Koc Holding A.s. · BIST:KCHOL

Koc Holding A.s — Investor Presentation (August 2019)

43 slides from Koc Holding A.s's investor presentation, August 2019

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

    Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY Investor Presentation – August 2019

  2. Slide 2: Koç Holding Overview

    Koç Holding Overview TURKEY’S LEADING INVESTMENT HOLDING COMPANY  Turkey’s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization Combined Revenues / GDP 8% PROFITABLE AND HIGH GROWTH MODEL FOCUSED ON SUSTAINABILITY  The only Turkish co

  3. Slide 3: Strong, Stable and Supportive Shareholding Structure

    Strong, Stable and Supportive Shareholding Structure WORLD CLASS CORPORATE GOVERNANCE PRACTICES  Koç Family has its own internal governance and investment vehicle which provides stability in shareholder structure (Temel Ticaret) Temel Koç Family2 Ticaret1 20.64%  Sustainability is key as the major

  4. Slide 4: Positioned to Benefit from Turkey's Growth Potential

    Positioned to Benefit from Turkey’s Growth Potential Scale and Strategy Ensuring Strong Positioning Largest Industrial Group Largest Exporters in Largest R&D Investments in Turkey Turkey in Turkey 4 of the Top 10 4 of the Top 10 Largest Intellectual Significant R&D Industrial Enterprises1 Exporters2

  5. Slide 5: Leading Positions in Strategic and Lucrative Business Lines

    Leading Positions in Strategic and Lucrative Business Lines Energy Automotive Consumer Durables Finance Other Sectors Automotive Main Companies Main Companies Main Companies Main Companies Main Companies Tüpraş1 / Aygaz1 Ford Otosan1 / Tofaş1 / Arçelik1 Yapı Kredi Bankası1 / Food: Tat Gıda1 / Retail

  6. Slide 6: Portfolio Structure (I/III)

    Portfolio Structure (I/III) Balanced Between Defensive & Growth Assets Defensive Assets Growth Assets 55% 45% Aygaz Arçelik Koçfinans Ford Otosan Yapı Kredi Otokoç Opet Divan Otokar Tüpraş Düzey Marinas Tofaş Entek Setur TürkTraktör KoçSistem Tat Gıda Higher dividends Higher growth Dividend Payout ≥

  7. Slide 7: Portfolio Structure (II/III)

    Portfolio Structure (II/III) Sectorally Diversified -- Resilient vs Cyclicality Share in: Dividends Net Income NAV Key Risks & Sensitivities Key Strengths Automotive • Domestic growth potential Turkey and European demand (PC & CV Mfg) 28% 21% 24% (main drivers: GDP & int. rates) • Secured export con

  8. Slide 8: Portfolio Structure (III/III)

    Portfolio Structure (III/III) Geographically Diversified International Sales / Total (Combined) Regional Breakdown of International Sales (Combined-2018) YE18: $20 bn combined international revenues ~55% Including Tüpraş, c.55% of combined sales (US$ 36bn) not sensitive to domestic economy 30% 31% 2

  9. Slide 9: Focus on Sustainability and Resilience

    Focus on Sustainability and Resilience Consolidated Net Income (TL mn) Dividend Income (TL mn) Dividend Income Breakdown (TL mn) 2016 2017 2018 2019 2,560 2,692 Dividend Income 1,228 1,291 2,692 2,3371 -14% 2 2,205 ~2x 2,337 Tüpraş (via EYAŞ) 335 337 1,338 1,489 2Q 1,418 Ford Otosan 255 304 463 328

  10. Slide 10: Disciplined Approach

    Disciplined Approach Strong US$ 2.7 bn gross cash → 79% in US$, 21% in TL US$ 2.3 bn total debt Cash Position (Solo) US$ +400 mn net cash (US$ +617 mn including YKB AT1) 3 Eurobonds totaling US$ 2.25 bn Stable - Mar’19: US$ 750 mn, 6 yrs, 6.5% coupon (to prefinance US$750mn Eurobond due in Apr’20) F

