Ford Otomotiv Sanayi A.s. · BIST:FROTO

Ford Otomotiv Sanayi A.s — Investor Presentation (July 2016)

62 slides from Ford Otomotiv Sanayi A.s's investor presentation, July 2016

  1. Slide 1: Investor Presentation July 2016

    Investor Presentation July 2016

  2. Slide 2: Contents

    Contents  About Ford Otosan 3  Plants and Facilities 9  Products 16  Investment Case 23  Operating and Financial Performance 41  Guidance 59  Contacts 60 Page 2

  3. Slide 3: About Ford Otosan

    GA Koc About Ford Otosan Page 3

  4. Slide 4: Company Profile

    Company Profile Key Performance Indicators, 2015 Revenues $6.2 billion Export Revenues $3.9 billion EBITDA $530 million Ford Motor Co. Koç Group Profit Before Tax $318 million Ford Otosan 41% 41% Net Profit $310 million ROE 27.5% Free Float EBITDA margin 8.6% 18% Annual Production Capacity 415,000 G

  5. Slide 5: Ford Otosan at a Glance

    Ford Otosan at a Glance First Turkish passenger car Anadol (1966) Pioneer of Turkish Turkey’s first domestic diesel engine Erk (1986) automotive Turkey’s first private R&D center in automotive (1961) First export of Turkish automotive to the US (2009) Strong value Turkey’s export leader contribution

  6. Slide 6: Key Player in Ford Motor Company Universe

    Key Player in Ford Motor Company Universe Robust sales Highest commercial vehicle market share of Ford in Europe performance Ford’s 3rd biggest market in Europe (UK, Germany, Turkey, Italy, France) Lead manufacturing plant of Ford Transit globally Leading Single source of Ford Transit Custom & Tourn

  7. Slide 7: Vision, Mission and Strategy

    Vision, Mission and Strategy Vision Mission Being Turkey’s most valuable and most Providing innovative automotive products and preferred industrial company. services beneficial to the community. Strategy  Growth: Organic and inorganic growth in new markets and existing business areas by developing

  8. Slide 8: Brief History

    Brief History First automotive Turkey takes first Customs Union is Turkey becomes a major Turkey is the 17th production starts in steps to liberalize signed with the EU hub in automotive largest auto Turkey under its economy and in 1996. Exports production and moves up manufacturing hub in license a

  9. Slide 9: Plants and Facilities

    GA Koc Plants and Facilities Go Further

  10. Slide 10: Locations

    Locations Sancaktepe Parts Distribution Center (1998) Sancaktepe Engineering Center (2015) İnönü Plant (1982) Kocaeli Plants: Gölcük Plant: Transit (2001), Custom (2012) Yeniköy Plant: Courier (2014) Page 10

  11. Slide 11: Gölcük Plant - Lead manufacturing plant of Ford Transit

    Gölcük Plant - Lead manufacturing plant of Ford Transit Port Yeniköy Plant Assembly Shop Paint Shop Tool & Die Body Shop Press Shop Opened in 2001 1,600,000 m2 total area; 340,000 m2 covered area 290,000 units manufacturing capacity Transit 140k-160k Custom 130k-150k Page 11

  12. Slide 12: Yeniköy Plant - The single production center of Ford Courier in the world

    Yeniköy Plant - The single production center of Ford Courier in the world New production facility at Gölcük plant site opened on 22 May 2014 70,000 m2 covered area Environment and disabled-friendly plant Courier 110k Page 12

  13. Slide 13: İnönü Plant - One of the two global production centers for Ford Cargo

    İnönü Plant - One of the two global production centers for Ford Cargo Opened in 1982 88,000 m2 covered area 80k units engine, 140k units powertrain production capacity - 12.7L / 9.0L E6 Diesel engines for Cargo heavy truck - 2.2L 4-cyl. Duratorq TDCI engines for Transit Cargo 15k Page 13

  14. Slide 14: Sancaktepe Parts Distribution Center - 96% Fill rate

    Sancaktepe Parts Distribution Center - 96% Fill rate Opened in 1998 25,000 m2 warehouse: Largest of its kind in Turkey 4th largest warehouse capacity among Ford’s parts distribution centers in Europe Page 14

