Koc Holding A.s. · BIST:KCHOL
Koc Holding A.s — Investor Presentation (October 2006)
68 slides from Koc Holding A.s's investor presentation, October 2006
Slide 1: Koç Holding Investor Presentation
Koç Holding Investor Presentation October 2006
Slide 2: Contents
Contents Company Overview and Highlights P2 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 3: Contents
Contents Company Overview and Highlights P3 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 4: The Only Turkish Company in Fortune 500
The Only Turkish Company in Fortune 500 Deep rooted and Dynamic P4 US$bn 2005 2004 YoY ∆ Total Revenues* Combined Revenues / GDP* 8% 31.2 28.3 10% (Combined) Koç Exports / Turkey’s Exports* 12% Koç Group Share in ISE Market Cap.** 18% Total Revenues* 18.1 16.6 9% (Consolidated) *As of 1H06 Internati
Slide 5: Contents
Contents Company Overview and Highlights P5 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 6: Strategic Planning and Aggressive Targeting
Strategic Planning and Aggressive Targeting Optimized Resource Allocation P6 Vision To become one of the leading companies in Europe through rapid and profitable growth Strategic Targets Register 14% p.a. real growth in total revenues on average Generate positive economic profit Portfolio Theme To b
Slide 7: Exposure in the Main Driving Sectors of the Turkish Economy
Exposure in the Main Driving Sectors of the Turkish Economy Initiatives to Create New Value Chains P7 Automotive Consumer Durables Retailing Finance Energy Total Revenues*:US$4.2bn Total Revenues*:US$4.7bn Total Revenues*:US$2.7bn Total Revenues*:US$1.8bn Total Revenues*:US$3.5bn** • 47% of total mo
Slide 8: Contents
Contents Company Overview and Highlights P8 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 9: Sustainable Revenue Streams with Potential & Dedication for Growth
Sustainable Revenue Streams with Potential & Dedication for Growth Koç Holding outperformed the target growth rates continuously for the last three years Total Revenues* – Combined (US$bn) Total Revenues* – Consolidated (US$bn) P9 CAGR : 47% CAGR : 49% 2002-2006 2002-2006 50.1 33.5 85% 61% 10% 31.2
Slide 10: Becoming even Stronger with the Latest Acquisitions
Becoming even Stronger with the Latest Acquisitions Moving from 358th place into the first 200 in Fortune 500 by year-end 2006 P10 2004 2006F Total Assets $14.2 bn $37.4 bn Combined Revenues $28.3 bn $50.1 bn Consolidated Revenues $16.6 bn $33.5 bn Retail Retail Other Energy 4% 2% 6% 10% Auto Combin
Slide 11: Robust & Credible Domestic Growth Strategy
Robust & Credible Domestic Growth Strategy Investments in Sectors with Low Penetration Rates and Long-term Growth Potential P11 Automotive Consumer Durables Food & Retail Finance Energy 476 90 65 224 3.7 68 35 86 1.2 78 EU Turkey EU Turkey EU Turkey EU Turkey EU Turkey Car Ownership Penetration, % O
Slide 12: Contents
Contents Company Overview and Highlights P12 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 13: Strong Franchise
Strong Franchise A Fine Reputation with Customers and Regulators P13 Well Established & Prominent Brands - Unparalleled Distribution Network • 14,000 Independent Dealers & Agencies • 773 Migros + Tansaş Retail Outlets • 638 Bank Branches Automotive Consumer Durables* 171 4,600 4,200 84 76 52 1,250 2
Slide 14: Leading Market Positions
Leading Market Positions Differentiate Itself by Continued Innovation, Best Product and Service Quality P14 Product Position Product Position • Passenger cars #1 • Banking* #3 • Commercial vehicles #1 • Credit cards #1 • Farm tractors #2 • Loans #3 • Automotive retailing #1 • Deposits #4 • Brokerage
Slide 15: Contents
