Slide 1: Koç Holding: Turkey's Leading Investment Holding Company
Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY creating one common legacy for 89 years Investor Presentation – September 2015
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
Slide 3: Koç Group History
Koç Group History Today Turkey's largest industrial and services group 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 Financial services consolidated under one r
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* 8% 11 9 Total Exports / Turkey’s Exports* 9% 7 6 6 5 5 5 4 4 3 3 Total Market Cap. on Borsa İstanbul* 1
Slide 5: One of the Few Companies in Turkey with Investment Grade
One of the Few Companies in Turkey with Investment Grade Ratings* Outlook* Moody’s Baa3 Positive S&P BBB- Stable Moody’s Koç Holding's Baa3 issuer rating reflects the company's strong financial profile and investments in a balanced portfolio of mature and high-growth companies, which have diversifie
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: 76.7 mn people; Median age at 29.7 vs. 41.5 in EU Unsaturated domestic market as most
Slide 7: Strong, Stable and Supportive Shareholder
Strong, Stable and Supportive Shareholder Koç Family Temel Members Koç Family has its own internal governance and Ticaret* 25.9% 42.6% investment vehicle, which provides stability and consistency Koç Pension Koç Family mainly assumes Board level Fund responsibility 2.0% Business run by highly
Slide 8: Leadership Positions in Strategic and Lucrative Business Lines
Leadership Positions in Strategic and Lucrative Business Lines 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* / Otokar* / Otokoç Domes
Slide 9: Large Distribution Networks & Large Customer Database in Low Penetrated Sectors
Large Distribution Networks & Large Customer Database in Low Penetrated Sectors with Strong Growth Potential Large customer database with around 44 million (approximately 15 mn CRM card holders with data sharing Large customer database permission) in different business segments together with strong
Slide 10: Investment Focus on Sectoral Diversification
Investment Focus on Sectoral Diversification to be Resilient to Different Risk Profiles (mn) TL895* TL2,435** TL32,885 Key Risks & Sensitivites Key Strengths 100 • Strong growth potential , esp. for large banks Domestic credit and interest • Profitability ROATE: 12.0% 15 Finance rate risk, regulatio
Slide 11: Balanced Portfolio Between Defensive & Growth Assets
Balanced Portfolio Between Defensive & Growth Assets Wealth preservation Bank on growth 55% Yapı Kredi 45% Tüpraş Arçelik Otokar Otokoç Aygaz Entek Opet Koçtaş Tofaş Tat, Düzey Ford Otosan Demir Export Türk Traktör KoçFinansman Setur KoçSistem Marinas Divan High
Slide 12: Further Diversification via Geographic Coverage
Further Diversification via Geographic Coverage: International Sales Continues To Grow Combined International Sales (US$ billion) 2009 2014 regional breakdown and percentages 14% CAGR 18.6 18.6 18.7 16.6 13.2 $0.6b $0.7b $6.5b $11.3b $1.7b $4.2b 29.3% 6% 4% 68% 61% 18% 23% 9.6 27.6% 27
Slide 13: Resilient & Improving Performance Despite Volatile Domestic Market
Resilient & Improving Performance Despite Volatile Domestic Market 9.2 8.8 10.0 Turkey GDP Growth (%) 4.2 5.0 2.9 2.1 Source: TurkStat 0.0 2009 2010 2011 2012 2013 2014 -5.0 -4.8 CAGR: 14% 4.0 Net Profit 2.7 3.0 2.7 attributable to 2.1 2.3 Equity Holders of 2.0 1.7 1.4 the Parent 1.0 (TL billion) 0.
