Kordsa Teknik Tekstil A.s. · BIST:KORDS

Kordsa Teknik Tekstil A.s — Investor Presentation (August 2020)

32 slides from Kordsa Teknik Tekstil A.s's investor presentation, August 2020

  1. Slide 1: Kordsa Investor Presentation

    Kordsa Investor Presentation Aug, 2020

  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 4 continents ~4,500 2 R&D 851 patent applications 12 facilities employees Centers 197 patents WE REINFORCE LIFE External 3

  4. Slide 4: Global Footprint

    Global Footprint Regional footprint versus key competitors Kordsa • #1 NY TCF producer • #1 NY TCF • The only PET yarn, TCF and • #2 NY TCF producer market producer in the US SEC producer in LATAM • #1 PET TCF producer • #2 PET TCF producer position Confidential 4

  5. Slide 5: 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 -

  6. Slide 6: Strategy House

    Strategy House Fon ur Vision Inspired to Reinforce Life Pillar Initiatives _ ——— BUSINESS EXCELLENCE GROWTH INNOVATION © Operational Excellence @ Tire Industry © Digital Transformation © Composite Industry © Effective Finance & © New Industries Risk Management ¢ Composite Technology © Effe @ Commerc

  7. Slide 7: 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

  8. Slide 8: 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 Technology leadership at the cutting edge of reinforcement 4 Growth in composite reinforcement market 5 Growth oppo

  9. Slide 9: Must Win Battles

    Must Win Battles a. Operational Excellence : Safe and reliable operations, 1. competitive cost Business b. Digital Transformation: Data analytics and Artificial Excellence Intelligence, Robotics and Automations, Cybersecurity c. Effective Finance & Risk Management d. Commercial Excellence a. Growth

  10. Slide 10: 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

  11. Slide 11: Market Dynamics - Tire

    Market Dynamics - Tire Glo b al Au t o mo tive Market (Mu n its ) Gl o b al T i re M ark e t ( M u n i ts ) APAC ex. China China EMEA North America South America APAC APAC ex. ex. China China China China EMEA EMEA North NorthAmerica America South South America America 1,699 88.8 1,347 61.0 61.0 1,47

  12. Slide 12: RM Price Drivers - Tire

    RM Price Drivers - Tire NY R aw M at e ri al T re n d ( I n d e x e d ) 420 Benzene Propylene Butadiene Crude Oil • Butadiene: As global economies re- 370 opened, the first spike of demand 320 Forecast increased, butadiene prices although it is not set to hold within upcoming months. 270 • Propylene

  13. Slide 13: 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 Global Tire Player 1 Since 1986 ~ 5 years 

  14. Slide 14: 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% 23% 22% 22% 25% 5% 4% 5% 5% 4% 9% 8% 8% 8% 10% 65% 64% 65% 65% 61% 2017 2018 2019 1H 2019 1H 2020 External 14

  15. Slide 15: 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

  16. Slide 16: Overview of The Composites Value Chain

    Overview of The Composites Value Chain NA Composite Revenues* (M$) 158.4 2019 - Actual 2019 - Valuation Expectation 136.5 * 2019 Full year performance of entities regardless of joining time to Kordsa 2019 - Actual 2019 - Valuation Expectation External 16

  17. Slide 17: Market Dynamics – Composite

    Market Dynamics – Composite Market Size ($M) – Global Carbon Fiber Value (M$) Volume (M lbs) CAGR ‘18-’22 value : 3.0% CAGR ‘18-’22 volume : 6.4% 43 38 33 37 30 1,593 1,661 1,478 1,437 1,209 2018 2019E 2020F 2021F 2022F Market Size ($M) – Prepreg CAGR ‘18-’22 value : 2.4% Value (M$) Volume (M lbs) C

  18. Slide 18: Market Dynamics – Composite

    Market Dynamics – Composite Market Size ($M) – Global Aerospace Composite Commercial Aerospace (M$) Total Aerospace (M$) 1,234 1,194 1,130 1,158 1,106 1,110 1,007 929 896 833 846 868 832 758 2019 2020 2021 2022 2023 2024 2025 External 18

  19. Slide 19: 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

  20. Slide 20: 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

  21. Slide 21: Update on 1Q 2020 Results

    Update on 1Q 2020 Results Ke y F i n an ci als TL Financials (MTL) USD Financials (MUSD) 1H 2019 1H 2020 D 1H 2019 1H 2020 D Sales 2,586 2,007 -22.4% 461 311 -32.6% Gross Profit 526 362 -31.2% 94 56 -40.2% Gross Margin (%) 20.3% 18.0% -2 pts' 20.3% 18.0% -2 pts' OPEX (%) 8.1% 11.4% 3 pts' 8.1% 11.4%

  22. Slide 22: Segment Reporting

    Segment Reporting Ju n ’ 2 0 R e v e n u e S p l i t Asia EMEA TCF & Yarn %21 %33 %78.9 SA By Region By Product %10 NA Other Composite %36 %2.8 %18.3 Ju n ’ 1 9 R e v e n u e S p l i t TCF & Yarn Asia EMEA %83.7 %26 %30 By Product By Region SA Other %11 NA %3.6 %33 Composite %12.7 External 22

  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) 101 103 volatility: 100 97 99 100 97 (Revenue – raw material costs) tracked as a KPI by 95 93 96

  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 20.3% 300 18.0%  Price is a function of 526 • Value Proposal of Product including services 200 362 offered (TLm) • Product type (nylon vs polyester or fabric vs yarn) 100 • Raw Material Price Movement

  27. Slide 27: What we have for Sustainability

    What we have for Sustainability Confidential 2 7

  28. Slide 28: 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

  29. Slide 29: 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

  30. Slide 30: Appendix

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  31. Slide 31: 2016 – 2019 Financial Trend (MTL)

    2016 – 2019 Financial Trend (MTL) 2016 2017 2018 2019 747 621 293 339 Revenue 339 378 178 212 EBITDA 5,137 Net Income (parent) 3,947 2,485 1,908 Confidential 3 1

  32. Slide 32: 1H 2020 Highlights (FX Rates)

    1H 2020 Highlights (FX Rates) Jul'19 Aug'19 Sep'19 Oct'19 Nov'19 Dec'19 Jan'20 Feb'20 Mar'20 Apr'20 May'20 Jun'20 USDTRY (end rate) EURTRY (end rate) 7.58 7.58 7.71 7.22 6.86 6.65 6.58 6.44 6.38 6.32 6.21 6.18 6.98 6.81 6.84 6.52 6.23 5.81 5.94 5.97 5.57 5.66 5.74 5.74 Jul'19 Aug'19 Sep'19 Oct'19 No

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