Slide 1: Koç Holding Investor Presentation
Koç Holding Investor Presentation September 2008
Slide 2: Best Proxy to the Growing Consumer Demand in Turkey
Best Proxy to the Growing Consumer Demand in Turkey • Total Sales / GDP : 9% Leading conglomerate in • Total Exports / Turkey’s Exports : 12% Turkey • Total Share in ISE Market Cap : 14% Largest distribution • 14,000 dealerships, after-sales network • 814 branches Largest customer • Customer databas
Slide 3: Strategic Targets
Strategic Targets Strong growth • Last 5 years CAGR : 42% in US$ terms in revenues • Last 5 years CAGR : 27% in US$ terms (organic only) • Last 5 years CAGR : 40% in exports Increase exports and • Last 5 years CAGR : 34% in international international revenues sales Maximize • 2003-2007 CAGR : 68% i
Slide 4: Main Competitive Advantages
Main Competitive Advantages Leading positioning in low Superior growth opportunities penetrated growth sectors Largest customer database Most efficient use of CRM Higher geographical diversification Better risk management Largest distribution network Highest customer satisfaction Synergies among gro
Slide 5: Focused Growth Strategy
Focused Growth Strategy Energy Automotive Consumer Durables Finance Main Companies Main companies Main Companies Main Companies Tüpraş* / Aygaz* / Opet / Entek Ford Otosan* / Tofaş* / Türk Traktör* / Arçelik* / Grundig Elektronik* Yapı Kredi Bankası* Otokar* International Alliances International All
Slide 6: Energy
Energy Key 2007 2007 Annual Chg. 1H 2008 1H08 Annual Indicators US$mn YTL mn (YTL) YTL mn Chg. (YTL) Total 20,139 26,210 9% 17,101 48% Revenues Net Operating 1,178 1,533 51% 1,119 52% Profit EBITDA 1,400 1,822 44% 1,271 46% Competitive Advantages Vision & Strategies • The only refiner in Turkey, mee
Slide 7: Automotive
Automotive Key Indicators 2007 US$mn 2007 YTL mn Annual Chg. (YTL) 1H 2008 YTL mn 1H 08 Annual Chg. (YTL) Total 5,007 6,517 3% 3,734 31% Revenues Net Operating 338 440 2% 332 91% Profit EBITDA 453 589 -2% 423 71% Competitive Advantages Vision & Strategies • Domestic market leader with 28% share in s
Slide 8: Consumer Durables
Consumer Durables Key Indicators 2007 US$mn 2007 YTL mn Annual Chg. (YTL) 1H 2008 YTL mn 1H08 Annual Chg. (YTL) Total 5,456 7,101 -7% 3,395 -8% Revenues Net Operating 416 541 -10% 259 -15% Profit EBITDA 537 699 -10% 345 -11% Competitive Advantages Vision & Strategies • Domestic market leader with 55
Slide 9: Finance
Finance Key Indicators 2007 US$mn 2007 YTL mn Annual Chg. (YTL) 1H 2008 YTL mn 1H08 Annual Chg. (YTL) Total 4,151 5,403 15% 2,948 13% Revenues Net Operating 621 808 21% 506 41% Profit Competitive Advantages Vision & Strategies • A financial supermarket with leading companies in • Expand branch netwo
Slide 10: M&A Strategy: Strong turnaround in acquired companies
M&A Strategy Strong turnaround in acquired companies Acquired Terms Improvements companies Under new management : Higher focus on efficiency, profitability and new investment opportunities: Profit enhancement programs, increased product yields, increased nelson complexity, increased export premiums,
Slide 11: Proactive Divestitures
Proactive Divestitures 2004 – 2008 Sector Buyer Terms Timeline Implied Value: US$299mn St.Gobain Announced on 23 June 06 Insulation Total Proceeds: US$179mn Isover & STA signed on 5 September 06 Materials Koç Holding Share: 17.4% Alamana Ind. Closed on 29 November 06 Other Koç Share: 43.8% Implied V