Slide 14: High Resilience Against Risks: Strong B/S & Cash Position
High Resilience Against Risks Strong B/S & Cash Position Our net cash position enables us to be proactive Our combined net financial debt remains at 2.5 in new M&As times EBITDA* Koç Holding Stand-Alone Consolidated Net Debt / Cash Excl. Finance Net Cash Position 1Q15 1H15 ~US$ -4.0bn ~US$ -4.4bn To
Slide 15: Major Portfolio Companies Have Strong Current Ratios
Major Portfolio Companies Have Strong Current Ratios Group’s(*) Current Ratio 31 December 2014 Total Current Assets: TL35.6 bn Total Current Liabilities: TL27.8 bn Current Ratio : 1.3 8,472 6,816 3,624 3,137 2,958 1,319 714 672 7 Current Assets (TL mn) 8,362 4,431 2,972 2,932 198 575 715 635 738 Cur
Slide 16: Average Duration of Financial Debt is Lengthened by ~12 Months
Average Duration of Financial Debt is Lengthened by ~12 Months 30 September 2012 30 June 2015 Combined Financial Debt Combined Financial Debt Average duration: ~22 months Average duration: ~34 months 1. Eurobond Transactions: Koç Holding - US$ 750 mn, 7 yrs in April 13 (3.5% p.a. - coupon rate)
Slide 17: FX Position
FX Position Koç Holding Stand-Alone FX Position 1Q15 1H15 US$ + 70mn US$ +65mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 1Q15 1H15 1Q15 1H15 US$ -3.0bn US$ -2.8bn* US$ -1.2bn US$ -1.2bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş invento
Slide 18: Adjusted Net FX Position / Equity Ratio Meets Policy Limits
Adjusted Net FX Position / Equity Ratio Meets Policy Limits for Major Portfolio Companies 31 December 2014 Group’s Adjusted Net FX Position Group’s Adj. Net FX Position/Equity US$259 mn 2.3% 31 December 2014 72 10 Net FX Position (US$ mn) (Reported) -245 -5 0 -30 -688 -519 -2,903 72 54 14 35 18 34 N
Slide 19: Active Player in M&As and Privatizations
Active Player in 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
Slide 20: 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
Slide 21: 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 7.6 with our JV partners international markets a
Slide 22: Disciplined Investment Strategy
Disciplined Investment Strategy Consolidate leading positions to benefit the most from the growth potential Exploit new growth opportunities Only consider very (Privatizations, secondary M&A opportunistic plays market as well as greenfield investments) www.koc.com.tr 22
Slide 23: 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
Slide 24: 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 Strong share performance Strong relative stock performan
Slide 25: 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 26: 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: 7,100 trademarks 3,000 patent families 6,600 patents 700 industrial design registrations 4,200 Internet domain names 4 Koç Group companies ranked in the top 10 on the Turkish Koç Grou
Slide 27: 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, cultu
Slide 28: 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 for Grassroots initiative organized annually since the Nation 2006, to s
Slide 29: 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 Koç Group companies With its efficiency projects, Koç Group made 3.06 million GJ invested TL228 million savings in energy consumption and
Slide 30: 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
Slide 31: Operational Excellence and Leadership in Core Business Segments
Operational Excellence and Leadership in Core Business Segments Slide # 32 Energy Sector Strongest Player in the Turkish Energy Sector 38 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 44 Consumer Durables Sector Strong Global Network 46 Finance Sector Focus on Lucrative Busin
Slide 32: Why Energy Sector?
Why Energy Sector? High growth potential Strong demand dynamics Final Energy Consumption per Head – Toe Among the fastest growing energy markets in the world parallel to its economic growth 2.2 Growing domestic oil demand coupled with 1.1 insufficient diesel capacity Offers a wide range of opp
Slide 33: Tüpraş: Turkey's Sole Refining Company
