Ford Otomotiv Sanayi A.s. · BIST:FROTO

Ford Otomotiv Sanayi A.s — Investor Presentation (August 2015)

56 slides from Ford Otomotiv Sanayi A.s's investor presentation, August 2015

  1. Slide 1: Investor Presentation August 2015

    Investor Presentation August 2015

  2. Slide 2: Contents

    Contents  About Ford Otosan 3  Plants and Facilities 9  Products 16  Investment Case 23  Operating and Financial Performance 40  2015 Guidance 55  Contacts 56 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, 2014 Revenues $5.5 billion Export Revenues $3.5 billion EBITDA $387 million Ford Motor Co. Koç Group Profit Before Tax $179 million Ford Otosan 41.04% 41.04% Net Profit* $272 million ROE 21.6% Free Float EBITDA margin 7.1% 17.92% Annual Production Capacity

  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 Export leader in Turkish automotive

  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 5th biggest market in Europe (UK, Germany, Italy, France, Turkey) 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 the new generation Transit

    Gölcük Plant - Lead manufacturing plant of the new generation 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 Transit 160k Custom 130k Page 11

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

    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 79,000 m2 covered area 66k units engine, 140k units powertrain production capacity - 7.3L / 9.0L I6 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  160k units annual production capacity  All-New

  18. Slide 18: Ford Custom

    Ford Custom  Ford Otosan is the single global source of Ford Custom  130k units annual production capacity  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 – 5.3

  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  110k units annual production capacity  Launched in May 2014 Tourneo Courier Transit Courier Combi Van Transit Courier Van (People mover) (Commercial) (Commercial) Market share

  20. Slide 20: Ford Trucks

    Ford Trucks  Manufactured at Ford Otosan’s İnönü Plant since 1983  Road truck, construction and trailer series available  Cargo 1846T – 2013 International Truck of the Year 3rd place Market share details available on page 44 Page 20

  21. Slide 21: A Full Line of Cars

    A Full Line of Cars Go Further

  22. Slide 22: Major Product Acceleration

    Major Product Acceleration 2014 Focus Courier Connect Transit 2015 Mondeo Galaxy C-Max Mustang 2016 EcoSport Edge Page 22

  23. Slide 23: Investment Case

    GA Koc Investment Case Go Further

  24. Slide 24: Ford Otosan's Value Proposition

    Ford Otosan’s Value Proposition Domestic industry leader for 12 consecutive years (2002-2013) 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

  25. Slide 25: 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

  26. Slide 26: Turkey's Export Leader in Automotive

    Turkey’s Export Leader in Automotive Exports (000 units) US$ 3.5 billion export revenues in 2014 227 222 219 213 205 Turkey’s export leader in automotive for 185 192 177 164 4 consecutive years 141 129 US$ 2.0 billion net exporter in the last 75 five years (2010-2014) 2003 2004 2005 2006 2007 2008 2

  27. Slide 27: Best Proxy to Ongoing Growth in European CV Market

    Best Proxy to Ongoing Growth in European CV Market Export breakdown by units UK 36.5% Germany 17.8% W. Europe 12.7% 1H15 Spain 7.5% Other 5.7% E. Europe 6.7% Belgium 2.8% Italy 3.7% France 6.7% Page 27

  28. Slide 28: Strong Export Performance

    Strong Export Performance European commercial vehicle market (Up to 3.5 tons) In June, the European market grew for the 22nd consecutive month. Van segment grew by 12.3% year-on-year. (www.acea.be) 63% FY14 01/15 02/15 03/15 04/15 05/15 06‘15 YTD UK 18.7% 21.7% 17.9% 23.6% 20.9% 15.1% 16.4% 19.8% Ge

  29. Slide 29: 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 29

  30. Slide 30: Favorable Financing Terms

    Favorable Financing Terms  €150 million loan agreement signed with EBRD in 2010 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 million in Q4 at 1.47%  €100 million loa

  31. Slide 31: Highest Production Capacity in Turkish Automotive

    Highest Production Capacity in Turkish Automotive Old: 330,000 (pre-investments) New: 415,000 (2014) Page 31

