Koc Holding A.s. · BIST:KCHOL

Koc Holding A.s — Investor Presentation (March 2017)

64 slides from Koc Holding A.s's investor presentation, March 2017

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

    Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY creating one common legacy for over 90 years Investor Presentation – March 2017

  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 , taxes paid and market capitalization on the Borsa İstanbul. PROFITABLE AND HIGH GROWTH MODEL, FOCUSIN

  3. Slide 3: Koç Group History

    Koç Group History Today Turkey's largest industrial and services group 2016 Passing away of Mustafa V. Koç 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 Financi

  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 15 Combined Revenues / GDP* 6.3% 11 9 Total Exports / Turkey’s Exports* 9.5% 6 6 6 6 5 5 5 4 3 3 Total Market Cap. on Borsa İstanbu

  5. Slide 5: Koç Holding Credit Ratings

    Koç Holding Credit Ratings One notch above Turkey’s Ratings Outlook government bond rating Moody’s Baa3 Negative Two notches above Turkey’s foreign S&P BBB- Negative currency rating Moody’s: Koç Holding's Baa3 issuer rating reflects the company's strong financial profile and balanced portfolio of in

  6. Slide 6: Best Positioned to Benefit once the Economy Normalizes

    Best Positioned to Benefit once the Economy Normalizes  Maturing democracy with a functioning market economy  Strategic location at the crossroads of continents, cultures and economies  Favorable demographics: 79.8 million people; Median age at 31.4 vs. 42.2 in EU  Unsaturated domestic market as

  7. Slide 7: Strong, Stable and Supportive Shareholder

    Strong, Stable and Supportive Shareholder  Koç Family has its own internal governance and Koç Family investment vehicle, which provides stability and Temel Members Ticaret* 24.86% consistency 43.65%  Koç Family mainly assumes Board level responsibility Koç Pension Fund 2.0%  Business run by highl

  8. Slide 8: Leadership Positions in Strategic & Lucrative Business Lines

    Leadership Positions in Strategic & Lucrative Business Lines as of year-end 2016 Energy Automotive Consumer Durables Finance Automotive Main Companies Main companies Main Companies Main Companies Tüpraş* / Opet / Aygaz* / Entek Ford Otosan* / Tofaş* / Arçelik* Yapı Kredi Bankası* TürkTraktör* / Otok

  9. Slide 9: Large Distribution Networks & Customer Database in Low Penetrated Sectors

    Large Distribution Networks & Customer Database in Low Penetrated Sectors with Strong Growth Potential  ~ 950 bank branches Largest distribution network  ~ 11,000 dealers and after-sales services  Large customer database of over 29 million (18.5 mn with data Largest customer sharing permission) i

  10. Slide 10: Energy: Defensive Business Profile with Significant Growth Prospects

    ENERGY Defensive Business Profile with Significant Growth Prospects Competitive Advantages Low Penetration Robust Diesel Demand in Turkey Final Energy Consumption mn tones CAGR: 9% per Head – TOE  Strong and sustainable demand for 22 20 energy products with 2012-16 CAGR of 2.2 18 diesel at 9% and j

  11. Slide 11: Automotive: Well-positioned Both Domestically and Globally

    AUTOMOTIVE Well-positioned Both Domestically and Globally Low Penetration Robust Domestic Demand Competitive Advantages New plato in annual auto sales Passenger car per ‘000 1,200 Auto market ('000) average  Low auto penetration levels in Turkey 613 1,000 1,000 857 offering high growth prospects; K

  12. Slide 12: White Goods: Truly Global with Strong Brand Awareness

    WHITE GOODS Truly Global with Strong Brand Awareness Competitive Advantages  Strength in Turkey with c. 50% market share  Nearly 60% of revenues from international sales  Rising market share in EU: Beko no 2 brand in EU (7th in 2008)  Competitive cost structure with low cost manufacturing center

  13. Slide 13: Banking Offers High Growth Prospects with a Sound Structure

    BANKING Offers High Growth Prospects with a Sound Structure Competitive Advantages of Yapı Kredi Bank Underpenetrated Market Loans + Deposits / GDP Mortgage loans / GDP  4th largest private bank in terms of asset size (%, 1H16) (%, 1H16) 220  Extensive branch network, no 2 among private banks 41 1

