Koc Holding A.s. · BIST:KCHOL
Koc Holding A.s — Investor Presentation (May 2006)
47 slides from Koc Holding A.s's investor presentation, May 2006
Slide 1: Koç Holding Investor Presentation May 2006
KOÇ HOLDING INVESTOR PRESENTATION MAY 2006
Slide 2: The Only Turkish Company in Fortune 500
The Only Turkish Company in Fortune 500 Largest & Most Reputable Conglomerate in Turkey US$bn 2005 2004 YoY ∆ Combined Revenues / GDP* 9% Koç Exports / Turkey’s Exports* 8% Koç Group Share in ISE Total Revenues* Market Cap.** 17% (Combined) 31.2 28.3 10% Total Revenues 9% *As of year-end 2005 **As o
Slide 3: Strategic Planning and Aggressive Targeting
Strategic Planning and Aggressive Targeting Optimized Resource Allocation to Long-term Projects Vision To become one of the leading companies in Europe through rapid and profitable growth Strategic Targets Register 14% p.a. growth in total revenues on average (compared to the expected 5% p.a. growt
Slide 4: Sustainable Revenue Streams with Potential & Dedication for Growth
Sustainable Revenue Streams with Potential & Dedication for Growth Koç Holding outperformed the target growth rates consecutively for the last three years Total Revenues* – Combined (US$bn) Total Revenues* – Consolidated (US$bn) CAGR : 48% CAGR : 52% 2002-2006 2002-2006 65% 51.5 10% 98% 35.9 59% 28.
Slide 5: Becoming even Stronger with the Latest Acquisitions
Becoming even Stronger with the Latest Acquisitions Moving from 389. Ranking into the first 200 in Fortune 500 in 2006 2004 2006F Total Assets $14.2 bn $39.3 bn Combined Revenues $28.3 bn $51.5 bn Consolidated Revenues $16.6bn $35.9 bn Other Other Finance 0% 2% 23% Finance Auto Combined Profit Befor
Slide 6: Optimal Portfolio Selection
Optimal Portfolio Selection Continuous Restructuring and Selective Portfolio with Focus on Growth, Leadership & Profitability Portfolio Theme: Focus on businesses where… “To Be Closest to the Consumer” f…we have a differential (manufacturing, marketing and competitive advantage selling goods and ser
Slide 7: Exposure in the Main Driving Sectors of the Turkish Economy
Exposure in the Main Driving Sectors of the Turkish Economy Design and Implementation of Initiatives that Create New Value Chains Automotive Consumer Durables Food & Retailing Finance Energy Total Revenues*:US$4.2bn Total Revenues*:US$4.7bn Total Revenues*:US$2.7bn Total Revenues*:US$1.8bn Total Rev
Slide 8: Strong Underlying Companies
Strong Underlying Companies Compelling Growth Stories in Core Sectors Vehbi Koç Foundation 7% Koç pension fund 2% Koç Holding ownership Free float 22% Koç family 69% structure Automotive Consumer Durables Food & Retailing Finance Energy Other Ford Otosan Arçelik KH share: 39.14% Migros Aygaz Informa
Slide 9: Robust & Credible Domestic Growth Strategy
Robust & Credible Domestic Growth Strategy Investments in Sectors with Low Penetration Rates and Long-term Growth Potential Why How Target Automotive 495 Car ownership is expected to increase in Leader in domestic automotive market To maintain its position as 79 line w/ stronger purchasing power
Slide 10: Strong Franchise
Strong Franchise A Fine Reputation with Customers and Regulators Well Established & Respected Brands Among Largest Industrial Among Most Recognized Brand An Innovator: Companies in Turkey Names in Turkey Many Firsts 5 Subsidiaries 6 out of the among Turkey’s top 10 largest 10 largest Turkish Every h
Slide 11: Leading Market Positions
Leading Market Positions Differentiate Itself by Continues Innovation, Best Product and Service Quality Product Position Product Position • Passenger cars #1 • Banking* #3 • Commercial vehicles #1 • Credit cards #1 • Farm tractors #2 • Loans #3 • Automotive retailing #1 • Deposits #4 • Brokerage #1
Slide 12: Increasing Global Reach
