Koc Holding A.s. · BIST:KCHOL

Koc Holding A.s — Investor Presentation (September 2013)

63 slides from Koc Holding A.s's investor presentation, September 2013

  1. Slide 1: Koç Holding: Turkey's Leading Holding Company

    Koç Holding TURKEY’S LEADING HOLDING COMPANY creating one common legacy for 87 years Investor Presentation – September 2013

  2. Slide 2: A Leading Investment Holding Company

    A Leading Investment Holding Company KOÇ HOLDING: TURKEY’S LEADING INVESTMENT HOLDING COMPANY  Koç Group is Turkey’s largest industrial and services group in terms of revenues, exports, employees and market capitalization on the Borsa İstanbul. PROFITABLE AND HIGH GROWTH MODEL, FOCUSING ON SUSTAINA

  3. Slide 3: Koç Group History

    Koç Group History Today Turkey's largest industrial and services group 2006-08 Proactive disposals 2006 Koç Holding signs the UN Global Compact 2005-06 Acquisition of Tüpraş, Yapı Kredi Bank & Tansaş 2003 Third generation of Koç Family takes the reins 2001 Financial services consolidated under one r

  4. Slide 4: Strong Beneficiary of the Growth Potential in Turkey

    Strong Beneficiary of the Growth Potential in Turkey We have the right size to benefit from economies We continuously out-perform the growth rates of scale in Turkey 17 16 15 Combined Revenues / GDP* 9% 11 9 Total Exports / Turkey’s Exports* 10% 6 6 5 5 5 5 4 3 3 Total Market Cap. on ISE* 16% 1980-8

  5. Slide 5: One of the Only Two Companies in Turkey with Investment Grade

    One of the Only Two Companies in Turkey with Investment Grade, Higher than Turkey’s Sovereign Rating Ratings Outlook Moody’s Baa3 Positive S&P BBB- Stable Moody’s Our Baa3 ratings are based on Koç Holding’s strong financial profile and investments in a balanced portfolio of mature and high-growth co

  6. Slide 6: Strong, Stable and Supportive Shareholder

    Strong, Stable and Supportive Shareholder Koç Family Temel Members  Koç Family has its own internal governance and Ticaret* 25.9% 42.6% investment vehicle, which provides stability and consistency Koç Pension  Koç Family mainly assumes Board level Fund responsibility 2.0%  Business run by highly

  7. Slide 7: Leadership Positions in Strategic and Lucrative Business Lines

    Leadership Positions in Strategic and Lucrative Business Lines Energy Automotive Consumer Durables Finance Automotive Main Companies Main companies Main Companies Main Companies Tüpraş* / Aygaz* / Opet / AES Entek Ford Otosan* / Tofaş* / Arçelik* Yapı Kredi Bankası* TürkTraktör* / Otokar* / Otokoç I

  8. Slide 8: Large Distribution Networks & Large Customer Database in Low Penetrated Sectors

    Large Distribution Networks & Large Customer Database in Low Penetrated Sectors with Strong Growth Potential Large customer database of over 16 million (approximately 11.5 mn with data sharing permission) in Large customer database different business segments together with strong CRM capabilities, e

  9. Slide 9: Strongest Beneficiary of the High Growth Environment and Strong Profitability

    Strongest Beneficiary of the High Growth Environment and Strong Profitability Despite Global Turmoil Revenues – Consolidated-US$bn EBITDA – Consolidated-US$bn 47.3 3.9 44.9 3.4 3.1 35.9 2.8 29.0 2009 2010 2011 2012 2009 2010 2011 2012 Operating Profit – Consolidated-US$bn 3.3 2.7 2.5 2.2 2009 2010 2

  10. Slide 10: Well Diversified Across Sectors With Different Risk Profiles

    Well Diversified Across Sectors With Different Risk Profiles Prudent Risk Management Policies 2012FY figures 100%= TL84.8bn TL5.6bn TL2.3bn Key Risks/Challenges Key Strengths 100 9 • Strong growth potential , esp. for large banks 90 Domestic credit and interest • Robust profitability (Avg. RoAE: 17.

