumer Durables Food & Retail Finance Energy 476 90 65 224 3.7 68 35 86 1.2 78 EU Turkey EU Turkey EU Turkey EU Turkey EU Turkey Car Ownership Penetration, % O
Slide 12: Contents
Contents Company Overview and Highlights P12 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 13: Strong Franchise
Strong Franchise A Fine Reputation with Customers and Regulators P13 Well Established & Prominent Brands - Unparalleled Distribution Network • 14,000 Independent Dealers & Agencies • 773 Migros + Tansaş Retail Outlets • 638 Bank Branches Automotive Consumer Durables* 171 4,600 4,200 84 76 52 1,250 2
Slide 14: Leading Market Positions
Leading Market Positions Differentiate Itself by Continued Innovation, Best Product and Service Quality P14 Product Position Product Position • Passenger cars #1 • Banking* #3 • Commercial vehicles #1 • Credit cards #1 • Farm tractors #2 • Loans #3 • Automotive retailing #1 • Deposits #4 • Brokerage
Slide 15: Contents
Contents Company Overview and Highlights P15 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 16: Increasing Global Reach
Increasing Global Reach Expansion into Markets with High Growth Potential Strategy P16 • To position Koç Group companies among the largest and most rapidly growing companies in Europe • To generate at least 50% of revenues outside Turkey and lessen dependence on domestic economy Russia China, Hong K
Slide 17: Increasing International Sales
Increasing International Sales Mitigate Risk while Pursuing Growth Opportunities P17 Share of International Sales in Total Revenues Leading Positions in Europe: 14 Int’l Sales (US$bn)* • Beko -Europe’s 2nd largest television Exports (US$bn) 12.3 manufacturer 12 4% • Arçelik – Europe’s 3rd largest ho
Slide 18: Strong International Partners
Strong International Partners Alliances for Growth and Sustainability P18 International partnerships for growth that involve new capabilities, new channels and new geographies while mitigating risk Automotive Finance Consumer Durables Retailing Energy
Slide 19: Contents
Contents Company Overview and Highlights P19 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 20: Continuous Recalibration
Continuous Recalibration P20 2005: Acquisitions for Growth • Migros + Tansaş Undisputable leadership in FMCG retailing • KFS + YKB Best franchise in financial services • Tüpraş Sole refinery in Turkey 2006: Portfolio Optimization • Divesting non-core assets • Maximizing synergies from the new acquis
Slide 21: Contents
Contents Company Overview and Highlights P21 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 22: Maximizing Group Synergies
Maximizing Group Synergies Focus on Cost Efficiencies and Cross-Business Opportunities P22 • Centralized planning, coordination and controlling of : Strategic Planning Audit and Control Finance Corporate Communications and IR Human Resources • Common traits across group companies • Largest customer
Slide 23: Main Goal: Maximizing Shareholder Value
Main Goal: Maximizing Shareholder Value One of the Few Companies in Turkey which Links Executive Compensation to Share Performance P23 Shareholder Value L-T Strategic Targets Economic Profit Market Cap to Maximize Future Shareholder Value Customer Technology Satisfaction Development Aggressive Susta
Slide 24: Strong Commitment to Corporate Governance
Strong Commitment to Corporate Governance One of the Few Companies in Turkey with Independent Members in BoD P24 • Voluntary commitment and proactive approach to principles of good corporate governance • Executive compensation based on economic profit and share performance • One of the first domesti
Slide 25: Koç Holding Automotive Group
Koç Holding Automotive Group
Slide 26: Overview of Turkish Automotive Industry
Overview of Turkish Automotive Industry Major automakers have chosen Turkey as their production and export hub P26 • Turkish automotive industry is well integrated Company Vehicles Produced into Europe Fiat Tofaş Passenger Car, Light Comm. Vehicle • Among EU(25) countries Turkey is the Oyak Renault
Slide 27: Overview of Turkish Automotive Industry
Overview of Turkish Automotive Industry Turkish automotive industry offers a good investment opportunity in terms of rising exports and untapped potential in domestic demand P27 Strengths Opportunities • Strategic geographic position • Domestic demand is expected to rise: • Unsaturated market, low p
Slide 28: Koç Leadership in the Automotive Industry
Koç Leadership in the Automotive Industry P28 Koç Group is the undisputed leader in Turkey’s Koç Group maintained its production, automotive production, exports & sales exports & sales growth in 2005 Turkey’s Motor Vehicle Production* Koç Production* 000 units 429 Others 53% 53% 383 12% 47% 47% Koç