  14. Slide 14: Balanced Portfolio Between Defensive & Growth Assets

    Balanced Portfolio Between Defensive & Growth Assets Wealth Preservation Bank on Growth 48%  Yapı Kredi 52%  Tüpraş  Arçelik  Aygaz  Otokoç  Opet  Otokar  Tofaş  Entek  Ford Otosan  Koçtaş  TürkTraktör  Tat, Düzey  Demir Export  KoçFinansman  Setur  KoçSistem  Marinas  Divan Highe

  15. Slide 15: Investment Focus on Sectoral Diversification

    Investment Focus on Sectoral Diversification to be Resilient to Different Risk Profiles (mn) TL 1,228* TL 3,460 TL 37,451 Key Risks & Sensitivites Key Strengths 100 • Strong growth potential, esp. for large banks Domestic credit and interest 14 Finance • Yapı Kredi has completed its physical rate ri

  16. Slide 16: Geographical Diversification to be Resilient to Country-Specific Risks

    Geographical Diversification to be Resilient to Country-Specific Risks Combined International Sales (US$ billion) 2016 regional breakdown of international revenues & percentages 18.6 18.6 18.7 16.6 15.7 15.6 13.2 29.2% 29.2% 28.6% 9.6 27.6% 27.6% $1.0bn $11.3bn $1.8 bn 6% 72% 11% 25.2% 25.3% 22.1% $

  17. Slide 17: Proven Resilience & Improving Performance Despite Volatile Domestic Market

    Proven Resilience & Improving Performance Despite Volatile Domestic Market 11.1 10.0 8.5 8.5 Turkey GDP Growth 6.1 4.8 5.2 (%) 5.0 3.2 Source: TurkStat 0.0 2009 2010 2011 2012 2013 2014 2015 2016* -5.0 -4.7 4.0 3.6 3.5 Net Profit 2.7 3.0 2.7 attributable to 2.1 2.3 Equity Holders of 2.0 1.7 1.4 the

  18. Slide 18: 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 financial debt stands at 1.4 in new M&As times EBITDA*** YE16 Koç Holding Stand-Alone Consolidated Net Debt / Cash Excl. Finance Net Cash Position 9M16 FY16 ~US$ -3.2bn ~US$ -2.

  19. Slide 19: Major Portfolio Companies Have Strong Current Ratios

    Major Portfolio Companies Have Strong Current Ratios Group’s(*) Current Ratio 31.12.2016 Total Current Assets: TL56.9 bn Total Current Liabilities: TL40.2 bn Current Ratio : 1.4 13,537 10,986 7,366 4,676 4,958 1,360 1,450 1,583 Current Assets (TL mn) 12,530 6,606 4,308 4,544 271 1,007 1,066 787 Curr

  20. Slide 20: FX Position

    FX Position Koç Holding Stand-Alone FX Position 9M16 FY16 US$ +38mn US$ +31mn Koç Holding Consolidated Net FX Position After Natural Hedge Net FX Position * Net FX Position After Natural Hedge** Weighted by Effective Ownership 9M16 FY16 9M16 FY16 9M16 FY16 US$ -0.7bn US$ -1.1bn US$ +225mn US$ -109mn

  21. Slide 21: Adjusted Net FX Position / Equity Ratio Meets Policy Limits

    Adjusted Net FX Position / Equity Ratio Meets Policy Limits for Major Portfolio Companies 31 December 2016 Group’s Combined Group’s Adj. Net FX Position/Equity Adjusted Net Long FX Position 2.0% US$178 mn 31 December 2016 31 2 Net FX Position (US$ mn) (Reported) -27 -37 -42 -521 -604 -2,495 31 6 88

  22. Slide 22: M&As and Privatizations

    M&As and Privatizations 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  Through privatization  Turkey’s sole refining co

  23. Slide 23: Profitable Disposals

    Profitable Disposals 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 Demirdöküm) Retailing 1975 BC Partne

  24. Slide 24: Focus on Large Investments with High Returns

    Focus on Large Investments with High Returns Ongoing Investments to Increase Efficiency Opportunistic M&A Activities in Core Business Lines Combined Investments – TL bn  New manufacturing and R&D  Opportunistic projects for export markets buyouts in with our JV partners international 6.9 markets a