Contents Company Overview and Highlights P15 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 16: Increasing Global Reach
Increasing Global Reach Expansion into Markets with High Growth Potential Strategy P16 • To position Koç Group companies among the largest and most rapidly growing companies in Europe • To generate at least 50% of revenues outside Turkey and lessen dependence on domestic economy Russia China, Hong K
Slide 17: Increasing International Sales
Increasing International Sales Mitigating Risk while Pursuing Growth Opportunities P17 International Sales* (US$bn) Exports (US$bn) CAGR : 41% CAGR : 44% 9.5 2002-2006 12.3 2002-2006 53% 45% 8.5 6.2 13% 5.7 7.5 9% 5.0 50% 3.7 54% 3.1 61% 2.2 68% 2002 2003 2004 2005 2006F 2002 2003 2004 2005 2006F *I
Slide 18: Strong International Partners
Strong International Partners Alliances for Growth and Sustainability P18 International partnerships for growth that involve new capabilities, new channels and new geographies while mitigating risk Automotive Finance Consumer Durables Retailing Energy
Slide 19: Contents
Contents Company Overview and Highlights P19 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 20: Continuous Recalibration
Continuous Recalibration P20 2005: Acquisitions for Growth • Migros + Tansaş Undisputable leadership in FMCG retailing • KFS + YKB Best franchise in financial services • Tüpraş Sole refinery in Turkey 2006: Portfolio Optimization • Divesting non-core assets • Maximizing synergies from the new acquis
Slide 21: Contents
Contents Company Overview and Highlights P21 Strategy and Core Business Lines Key Financial Indicators Strong Franchise and Market Position International Expansion Acquisitions Group Synergies and Corporate Governance
Slide 22: Maximizing Group Synergies
Maximizing Group Synergies Focus on Cost Efficiencies and Cross-Business Opportunities P22 • Centralized planning, coordination and controlling of : Strategic Planning Audit and Control Finance Corporate Communications and IR Human Resources • Common traits across group companies • Largest customer
Slide 23: Main Goal: Maximizing Shareholder Value
Main Goal: Maximizing Shareholder Value One of the Few Companies in Turkey which Links Executive Compensation to Share Performance P23 Shareholder Value L-T Strategic Targets Economic Profit Market Cap to Maximize Future Shareholder Value Customer Technology Satisfaction Development Aggressive Susta
Slide 24: Strong Commitment to Corporate Governance
Strong Commitment to Corporate Governance One of the Few Companies in Turkey with Independent Members in BoD P24 • Voluntary commitment and proactive approach to principles of good corporate governance • Executive compensation based on economic profit and share performance • One of the first domesti
Slide 25: Koç Holding Automotive Group
Koç Holding Automotive Group
Slide 26: Overview of Turkish Automotive Industry
Overview of Turkish Automotive Industry Turkish automotive industry offers a good investment opportunity in terms of rising exports and untapped potential in domestic demand P26 Strengths Opportunities • Strategic geographic position • Domestic demand is expected to rise: • Unsaturated market, low p
Slide 27: Koç Leadership in the Automotive Industry
Koç Leadership in the Automotive Industry P27 Koç Group is the undisputed leader in Turkey’s Koç Group maintained its production, automotive production, exports & sales exports & sales growth in 2005 Turkey’s Motor Vehicle Production* Koç Production* 000 units 429 Others 53% 53% 383 12% 47% 47% Koç
Slide 28: Koç Leadership in the Automotive Industry
Koç Leadership in the Automotive Industry Well Established & Respected Brands P28 Koç Group’s competitive strengths in the automotive segment • Well-established history & sound experience in the sector since 1926 • Long-standing joint ventures with leading global automakers Unparalleled Distribution