Slide 29: Koç Leadership in the Automotive Industry
Koç Leadership in the Automotive Industry Well Established & Respected Brands P29 Koç Group’s competitive strengths in the automotive segment • Well-established history & sound experience in the sector since 1926 • Long-standing joint ventures with leading global automakers Unparalleled Distribution
Slide 30: Koç Leadership in the Automotive Industry
Koç Leadership in the Automotive Industry Automotive Segment’s Share in Koç Group’s Total International Sales in 2005 is 40% P30 • Exports provide 9 A steady revenue stream 9 Strengthened relations with global partners 9 Improved quality, level with European markets 9 Enhanced product development an
Slide 31: Future Outlook
Future Outlook P31 Vision • Become “the center of excellence” in production and grow as a “Regional Production Base” Strategies • Become the global production base of several models • Assume full product development responsibility for these models • Maximize efficiency by reducing costs and increasi
Slide 32: Koç Holding Durable Goods and Construction Group
Koç Holding Durable Goods and Construction Group
Slide 33: Domestic Market
Domestic Market P33 Penetration Rates (%) 97 89 56 34 10 Washing Refrigerator Dishwasher Oven A/C Machine • Population 70 Million Turkish urbanization and young population present • Households 15 Million significant growth opportunities
Slide 34: Durable Goods & Construction Group in Turkey
Durable Goods & Construction Group in Turkey P34 1st in White Goods 2005 Market Share : 58% 2nd in TV 2005 Market Share : 33% 1st in Panel Radiators 2005 Market Share : 32%
Slide 35: Position in Europe
Position in Europe P35 Arçelik 3rd in White Goods Sales Beko Elektronik 2nd in TV Production Demirdöküm Largest Panel Radiator Facilities
Slide 36: Competitive Advantages
Competitive Advantages P36 • Unique Distribution Network • Quality • Innovation • Valuable Brands • Technological Competence
Slide 37: Export Figures
Export Figures P37 • White Goods : € 1.2 Billion • 2000-2005 Annual Growth : 35% • 2006 Target : 19% • Consumer Electronics : € 1.0 Billion • 2000-2005 Annual Growth : 26% • 2006 Target : 5%
Slide 38: Financial Review & Long Term Projections
Financial Review & Long Term Projections P38 € Million 2005 Net Sales 4,700 Gross Profit 1,100 Operating Profit 254 Capital Expenditures 177 Net Sales € Billion 6.0 3.4 3.1 2.3 1.3 1.5 1.5 0.5 0.7 2005 2006 2010 Arçelik Group Beko Elektronics Group Construction Group
Slide 39: Koç Holding Food & Retailing Group
Koç Holding Food & Retailing Group
Slide 40: Turkish Retailing Market
Turkish Retailing Market P40 Turkey (USD mn) 2004 2005 2006 F 2007 F Retail Sales 106,339 129,242 137,666 149,608 Grocery Retail Sales 56,797 69,029 72,800 78,232 Trade Channels Trends in Retailing in Turkey Other Hyper & • The share of organized retailers Super markets in total trade increased from
Slide 41: Turkish Food Retailing Market
Turkish Food Retailing Market P41 No of Stores Sales Area Net Sales Actors Service Format (2006 1Q) (2006 1Q) (2005 USD Mn) Migros +Tansaş HPM, SPM, Discount 726 477,188 2,505 BIM Discount 1,218 298,500 1,248 Metro Cash&Carry, HPM, DIY 24 258,500 1,132 Carrefour+Gima HPM, SPM, Discount 450 310,000 1
Slide 42: Migros Physical Growth in 2005
Migros P42 Physical Growth in 2005 • The Company grew 46% in 2005, driven by Tansaş acquisition. • Overall net sales area increased by 192,714 sqm. in 2005. • Russia leads the international expansion by 59%.
Slide 43: Migros Sales & EBITDA
Migros Sales & EBITDA P43 Combined Sales ($ million) and EBITDA Margin $ Million % 4,500 8.2 8.0 9.0 7.6 4,000 8.0 4,174 3,500 3,814 7.0 3,478 3,000 6.0 2,500 5.0 2,000 4.0 1,500 3.0 1,000 2.0 500 1.0 0 0.0 2006 2007 2008 Sales EBITDA Margin
Slide 44: Koç Holding Energy Group
Koç Holding Energy Group
Slide 45: Vision & Strategies
Vision & Strategies P45 Vision • To become a leading energy player in Turkey and in the region Strategies • Organic growth, leading market positions and brands in existing businesses • Diversification through M&A, privatizations and/or greenfield investments • Integration of value chains • Internati
Slide 46: Tüpraş
P46 • 51% stake acquired through privatization, the rest is free float • The largest industrial company and the sole refinery in Turkey • Supplying 70% of the market from 4 refineries (İzmit, İzmir, Kırıkkale, Batman) • 7th largest in Europe with 27.6 million ton refining capacity • Revenues........