  25. Slide 25: Disciplined Investment Strategy

    Disciplined Investment Strategy Existing Consolidate leading Expand globally in businesses positions to benefit the sectors we are already most from the growth present or/and adjacent potential sectors New Exploit new growth business opportunities Only consider very (Privatizations, secondary M&A op

  26. Slide 26: Systematic Investment Evaluation

    Systematic Investment Evaluation 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  Treating all investments on the sam

  27. Slide 27: 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  Continuous track record in strong share performance  On

  28. Slide 28: 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

  29. Slide 29: Leading Positions in R&D and Technology Investments

    Leading Positions in R&D and Technology Investments Turkey’s largest intellectual property portfolio with more than: 7,500 trademarks 4,100 patent families 9,600 patents 800 industrial design registrations 5,400 Internet domain names Koç Holding is listed among 3 Koç Group companies ranked in the to

  30. Slide 30: 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, cultur

  31. Slide 31: 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 Matter Grassroots initiative organized annually since 2006, to for the Nation sp

  32. Slide 32: 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 With practices in water management, over 96 Koç Group companies million m³ of water was reused in production, invested TL 242 million co

  33. Slide 33: Key Takeaways: Value Propositions

    Key Takeaways : Value Propositions Largest investment Robust top-line growth holding company in Leading positions in enabling the benefits of Turkey sectors with strong economies of scale Best proxy to growth potential Well-proven track record in the Turkish Strong commitment portfolio restructuring

  34. Slide 34: Operational Excellence and Leadership in Core Business Segments

    Operational Excellence and Leadership in Core Business Segments Slide # 35 Energy Sector Strongest Player in the Turkish Energy Sector 40 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 44 Consumer Durables Sector Strong Global Network 46 Finance Sector Focus on Lucrative Busin

  35. Slide 35: Why Energy Sector?

    Why Energy Sector? High Growth Potential Strong Demand Dynamics Final Energy Consumption per Head – TOE 2.2  Among the fastest growing energy markets in the world parallel to its economic growth  Growing domestic oil demand coupled with 1.1 insufficient diesel capacity  Offers a wide range of opp

  36. Slide 36: Tüpraş: Turkey's Sole Refining Company

    TÜPRAŞ Turkey’s Sole Refining Company  4 refineries with 28.1 MT total capacity  Tüpraş Izmit Refinery is one of the most complex refineries in the 7th largest refinery in Mediterranean and globally with 14.5 (Avg Nelson Complexity: 9.5) Europe and  All units of RUP (Residuum Upgrade Project - US

  37. Slide 37: Aygaz: Turkey's Undisputable Market Leader in LPG

    AYGAZ Turkey’s Undisputable Market Leader in LPG for more than 50 years  Generic brand in Turkey for LPG with 29% market share Leading LPG distributor of in total LPG market Turkey  42% market share in cyclinder LPG (3nd largest LPG market in Europe,  25% market share in autogas 2nd largest autog

  38. Slide 38: 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 9 & station 2nd in white consecutive years products in Turkey satisfaction  Retail and wholes

  39. Slide 39: Automotive Sector: A Global Manufacturing and Distribution Hub

    Automotive Sector A Global Manufacturing and Distribution Hub Dynamic Market with High Growth Potential Strong Domestic Demand Passenger car per ‘000 A new plato of annual auto sales 1,200 Auto market ('000) average 613 1,000 1,000 857 800 336 632 600 1,011 1,008 183 400 793 911 818 893 807 634 576

  40. Slide 40: 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  Present in high growth segments both in Turkey & in EU Highest quality and safety  Largest distribution network of production among the  Highly skilled and exp

  41. Slide 41: Ford Otosan: Turkey's Leader in Commercial Vehicle Industry

    FORD OTOSAN Turkey’s Leader in Commercial Vehicle Industry  50-50% JV with Ford  Turkey’s largest vehicle manufacturer (415k) and commercial Highest Ford Largest R&D vehicle industry leader with 30% share market share in center in Turkish  €-denominated export revenues, including non-€ countries

  42. Slide 42: Tofaş: Defensive Portfolio via Take-or-pay Contracts

    TOFAŞ Defensive Portfolio via Take-or-pay Contracts  50-50% JV with Fiat Chrysler Automobiles  The only domestic manufacturer and exporter of both PCs & LCVs Among Fiat’s 3 main R&D  Extensive dealer and after-sales network centers globally  Owns the intellectual and industrial property rights f