  11. Slide 11: Increasing Share of International Sales

    Increasing Share of International Sales Prudent Risk Management Policies International Sales (TL billion) 25 23 14% CAGR 20 19 15 14 14 10 27.3% 10 25.4% 25.3% 25% 22.5% 5 0 2008 2009 2010 2011 2012 Share of international markets in consolidated total XX% revenues including Finance Segment Including

  12. Slide 12: Geographic Diversification to Reduce Country-specific Risks

    Geographic Diversification to Reduce Country-specific Risks Prudent Risk Management Policies International Sales 2007  2012 regional breakdown and percentages Europe Asia 77%  56% 12%  20% Americas 4%  9% Africa 7%  16% www.koc.com.tr 12

  13. Slide 13: Well-Designed Financial Policies

    Well-Designed Financial Policies Prudent Risk Management Policies Risk Financial Policy  Sustainable leverage with NFD/EBITDA limits for each major company, and at the combined level Leverage (excluding Finance)  Maintain sufficient liquidity to meet obligations for all terms Liquidity  Minimize

  14. Slide 14: Strong & Stable Financial Performance Despite a Volatile Economic Environment

    Strong & Stable Financial Performance Despite a Volatile Economic Environment 9.2 8.8 8.0 2.2 3.0 0.7 Turkey GDP Growth (%) -2.0 2008 2009 2010 2011 2012 -7.0 -4.8 Source: TurkStat -12.0 10.0 Consolidated 5.1 5.7 5.6 4.2 4.4 EBITDA 5.0 (TL billion) 0.0 2008 (*) 2009 2010 2011 (**) 2012 1,500 1.016 H

  15. Slide 15: High Resilience Against Risks – Strong B/S & Cash Position

    High Resilience Against Risks – Strong B/S & Cash Position Our net cash position enables us to be proactive Our combined net debt remains at 1.6 times in new M&As EBITDA Koç Holding Stand-Alone Consolidated Net Debt / Cash Excl. Finance Net Cash Position 1Q13 1H13 Total Debt: ~US$ 0.75bn Total Cash:

  16. Slide 16: FX Position

    FX Position Koç Holding Stand-Alone FX Position 1Q13 1H13 US$ + 233mn US$ +227mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 1Q13 1H13 1Q13 1H13 US$ - 3.6bn US$ -3.6bn* US$ - 1.5bn US$ -1.5bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş & A

  17. Slide 17: Active Player in M&As and Privatizations

    Active Player in M&As and Privatizations Proactive Portfolio Management Opportunistic M&A strategy to consolidate leadership positions and reach optimal portfolio diversification Acquisitions ahead of 2008 Koç Holding Share: US$ 6.6 billion  51% for US$ 4,140mn  Consolidated as of January 2006  T

  18. Slide 18: Profitable Disposals

    Profitable Disposals Proactive Portfolio Management Divested Companies Sector Held Since Buyer Closing Date IT 2000 Vodafone 30 November 2011 Auto Supplies 1963 Continental A.G. 28 August 2008 Insurance 1974 Allianz SE 21 July 2008 2003 Heating & Ventilation (spin-off of Ada Metal 26 June 2008 Demir

  19. Slide 19: Focus on Large Investments with High Returns

    Focus on Large Investments with High Returns Proactive Portfolio Management Ongoing investments to increase efficiency Opportunistic M&A activities in core business lines Combined Investments – US$bn  New manufacturing and R&D  Opportunistic projects for export markets buyouts in with our JV partn

  20. Slide 20: Disciplined Investment Strategy

    Disciplined Investment Strategy Proactive Portfolio Management Consolidate leading positions to benefit the most from the growth potential Exploit new growth opportunities Only consider very (Privatizations, secondary M&A opportunistic plays market as well as greenfield investments) www.koc.com.tr 2