Slide 29: Koç Leadership in the Automotive Industry
Koç Leadership in the Automotive Industry Automotive Segment’s Share in Koç Group’s Total International Sales in 2005 is 40% P29 • Exports provide 9 A steady revenue stream 9 Strengthened relations with global partners 9 Improved quality, level with European markets 9 Enhanced product development an
Slide 30: Future Outlook
Future Outlook P30 Vision • Become “the center of excellence” in production and grow as a “Regional Production Base” Strategies • Become the global production base of several models • Assume full product development responsibility for these models • Maximize efficiency by reducing costs and increasi
Slide 31: Koç Holding Durable Goods and Construction Group
Koç Holding Durable Goods and Construction Group
Slide 32: Domestic Market
Domestic Market P32 Penetration Rates (%) 97 89 56 34 10 Washing Refrigerator Dishwasher Oven A/C Machine • Population 70 Million Turkish urbanization and young population present • Households 15 Million significant growth opportunities
Slide 33: Durable Goods & Construction Group in Turkey
Durable Goods & Construction Group in Turkey P33 1st in White Goods 2005 Market Share : 58% 2nd in TV 2005 Market Share : 33% 1st in Panel Radiators 2005 Market Share : 32%
Slide 34: Position in Europe
Position in Europe P34 Arçelik 3rd in White Goods Sales Beko Elektronik 2nd in TV Production Demirdöküm Largest Panel Radiator Facilities
Slide 35: Competitive Advantages
Competitive Advantages P35 • Unique Distribution Network • Quality • Innovation • Valuable Brands • Technological Competence
Slide 36: Financial Review & Long Term Projections
Financial Review & Long Term Projections P36 € Million 2005 Net Sales 4,700 Gross Profit 1,100 Operating Profit 254 Capital Expenditures 177 Net Sales € Billion 6.0 3.4 3.1 2.3 1.3 1.5 1.5 0.5 0.7 2005 2006 2010 Arçelik Group Beko Elektronics Group Construction Group
Slide 37: Koç Holding Food & Retailing Group
Koç Holding Food & Retailing Group
Slide 38: Turkish Retailing Market
Turkish Retailing Market P38 Turkey (USD mn) 2004 2005 2006 F 2007 F Retail Sales 106,339 129,242 137,666 149,608 Grocery Retail Sales 56,797 69,029 72,800 78,232 Trade Channels Trends in Retailing in Turkey Other Hyper & • The share of organized retailers Super markets in total trade increased from
Slide 39: Turkish Food Retailing Market
Turkish Food Retailing Market P39 No of Stores Sales Area Net Sales Actors Service Format (2006 1Q) (2006 1Q) (2005 USD Mn) Migros +Tansaş HPM, SPM, Discount 726 477,188 2,505 BIM Discount 1,218 298,500 1,248 Metro Cash&Carry, HPM, DIY 24 258,500 1,132 Carrefour+Gima HPM, SPM, Discount 450 310,000 1
Slide 40: Migros
Migros P40 Physical Growth in 2005 • The Company grew 46% in 2005, driven by Tansaş acquisition. • Overall net sales area increased by 192,714 sqm. in 2005. • Russia leads the international expansion by 59%.
Slide 41: Migros Sales & EBITDA
Migros Sales & EBITDA P41 Combined Sales ($ million) and EBITDA Margin $ Million % 4,500 8.2 8.0 9.0 7.6 4,000 8.0 4,174 3,500 3,814 7.0 3,478 3,000 6.0 2,500 5.0 2,000 4.0 1,500 3.0 1,000 2.0 500 1.0 0 0.0 2006 2007 2008 Sales EBITDA Margin
Slide 42: Koç Holding Energy Group
Koç Holding Energy Group
Slide 43: Tüpraş overview
P43 • 51% stake acquired through privatization, the rest is free float • The largest industrial company and the sole refinery in Turkey • Supplying 70% of the market from 4 refineries (İzmit, İzmir, Kırıkkale, Batman) • 7th largest in Europe with 27.6 million ton refining capacity • Revenues........