Increasing Global Reach Expansion into Adjacent & Emerging Markets with High Growth Potential Strategy: To position Koç Group companies among the largest and most rapidly growing companies in Europe, To be competitive on a global scale in each business line in terms of product reach, quality and ser
Slide 13: Increasing International Sales
Increasing International Sales Mitigate Risk while Pursuing Growth Opportunities Share of International Sales in Total Revenues 14 Int'l Sales (US$bn)* 12.3 Leading Positions in Europe: 12 •Beko -Europe’s 2nd largest television manufacturer 2% •Arçelik – Europe’s 4th largest household appliance Expo
Slide 14: Strong International Partners
Strong International Partners Alliances for Growth and Sustainability International partnerships for growth that involve new capabilities, new channels and new geographies while mitigating risk Automotive Finance While Ford Otosan is one of Ford’s largest and most Koç Group plays for leadership as a
Slide 15: Leading Companies with Leading Positions: Ford Otosan and Tofaş
Leading Companies with Leading Positions… …Through Strong and Committed JVs •JV with Ford Motor Company- one of Ford’s main production bases US$ mn 2003 2004 2005 •Leading light commercial vehicles manufacturer and exporter in Revenues 2,497 4,142 4,516 Turkey Int'l Revenues 1,143 2,005 2,114 •Ford’
Slide 16: Leading Companies with Leading Positions: Arçelik and Beko
Leading Companies with Leading Positions… …Increasingly Becoming a Leading Global Player •Leading household appliance producer in Turkey and among the four Market US$ mn 2003 2004 2005 largest households appliance manufacturers in Europe White Goods Shares Revenues 2,834 3,656 3,807 •Each of the com
Slide 17: Leading Companies with Leading Positions: Migros and Aygaz
Leading Companies with Leading Positions… …Through Opportunistic M&As and Continuous Organic Growth FMCG Market Retailing Shares US$ mn 2003 2004 2005 •Leading FMCG retailer in Turkey Migros 4.0% Revenues 1,571 1,694 2,004 •While expanding abroad, Migros secured its leading position in the BIM 3.5%
Slide 18: Acquisitions for Growth: Yapı Kredi Bank
Acquisitions for Growth Acquisition of Yapı Kredi Bank (YKB) by Koçbank... Finance : Acquisition of YKB by Koçbank Koçbank +YKB Koç YKB Koçbank + YKB Market Ranking Ranking Ranking Share(%) Koçbank acquired 57.4% of YKB shares in May 05 – following the tender call and block # of Branches 13 6 5 9.4
Slide 19: Strengthening Position in the Banking Sector
...Strengthening Position in the Banking Sector Target: To Become the Leading Player in the Market in terms of Growth and Value Creation What to expect from YKB Acquisition? The combination of YKB’s strong fEconomies of scale franchise with Koç Group’s fStrong franchise value reputation and UniCredi
Slide 20: Acquisitions for Leadership: Tansaş by Migros
Acquisitions for Leadership Acquisition of Tansaş by Migros... Retail: Acquisition of Tansaş by Migros Migros Migros+Tansaş 2005 (Domestic) Tansaş Migros+Tansaş* Net Sales (US$mn) 1,557 948 2,505 Gross Profit (US$mn) 345 229 574 Migros and Koc Holding acquired the Operational Profit majority share
Slide 21: Becoming the Unbeatable Leader in FMCG Retailing in Turkey
...Becoming the Unbeatable Leader in FMCG Retailing in Turkey Target: to be the independent leading FMCG retailer not only in Turkey but also in its hinterland What to expect from Tansaş Acquisition? f Rapid growth opportunity The acquisition of Tansaş will expand the domestic market share, making M
Slide 22: Acquisitions for Sustained Profitability: Tüpraş
Acquisitions for Sustained Profitability Acquisition of Tüpraş by Koç Holding... Energy : Tüpraş Acquisition Tüpraş 2004 2005 Net Sales (US $bn): 8.5 11.1 Sole refiner in Turkey supplying 70% of market EBITDA(US $mn): 766 800 – 7th largest in Europe PBT (US$mn): 695 657 Vertical integration with
Slide 23: Becoming the Owner of the Sole Refinery in Turkey