  32. Slide 32: 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

  33. Slide 33: Focus on Shareholder Value

    Focus on Shareholder Value Strong relative share performance Commitment to corporate governance 1400  Separate CEO and Chairman roles FROTO 1200 1,256  Independent BoD members 1000  Audit Committee 800  Corporate Governance Committee 600  Early Determination and Management of Risk Committee 400

  34. Slide 34: Dividend History and Policy

    Dividend History and Policy TL 4.4 billion (US$2.9 billion) dividend was distributed by Ford Otosan between 2004-2015. 579 Heavy capex 519 period 446 451 439 402 397 400 300 200 175 113 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Dividend (TL mn, gross) 113 446 451 402 439 397 400 51

  35. Slide 35: 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

  36. Slide 36: Large Distribution Network

    Large Distribution Network Ford Otosan provides maintenance, servicing and repairs Sales: 140 through its customer-focused and innovative sales and after- After-Sales: 153 sales network that spans the whole country. Total Dealers: 194 Page 36

  37. Slide 37: Efficient Production Hub

    Efficient Production Hub 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 Year-end Capacity ('000 units) 40 140 140 200 200 250 300 320 320 320 320 320 320 400 Kocaeli Plants (Gö

  38. Slide 38: 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

  39. Slide 39: Experienced and Skilled Workforce

    Experienced and Skilled Workforce High School B.Sc. – B.A. 69% 16% M. Sc. 23% Technical High School 58% Primary & Secondary School 6% PhD 1% University 2% Blue White Others 7% Collar Collar Vocational College 18% Page 39

  40. Slide 40: Operating & Financial Performance

    Operating & Financial Performance Page 40

  41. Slide 41: Turkish Automotive Industry (000 units)

    Turkish Automotive Industry (000 units) SCT increase (-) SCT increase (-) 907 885 Global SCT financial incentives 812 803 crisis (-) (+) 792 766 741 668 633 574 524 Turkish financial 393 crisis (-) 203 177 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HCV 12 18 34 30 34 34 27

  42. Slide 42: Domestic Market (000 units)

    Domestic Market (000 units) Total Industry, July 2015 YTD Ford Otosan, July 2015 YTD 539 68 365 39 2014 2015 2014 2015 Total Industry Sales Ford Otosan Retail Sales 988 132 803 94 2014 2015F 2014 2015F Page 42

  43. Slide 43: Turkish Market Shares (2014)

    Turkish Market Shares (2014) Total Industry Passenger Cars 15.3% 13.5% 14.4% 12.3% 11.7% 11.1% 7.6% 6.2% 6.7% 6.7% 6.3% VW Renault Ford Fiat Mercedes Renault VW Hyundai Fiat Opel Ford Light Commercial Vehicles Medium Commercial Vehicles Heavy Trucks 43.1% 53.7% 31.7% 23.7% 16.4% 21.8% 10.6% 9.8% 9.3

  44. Slide 44: Turkish Market Shares (July'15 YTD)

    Turkish Market Shares (July‘15 YTD) Total Industry Passenger Cars +0.2 ppt YoY +1.9 pps YoY +0.6 ppt YtD +0.9 ppt YtD 15.8% 13.2% 14.7% 12.6% 10.9% 10.5% 6.9% 6.9% 6.8% 5.7% VW Ford Renault Fiat Mercedes VW Renault Ford Hyundai Toyota Light Commercial Vehicles Medium Commercial Vehicles Heavy Trucks

  45. Slide 45: Production Volume by Segment (000 units)

    Production Volume by Segment (000 units) 296 286 281 269 272 258 243 242 245 207 174 159 110 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H14 1H15 Heavy Truck 6 10 8 6 6 2 5 9 7 6 8 3 5 Light Commercial Vehicle 95 102 112 113 85 83 85 102 105 76 40 14 30 Medium Commercial Vehicle 106 131