Slide 44: Overview of TÜPRAŞ Assets
Overview of TÜPRAŞ Assets P44 Black Sea AZERBAIJAN İstanbul Sea of From Baku Marmara İzmit (11.5 MT/y) Nelson:6.17 (7.78) Ankara Körfez Kırıkkale (5.0 MT/y) Nelson:5.32 (6.32) İzmir (10MT/y) Batman Nelson: 7.66 (1.1 MT/y) Nelson:1.83 Mersin TÜPRAŞ TÜPRAŞ Nelson Nelson Complexity Complexity 6.43 6.43
Slide 45: Synergies with OPET and AYGAZ
Synergies with OPET and AYGAZ OPET and AYGAZ Terminals and Storage Areas P45 Black Sea AZERBAIJAN 230 230 15,730 14100 453,000 36,960 36,538 43,700 1873 1,330 19,290 2460 3264 19,290 65,567 1295 1395 1,526 33,315 1295 2,575 249,104 • Extra terminal advantages: expanding the coverage in the hinterlan
Slide 46: Aygaz LPG
P46 • Active in LPG sourcing, storage, filling and distribution, LPG appliances production, and LPG marine transportation • Market leader in Turkey since its establishment in 1961 • 5th largest LPG distributor in Europe • Market Share in Turkey..: 30.5% • Revenue..........................: $1.7 bill
Slide 47: Opet
P47 • A 50%-50% JV between Koç Group and Öztürk family • 4th largest fuel retail company in Turkey • Also active in lubricants production and marketing, marine bunkering, and international fuel trade • White Products* Market Share..: 12.7% • Black Products* Market Share..: 15.3% • Revenues..........
Slide 48: Turkey's fastest growing fuel distribution company
P48 Turkey’s fastest growing fuel distribution company Sales White Products Market Share $ billion % 3.6 3.4 13.9 3.1 12.7 11.5 9.5 9.7 2.3 1.6 2002 2003 2004 2005 2006F 2002 2003 2004 2005 2006F
Slide 49: Koç Holding Banking and Insurance Group
Koç Holding Banking and Insurance Group
Slide 50: Banking Sector: Low Penetration Rates and High Growth Potential
Banking Sector: Low Penetration Rates and High Growth Potential P50 Loan Penetration (2003) Deposit Penetration (2003) 250% Netherlands 250% UK UK 200% 200% Ireland Austria Deposits/GDP Switzerland Loans/GDP Belgium 150% Portugal 150% Belgium Germany Switzerland Austria Spain Germany Portugal Irelan
Slide 51: A Strong Combination: Koçbank and YKB
A Strong Combination: Koçbank and YKB P51 Strengths Strengths Flight to Quality Franchise Value Corporate Banking Market Leader in Credit Cards Asset Management Retail Banking Private Banking SME Banking Strong Risk Management The combination of YKB’s strong franchise with Koç Group’s reputation and
Slide 52: KFS: Playing for Leadership in High Margin Products
KFS: Playing for Leadership in High Margin Products and Lucrative Business Lines Rank Rank KFS YKB KFS+YKB Mkt. Sh. Key Competitors - % P52 March 2006 # of Branches 13 7 5 9.3 Ziraat 18, İş 14 Deposits (1) 8 7 4 9.6 Ziraat 21, İş 15 Retail Consumer Loans (2) 12 9 6 7.0 Ak 15, Ziraat 14, İş 14 (3) Cr
Slide 53: KFS 2008 Key Strategic Goals
KFS 2008 Key Strategic Goals: Ensuring Growth, Efficiency and Profitability P53 KEY STRATEGIC GUIDELINES • Focus on 5 main business targets: 50% 50% • Consolidate leadership in cards and become leader in consumer finance • Become leader in Asset Gathering and 1st choice for HNWI • Achieve higher pro
Slide 54: Appendix Financial Review 1H 2006 Results
Appendix Financial Review_1H 2006 Results
Slide 55: Consolidated Interim Statements of Income
Consolidated Interim Statements of Income 30-06-06 30-06-06 30-06-06 30-06-05 % P55 EUR mn USD mn TRY mn TRY mn Change (*) (*) (*) (*) Net Revenues 11,080 13,890 22,265 11,127 100 Net operating profit Gross Profit 1,710 2,144 3,436 1,889 82 increased by 156% YoY to TRY 1.35bn Net Operating Profit 67
Slide 56: Improvement in Margins
Improvement in Margins P56 30-06-06 30-06-06 30-06-06 30-06-05 % Change EUR mn (*) USD mn (*) TRY mn (*) TRY mn (*) Net Operating Profit 674 845 1,354 529 156 Depreciation & Amortization 231 290 464 362 28 EBITDA 905 1,135 1,819 892 104 Operating Margin, % EBITDA Margin, % 6.08 8.01 8.17 4.76 1H05 1