  15. Slide 15: Sancaktepe Engineering Center – Turkey's largest R&D Center

    Sancaktepe Engineering Center – Turkey’s largest R&D Center Center of Excellence for heavy trucks and heavy duty diesel powertrain for large trucks Global engineering lead for Ford Cargo heavy trucks and related powertrains Global support for diesel powertrain engineering Global support for light co

  16. Slide 16: Products

    GA Koc Products Go Further

  17. Slide 17: Ford Transit

    Ford Transit  Longest-running model in Ford of Europe’s product range  ~ 8 million units produced globally since its launch in 1965 2001 2007  Manufactured by Ford Otosan since 1967  Ford Otosan is the lead manufacturing plant of Transit globally  All-New Transit launched from March 2014 to Oct

  18. Slide 18: Ford Custom

    Ford Custom  Ford Otosan is the single global source of Ford Custom  Launched in October 2012  First vehicle in its segment to achieve a maximum five-star Euro NCAP rating Tourneo Custom (People Mover) Long and Short Chassis 8+1 Seating Capacity 4.97m – 5.34 m Transit Custom (Commercial) Loading

  19. Slide 19: Ford Courier

    Ford Courier  Ford’s first vehicle in the compact van segment  Ford Otosan is the single global source of Ford Courier  Launched in May 2014 Tourneo Courier Transit Courier Combi Van Transit Courier Van (People mover) (Commercial) (Commercial) Market share details available on page 47 Page 19

  20. Slide 20: Ford Trucks

    Ford Trucks  Manufactured at Ford Otosan’s İnönü Plant since 1983  Road truck, construction and tractor series available  Cargo 1846T – 2013 International Truck of the Year 3rd place TRACTOR ROAD TRUCK CONSTRUCTION 4x2 Tractor and 6x2 Full Trailer are the Mainly used for local distribution and Ti

  21. Slide 21: Ecotorq Engine Family

    Ecotorq Engine Family  Available in 9L 330PS and 13 L 420 to 480PS  Euro 3, Euro 5 and Environmentally Friendly Euro 6 Emission Levels  Turbocharger with Variable-Geometry  2500 bar Common-Rail Fuel Injection System  Specially Coated Pistons  Smart Charging Alternator Page 21

  22. Slide 22: The Newest Portfolio in the Industry

    The Newest Portfolio in the Industry 1.2 years Average product age Page 22

  23. Slide 23: Major Product Acceleration

    Major Product Acceleration 2014 Focus Courier Connect Transit 2015 Mondeo Galaxy C-Max Mustang 2016 Ranger EcoSport Edge Page 23

  24. Slide 24: Investment Case

    GA Koc Investment Case Go Further

  25. Slide 25: Ford Otosan's Value Proposition

    Ford Otosan’s Value Proposition Domestic industry leader in commercial vehicles Scale & growth Largest manufacturer and exporter of commercial vehicles in Turkey Increased capacity and fully revamped products to grow volumes and profitability Technology licensing agreements delivering royalty fees w

  26. Slide 26: Relatively Favorable Taxes on Commercial Vehicles

    Relatively Favorable Taxes on Commercial Vehicles Passenger Cars Commercial Vehicles Engine Model VAT SCT Total Engine Model VAT SCT Total Size Size <1600 cc Courier (PC) <3000cc Transit Van 18% 4% 23% Fiesta Transit Minibus (16+1) (17+1) B-Max Transit Chassis Cab Focus Transit Custom Van 18% 45%* 7

  27. Slide 27: Scalable Export Business

    Scalable Export Business Exports (000 units) US$ 3.9 billion export revenues in 2015 254 Turkey’s export leader in automotive for 222 219 227 213 205 5 consecutive years 185 192 177 164 141 129 US$ 3.0 billion net exporter in the last 75 five years (2011-2015) 2003 2004 2005 2006 2007 2008 2009 2010

  28. Slide 28: Turkey's Largest Exporter

    Turkey’s Largest Exporter Export breakdown (units) Turkey’s CV exports W. Europe 13% Ford Otosan 67% UK 40% Germany 12% 1Q16 1Q16 E. Europe 8% France 8% Belgium 4% Spain 6% Other 4% Italy 5% Page 28