  43. Slide 43: Other Automotive Companies

    Other Automotive Companies TÜRK TRAKTÖR – Turkey’s Largest Farm Tractor Manufacturer  50-50% JV with Case New Holland Undisputable market  Utilising “flexible manufacturing system” in tractors, providing a high degree leader of flexibility with c. 50% share  Strong dealership network and reputabl

  44. Slide 44: Consumer Durables Sector: Low Penetration Levels and Strong Margins

    Consumer Durables Sector Low Penetration Levels and Strong Margins Underpenetrated segments, renewals, rapid Rising domestic demand household formation & urbanization drive growth White Goods Penetration – % Turkish White Goods market : New plato of annual sales Refrigerator Washing machine Dishwash

  45. Slide 45: Arçelik: Products and Services to Over 100 Countries

    ARÇELİK Provides Products and Services to Over 100 Countries Worldwide  Privileged position in Turkey with superior exclusive dealer Turkey’s market leader in network (Extensive sales & after-sales network) white goods (c. 50%) and  Highest level of brand recognition in Turkey air-conditioners U.K

  46. Slide 46: Why Finance Sector?

    Why Finance Sector? Low Penetration Levels, Providing an Opportunity for Rapid Growth Loans + Deposits / GDP – % (1H16) Branches per million inhabitants Mortgage loans / GDP – % (1H16) 220 434 41 137 20 140 7 EU-27 Turkey EU-27 Turkey EU-27 Poland Turkey Source: European Central Bank, BRSA, CBRT Not

  47. Slide 47: Finance – Yapı Kredi Bank

    Finance – Yapı Kredi Bank Significant Profitability Acceleration Solid Fundamentals Net Income (TL bn) ROATE(1) Capital Ratios LDR (3) 54% +317 14.2% 13.8% bps 12.8% CAR (2) 114% 2.9 110% 9.7% 10.7% 10.6% 1.9 CET1 (2) 2015 2016 2015 2016 2015 2016 2015 2016 Efficient Scale Strong Operational Perform

  48. Slide 48: Yapı Kredi Subsidiaries and Other Finance Companies

    Yapı Kredi Subsidiaries and Other Finance Companies YAPI KREDİ YAPI KREDİ YAPI KREDİ LEASING FACTORING ASSET MANAGEMENT  Leader with 20% share  Leader with 18% share  2nd in the market with 17% share YAPI KREDİ KOÇFİNANS INVEST  Turkey’s first consumer finance  3rd in in equity transaction comp

  49. Slide 49: Table of Contents

    Table of Contents Page 1. 2016 Earnings Review 51 2. Shareholder Structures 62 3. Disclaimer 63 4. Contacts 64 www.koc.com.tr 49

  50. Slide 50: Group's Overall Financial Performance

    Group’s Overall Financial Performance Consumer 2016 Change Over TL million Energy Automotive Finance Other Durables Total 2015 Total Combined Revenues * 67,273 42,704 17,997 24,236 9,582 161,792 8% Combined Gross Profit 6,259 5,254 5,480 10,841 1,876 29,711 14% Combined Operating Profit ** 3,811 2,8

  51. Slide 51: Combined Revenues

    Combined Revenues Combined Revenues – TL mn Segmental Combined Revenues Breakdown – % +8% 161,792 Automotive 149,621 26% Consumer Energy Durables 42% 11% Finance 2015 2016 Other 15% 6% Segment Contribution to Combined Revenues – TL mn -1% 67,707 67,273 +18% +14% 42,704 36,116 +14% +9% 21,267 24,236

  52. Slide 52: Combined Operating Profit

    Combined Operating Profit * Combined Operating Profit – TL mn Segmental Combined Operating Profit Breakdown – % +9% Energy 12,144 31% 11,161 Automotive +7% 11,913** 24% Other 1% Consumer Durables 11% 2015 2016 Finance 33% Segment Contribution to Combined Operating Profit – TL mn +19% -4% 3,968 +12%