Slide 47: Overview of TÜPRAŞ Assets
Overview of TÜPRAŞ Assets P47 Black Sea AZERBAIJAN İstanbul Sea of From Baku Marmara İzmit (11.5 MT/y) Nelson:6.17 (7.78) Ankara Körfez Kırıkkale (5.0 MT/y) Nelson:5.32 (6.32) İzmir (10MT/y) Batman Nelson: 7.66 (1.1 MT/y) Nelson:1.83 Mersin TÜPRAŞ TÜPRAŞ Nelson Nelson Complexity Complexity 6.43 6.43
Slide 48: Synergies with OPET and AYGAZ
Synergies with OPET and AYGAZ OPET and AYGAZ Terminals and Storage Areas P48 Black Sea AZERBAIJAN 230 230 15,730 14100 453,000 36,960 36,538 43,700 1873 1,330 19,290 2460 3264 19,290 65,567 1295 1395 1,526 33,315 1295 2,575 249,104 • Extra terminal advantages: expanding the coverage in the hinterlan
Slide 49: Aygaz LPG
P49 • Active in LPG sourcing, storage, filling and distribution, LPG appliances production, and LPG marine transportation • Market leader in Turkey since its establishment in 1961 • 5th largest LPG distributor in Europe • Market Share in Turkey..: 30.5% • Revenue..........................: $1.7 bill
Slide 50: Opet
P50 • A 50%-50% JV between Koç Group and Öztürk family • 4th largest fuel retail company in Turkey • Also active in lubricants production and marketing, marine bunkering, and international fuel trade • White Products* Market Share..: 12.7% • Black Products* Market Share..: 15.3% • Revenues..........
Slide 51: Turkey's fastest growing fuel distribution company
P51 Turkey’s fastest growing fuel distribution company Sales White Products Market Share $ billion % 3.6 3.4 13.9 3.1 12.7 11.5 9.5 9.7 2.3 1.6 2002 2003 2004 2005 2006F 2002 2003 2004 2005 2006F
Slide 52: Koç Holding Banking and Insurance Group
Koç Holding Banking and Insurance Group
Slide 53: Banking Sector: Low Penetration Rates and High Growth Potential
Banking Sector: Low Penetration Rates and High Growth Potential P53 Loan Penetration (2003) Deposit Penetration (2003) 250% Netherlands 250% UK UK 200% 200% Ireland Austria Deposits/GDP Switzerland Loans/GDP Belgium 150% Portugal 150% Belgium Germany Switzerland Austria Spain Germany Portugal Irelan
Slide 54: Strong Future Outlook
Strong Future Outlook Penetration Levels are Expected to Improve in Line with the Changing Dynamics of the Turkish Economy P54 Branches per million (Loans + Deposits)/GDP Banking Assets/GDP inhabitants (2004) (2004) (2004) 513 224% 265% 68% 82% 84 EU Turkey EU Turkey EU Turkey Historically high infl
Slide 55: Strong Growth Potential in Selective Business Lines
Strong Growth Potential in Selective Business Lines Growth rates will be specifically high in loyalty products such as mortgages and lucrative business lines such as credit cards and SME banking P55 Mortgage Loans/GDP Mortgages 46% • Only 2.5% of the GDP • Room for further growth in mortgages in lin
Slide 56: Koç Holding in Financial Services: Vision & Strategies
Koç Holding in Financial Services Vision & Strategies P56 Vision • Become the leading player in banking and insurance markets in terms of growth and value creation as a full service provider Strategies • Leader in the segments/businesses with higher return on capital/growth potential • Leanest playe
Slide 57: A Strong Combination: Koçbank and YKB
A Strong Combination: Koçbank and YKB P57 Strengths Strengths Flight to Quality Franchise Value Corporate Banking Market Leader in Credit Cards Asset Management Retail Banking Private Banking SME Banking Strong Risk Management The combination of YKB’s strong franchise with Koç Group’s reputation and
Slide 58: KFS: Playing for Leadership in High Margin Products
KFS: Playing for Leadership in High Margin Products and Lucrative Business Lines Rank Rank KFS YKB KFS+YKB Mkt. Sh. Key Competitors - % P58 March 2006 # of Branches 13 7 5 9.3 Ziraat 18, İş 14 Deposits (1) 8 7 4 9.6 Ziraat 21, İş 15 Retail Consumer Loans (2) 12 9 6 7.0 Ak 15, Ziraat 14, İş 14 (3) Cr
Slide 59: KFS 2008 Key Strategic Goals
KFS 2008 Key Strategic Goals: Ensuring Growth, Efficiency and Profitability P59 KEY STRATEGIC GUIDELINES • Focus on 5 main business targets: 50% 50% • Consolidate leadership in cards and become leader in consumer finance • Become leader in Asset Gathering and 1st choice for HNWI • Achieve higher pro
Slide 60: Conclusion
Conclusion P60 Banking sector offers… Strong growth potential in volumes due to low penetration levels and a more sustainable growth environment Low systematic-risk in the sector due to higher capitalization, stronger risk management measures and higher value-add from international partners Su
Slide 61: For Further Questions, Please Contact
For Further Questions, Please Contact: Koç Holding P61 Funda Güngör, Coordinator Aslı Selçuk Iskır, Manager Investor Relations Investor Relations Strategic Planning Group Strategic Planning Group fundag@koc.com.tr aslii@koc.com.tr +90 216 531 0535 +90 216 531 0537 Major Group Companies: Arçelik: Bek
Slide 62: Disclaimer
Disclaimer P62 This presentation contains forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by a variety of variables a