  21. Slide 21: Systematic Investment Evaluation

    Systematic Investment Evaluation Proactive Portfolio Management Strategy Main Investment Criteria  Standardized investment evaluation process for  IRR Criteria: risk adjusted cost of capital applied to investments that require Holding Evaluation calculate IRR threshold in different projects  Trea

  22. Slide 22: Proactive Investor Relations Management

    Proactive Investor Relations Management We endeavor to maximize the value we create for our shareholders  Executive compensation based on economic profit and share performance  Proactive investor relations management  Cash dividend payout  Strong share performance Strong relative stock performan

  23. Slide 23: Main Goal: Maximizing Shareholder Value

    Main Goal: Maximizing Shareholder Value One of the few Turkish Companies which Links Executive Compensation to Share Performance Shareholder Value L-T Strategic Targets Economic Profit Market Cap to Maximize Future Shareholder Value Customer Technology Satisfaction Development Aggressive Sustainable

  24. Slide 24: Leading Positions in R&D and Technology Investments

    Leading Positions in R&D and Technology Investments Koç Group makes the highest Koç Group’s share in R&D investments in Turkey private sector R&D compared to any other investments in Turkey is corporation 12-16% each year with around TL506 million Ratio of annual R&D spent in 2012 With 310 filings,

  25. Slide 25: Leading Corporate Citizen

    Leading Corporate Citizen Vehbi Koç Foundation : Institutionalization for social development  Established in 1969 as Turkey’s first private foundation;  to make philanthropic endowments for the public good  to create sustainable and replicable projects and programs in education, healthcare, cultu

  26. Slide 26: Corporate Solutions for Social Advancement

    Corporate Solutions for Social Advancement Our projects’ commonalities are unity, synergy and leadership established through our companies, employees and dealers “For My Country” project Vocational Education: A Crucial  Grassroots initiative organized annually Matter for the Nation since 2006, to s

  27. Slide 27: Commitment to the Environment

    Commitment to the Environment Koç Group endeavors to preserve national and natural resources in the most efficient way and minimize or recycle waste at the source Koç Group companies With its efficiency projects, Koç Group made 3.37 million GJ invested TL203.5 million savings in energy consumption a

  28. Slide 28: Key Takeaways: Value Propositions

    Key Takeaways : Value Propositions Strong top-line growth Leading positions in enabling the benefits of Best proxy to core sectors and new economies of scale the Turkish investment and M&A Economy opportunities Strong commitment to Corporate Governance, Corporate Social Superior and sustainable Resp

  29. Slide 29: Operational Excellence and Leadership in Core Business Segments

    Operational Excellence and Leadership in Core Business Segments Slide # 30 Energy Sector Strongest Player in the Turkish Energy Sector 35 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 40 Consumer Durables Sector Strong Global Network 42 Finance Sector Focus on Lucrative Busin

  30. Slide 30: Why Energy Sector?

    Why Energy Sector? High growth potential Strong demand dynamics Final Energy Consumption per Head – Toe  Among the fastest growing energy markets in the world parallel to its economic growth  Demand for electricity is estimated to grow at an 2.2 annual rate of 6% between 2009-2023 1.1  Growing do

  31. Slide 31: Tüpraş – Turkey's Sole Refining Company

    Tüpraş – Turkey’s Sole Refining Company  4 refineries with 28.1 MT total capacity 7th largest refinery in  One of the most complex refineries in the Europe and Mediterranean. Nelson Complexity: 7.25 29th largest in the world  Among the most profitable refineries in Europe and the U.S. : Integrate

  32. Slide 32: Aygaz – Turkey's Undisputable Market Leader in LPG

    Aygaz – Turkey’s Undisputable Market Leader in LPG for 50 years  Generic brand in Turkey for LPG Leading LPG  Fully integrated LPG services distributor of Turkey (2nd largest LPG market in  Serves 100,000 homes with cylinder LPG everyday Europe)  More than 1 million vehicles use Aygaz autogas da