Slide 57: Continuous Growth in Revenues
Continuous Growth in Revenues P57 Total Revenues Segment Contribution to Total Revenues TRY mn TRY mn 22,265 373% 10,327 100% 11,127 14% 15% 53% 148% 9% 2,677 3,064 2,940 3,377 2,498 2,302 2,183 1,631 927 769 697 1H05 1H06 1H05 1H06 1H05 1H06 1H05 1H06 1H05 1H06 1H05 1H06 1H05 1H06 Auto Durables Ret
Slide 58: Increasing Share of FX-linked Revenues
Increasing Share of FX-linked Revenues P58 International Sales, Consolidated Total Revenues – Consolidated USD mn % 3,692 1H05 1H06 Other Other 2,889 7% Auto Energy 3% 24% 28% Energy 46% Auto 20% 14% Finance Durables 8% 15% Durables Retail 26% Finance Retail 1H05 1H06 15% 10% 11% Total: TRY 11,127 m
Slide 59: Strong Net Operating Profit in All Business Lines
Strong Net Operating Profit in All Business Lines P59 30 June 2006 Consumer Food and Consolidated Automotive Finance Energy Other TRY mn Durables Retail Total Net Operating Profit 245 264 127 297 429 (9) 1,354 Net Operating Profit Segment Contribution to Net Operating Profit TRY mn TRY mn Other Othe
Slide 60: Automotive Group
Automotive Group P60 Automotive Total revenues of the automotive group were up by 14%, while Net Operating Profit its net operating profit registered 64% increase compared to the TRY mn same period last year. 245 Ford Otosan’s both domestic and export volumes increased in 64% 1H06. In the domestic m
Slide 61: Consumer Durables Group
Consumer Durables Group P61 Consumer Durables Total revenues of the consumer durables group were up by Net Operating Profit TRY mn 15%, while its net operating profit registered 71% increase 264 compared to the same period last year. 71% Integration of Grundig to the Group and Arçelik’s domestic and
Slide 62: Food and Retailing Group
Food and Retailing Group P62 Retail Total revenues of the retail sector were up by 53%, while its net Net Operating Profit operating profit registered a significant 308% increase TRY mn compared to the same period last year. 127 1H06 results show the full impact of the Migros-Tansaş 308% merger. Con
Slide 63: Finance Group
Finance Group P63 Finance Total revenues of the finance group were up by 148%, while its Net Operating Profit net operating profit registered 89% increase compared to the TRY mn same period last year. 297 89% The merger of Kocbank and YKB is expected to be finalized in October 2006. In 1H06, total l
Slide 64: Energy Group
Energy Group P64 Energy Energy was the fastest growing segment among the core Net Operating Profit sectors, with total revenues growing by 373%, while net TRY mn operating profit registered a 532% increase compared to 429 the same period last year. 532% Tüpraş’ net sales revenue went up by 42% to TR
Slide 65: Details of the Tüpraş Financing
Details of the Tüpraş Financing Tüpraş financing was secured in 1Q06 with the following terms: P65 • USD1 billion with 3-year maturity at Libor+1.0 from the consortium composed of JP Morgan Europe Limited, Calyon Corporate and Investment Bank, JP Morgan Plc., WestLB AG London Branch and JP Morgan Ch
Slide 66: FX Gain / Loss
FX Gain / Loss P66 FX Fluctuations During the Recent Market Turmoil USD / TRY 1.8 19.4% 9.2% 1.7 1.6 1.5 1.4 1.3 1.2 Dec-05 Mar-06 Jun-06 Oct-06 Tüpraş financing was secured through long-term loans and requires no strong cash outflow in 2006 and 2007 (net cash outflow is USD 75mn in 2006 and USD 1
Slide 67: For Further Questions, Please Contact
For Further Questions, Please Contact: Koç Holding P67 Funda Güngör, Coordinator Aslı Selçuk Iskır, Manager Investor Relations Investor Relations Strategic Planning Group Strategic Planning Group fundag@koc.com.tr aslii@koc.com.tr +90 216 531 0535 +90 216 531 0537 Major Group Companies: Arçelik: Bek
Slide 68: Disclaimer
Disclaimer P68 This presentation contains forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by a variety of variables a