  53. Slide 53: Combined Net Income

    Combined Net Income Combined Net Income – TL mn Segmental Combined Net Income Breakdown – % 8,936 +2% 9,092 Automotive Energy 27% 8,758* +1% 8,888* 24% Consumer Other Durables 3% 10% 2015 2016 Finance 36% Segment Contribution to Combined Net Income – TL mn -19% +21% +17% +15% 3,290 2,719 2,721 3,117

  54. Slide 54: Consolidated Net Income

    Consolidated Net Income Consolidated Net Income – TL mn Segmental Consolidated Net Income Breakdown – % 3,568 -3% 3,460 Automotive Energy 29% -1% 3,389* 24% 3,359* Other Consumer 4% Durables 11% 2015 2016 Finance 33% Segment Contribution to Consolidated Net Income – TL mn +25% -22% +15% +18% 1,133 1

  55. Slide 55: Combined Exports & International Sales

    Combined Exports & International Sales Combined Exports – US$ mn Combined International Sales – US$ mn +1% -1% 13,375 13,509 15,701 15,614 2015 2016 2015 2016 www.koc.com.tr 55

  56. Slide 56: Combined Investments

    Combined Investments Combined Investments – TL mn Segmental Investments Breakdown – % Automotive 6,885 54% 6,164 Consumer Durables Energy 14% 24% Other Finance 2% 6% 2015 2016 www.koc.com.tr 56

  57. Slide 57: Koç Holding Net Cash Position

    Koç Holding Net Cash Position Koç Holding Stand-Alone 31.12.2016 Net Cash Position Total Debt: ~US$ 1.5bn* Total Cash: ~US$ 2.0bn** Net Cash: ~US$ 525mn Consolidated Net Debt / Cash Excl. Finance 9M16 FY16 ~US$ -3.2bn ~US$ -2.7bn * The total debt of US$ 1.5bn consists of two Eurobond issuances by Ko

  58. Slide 58: SPV Debt

    SPV Debt Initial Loan Amount US$ 1.8 billion Remaining Debt TL 322 million Maturity of the Debt April 2017 www.koc.com.tr 58

  59. Slide 59: FX Position

    FX Position Koç Holding Stand-Alone FX Position 9M16 FY16 US$ +38mn US$ +31mn Koç Holding Consolidated Net FX Position After Natural Hedge Net FX Position * Net FX Position After Natural Hedge** Weighted by Effective Ownership 9M16 FY16 9M16 FY16 9M16 FY16 US$ -0.7bn US$ -1.1bn US$ +225mn US$ -109mn

  60. Slide 60: Consolidated Main Financial Indicators

    Consolidated Main Financial Indicators € Mn* US$ Mn* TL Mn TL Mn Change 31.Dec.2016 31.Dec.2016 31.Dec.2016 31.Dec.2015 %, TL Revenues 21,238 23,478 70,932 69,492 p 2 Gross Profit 3,662 4,048 12,229 11,454 p 7 Operating Profit 2,081 2,300 6,949 6,677 p 4 Profit Before Tax 1,630 1,801 5,443 5,557 q -

  61. Slide 61: Shareholder Structures as of December 2016

    Shareholder Structures as of 31 December 2016 Koç Holding Koç Family: 68.51% Free Float: 22.24% Vehbi Koç Foundation: 7.26% Koç Pension Fund: 1.99% Consumer Energy Automotive Finance Other Durables Tüpraş Ford Otosan KH share: 38.46% Arçelik Koç Financial Services Tat Gıda SPV share: 51.00% Ford: 41

  62. Slide 62: 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

  63. Slide 63: For Further Questions, Please Contact

    For Further Questions, Please Contact : www.koc.com.tr IR Application investorrelations@koc.com.tr Funda Güngör Akpınar, Coordinator Investor Relations fundag@koc.com.tr +90 216 531 0535 Gizem Bodur, Manager Investor Relations gizemb@koc.com.tr +90 216 531 0533 Neslihan Aycıl, Manager Investor Relat

  64. Slide 64: Main Group Companies' Contacts

    Main Group Companies’ Contacts Arçelik Otokar Tüpraş Hande Sarıdal, Finance Director Hüseyin Odabaş, AGM Finance Tuncay Önbilgin, IR & Reporting Director hande.saridal@arcelik.com hodabas@otokar.com.tr tuncay.onbilgin@tupras.com.tr +90 212 314 3185 +90 264 229 2244 Ext. 6000 +90 262 316 3085 Orkun İ

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