  29. Slide 29: Lead Beneficiary of the Growth in European Van Segment

    Lead Beneficiary of the Growth in European Van Segment European commercial vehicle market (Up to 3.5 tons) 2014 2015 1Q 2016 Apr’16 May’16 YTD UK 18.7% 15.6% 1.2% 11.8% 1.9% 3.3% Germany 7.3% 4.2% 9.3% 9.1% 15.3% 9.3% Italy 16.4% 12.4% 30.0% 30.8% 35.0% 30.4% Spain 33.2% 36.1% 8.9% 18.0% 19.3% 11.3%

  30. Slide 30: Ford Ranks No. 1 in European Commercial Vehicles

    Ford Ranks No. 1 in European Commercial Vehicles Ford’s CV Ranking in Europe #3 #1 #6 #7 #7 11.5% 12.6% 10% 8.6% 8.5% 2011 2012 2013 2014 2015 #1 Ford was Europe’s No. 1 commercial vehicle brand in 2015. 23% Ford’s commercial vehicle sales increase in 2015 compared to 2014. 12.6% Ford’s 2015 commerc

  31. Slide 31: Large Scale Investment Program >US$1 Billion (2010-2014)

    Large Scale Investment Program >US$1 Billion (2010-2014) Transit Courier US$ 75 million + Ford Trucks Custom € 370 million Yeniköy US$ 850 million Page 31

  32. Slide 32: Favorable Financing Terms

    Favorable Financing Terms  €150 million loan agreement signed with EBRD in 2010 (Paid and closed as of December 2015) 5-year loan with 2-years grace period Euribor + 2.75%  €190 million loan agreement signed with EIB in 2012 8-year loan with 2-years grace period €100 million in Q3 at 2.06% €90 mil

  33. Slide 33: Highest Production Capacity in Turkish Automotive

    Highest Production Capacity in Turkish Automotive Old: 330,000 (pre-investments) Kocaeli Plant İnönü Plant New: 415,000 (2014) Gölcük Plant 290,000 Yeniköy Plant 110,000 İnönü Plant Kocaeli Plants 400,000 Page 33

  34. Slide 34: Technology Licensing & Engineering Agreements

    Technology Licensing & Engineering Agreements  The agreements with JMC have a 12-year term, starting with 2016 model year, to be extended every 3-years.  Ford Otosan will be generating royalty fees with strong long-term growth potential. Ecotorq engines  Signed on April 24th, 2013.  JMC branded

  35. Slide 35: Focus on Shareholder Value

    Focus on Shareholder Value Strong relative share performance Commitment to corporate governance 1.600 FROTO 1.400 1.217  Separate CEO and Chairman roles 1.200  Independent BoD members 1.000  Audit Committee 800  Corporate Governance Committee 600  Early Determination and Management of Risk Comm

  36. Slide 36: Dividend History and Policy

    Dividend History and Policy TL 4.97 billion (US$3.1 billion) dividend was distributed by Ford Otosan between 2004-2016. 579 Heavy capex 519 period 446 451 439 402 397 400 400 351 300 175 113 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Dividend (TL mn, gross) 113 446 451 402 439

  37. Slide 37: Strong & Committed JV Partner Support

    Strong & Committed JV Partner Support  Turkey’s largest industrial and services group in terms of revenues, exports, employees and market capitalization on the Borsa İstanbul.  Following an average annual growth rate of 18% in consolidated profit in US$ terms between 2003-2013, Koç Holding ranks a

  38. Slide 38: Large Distribution Network (LCV/MCV/Passenger)

    Large Distribution Network (LCV/MCV/Passenger) Ford Otosan provides maintenance, servicing and repairs Sales: 114 through its customer-focused and innovative sales and after- After-Sales: 125 sales network that spans the whole country. Total 159 Page 38

  39. Slide 39: Large Distribution Network (Cargo)

    Large Distribution Network (Cargo) Ford Otosan provides maintenance, servicing and repairs Sales: 27 through its customer-focused and innovative sales and after- After-Sales: 29 sales network that spans the whole country. Total 30 Page 39

  40. Slide 40: Efficient Production Hub

    Efficient Production Hub 400 400 Ford Otosan Kocaeli Plants (Gölcük & Yeniköy) 320 320 320 320 320 320 300 250 200 200 140 140 40 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year-end Capacity ('000 units) 40 140 140 200 200 250 300 320 320 320 320 320 320 400 400 Kocae