...Becoming the Owner of the Sole Refinery in Turkey Target: Exploit the Growth and Revenue Potential in Turkey as well as Neighboring Countries What to expect from Tüpraş Acquisition? fSignificant growth potential due to Turkey’s strategic role in leading the energy market in the neighboring countr
Slide 24: Unlisted Companies: Hidden Values
Unlisted Companies… …Hidden Values JV with Unicredit Italiano; active in banking, JV with Allianz for life and Turkey’s largest consumer brokerage services, asset non-life insurance products distribution network management, leasing and businesses reaching 140,000 points factoring #3 in the market Re
Slide 25: Best use of Group Synergies
Best use of Group Synergies Focus on Cost Efficiencies and Cross-Business Opportunities •Centralized planning, coordination & controlling of : Strategic Planning Audit & Control Finance Corporate Communications & IR Human Resources •Performance Focused Active Parenting Industrial Relations •Shared S
Slide 26: Main Goal: Maximizing Shareholder Value
Main Goal: Maximizing Shareholder Value One of the Few Companies in Turkey which Links Executive Compensation to Share Performance Shareholder Shareholder Value Value L-T Strategic Targets Economic Profit Market Cap to Maximize Future Shareholder Value Customer Technology Aggressive Sustainable Exec
Slide 27: Strong Commitment to Corporate Governance
Strong Commitment to Corporate Governance One of the Few Companies in Turkey with Independent Members in BoD Voluntary commitment and proactive approach to principles of good corporate governance Executive compensation based on economic profit and share performance One of the first domestic companie
Slide 28: Summary: Ideally Positioned to Create Value for its Shareholders
Summary: Ideally Positioned to Create Value for its Shareholders Commitment for Excellence Excellent Leading Robust & Capitalize on Strong Best Corporate Reputation & Diversification Market Credible new Financials Governance Brand Positions Strategy opportunities Practice Recognition Productive, Wel
Slide 29: Key Take-aways
Key Take-aways Koç Holding: The best proxy for the growing Turkish market 12,9 9,7 Koç Holding outperformed 7,1 the Turkish economic 5,2 6,0 growth rates significantly, 4,5 3,7 4,4 3,1 proving to be a strong 2,4 play especially at times of economic upturn. 1981-85 1986-90 1991-95 1996-00 2001-05 GNP
Slide 30: Financial Review
Financial Review APPENDIX 1 As of April 2006, Page 30
Slide 31: Continuous Growth in Revenues
Continuous Growth in Revenues With the Acquisition of Tüpraş, Revenues are Expected to almost Double as of 2006 Total Revenue Growth (TRY mn) as of FY 2005 24,353 22,264 9.4% 2004 2005 Total Revenues – FY2004 Total Revenues - FY2005 Other Other 7.3% Automotive Automotive 6.4% Energy 26.3% Energy 23.
Slide 32: Balanced Segmental Revenues among Core Operations
Balanced Segmental Revenues among Core Operations Composition will be More Even following the Full Integration of the New Acquisitions Segment Contribution to Total Revenues (TRY mn) as of FY 2005 9% -3% 6,338 5,852 5,656 5,841 10% 2004 4,756 24% 4,329 2005 3,639 44% 2,941 2,398 -4% 1,667 1,634 1,56
Slide 33: Improving Profitability
Improving Profitability Improvement mainly Driven by Food & Retail and Finance Segments Gross Profit Growth (TRY mn) Gross Profit - FY2005 as of FY 2005 Other 4,313 5.7% 4,047 6.6% Energy Automotive 17.6% 8.5% Finance 17.1% Consumer 2004 2005 Food & Retail Durables 15.6% 35.5% * Before cross-sector
Slide 34: Operating Profit is Expected to Increase
Operating Profit is Expected to Increase with Improvements in Consumer Durables (Beko) and Finance Segments Operating Profit Growth Operating Profit - FY2005 1,251 1,209 Energy 10.8% Automotive -3% 29.0% Finance 20.1% Food & Retail 8.8% Consumer 2004 2005 Durables 31.3% Segment Contribution to Opera
Slide 35: Sustainable & Strong RoE
