Kordsa Teknik Tekstil A.s. · BIST:KORDS

Kordsa Teknik Tekstil A.s — Q3 2019 Earnings Presentation

34 slides from Kordsa Teknik Tekstil A.s's earnings presentation, November 2019

  1. Slide 1: Kordsa Investor Presentation

    Kordsa Investor Presentation Nov, 2019

  2. Slide 2: Disclaimer

    Disclaimer The information and opinions contained in this The Company does not undertake any obligation, and document have been compiled by KORDSA Teknik disclaims any duty to update or revise any forward Tekstil Anonim Şirketi (the “Company”) from sources looking statements, whether as a result of

  3. Slide 3: Global Footprint

    Global Footprint 788 patent applications 4 continents ~4,500 2 R&D 188 patents 12 facilities employees Centers 186 inventions WE REINFORCE LIFE External 3

  4. Slide 4: Milestones

    Milestones Second R&D Center Brezilya @Composite Global Start up of GPTW Technology Finalized the Merging The Best AS9100 acquisition of Technology Indonesia Export 2 years Center of Acqusitions Reinforcer expansion R&D RevD Axiom Centre in Izmit Center Champion in a row Excellence Certified 1973 -

  5. Slide 5: Strategy House

    Strategy House Pillar Initiatives •Reinforcements for •Competitive Cost •Profitable Growth for Tire Composites Industry Industry •Product and Service Quality Leadership •Reinforcements for •New Products for High Construction Industry •Lean and Agile Processes and Performing Tires Teams •Fibers for A

  6. Slide 6: Kordsa in Brief

    Kordsa in Brief Tire cord fabrics (“TCF”) Next generation fabrics Composite Construction • Nylon and polyester based • Textile reinforcement • Carbon fiber, aramid, • Macro and micro fibers for tire reinforcement fibers materials for green tires hybrid fabrics, and pre- concrete reinforcement and fa

  7. Slide 7: Must Win Battles

    Must Win Battles a. Continue TPM implementation at every site for zero 1. incident, zero defect, zero downtime Operational b. High capacity utilization and/or optimisation at all Excellence entities c. Local Talent Development for cost and productivity 2. d. Focus on high value added segments e. Inv

  8. Slide 8: Overview of The Tire Cord Fabric Value Chain

    Overview of The Tire Cord Fabric Value Chain Raw materials Manufacturing Process Products Kordsa Products NY66 and Polymerisation PET HMLS Spinning Yarns Oil Derivative Twisting Ingredients For NY66 yarns: • Hexamethylenediamine (HMD) • Adipic Acid • NY66 Salt • NY66 Flake • A tire is a highly compl

  9. Slide 9: Market Dynamics – Tire Cord Fabric

    Market Dynamics – Tire Cord Fabric Glo b al A u t o mo tiv e M ark e t Global LV Assembly – M Units / Year North America APAC ex. China China EMEA North America South America Production decrease 2.5% in 2019 (vs 2018) CAGR‘18-’22: -0.5% 94 89 88 91 92 South America 3.4 3.5 3.7 Production decrease 1.

  10. Slide 10: Market Dynamics – Tire Cord Fabric

    Market Dynamics – Tire Cord Fabric T ire R e in f o rc e me nt M ark e t ( N Y 6 . 6) Supply Demand NY Demand ‘18-’22 CAGR: 0.7% 445.0 445.0 430.0 430.0 414.0 Nylon 6.6 336.0 336.3 337.3 341.4 345.5 • Utilization rates lower compared to previous years • Engineering plastics is affected by Automotive

  11. Slide 11: RM Price Drivers – Tire Cord Fabric

    RM Price Drivers – Tire Cord Fabric N Y R aw M at e ri al T re n d ( I n d e x e d ) Benzene Propylene Butadiene Crude Oil Forecast Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Source: Company Estimates External 11

  12. Slide 12: RM Price Drivers – Tire Cord Fabric

    RM Price Drivers – Tire Cord Fabric P ET F e e d s t ock A s i a 120 MEG Asia Contract PX Asia Contract PTA Asia Contract Crude Oil Dubai 110 100 90 Dollars per ton 80 70 60 50 40 30 20 Jan-13 Aug-13 Mar-14 Oct-14 May-15 Dec-15 Jul-16 Feb-17 Sep-17 Apr-18 Nov-18 Jun-19 Jan-20 Aug-20 Source : IHS Mar