TÜPRAŞ Turkey’s Sole Refining Company 4 refineries with 28.1 MT total capacity 7th largest refinery in One of the most complex refineries in the Europe and Mediterranean and globally with Nelson 28th largest in the world Complexity of 9.5 Among the most profitable refineries in Europe and the
Slide 34: Residuum Upgrade Project (RUP) of Tüpraş
Residuum Upgrade Project (RUP) of Tüpraş RUP is completed as of 1H15 and all units are working at full capacity: Not only will RUP have a US$1 bn positive impact on the Turkish C/A balance, but also will bring significant improvement for Tüpraş in terms of Nelson complexity, capacity utilization, wh
Slide 35: Aygaz: Turkey's 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 in total LPG market Leading LPG 43% market share in cyclinder LPG distributor of Turkey (2nd largest LPG market in 24% market share in autogas Europe) Fully integrate
Slide 36: 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
Slide 37: 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 Motorization Rate per ‘000 Turkish automotive market : New plato of ~ 860k annual sales 563 Auto market average 1000 857 900 173 800 700 632 911 893 600 793 818 807 EU27/EFT
Slide 38: 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
Slide 39: Ford Otosan: Turkey's Largest Installed Production Capacity
FORD OTOSAN Turkey’s Largest Installed Production Capacity 50-50% JV with Ford – Ford’s center of excellence for heavy trucks and heavy duty diesel powertrains Largest R&D staff Highest Ford in the Turkish market share in Export champion of Turkish Automotive Industry (62% of Turkey’s CV exports
Slide 40: Ford Otosan: Major Investment Plan is Completed
FORD OTOSAN Major Investment Plan is Completed US$ 1.4bn investment of Ford Otosan is finalized with its Investments of Ford Otosan capacity increase & complete new product portfolio US$ mn Ford Otosan expects in 2015 700 682 Market share gains in the domestic market 600 523 Rising exports on EU
Slide 41: Tofaş: Defensive Portfolio via Take-or-pay Contracts
TOFAŞ Defensive Portfolio via Take-or-pay Contracts 50-50% JV with Fiat The only domestic manufacturer and exporter of both PCs & Among Fiat’s 3 main R&D LCVs centers globally Extensive dealer and after-sales network Owns the full intellectual and industrial property rights for Take-or-pay M
Slide 42: Tofaş: Investing in New Models
TOFAŞ Investing in New Models Tofaş entered a new investment phase in 2014 Investment of Tofaş Capex Period Adaptation of New Doblo* is complete in 4Q14 Total Investment US$1.4 bn 2014-2016 US$1.04 bn investment to produce 1.3mn units of PCs: PC – Sedan US$520 mn will be complete in 4Q15 PC – Co
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
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 Turkish White Goods market : New plato of ~ 6.6mn annual sales White Goods Penetration – % 92 mn Refrigerator Washing ma
Slide 45: Arçelik: Products and Services in 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 white network (Extensive sales & after-sales network) goods (50%), Highest level of brand recognition in Turkey TVs and air-conditioners U
Slide 46: Why Finance Sector?
Why Finance Sector? Low Penetration Levels, Providing an Opportunity for Rapid Growth Loans + Deposits / GDP – % (2014) Branches per million inhabitants Mortgage loans / GDP – % (2014) 226 434 42 127 20 144 7 EU-27 Turkey EU-27 Turkey Euro Area Poland Turkey Source: European Central Bank, BRSA, CBRT
Slide 47: Yapı Kredi Bank: Market share gains with sustainable profitability
YAPI KREDİ BANK Market share gains with sustainable profitability +358k customers Ongoing volume growth and remix Solid commercial performance acquired in 1H15 Ytd ∆ NIM 2 Fees (TL mn) Cost / Income YKB Private State Sector Market Ytd ∆ Banks Banks Share (bps) +18% 1,320 +50bps 3.6% 1,115 Loans 14%
Slide 48: Yapı Kredi Bank: Targeting above-sector growth
YAPI KREDİ BANK Targeting above-sector growth 2015 Expectations 2014 2015E 1H15 Banking Sector Loan growth 18% >17% Volumes potentially +13% ytd ~20% due to currency Deposit growth 10% >15% depreciation impact +13% ytd NIM -20bps flat -10bps ytd CoR flat +30bps +20bps ytd NPL +20bps +40bps -10bps yt