  33. Slide 33: Opet – Turkey's Fastest Growing Fuel Distribution Company

    Opet – Turkey’s Fastest Growing Fuel Distribution Company  Fastest growing player of its sector while maintaining profitability Highest customer  Unrivaled leader in customer satisfaction in its sector for 7 & station consecutive years 2nd in white products satisfaction  Retail and wholesale acti

  34. Slide 34: AES Entek – Investing to become a Leading Player in Electricity Generation

    AES Entek – Investing to become a Leading Player in Electricity Generation AES ENTEK 50-50% JV established  Power generation company with AES, targeting 3000MW total installed capacity  Over 350 MW installed capacity  2 natural gas combined cycle plants  Gas turbine based cogeneration facility I

  35. Slide 35: Why Automotive Sector?

    Why Automotive Sector? Dynamic market with high growth potential Well-supplied manufacturing hub Car Ownership per ‘000 473  5th largest labor force compared with the EU  Over 24.7 million young and well-educated professionals 141  High growth in labor productivity  Strong local supply base  Lo

  36. Slide 36: Koç Group in the Automotive Sector

    Koç Group in the Automotive Sector  Almost half of the Turkish manufacturing and export of motor vehicles are realized by Koç Companies High profitability  Present in high growth segments both in Turkey & in EU vis-a-vis global peers  Opportunities in new Segments such as HCVs Highest quality and

  37. Slide 37: Ford Otosan – Leader in Total Automotive Sales for 11 Consecutive Years

    Ford Otosan – Leader in Total Automotive Sales for 11 Consecutive Years  Leader in Turkish Automotive Industry  50-50% JV with Ford - Global engineering center for Ford’s diesel engines and heavy trucks 2nd highest Ford market  Strong distribution network share in Europe  Export leader in Turkis

  38. Slide 38: Tofaş – Production for 5 Global Brands

    Tofaş – Production for 5 Global Brands  50-50% JV with Fiat  The only domestic manufacturer and exporter of both Among Fiat’s 3 main R&D PCs and LCVs centers globally  Extensive dealer and after-sales network  Owns the full intellectual and industrial property rights 2nd in total Take-or-pay for

  39. Slide 39: Other Automotive Companies

    Other Automotive Companies TÜRKTRAKTÖR – Turkey’s Largest Farm Tractor Manufacturer Undisputable market  50-50% JV with Case New Holland leader with 50% share  Utilising “flexible manufacturing system” in tractors, providing a high degree of flexibility Profitability level among the highest  Stro

  40. Slide 40: Why Consumer Durables Sector?

    Why Consumer Durables Sector? Underpenetrated segments and renewals drive Strong value proposition growth White Goods Penetration – % 92  Strong R&D focus and innovative products 70  Efficient and cost-effective outlet to multiple markets with over 1.5 billion customers  Competitive labor cost 

  41. Slide 41: Arçelik – Provides Products and Services to Over 100 Countries Worldwide

    Arçelik – Provides Products and Services to Over 100 Countries Worldwide  Privilidged position in Turkey with superior exclusive dealer Turkey’s market leader in network (Extensive sales and after-sales network in Turkey) white goods (50%),  Highest level of brand recognition in Turkey TVs and air

  42. Slide 42: Why Finance Sector?

    Why Finance Sector? Low Penetration Levels, Providing an Opportunity for Rapid Growth Loans + Deposits / GDP – % (2012) Branches per million inhabitants (2011) Mortgage loans / GDP – % (2012) 371 40.4 531 20.8 111 137 6.0 Euro Area* Turkey** Euro Area * Turkey ** Euro Area* Poland** Turkey*** Source

  43. Slide 43: Yapı Kredi Bank – Balanced Growth and Sustained Profitability

    Yapı Kredi Bank – Balanced Growth and Sustained Profitability  Well-positioned to capture benefits of sector growth as a Top-4 privately owned bank 4th among private sector  Committed and strong shareholders: 50-50% JV with banks in asset size UniCredit Continuation of  Widespread network with 92