  13. Slide 13: Further Growth Opportunities: Composite

    Further Growth Opportunities: Composite M i d - t erm o p p o rtun ity: c o m p o sites rein f o rc ement Cu rre n t s t at us Buy & Build • Composite Technologies Center of Excellence opened in 2016 (~30 • Finalized acquiring Axiom Materials which provides advanced MM$ investment) composite materia

  14. Slide 14: Overview of The Composites Value Chain

    Overview of The Composites Value Chain Raw materials Intermediates Composite Parts Precursors & Fibers: Weaving • PAN Precursor • Carbon Fiber • Aramide • Glass Fiber • ... Resins: • Phenolic Prepregging • Epoxy • Cyanate ester • Composites use in aerospace & automotive is increasing, due to improve

  15. Slide 15: Overview of The Composites Value Chain

    Overview of The Composites Value Chain External 15

  16. Slide 16: Market Dynamics – Composite Prepreg

    Market Dynamics – Composite Prepreg Market Size ($M) – Prepreg CAGR ‘18-’22 value : 5.0% Value (M$) Volume (M lbs) CAGR ‘18-’22 volume : 5.9% 258 244 231 218 205 5,663 5,920 5,140 5,403 4,867 2018 2019E 2020F 2021F 2022F Market Size ($M) – Thermoset and Thermoplastics CAGR ‘18-’22 thermoset : 4.8% T

  17. Slide 17: Market Dynamics – Carbon Fabric

    Market Dynamics – Carbon Fabric Market Size ($M) – Global Carbon Fiber Value (M$) Volume (M lbs) CAGR ‘18-’22 value : 7.4% CAGR ‘18-’22 volume : 11.7% 52 47 42 38 33 1,841 1,969 1,593 1,717 1,478 2018 2019E 2020F 2021F 2022F Market Size ($M) – North America and Europe Carbon Fiber North America (M$)

  18. Slide 18: Kordsa Investment Highlights

    Kordsa Investment Highlights 1 Market leadership based on longstanding strategic partner status with all global tire players 2 Global footprint with large presence at growing regions 3 Volume growth supported by favourable OE and replacement tire demand 4 Technology leadership at the cutting edge of

  19. Slide 19: Kordsa in Brief – Key Financials

    Kordsa in Brief Ke y F i n an ci als Million TL Million USD Sep'18 Sep'19 Sep'18 Sep'19 Sales 2,776 3,871 608 688 Gross Profit 606 760 133 135 Gross Margin (%) 21.8% 19.6% 21.8% 19.6% EBITDA* 493 583 108 103 EBITDA* Margin 17.8% 15.0% 17.8% 15.0% OPEX Margin 7.6% 8.5% 7.6% 8.5% Net Income 290 301 64

  20. Slide 20: Market Leadership Based on Longstanding Strategic Partner Status with All Global Tire Players

    Market Leadership Based on Longstanding Strategic Partner Status with All Global Tire Players Nature of customer relationship as key barrier to entry Leading market shares Length of Typical length of Co-development relationship approval period(a) projects Global Tire Player 1 Since 1986 ~ 5 years 

  21. Slide 21: Capitalize on Global Footprint and Entrenched Supplier Status – Segmental Progress

    Capitalize on Global Footprint and Entrenched Supplier Status with All Key Tire Manufacturers - Segmental Progress Global Players Regional Players Emerging Players Others 21% 22% 23% 24% 21% 4% 5% 5% 4% 5% 9% 9% 8% 8% 8% 66% 65% 64% 64% 66% 2016 2017 2018 Sep'18 Sep'19 External 21

  22. Slide 22: Global Footprint – Regional Breakdown of Revenues

    Global Footprint – Regional Breakdown of Revenues 2016 2017 2018 Sep'18 Sep'19 36% 37% 35% 36% 33% 32% 30% 31% 29% 29% 24% 26% 22% 18% 17% 15% 14% 12% 13% 11% EMEA NA SA APAC Regional footprint versus key competitors Kordsa • #1 NY TCF producer • #1 NY TCF • The only PET yarn, TCF and • #2 NY TCF pr