  41. Slide 41: R&D Focused on Excellence

    R&D Focused on Excellence Ford Otosan has the largest R&D center in Turkey with over 1,350 R&D engineers. Capability and infrastructure to design, develop and test a complete vehicle end-to-end, including its engine and engine systems. Sancaktepe R&D Center Center of Excellence for heavy trucks and

  42. Slide 42: Experienced and Skilled Workforce

    Experienced and Skilled Workforce High School B.Sc. – B.A. 71% 17% M. Sc. 22% Technical High School 54% Primary & Secondary School 10% PhD 1% University 2% Blue White Others 6% Collar Collar Vocational College 17% Page 42

  43. Slide 43: Operating & Financial Performance

    Operating & Financial Performance Page 43

  44. Slide 44: Turkish Automotive Industry (000 units)

    Turkish Automotive Industry (000 units) SCT increase SCT (-) increase (-) 1,006 SCT incentives 907 (+) 885 Global financial 812 803 crisis (-) 792 766 741 668 633 574 524 Turkish financial crisis (-) 393 203 177 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 HCV 12 18 34

  45. Slide 45: Domestic Market (000 units)

    Domestic Market (000 units) Total Industry, May YTD 2016 Ford Otosan, May YTD 2016 449 53 363 47 2015 2016 2015 2016 Total Industry Ford Otosan Retail Sales 1,006 980 126 123 2015 2016F 2015 2016F Page 45

  46. Slide 46: Turkish Market Shares (2015)

    Turkish Market Shares (2015) Total Industry Passenger Cars +0.2 ppt YoY +0.9 ppt YoY 13.8% 14.8% 12.6% 14.0% 11.7% 10.9% 5.8% 6.9% 6.6% 6.5% 6.5% VW Ford Renault Fiat Mercedes VW Renault Hyundai Toyota Fiat Ford Light Commercial Vehicles Medium Commercial Vehicles Heavy Trucks +2.2 pps YoY +2.0 pps

  47. Slide 47: Turkish Market Shares (June YTD 2016)

    Turkish Market Shares (June YTD 2016) Total Industry Passenger Cars 15.5% 13.2% 13.1% 12.9% 11.9% 10.3% 7.1% 6.8% 6.7% 5.4% 6.3% VW Renault Ford Fiat Opel Renault VW Opel Fiat Hyundai Ford Light Commercial Vehicles Medium Commercial Vehicles Heavy Trucks 33.1% 41.8% 39.2% 21.4% 25.8% 26.7% 12.7% 7.7

  48. Slide 48: Turkish Market & Ford Otosan Retail Sales

    Turkish Market & Ford Otosan Retail Sales June'16 June'16 YTD. June'15 YTD. 2015 PC Adet % Pay Adet % Pay Adet % Pay Adet % Pay Ford Otosan 4,954 7.0 21,176 6.3 22,861 7.0 47,158 6.5 Industry 71,111 338,482 327,846 725,596 LCV Ford Otosan 3,148 27.4 14,043 26.7 14,891 25.8 33,708 25.9 Industry 11,49

  49. Slide 49: Production Volume by Segment (000 units)

    Production Volume by Segment (000 units) 335 296 286 281 269 272 258 243 242 245 207 174 89 82 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q15 1Q16 Heavy Truck 6 10 8 6 6 2 5 9 7 6 8 11 1 1 Light Commercial Vehicle 95 102 112 113 85 83 85 102 105 76 40 65 15 17 Medium Commercial Veh

  50. Slide 50: Wholesale Volume – Domestic & Export (000 units)

    Wholesale Volume – Domestic & Export (000 units) 381 354 341 325 316 295 298 294 303 283 255 214 94 86 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q15 1Q16 Domestic 114 131 113 103 76 85 127 141 112 114 91 127 26 22 Export 141 164 185 222 218 129 176 213 205 227 192 254 60 72 Share

  51. Slide 51: Sales Volume by Model

    Sales Volume by Model 1Q16 1Q15 YoY % Domestic 22.096 26.236 -16% PC Transit Courier 7.259 6.773 8.806 7.261 -18% -7% 20% • Strong markets • Higher demand for new products Transit Connect 532 389 37% YoY growth Total LCV 7.305 7.650 -5% in exports Transit 5.313 6.363 -17% Transit Custom 1.277 1.284

  52. Slide 52: Volume Analysis (1Q16)

    Volume Analysis (1Q16) Total Sales Domestic Sales Domestic Imports 24% 35% Exports From Production 76% 65% Exports by Model Imports Custom 8% 48% Transit From Production 39% 92% Courier 13% Page 52