  46. Slide 46: Wholesale Volume – Domestic & Export (000 units)

    Wholesale Volume – Domestic & Export (000 units) 354 341 325 316 295 298 294 303 283 255 214 176 124 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H14 1H15 Domestic 114 131 113 103 76 85 127 141 112 114 91 30 60 Export 141 164 185 222 218 129 176 213 205 227 192 94 116 Share of Exports 55%

  47. Slide 47: Sales Volume by Model

    Sales Volume by Model 1H15 1H14 YoY % 2Q15 2Q14 YoY % 1Q15 QoQ % Domestic 60.374 29.625 104% 34.138 20.288 68% 26.236 30% Domestic sales rose significantly with: PC 22.957 12.204 88% 14.151 9.179 54% 8.806 61% • Strong market Transit Courier 16.140 3.610 347% 8.879 3.610 146% 7.261 22% • Higher dema

  48. Slide 48: Revenues - Domestic & Export

    Revenues - Domestic & Export 6,208 6,254 5,992 5,450 5,454 4,844 4,948 4,516 4,640 4,142 3,702 2,939 2,411 2,109 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H14 1H15 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 1.749 1.837 Domestic (US$ bn) 1

  49. Slide 49: Operating Profit and Margin

    Operating Profit and Margin 530 472 435 437 392 407 342 352 352 252 247 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Operating Profit, US$ mn 342 392 435 530 472 252 407 437 352 352 247 Operating Profit, TL mn 487 538 569 690 613 389 610 729 631 670 541 Operating Margin (%) 8,8% 8,7% 9,5%

  50. Slide 50: EBITDA and EBITDA Margin (2004-2014)

    EBITDA and EBITDA Margin (2004-2014) Changing business mix, industry trends and macro drivers leading to declining margins:  Declining share of the domestic business  Highly competitive pricing landscape in the domestic market  Industry shift towards passenger cars leading to a less favorable sal

  51. Slide 51: 2Q15 and 1H15 Margins

    2Q15 and 1H15 Margins Operating Margin EBITDA Margin Profitability continued to increase with • Higher unit sales • Favorable sales mix 8.7% 8.7% 8.7% 6.0% 6.3% 6.2% • Lower import costs YoY in 1H15 with 6.6% lower EUR/TL 4.0% • Higher CUR • Cost reduction actions 1Q15 2Q15 1H14 1H15 1Q15 2Q15 1H14

  52. Slide 52: Net Income

    Net Income 396 372 382 350 337 337 336 306 297 272 216 163 159 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 . 1H14 1H15 Net Income (Million $) 306 297 350 372 336 216 337 396 382 337 272 163 159 Net Income (Million TL) 436 398 501 484 436 333 505 662 685 641 595 353 407 Net Income Margin (

  53. Slide 53: 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

  54. Slide 54: Debt Profile & Financial Ratios

    Debt Profile & Financial Ratios Cash Position (TL mn) 30.06.2015 31.12.2014 Cash & Cash Equivalents 282 577 Total Financial Debt (2,722) (2,350) Net financial debt (2,440) (1,773) Financial Ratios 30.06.2015 31.12.2014 Current ratio 1.13 1.00 Liquidity ratio 0.70 0.74 Net Financial Debt / Tangible N

  55. Slide 55: 2015 Guidance

    2015 Guidance 1Q15 1H15 Turkish Industry Volume 922TıK 988 K Ford Otosan Retail Sales Volume 126 K 132 K Exports 245 K 262 K Wholesale Volume 372 K 394 K Production Volume 325 K 344 K Capex (fixed assets) US$230 mn US$200 mn Guidance updated in August 2015. According to the Capital Markets Board, co

  56. Slide 56: Contacts

    Contacts Aslı Selçuk Investor Relations Manager +90 216 564 7499 aselcuk@ford.com.tr Burak Çekmece Treasury & Risk Manager (Responsible for compliance with Capital Markets Law) +90 262 315 69 60 bcekmece@ford.com.tr Gülçin Öztitiz Investor Relations Officer +90 216 564 7495 goztitiz@ford.com.tr www.

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