  11. Slide 11: Group's Overall Financial Performance

    Group’s Overall Financial Performance Consumer TL mn, 1H19 Energy Automotive Finance Other Total Durables Combined Revenues 1 75,465 34,501 17,603 24,644 7,892 160,105 y/y 22% 11% 28% 38% 34% 23% Combined Operating Profit2 2,762 2,768 1,123 2,889 -28 9,513 y/y -25% 17% 29% -9% 34% -6% Combined Profi

  12. Slide 12: Summary Combined Financials by Segment

    Summary Combined Financials by Segment Energy Segment Automotive Segment Consumer Durables Segment Finance Segment Share in Share in Share in Share in Share in Share in Share in Share in Combined Consolidated Combined Consolidated Combined Consolidated Combined Consolidated Operating Profit1 Net Inc

  13. Slide 13: Investments (I/III)

    Investments (I/III) Disciplined Strategy and Clear Evaluation Process Strategy  Standardized evaluation process for investments that require Holding Evaluation  All investments treated equally based on standard metrics Turkey Global and methods, facilitating informed decisions Consolidate Main Inv

  14. Slide 14: Investments (II/III)

    Investments (II/III) Focus on Scale and Returns Investments (Combined, TL bn) Growth Opportunities ~TL 37 bn Existing Businesses over the last 5 years with major capex cycle now finalised for main group companies Domestic & int’l growth opportunities across Energy different segments such as renewabl

  15. Slide 15: Maximizing Shareholder Value

    Maximizing Shareholder Value Structure Ensuring Robust Performance Performance Based Executive Compensation System  Comprehensive executive compensation Shareholder Value system, one of few in Turkey also linked to share performance  Proactive investor relations management Relative L-T Strategic T

  16. Slide 16: Ratings

    Ratings S&P Rating Above the Sovereign Standard & Poors (S&P) Moody’s BB- B1 One notch above Turkey sovereign Flat to Turkey sovereign Stable Stable Stable Stable Positive Stable Negative Stable Negative Negative Stable Stable Positive Positive Positive Positive Stable Stable Negative Stable Negativ

  17. Slide 17: 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, culture

  18. Slide 18: Initiatives for Social Advancement

    Initiatives 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 Matter for Since 2006: the Nation  >1 mn tree saplings planted in 7 ‘For My Country’ Sin

  19. Slide 19: Sectoral Developments

    SECTORAL DEVELOPMENTS www.koc.com.tr 19

  20. Slide 20: Energy Sector

    Energy Sector Brent Crude Oil & LPG Prices Crack Margins Diesel Jet Fuel 17 16 15 14 14 13 14 15 539 12 12 12 13 11 64 912 9 8 12 13 7 10 8 11 10 55 64 11 11 9 8 58 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 370 2016 2017 2018 2019 321 378 2016 2017 2018 2019 339 32 Gasoline High Sulphur Fuel Oil Sep-16 Sep-17 Sep-18

  21. Slide 21: Koç Group in the Energy Sector

    Koç Group in the Energy Sector Diversified and Synergetic Positioning Koç Positioning Coverage of Domestic Share of Turkey’s Fuel Demand Storage Capacity Largest refinery Imports Others & 43% 40% largest LPG distribution ~60% ~57% company in Turkey Koç Koç Market Position / Share Turkey’s largest re

  22. Slide 22: Tüpraş

    Tüpraş Turkey’s Largest Refinery (TL thousands) 1H18 1H19 y/y  7th largest refinery in Europe and 26th largest globally Sales Volume (mn, tons) 13.6 7.2 -47%  Wide range of crude oil processing capacity (30 MT via 4 well-positioned Domestic 11.9 5.2 -57% refineries) Exports 1.7 2.1 21%  One of th