Slide 49: 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 18% share Leader with 19% share 2nd in the market with 18% share YAPI KREDİ KOÇFİNANS INVEST Turkey’s first consumer finance 2nd in in equity transaction comp
Slide 50: Table of Contents
Table of Contents Page 1. 1H15 Earnings Review 51 2. Shareholder Structures 61 3. Disclaimer 62 4. Contacts 63 www.koc.com.tr 50
Slide 51: Group's Overall Financial Performance
Group’s Overall Financial Performance Consumer 1H15 Change Over TL million Energy Automotive Finance Other Durables Total 1H14 Total Combined Revenues * 29,443 16,257 6,510 9,973 4,618 66,802 7% Combined Gross Profit 2,343 1,987 2,001 4,295 730 11,358 30% Combined Operating Profit ** 1,503 1,071 470
Slide 52: Combined Revenues
Combined Revenues Combined Revenues – TLmn Segmental Combined Revenues Breakdown – % +7% 66,802 Automotive 62,266 24% Energy Durables 44% 10% Finance 1H14 1H15 15% Other 7% Segment Contribution to Combined Revenues – TLmn -9% 32,220 29,443 +36% 16,257 +5% +25% +16% 11,916 9,973 6,510 7,967 6,175 4,6
Slide 53: Combined Operating Profit
Combined Operating Profit * Combined Operating Profit – TLmn Segmental Combined Operating Profit Breakdown – % +52% Energy 4,475 34% Automotive 2,954 24% Other -1% Durables 10% 1H14 1H15 Finance 33% Segment Contribution to Combined Operating Profit – TLmn +14% +370% +30% 1,503 1,463 1,285 1,071 826
Slide 54: Combined Net Income
Combined Net Income Combined Net Income – TLmn Segmental Combined Net Income Breakdown – % +6% 3,592 3,382 Automotive Energy 26% 3,142* +14% 27% Other 1% Durables 13% 1H14 1H15 Finance 33% Segment Contribution to Combined Net Income – TLmn +16% +1% +13% 1,181 1,021 963 976 931 824 +68% -86% 462 274
Slide 55: Consolidated Net Income
Consolidated Net Income Consolidated Net Income – TLmn Segmental Consolidated Net Income Breakdown – % 1,435 -8% 1,322 Energy Automotive +11% 29% 28% 1,195* Other -0.3% Durables 14% 1H14 1H15 Finance 30% Segment Contribution to Consolidated Net Income – TLmn +15% -1% +11% 382 379 394 369 333 344 269
Slide 56: Combined Exports & International Sales
Combined Exports & International Sales Combined Exports – US$mn Combined International Sales – US$mn 7,328 -9% 8,895 -13% 6,694 7,750 1H14 1H15 1H14 1H15 www.koc.com.tr 56
Slide 57: Combined Investments
Combined Investments Combined Investments – TLmn Segmental Investments Breakdown – % +8% 3,068 Automotive 2,842 45% Energy Durables 36% 7% 1H14 1H15 Other Finance 2% 10% www.koc.com.tr 57
Slide 58: Koç Holding Net Cash Position
Koç Holding Net Cash Position Koç Holding Stand-Alone 30.06.2015 Net Cash Position Total Debt: ~US$ 0.75 bn Total Cash: ~US$ 1.44 bn Net Cash: ~US$ 685mn Consolidated Net Debt / Cash Excl. Finance 1Q15 1H15 ~US$ -4.0bn ~US$ -4.4bn www.koc.com.tr 58
Slide 59: FX Position
FX Position Koç Holding Stand-Alone FX Position 1Q15 1H15 US$ + 70mn US$ +65mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 1Q15 1H15 1Q15 1H15 US$ -3.0bn US$ -2.8bn* US$ -1.2bn US$ -1.2bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş invento
Slide 60: Consolidated Main Financial Indicators
Consolidated Main Financial Indicators € Mn* US$ Mn* TL Mn TL Mn Change Change 30.Jun.2015 30.Jun.2015 30.Jun.2015 30.Jun.2014 %, TL %, US$ Revenues 11,243 12,544 32,129 32,188 q -0.2 q -16 Gross Profit 1,665 1,857 4,757 3,385 p 41 p 19 Operating Profit 871 972 2,490 1,652 p 51 p 27 Profit Before Ta
Slide 61: Shareholder Structures as of June 2015
Shareholder Structures as of June 2015 Koç Holding Koç Family: 68.51% Free Float: 22.35% Vehbi Koç Foundation: 7.15% Koç Pension Fund: 1.99% Consumer Energy Automotive Finance Other Durables Ford Otosan Arçelik Tat Gıda Tüpraş KH share: 38.46% Koç Financial Services SPV share: 51.00% KH share: 40.51
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
Slide 63: For Further Questions, Please Contact
For Further Questions, Please Contact : investorrelations@koc.com.tr www.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 Relations neslihana@
Slide 64: Main Group Companies' Contacts
Main Group Companies’ Contacts Arçelik Otokar Tüpraş Doğan Korkmaz, Finance Director Hüseyin Odabaş, AGM Finance Tuncay Önbilgin, Head of IR dogan.korkmaz@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 Gözde Çullas, IR Man