Sustainable & Strong RoE RoE Targeting to Ensure Sustainability … through Acquisitions in High Margin Sectors Net Earnings TRY mn 598 508 ROAE (%) 14.2 2004 2005 13.8 / 2004 2005 Average equity TRY mn 4,198 3,671 2004 2005 Despite integration of YKB accounts as of 3Q05, with full effect on the equ
Slide 36: Total Assets Continue to Grow with a More Diversified Composition
Total Assets Continue to Grow with a More Diversified Composition* Strong Growth due to Acquisitions Total Assets (TRY mn) 36,682 19,055 93% 2004 2005 Balance Sheet Composition Segment Breakdown of Assets 22% 13% 9% 14% 12% 13% 21% 14% 65% 5% 51% 8% 42% 32% 54% 46% 7% 58% 54% 21% 7% 13% 12% 7% 2004
Slide 37: Financial Debt-to-Equity and Current Ratio at Comfortable Levels
Financial Debt-to-Equity and Current Ratio at Comfortable Levels Room for Leveraging Growth 7,379 Financial Debt TRY mn Financial Debt-to-Equity (%) 4,078 90 60 2004 2005 / Equity + Minorities TRY mn 8,207 6,848 2004 2005 2004 2005 Current Ratio (%) 1.14 0.83 Low leverage levels up until 2005 enable
Slide 38: Macroeconomic Overview
Macroeconomic Overview APPENDIX 2 As of April 2006, Page 38
Slide 39: Encouraging and Sustainable Macro Trends
Encouraging and Sustainable Macro Trends A Success Story Triggered by Political Stability and Economic Reforms Political Arena Macroeconomic Arena One-party government accelerated Structural reforms and adjustments Majority in the Parliament decision making Considerable consensus with regard
Slide 40: A Favorable Business Environment
A Favorable Business Environment Promising Strong Potential both for Domestic and International Players Strengths Opportunities One of the biggest emerging markets Start of accession negotiations with the EU Geopolitical location Increase in FDI Young/working-age population Availability o
Slide 41: A Successful Turnaround leading to Enduring Stability
A Successful Turnaround leading to Enduring Stability Closing the Gap with the Maastricht Criteria Consolidated Budget (%) Nominal Interest Rates (%) Consolidated budget met Maastricht criteria Nominal Interest Rates by the end of 2005 and is expected to give a 95-98 Consolidated Budget Balance/GNP
Slide 42: Increasing Resilience Against External Shocks
Increasing Resilience Against External Shocks No More Significant Debt Roll-Over and Devaluation Risks Domestic Debt Dynamics (%, 3months) Composition of Domestic Debt (%) 4 100 100 Since 2001, not only public 2003 2004 2005 2006 debt to GNP declined from 31 70 40 over 90% to below 60%, 80 80 44 com
Slide 43: Highest Growth Potential in Europe
Highest Growth Potential in Europe Supported by a Large and Young Population Base Growth (%) Demographics (%) 40 Population Growth Rate Labour-force Growth rate 24 30 Poland 11.5 20 8.8 8.5 Turkey 2.4 10 0 Portugal % -10 -20 Romania -30 Belgium -40 Holland 2001 2002 2003 2004 2005 Spain Priv. Consum
Slide 44: The Positive Impact of the EU Convergence is yet to be Seen
The Positive Impact of the EU Convergence is yet to be Seen Significant Increase in FDI already in 2006 Growth (%) FDI/GDP (%) Sweden Sweden Finland Finland Spain Spain The accession talks and membership to Portugal Portugal EU doubled the average growth rate Romania Romania and tripled the average
Slide 45: Credible Government Targets
Credible Government Targets Convergence Between Official Targets and Private Sector Expectations Koç Holding Goverment's Targets 2004 2005 2006 E 2006 2007 2008 Economic Growth * The Central bank switched to official targeting as of Jan 1, 2006, Growth Rate % 9.9 7.6 5.5 5.0 5.0 5.0 committing itsel
Slide 46: For Further Questions, Please Contact
For Further Questions, Please Contact: Koç Holding 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: Beko: M
Slide 47: Disclaimer
Disclaimer 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 and c