  44. Slide 44: Yapı Kredi Subsidiaries and Other Finance Companies

    Yapı Kredi Subsidiaries and Other Finance Companies YAPI KREDİ YAPI KREDİ YAPI KREDİ YAPI KREDİ LEASING FACTORING ASSET MANAGEMENT PENSION  Leader with 17.2%  Leader with 15% share  2nd in the market with  3rd in private pension share 17.6% share funds with 17.1% share YAPI KREDİ YAPI KREDİ YAPI

  45. Slide 45: Appendix

    Appendix www.koc.com.tr 45

  46. Slide 46: Table of Contents

    Table of Contents Page 1. 1H13 Earnings Review 47 2. Latest Macroeconomic Developments 56 3. Shareholder Structures 60 4. Disclaimer 61 5. Contacts 62 www.koc.com.tr 46

  47. Slide 47: New Financial Reporting Framework

    New Financial Reporting Framework Combined Financial Results:  All P&L line items of subsidiaries and joint ventures are included “Koç Group’s Operating Segments’ by full consolidation method (i.e.100%) after intra-group profit Financial Performance” eliminations. Consolidated Financial Results (Af

  48. Slide 48: Group's Overall Financial Performance

    Group’s Overall Financial Performance Consumer 1H13 Change Over TL million Energy Automotive Finance Other Durables Total 1H12 Total Combined Revenues * 29,095 12,037 5,562 6,692 3,460 56,846 0.4% Combined Gross Profit 1,099 1,483 1,615 3,819 612 8,628 12% Combined Operating Profit 187 869 467 1,682

  49. Slide 49: Combined Revenues

    Combined Revenues Combined Revenues – TLmn Segmental Combined Revenues Breakdown – % +0.4% 56,627 56,846 Automotive 21% Energy 51% Durables 10% 1H12 1H13 Finance Other 12% 6% Segment Contribution to Combined Revenues – TLmn -4% 30,182 29,095 +8% -1% +6% +2% 11,126 12,037 5,611 5,562 6,306 6,692 3,40

  50. Slide 50: Combined Operating Profit

    Combined Operating Profit Combined Operating Profit – TLmn Segmental Combined Operating Profit Breakdown – % 3,211 +2% 3,278 Automotive 27% Durables 14% Energy 6% Other 2% 1H12 1H13 Finance 51% Segment Contribution to Combined Operating Profit – TLmn +38% 1,682 +9% 1,215 -75% 869 +34% 756 794 467 -2

  51. Slide 51: Combined Net Income

    Combined Net Income Combined Net Income – TLmn Segmental Combined Net Income Breakdown – % +7% Automotive 2,935 29% 2,735 Durables 10% Energy 10% Other 3% 1H12 1H13 Finance 48% Segment Contribution to Combined Net Income – TLmn +40% 1,419 +11% 1,013 853 -50% 768 -3% 583 +12% 292 297 289 74 83 Energy

  52. Slide 52: Consolidated Net Income

    Consolidated Net Income Consolidated Net Income – TLmn Segmental Consolidated Net Income Breakdown – % +1% Automotive 1,026 1,038 33% Durables 10% Energy 7% Other 4% 1H12 1H13 Finance 45% Segment Contribution to Consolidated Net Income – TLmn +40% 472 +11% 343 338 -69% 308 228 -2% 111 108 +9% 71 40

  53. Slide 53: Combined Exports & International Sales

    Combined Exports & International Sales Combined Exports – US$mn Combined International Sales – US$mn 8,059 -1% 9,445 -2% 9,229 7,951 1H12 1H13 1H12 1H13 www.koc.com.tr 53

  54. Slide 54: Combined Investments

    Combined Investments Combined Investments – TLmn Segmental Investments Breakdown – % 50% 2,644 1,766 Automotive Energy 37% 51% Durables 1H12 1H13 Other Finance 7% 3% 2% www.koc.com.tr 54