  23. Slide 23: Aygaz

    Aygaz Market Leader in LPG for more than 55 years (TL thousands) 1H18 1H19 y/y  Generic brand in Turkey for LPG with 27% market share in LPG market Sales Volume (k, tons) 1,003 1,013 1% ‐ 22% market share in autogas Auto 357 336 -6% ‐ 42% market share in cylinder LPG Cylinder 157 146 -7%  Fully in

  24. Slide 24: Other Energy Companies

    Other Energy Companies Opet Station Numbers White Product Market Share  Second biggest distribution company by volume Opet Position #2  Unrivalled leader in customer satisfaction in its sector for 10 years 18.6% 1,589 1,635 17.3%  1.1 million m3 storage capacity via 5 terminals 446 466  21 stati

  25. Slide 25: Automotive Sector

    Automotive Sector Competitive Advantages Domestic Market Dynamics Sales (‘000) Production (‘000)  5th largest auto manufacturing hub in Europe; 14th largest globally with a production capacity of c. 2 million units 1,696 1,486 1,550  Underpenetrated domestic market with ongoing growth 1,359 1,019

  26. Slide 26: Koç Group in the Automotive Sector

    Koç Group in the Automotive Sector Undisputed Leader in Turkey Koç Positioning  Widest sales and after-sales network Production  Highly skilled and experienced workforce Koç  Highest number of R&D employees in Turkish automotive Leading positions 44% and ongoing  Long-standing JV partnerships St

  27. Slide 27: Ford Otosan

    Ford Otosan Turkey’s Leader in Commercial Vehicles with Strong R&D Power  Europe’s largest commercial vehicle manufacturer; ~85% share in Ford (TL thousands) 1H18 1H19 y/y Europe’s Transit family sales Total Unit Sales (000 k) 1 206.4 188.5 -9%  Ford’s CV focus is positive for Ford Otosan: Ford in

  28. Slide 28: Tofaş

    Tofaş Defensive Portfolio with Take-or-Pay Contracts (TL thousands) 1H18 1H19 y/y  Only company which produces both passenger & commercial vehicles Total Unit Sales (000 k) 181 135 -25%  Intellectual and industrial property rights for MiniCargo, New Doblo as well as its PC models (Egea/Tipo) Domes

  29. Slide 29: TürkTraktör

    TürkTraktör Largest Tractor Manufacturer in Turkey (TL thousands) 1H18 1H19 y/y  Market leader for the last 12 consecutive years. Covers ~70% of total Tractor Unit Sales (000 k) 19.4 11.9 -39% Turkish tractor production, 90% of total exports Domestic 13.1 4.4 -67%  Largest tractor producer with 50

  30. Slide 30: Other Automotive Companies

    Other Automotive Companies Otokar - Largest private sector defense company in Turkey  Turkish Armed Forces’ leading supplier and exporter of land platforms (TL thousands) 1H18 1H19 y/y  Products with Otokar IP rights used on 5 continents and >60 countries Revenues 488 1,284 163%  Market leader in

  31. Slide 31: Consumer Durables Sector

    Consumer Durables Sector Competitive Advantages Domestic Market Dynamics Sales (mn) Production (mn)  Efficient and cost-effective production hub for multiple markets 28.4 28.5 26.2 8.5 24.6  Solid domestic market growth potential driven by favourable 7.5 21.9 22.6 7.1 7.1 demographics, lower penet

  32. Slide 32: Arçelik (I/II)

    Arçelik (I/II) Truly Global with Sales to Over 100 Countries Worldwide (TL thousands) 1H18 1H19 y/y Revenues 11,794 15,330 30%  Domestic leader (50% m. share in white goods, 51% in Acs, c. 25% in TVs) Domestic 4,268 5,129 20%  Leading positions in key international markets. Beko as the flagship br

  33. Slide 33: Arçelik (II/II)

    Arçelik (II/II) Strong Growth Trends Utilising Organic and Inorganic Opportunities Initiatives / Developments Growth Strategy Overview  Mar’19: Acquisition of Singer in Bangladesh for $ 75mn (2nd largest Organic WG player in Bangladesh with a wide distribution network; #2 in refrigerator, #1 in was