Slide 12: Optimal portfolio allocation: Higher resilience against interest rate volatility
Optimal portfolio allocation Higher resilience against interest rate volatility 2004 2007 High Interest - High Interest - Revenues Sensitive* 27% Sensitive* 53% Less Interest- Less Sensitive* The portfolio is better suited to Interest - 47% Sensitive* continue to perform well in 73% robust times and
Slide 13: Optimal portfolio allocation: Strong risk management against FX volatility
Optimal portfolio allocation Strong risk management against FX volatility 2004 2007 FX-denominated FX-denominated & FX-linked & FX-linked 39% Revenues YTL 62% 38% Increased share of FX and FX-linked revenues; higher YTL resilience against FX volatility 61% Exports (Combined – US$bn) International Sa
Slide 14: Global Reach
Global Reach Double digit growth in all regions* Manufacturing facilities in low cost centers such as Turkey, Romania, 7,117 Russia and China US$ mn 11% 379 6,434 277 37% 1,002 US$ mn US$ mn 15% 2006 2007 875 2006 2007 2006 2007 676 481 41% US$ mn 2006 2007 50 19% US$ mn 42 2006 2007 * The charts ab
Slide 15: Historically Overperformed the Turkish Growth Rates Continuously
Historically Overperformed the Turkish Growth Rates Continuously Revenues (Consolidated-US$bn) Turkey vs Koç 34.8 (%) : 42% AGR 39.5 - 2 0 07 C 34.5 31% 2002 28.2 16.7 21.6 11.8 18.2 10.8 16.6 5.6 6.1 11.1 4.9 3.2 4.0 5.7 4.3 5.7 6.8 1980-85 1985-90 1990-95 1995-00 2000-05 2005-07 2002 2003 2004 200
Slide 16: Focus on Lucrative Businesses and Profitability
Focus on Lucrative Businesses and Profitability EBITDA (Consolidated-US$bn) Operating Profit (Consolidated-US$bn) 7% AG R:3 3.8 07 C 3.4 3.4 -2 0 92% 8% 2002 AG R:6 111% 2.7 2.7 -20 07 C 2002 2.1 2.0 1.5 1.5 1.6 1.2 0.9 0.9 0.7 Normalized 0.6 Normalized 2.7 0.2 2.3 2002 2003 2004 2005 2006 2007 1H 0
Slide 17: Net Cash Position Following the Sale of Migros and Koç Allianz
Net Cash Position Following the Sale of Migros and Koç Allianz Koç Holding Current Stand-alone Net Cash SPV Current Net Debt • ~ US$ 1.1 bn • US$ 1.3bn • 10 year maturity • Self financing mechanism - redemption schedule linked to Tüpraş dividend stream • Resilient against FX and interest rate volati
Slide 18: Potential Investment Areas
Potential Investment Areas • Residium Upgrade project • Opportunities in • New manufacturing different fields projects for export including electricity generation and markets with our JV Automotive renewable energy partners Focus on higher ROI generating Consumer Energy businesses and Durables enhan
Slide 19: 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
Slide 20: Key Takeaways
Key Takeaways Strong top-line p ro x y to Successful Agg growth enabling r Best play essive T u rkish de-leveragin e the benefits of t he g M& r for f c on omy story and Aa u ctiv rther economies of E ity strong net ca sh scale position Superior Diversific ation o n h igh- and of risk – h Focus even
Slide 21: Appendix
Appendix GP Koc 21
Slide 22: Table of Contents
Table of Contents Page 1. 1H08 Earnings Release …..……............................... 23 2. Corporate Governance and Social Responsibility ........................................... 32 3. Shareholder Structures ............................................. 33 4. Contacts and Disclaimer .............