  23. Slide 23: Well-Positioned to Enable Volume Growth

    Well – Positioned to Enable Volume Growth Co m m e n ts Light Vehicle Tire manufacturing market evolution SA SA %6 %4 • Fabric form contributes the highest value add NA • Disciplined approach to optimizing footprint NA APAC %13 %21 • 2015 investment in Indonesia has increased polyester tire %41 APAC

  24. Slide 24: Technology Leadership at The Cutting Edge of Reinforcement

    Technology Leadership at The Cutting Edge of Reinforcement S t ro n g f o c u s o n R& D Cu t t i ng e d g e n e w p ro d u c ts Rolling resistance improvements through higher modulus for high performance tires Sales from new products Protection layer for truck & bus tires; reduces tire weight (US

  25. Slide 25: Well-Positioned for Strong Cash Generation and Dividends

    Well-Positioned for Strong Cash Generation and Dividends Co s t d e v e l o p me nt ( U S $ ) • Demonstrates value-based pricing model • Ability to pass through raw material price Cost per ton (indexed) volatility: 100 93 (Revenue – raw material costs) tracked as a KPI by 92 91 91 90 88 sales team 9

  26. Slide 26: Well-Positioned for Strong Cash Generation and Dividends

    Well-Positioned for Strong Cash Generation and Dividends Gro s s p ro f i t Co m m e n ts % margin 1,000 19.6%  Price is a function of 900 800 21.8% • Value Proposal of Product including services 700 600 offered (TLm) 500 400 • Product type (nylon vs polyester or fabric vs yarn) 760 300 200 606 • R

  27. Slide 27: Kordsa's Financial Policy

    Kordsa's Financial Policy Our company guidance for financial year 2019 is as follows: EBITDA Kordsa is targeting progressive improvement in EBITDA margins over the medium term  Revenue : 30%-40% TL basis; 10%-15% USD basis margins  EBITDA : 20%-25% TL basis; 2%-5% USD basis Distribution of all the

  28. Slide 28: We Reinforce Life

    We Reinforce Life Reinforcing 2 out of every 3 aircraft tires and 1 out of every 3 automobile tires produced in the world

  29. Slide 29: Appendix

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  30. Slide 30: 2016 – 2019 Financial Trend (MTL)

    2016 – 2019 Financial Trend (MTL) 2015 2016 2017 2018 Sep'18 Sep'19 511 583 493 233 261 292.46 171 165.10 268.64 258.00 Revenue 143.08 99.33 EBITDA Net Income (parent) 3,947 3,871 2,776 2,485 1,816 1,908 Confidential 30

  31. Slide 31: Kordsa in Brief – Revenue Split

    Kordsa in Brief Sep’19 Revenue Split Asia EMEA TCF & Yarn %26 %30 %82.8 SA By Region By Product %11 NA Other Composite %33 %3.2 %14.0 Sep’18 Revenue Split Asia EMEA TCF & Yarn %29 %36 %92.9 By Region By Product SA %13 NA Other %22 %2.7 Composite %4.5 External 31

  32. Slide 32: FX Rates

    FX Rates F X R at e s as o f S e p , 1 9 Monthly Avr Sep’19 Sep’18 2018 YE $/TRY 5.63 4.57 4.81 EUR/$ 1.12 1.19 1.18 $/BRL 3.89 3.60 3.65 $/IDR 14,173 14,052 14,237 $/THB 31.30 32.14 32.31 Month End Sep’19 Sep’18 2018 YE $/TRY 5.66 5.99 5.26 EUR/$ 1.09 1.16 1.15 $/BRL 4.16 4.00 3.87 $/IDR 14,174 14,

  33. Slide 33: Overview of The Construction Reinforcement Value Chain

    Overview of The Construction Reinforcement Value Chain Raw materials Manufacturing Process Reinforced Concrete Structures NY66 and Polymerisation PP Spinning Fibers Oil Derivative Ingredients Twisting For NY66 Fibers: • Hexamethylenediamine (HMD) • Adipic Acid • NY66 Salt • NY66 Flake Major • Screed

  34. Slide 34: Growth Opportunities: Construction

    Growth Opportunities: Construction Co n s t ruc tion R e i n f o rce me n t Samsun 2nd and 3rd 3rd Bosphorus Bridge Stage Light Railway Toll Booths and Track Slab Electronic Pass Areas Asyaport (Non- Conductivity (Non-Conductivity Tekirdağ Port Concrete Concrete KraTos Macro Reinforcement) Reinforce

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