  53. Slide 53: Main Financial Indicators

    Main Financial Indicators Million TL 1Q16 1Q15 YoY % Total Revenues 4.185 3.563 17% Export 3.094 2.324 33% Domestic 1.092 1.239 -12% Gross Profit 465 387 20% Operating Profit 237 216 10% EBITDA 347 311 12% Profit Before Tax 210 188 12% Net Income 203 232 -13% Other Financial Data Depreciation & Amor

  54. Slide 54: Revenues - Domestic & Export

    Revenues - Domestic & Export 6,208 6,254 5,992 6,160 5,450 5,454 4,640 4,844 4,948 4,516 4,142 3,702 2,109 1,450 1,423 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q15 1Q16 Export (US$ bn) 965 1.957 2.114 2.543 3.846 3.450 2.101 2.655 3.505 3.312 3.835 3.516 3.944 946 1.052 Dome

  55. Slide 55: Operating Profit and Margin

    Operating Profit and Margin 530 472 435 437 407 392 381 342 352 352 252 247 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Operating Profit, US$ mn 342 392 435 530 472 252 407 437 352 352 247 381 Operating Profit, TL mn 487 538 569 690 613 389 610 729 631 670 541 1.036 Operating Margin

  56. Slide 56: EBITDA and EBITDA Margin

    EBITDA and EBITDA Margin Profitability rose in 2015 due to: 2010-2014 margin decline is due to: • New products • Changing business mix and highly competitive pricing landscape • Higher volumes in both domestic and export markets • Industry shift towards PC leading to a less favorable sales mix • Fav

  57. Slide 57: 1Q16 Margins

    1Q16 Margins Operating Margin EBITDA Margin 8.7% 8.6% 5.7% 6.0% 6.2% 7.9% 8.3% 5.7% 7.1% 4.5% 4Q15 1Q15 1Q16 2014 2015 4Q15 1Q15 1Q16 2014 2015 Operating Margin (excl. Other items) EBITDA Margin (excl. Other items) 8.6% 8.7% 8.3% 8.0% 5.9% 6.0% 7.0% 5.8% 5.9% 4.4% 4Q15 1Q15 1Q16 2014 2015 4Q15 1Q15

  58. Slide 58: PBT & Net Income

    PBT & Net Income 505 Deferred Tax Asset * 475 479 435 401 413 393 396 372 382 365 350 336 337 337 318 306 297 310 264 272 238 216 179 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Net Income (Million $) 306 297 350 372 336 216 337 396 382 337 272 310 Net Income (Million TL) 436 398 501

  59. Slide 59: Financial Risk Management

    Financial Risk Management Receivables from domestic vehicle sales to dealers are collected using a Direct Debit System Domestic spare part sales are guaranteed with collateral from dealers (bank guarantee letters) Credit Risk Receivables from Ford Motor Company and its subsidiaries are collected wit

  60. Slide 60: Debt Profile & Financial Ratios

    Debt Profile & Financial Ratios Cash Position (TL mn) 31.03.2016 31.12.2015 Cash & Cash Equivalents 1,038 980 Total Financial Debt (2,885) (2,561) Net Financial Debt (1,848) (1,580) Financial Ratios 31.03.2016 31.12.2015 Current ratio 1.07 1.05 Liquidity ratio 0.70 0.73 Net Financial Debt / Tangible

  61. Slide 61: 2016 Guidance

    2016 Guidance 2015 Actuals 2016 Turkish Industry Volume 1,006TıK 980 K Ford Otosan Retail Sales Volume 126 K 123 K Exports 254 K 263 K Wholesale Volume 381 K 385 K Production Volume 335 K 339 K Capex (fixed assets) €126 mn €215 mn Guidance updated in April 2016. According to the Capital Markets Boar

  62. Slide 62: Contacts

    Contacts Aslı Selçuk Investor Relations Manager +90 216 564 7499 aselcuk@ford.com.tr Alçin Hakca Investor Relations Officer +90 216 564 7495 ahakca@ford.com.tr www.fordotosan.com.tr Burak Çekmece Treasury & Risk Manager (Capital Markets Law Compliance) +90 216 564 74 80 bcekmece@ford.com.tr Disclaim

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