Slide 23: Financial and Operational Performance in 1H08
Financial and Operational Performance in 1H08 • Revenues reached YTL28.2bn (US$23.0bn), registering 31% YoY increase in YTL terms • Operating profit reached YTL3,433mn (US$2,798mn), registering 111% YoY increase in YTL terms • The operating profit for this period includes YTL 1,148,348,000 capital g
Slide 24: Strong Financial Performance 1H08
Strong Financial Performance 1H08 € Mn* US$ Mn* YTL Mn YTL Mn % 30.Jun.08 30.Jun.08 30.Jun.08 30.Jun.07 Change Revenues 15,026 23,001 28,213 21,590 31 Gross Profit 2,305 3,529 4,328 3,501 24 EBITDA 2,042 3,126 3,834 1,995 92 Operating Profit 1,828 2,798 3,433 1,626 111 FX Gain/(Loss) -150 -230 -282
Slide 25: Continuous Growth in Revenues from Ongoing Operations
Continuous Growth in Revenues from Ongoing Operations Total Revenues (YTLmn) Share of Segment Revenues (%) 31% 28,213 Energy 61% Automotive 21,590 13% Durables 12% Other Finance 4% 10% 1H07 1H08 Segment Contribution to Total Revenues (YTLmn) 48% 17,100 11,533 31% 8% 13% 3,734 3,709 3,395 16% 2,852 2
Slide 26: Increase in EBITDA
Increase in EBITDA * EBITDA Consumer Consolidated Energy Automotive Finance Other YTL mn Durables Total 1H08 1,271 423 345 549 1,246 3,834 Total EBITDA (YTL mn) Segmental EBITDA Breakdown (%) Automotive 11% 92% Durables 3,834 9% Energy 33% Finance 1,995 14% Normalized 2,681 Other 1H07 1H08 33% * The
Slide 27: EBITDA and EBITDA Margin by Segments
EBITDA and EBITDA Margin by Segments Segment Contribution to EBITDA (YTL mn) 46% 1367% 1,271 1,246 870 71% 36% 11% 549 423 388 404 345 247 94 85 Normalized Ene rgy Autom otive Durable s Finance Othe r 1H07 1H08 EBITDA Margin by Sectors 120.4 (%) 18.6 15.5 11.3 10.5 10.2 9.5 8.7 9.0 7.5 7.4 Normalize
Slide 28: Improving Operating Profit
Improving Operating Profit * Operating Profit Consumer Consolidated Energy Automotive Finance Other YTL mn Durables Total 1H08 1,119 332 259 506 1,217 3,433 Total Operating Profit (YTL mn) Segmental Operating Profit Breakdown (%) Durables 111% Automotive 8% 10% 3,433 Finance 15% Energy 1,626 33% Nor
Slide 29: Operating Profit and Margin by Segments
Operating Profit and Margin by Segments Segment Contribution to Operating Profit (YTL mn) 2090% 52% 1,217 1,119 41% 15% 734 91% 506 332 359 303 259 174 56 64 Normalized Ene rgy Autom otive Durable s Finance Othe r 1H07 1H08 Operating Profit Margin by Sectors 117.6 (%) 17.2 13.8 8.9 8.2 7.6 6.4 6.5 6
Slide 30: Sustainable Growth in Margins Continues
Sustainable Growth in Margins Continues EBITDA Margin (%) EBITDA Margin excl. Finance (%) 13.6 13.0 9.2 9.5 8.4 8.4 7.9 7.1 Normalized Normalized 1H06 1H07 1H08 1H06 1H07 1H08 Operating Profit Margin (%) 12.2 7.5 8.1 6.0 Normalized 1H06 1H07 1H08 30
Slide 31: Increasing Profitability
Increasing Profitability Net Income Margin (%) Net Income Margin (%) After Minority Interest 8.7 6.1 7.3 4.1 1H07 1H08 1H07 1H08 RoAE (%) 33.5 28.6 1H07 1H08 31
Slide 32: Commitment to Corporate Governance and Social Responsibility
Commitment to Corporate Governance and Social Responsibility A Pioneer in Corporate Citizenship • Voluntary commitment and proactive approach to principles of good corporate governance • Corporate Governance Committee to actively monitor changes in the regulation and ensure adaptation of the highest
Slide 33: Shareholder Structures as of July 2008
Shareholder Structures as of July 2008 Koç Holding Koç Family: 70.52% Free Float: 20.34% Vehbi Koç Foundation: 7.15% Koç Pension Fund: 1.97% Energy Automotive Consumer Durables Finance Other Ford Otosan Arçelik Koç Financial Services Tat Konserve Tüpraş KH share: 38.46% KH share: 39.14% KH share: 39
Slide 34: For Further Questions, Please Contact
For Further Questions, Please Contact: Funda Güngör, Coordinator Investor Relations & Economic Research Strategic Planning Group fundag@koc.com.tr +90 216 531 0535 Aslı Selçuk, Manager Investor Relations Strategic Planning Group aslii@koc.com.tr +90 216 531 0537 Neslihan Aycıl, Specialist Investor R
Slide 35: Major Group Companies' Contacts
Major 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. 451 +90 262 316 3085 M. Türkay Tatar, EVP Yasemi
Slide 36: Disclaimer
Disclaimer This presentation contains 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 affec