Kordsa Teknik Tekstil A.s. · BIST:KORDS

Kordsa Teknik Tekstil A.s — Investor Presentation (March 2019)

32 slides from Kordsa Teknik Tekstil A.s's investor presentation, March 2019

  1. Slide 1: Kordsa Investor Presentation

    Kordsa Investor Presentation March, 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 729 patent applications* 4 continents ~4,500 2 R&D 181 patents 11 facilities* employees Centers 179 inventions WE REINFORCE LIFE * Axiom Materials Acquisition LLC excluded due to the acquisition process continues External 3

  4. Slide 4: Milestones

    Milestones Second R&D Center Brezilya @Composite Global Start up of GPTW Technology Started the Merging The Best AS9100 acquisition Technology Indonesia Export 2 years Center of Acqusitions Reinforcer expansion R&D RevD of Axiom Centre in Izmit Center Champion in a row Excellence Certified 1973 - 20

  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 2017-2021E CAGR: +2,1% 3.5 3.6 3.7 • AP Exc. China: +3.4% Highest growing region 3.3 3.5 17.2 16.9 17.0 17.0 17.1 because of slowing other regions • China: +2.2% Effected by tariff wars 26.4 26

  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) kton ‘17-’21 CAGR: 2.5% Supply Demand 492.0 508.0 481.0 479.0 Nylon 6.6 446.0 384.0 394.0 366.0 375.0 357.0 • High capacity utilization rates • Increasing demand for another market, Engineering Plastics 2017 2018E

  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 ) Ny66 Feedstock 140 120 100 80 60 40 20 0 Benzene NA Contract Propylene Chem Grade Contract-Benchmark Stream Value Butadiene NA Contract Crude Oil WTI US$ per Barrel 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 MEG Asia Contract ($/mt) Crude Oil Dubai US$ per Barrel • Crude oil WTI (based on IHS) price is the major driver Px Asia Contract ($/mt) PTA Asia Contract ($/mt) for PET price, 110 • MEG prices decrease in 2019 due to new capacity 90 b

  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 FDI & TPI in the US in 16th July, 2018; AHT in MM$ investment) October 1,

  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: Market Dynamics – Composite

    Market Dynamics – Composite 4.0% 2017 CFRP Market 6.0% 9.0% 60% CFRP Carbon 13.0% Ceramic Metal Hybrid & Others 27% 68.0% 13% Carbon Composites Market (2017)* 19.2 B$ -----> 38.6 B$ Aerospace Automotive Other * AVK Composites Market Report - 2017 External 15

  16. Slide 16: Market Dynamics – Composite

    Market Dynamics – Composite Advanced Composite Market ** 3.5 B$ -----> 5.6 B$ Aerospace Automotive Other CAGR: 8.0% 58.30% 54.10% 33.40% 27.00% 14.70% 12.50% 2017 2023* Aerospace Automotive Other Prepreg Market ** 72.20% 73.80% 4.5 B$ -----> 6.3 B$ CAGR: 5.6% 22.10% 20.60% 5.70% 5.60% 2017 2023* * E

  17. Slide 17: 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

  18. Slide 18: Kordsa in Brief – Key Financials

    Kordsa in Brief Ke y F i n an ci als Million TL Million USD 2017 YE 2018 YE 2017 YE 2018 YE Sales 2,485 3,947 681 820 Gross profit 449 794 123 165 Gross profit margin 18.1% 20.1% 18.1% 20.1% EBITDA* (a) 339 621 93 129 EBITDA* margin (a) 13.7% 15.7% 13.7% 15.7% OPEX margin 8.6% 7.9% 8.6% 7.9% Net inc

  19. Slide 19: Market Leadership Based on Longstanding Strategic Partner Status

    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 Other %17 Global Tire Player 1 Since 1986 ~

  20. Slide 20: Capitalize on Global Footprint and Entrenched Supplier Status

    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% 27% 32% 4% 5% 5% 4% 9% 9% 4% 8% 9% 8% 66% 65% 64% 57% 60% 2014 2015 2016 2017 2018 External 20

  21. Slide 21: Global Footprint – Regional Breakdown of Revenues

    Global Footprint – Regional Breakdown of Revenues 2014 2015 2016 2017 2018 39% 36% 36% 37% 35% 31% 32% 29% 28% 30% 24% 22% 17% 18% 17% 14% 14% 15% 14% 12% EMEA NA SA APAC TURKEY Headquarters Istanbul, Factory Izmit, Technology Center Izmit Tire (NY6.6, PET, SEC, TCF), Composite, Construction Regiona

  22. Slide 22: 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

  23. Slide 23: 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

  24. Slide 24: 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

  25. Slide 25: 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 900 20.1%  Price is a function of 800 700 18.1% • Value Proposal of Product including services 600 offered (TLm) 500 400 794 • Product type (nylon vs polyester or fabric vs yarn) 300 200 449 • Raw Mat

  26. Slide 26: Kordsa's Financial Policy

    Kordsa's Financial Policy EBITDA Kordsa is targeting progressive improvement in EBITDA margins over the medium term margins Distribution of all the distributable profits • which is lower of the Kordsa Turkey local GAAP (VUK) or Kordsa Consolidated TFRS (IFRS) net income • in the form of cash and/or

  27. Slide 27: Appendix

    Q) bd XXX XK KIO Xs 7X K2 y @) «: 4: > ¢: ©: =e 4: 4: ©. DO re =e Appendix DO

  28. Slide 28: 2014 – 2018 Financial Trend (MTL)

    2014 – 2018 Financial Trend (MTL) 2014 2015 2016 2017 2018 621 300 339 240 292.46 182 Revenue 99.25 165.10 77.16 143.08 EBITDA Net Income (parent) 3,947 2,485 1,735 1,908 1,569 Confidential 28

  29. Slide 29: Kordsa in Brief – Revenue Split

    Kordsa in Brief Y E 2 0 1 8 Reven u e Sp lit Asia EMEA Tire Cord Fabric %29 %35 %71 SA By Region By Product %12 Adjacents Nylon Yarn NA %12 %17 %24 YE 2017 Revenue Split Asia EMEA Tire Cord Fabric %32 %37 %76 By Region By Product SA NA Nylon Yarn %14 %17 Adjacents %20 %4 External 29

  30. Slide 30: FX Rates

    FX Rates F X Rat es as o f Dec ,1 8 Monthly Avr 4Q'18 2018 YE 4Q'17 2017 YE $/TRY 5.55 4.81 3.80 3.65 EUR/$ 1.13 1.18 1.18 1.13 $/BRL 3.81 3.65 3.25 3.19 $/IDR 14,792 14,237 14,319 13,557 $/THB 32.81 32.31 32.95 33.94 Month End 4Q'18 2018 YE 4Q'17 2017 YE $/TRY 5.26 5.26 3.77 3.77 EUR/$ 1.15 1.15 1.

  31. Slide 31: 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

  32. Slide 32: Growth Opportunities: Construction

    Growth Opportunities: Construction C o 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) Reinforc

Kordsa Teknik Tekstil A.S. — Investor Presentation (March 2019) on 6ix