  55. Slide 55: Consolidated Main Financial Indicators

    Consolidated Main Financial Indicators € Mn* US$ Mn* TL Mn TL Mn Change Change 30.Jun.2013 30.Jun.2013 30.Jun.2013 30.Jun.2012 %, TL %, US$ Revenues 12,449 16,346 29,562 30,879 q -4 q -5 Gross Profit 1,254 1,647 2,978 2,957 p 1 q 0 Operating Profit 642 843 1,524 1,778 q -14 q -15 Profit Before Tax 5

  56. Slide 56: Fed's tapering talks and domestic political noise have led to a major sell-off

    1.80 1.90 2.00 2.10 2.20 2.30 2.50 2.60 2.70 2.40 4 5 6 7 8 9 10 11 12 04.01.10 04.01.10 08.03.10 08.03.10 10.05.10 10.05.10 12.07.10 12.07.10 13.09.10 13.09.10 15.11.10 15.11.10 17.01.11 17.01.11 21.03.11 21.03.11 23.05.11 23.05.11 25.07.11 25.07.11 Euro 26.09.11 26.09.11 Policy Rate (Weekly Repo)

  57. Slide 57: Healthy recovery in domestic demand has been interrupted

    Healthy recovery in domestic demand in April and May has been interrupted by challenging global and domestic economic setting since then GDP Growth (Quarterly, %) Industrial Production 20 32.0 10.0 115 30.0 15 5.0 28.0 26.0 10 Billion TL 0.0 105 % 24.0 -5.0 22.0 5 20.0 95 -10.0 0 18.0 -15.0 16.0 -5

  58. Slide 58: Current account deficit remains under control

    Despite deterioration in net gold exports, current account deficit remains under control on the back of weak domestic demand and low commodity prices June 2013 Last 12 Months $ Billion Annual Chg. $ Billion Annual Chg. Exports 12.4 -6.0% 153.4 6.8% Imports 21.0 2.8% 245.0 2.7% Trade Balance -8.6 18.

  59. Slide 59: Food prices and weakness in TL are pushing inflation above target

    Despite subdued domestic demand and lower commodity prices, food prices and weakness in TL are pushing inflation well above target 16 Annual Inflation (%) 14 12 10 8 6 4 2 0 01.2010 03.2010 05.2010 07.2010 09.2010 11.2010 01.2011 03.2011 05.2011 07.2011 09.2011 11.2011 01.2012 03.2012 05.2012 07.201

  60. Slide 60: Shareholder Structures as of June 2013

    Shareholder Structures as of June 2013 Koç Holding Koç Family: 68.51% Free Float: 22.35% Vehbi Koç Foundation: 7.15% Koç Pension Fund: 1.99% Consumer Energy Automotive Finance Other Durables Tüpraş Ford Otosan Arçelik Tat Konserve SPV share: 51.00% KH share: 38.46% Koç Financial Services KH share: 4

  61. Slide 61: Disclaimer

    Disclaimer This presentation does contain forward-looking statements that reflect the Company management’s current views with respect to certain future events based on the base-case assumptions. Although it is believed that the expectations reflected in these statements are reasonable, they may be a

  62. Slide 62: For Further Questions, Please Contact

    For Further Questions, Please Contact : investorrelations@koc.com.tr Funda Güngör Akpınar, Coordinator Winner 2010 Best IR Investor Relations Website Award fundag@koc.com.tr +90 216 531 0535 Neslihan Aycıl, Associate Investor Relations neslihana@koc.com.tr +90 216 531 0516 Winner Winner World Financ

  63. Slide 63: Main Group Companies' Contacts

    Main Group Companies’ Contacts Arçelik Otokar Tüpraş Fatih Ebiçlioğlu, CFO Hüseyin Odabaş, AGM Finance Tuncay Önbilgin, Head of IR fatih.ebiclioglu@arcelik.com hodabas@otokar.com.tr tuncay.onbilgin@tupras.com.tr +90 212 314 3434 +90 264 229 2244 Ext. 6000 +90 262 316 3085 Fulya Kırayoğlu, IR Special

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