  34. Slide 34: Finance Sector

    Finance Sector Low Penetration Levels Providing an Opportunity for Rapid Growth Loans + Deposits / GDP Branches per million inhabitants Mortgages / GDP 353 41% 195% 108% 21% 131 4% EU-28 Turkey EU-28 Turkey EU-28 Poland Turkey Source: European Central Bank, BRSA, CBRT Figures as of YE2018, GDP figur

  35. Slide 35: Yapı Kredi Bank

    Yapı Kredi Bank Sustained Profitability Sustained Profitability Strong Operational Performance Net Income (NI) & Cost/Income CoR ROATE Pre-Provision Profit (PPP) (TL mn) +25% 6,084 14.2% 12.5% 2.56% PPP 4,864 38.2% 2.33% 36.6% -4% NI 2,471 2,361 1H18 1H19 2018 1H19 1H18 1H19 2018 1H19 Controlled Vol

  36. Slide 36: Other Main Companies

    Other Main Companies Sector • Production of tomato products and dairy products. #1 in tomato products, tomato paste and pasteurized milk Tat Food • KH distribution company Düzey performs logistics for Tat Gıda products as well as some external leading brands • Strong focus on end-to-end efficiency a

  37. Slide 37: Annex

    Annex www.koc.com.tr 37

  38. Slide 38: 2019 Expectations of Listed Koç Group Companies

    2019 Expectations of Listed Koç Group Companies TÜPRAŞ 2018A 2019E ARÇELİK 2018A 2019E Sector Med Complex ($/bbl) 4.6 3.75-4.25 Sector Tüpraş Total WG Sales -17% -15% Net Margin ($/bbl) 9.3 6.0-7.0 Arçelik CUR 96% 95-100% Revenue +29% +20-25% Production (mn tons) 25.7 28.0 EBITDA Margin 10.4% 10.5%

  39. Slide 39: Unlisted Companies

    Unlisted Companies 1H19 Koç Hol di ng Revenues Opera ting Profi t1 EBITDA Book Va l ue (SHE) TL mn Di rect Sha re 1H18 1H19 1H18 1H19 1H18 1H19 1H18 1H19 Arçel i k LG Kl i ma 5.00% 670 568 50 54 57 64 296 318 Bi l kom 69.94% 1,271 1,620 37 77 38 78 86 158 Düzey 31.15% 869 908 -5 9 -3 17 18 0 Entek 4

  40. Slide 40: Shareholding Structures

    Shareholding Structures Koç Holding Koç Family: 64.3%1 Free Float: 26.5% Vehbi Koç Foundation: 7.3% Koç Pension Fund: 2% Consumer Energy Automotive Finance Other Durables Tüpraş Ford Otosan Arçelik Yapı Kredi Bank Tat Gıda SPV: 51% KH: 38% KH: 41% KFS: 81.9% KH: 44% Free float: 49% Ford: 41% Other K

  41. Slide 41: 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

  42. Slide 42: Koç Holding Contacts

    Koç Holding Contacts investorrelations@koc.com.tr www.koc.com.tr IR Application Nursel Ilgen, CFA, Coordinator Investor Relations nurseli@koc.com.tr +90 216 531 0414 Gizem Poyraz, Manager Investor Relations gizemb@koc.com.tr +90 216 531 0533 Neslihan Aycıl, Manager Investor Relations neslihana@koc.c

  43. Slide 43: Main Group Companies' Contacts

    Main Group Companies’ Contacts Arçelik Otokar Tüpraş Hande Sarıdal, Finance Director Doğan Seçkinler, Finance Manager Levent Bayar, IR Manager hande.saridal@arcelik.com dseckinler@otokar.com.tr Levent.Bayar@tupras.com.tr +90 212 314 3185 +90 264 229 2244 Ext. 6300 +90 262 316 3270 Orkun İnanbil, IR

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