Koc Holding A.s. · BIST:KCHOL
Koc Holding A.s — Investor Presentation (November 2013)
57 slides from Koc Holding A.s's investor presentation, November 2013
Slide 1: Turkey's Leading Investment Holding Company
Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY creating one common legacy for 87 years Investor Presentation – November 2013
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 and market capitalization on the Borsa İstanbul. PROFITABLE AND HIGH GROWTH MODEL, FOCUSING ON SUSTAINA
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 16 15 Combined Revenues / GDP* 9% 11 9 Total Exports / Turkey’s Exports* 10% 6 6 5 5 5 5 4 3 3 Total Market Cap. on Borsa İstanbul*
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 Our Baa3 ratings are based on Koç Holding’s strong financial profile and investments in a balanced portfolio of mature and high-growth companies, which enable Koç to diversify its d
Slide 6: 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 7: 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* / Aygaz* / Opet / AES Entek Ford Otosan* / Tofaş* / Arçelik* Yapı Kredi Bankası* TürkTraktör* / Otokar* / Otokoç I
Slide 8: 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 of over 16 million (approximately 11.5 mn with data sharing permission) in Large customer database different business segments together with strong CRM capabilities, e
Slide 9: Strongest Beneficiary of the High Growth Environment
Strongest Beneficiary of the High Growth Environment Revenues – Consolidated-US$bn EBITDA – Consolidated-US$bn 47.3 3.9 44.9 3.4 3.1 35.9 2.8 29.0 2009 2010 2011 2012 2009 2010 2011 2012 Operating Profit – Consolidated-US$bn 3.3 2.7 2.5 2.2 2009 2010 2011 2012 www.koc.com.tr 9
Slide 10: Well Diversified Across Sectors With Different Risk Profiles
Well Diversified Across Sectors With Different Risk Profiles 2012FY figures 100%= TL84.8bn TL5.6bn TL2.3bn Key Risks/Challenges Key Strengths 100 9 • Strong growth potential , esp. for large banks 90 Domestic credit and interest • Robust profitability (Avg. RoAE: 17.2%) 12 29 Finance rate risk, regu
Slide 11: Increasing Share of International Sales
Increasing Share of International Sales International Sales (TL billion) 25 23 14% CAGR 20 19 15 14 14 10 27.3% 10 25.4% 25.3% 25% 22.5% 5 0 2008 2009 2010 2011 2012 Share of international markets in consolidated total XX% revenues including Finance Segment Including Tüpraş, 63% of sales (TL 54 bill
Slide 12: Geographic Diversification to Reduce Country-specific Risks
Geographic Diversification to Reduce Country-specific Risks International Sales 2007 2012 regional breakdown and percentages Europe Asia 77% 56% 12% 20% Americas 4% 9% Africa 7% 16% www.koc.com.tr 12
Slide 13: Strong & Stable Financial Performance Despite a Volatile Economic Environment
Strong & Stable Financial Performance Despite a Volatile Economic Environment 9.2 8.8 8.0 2.2 3.0 0.7 Turkey GDP Growth (%) -2.0 2008 2009 2010 2011 2012 -7.0 -4.8 Source: TurkStat -12.0 10.0 Consolidated 5.1 5.7 5.6 4.2 4.4 EBITDA 5.0 (TL billion) 0.0 2008 (*) 2009 2010 2011 (**) 2012 1,500 1.016 H
Slide 14: Well-Designed Financial Policies
Well-Designed Financial Policies Risk Financial Policy Sustainable leverage with NFD/EBITDA limits for each major company, and at the combined level Leverage (excluding Finance) Maintain sufficient liquidity to meet obligations for all terms Liquidity Minimize asset maturity and maximize liabi
Slide 15: 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 debt remains at 1.7 times in new M&As EBITDA Koç Holding Stand-Alone Consolidated Net Debt / Cash Excl. Finance Net Cash Position 1H13 9M13 Total Debt: ~US$ 0.76bn Total Cash:
Slide 16: FX Position
FX Position Koç Holding Stand-Alone FX Position 1H13 9M13 US$ + 227mn US$ +226mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 1H13 9M13 1H13 9M13 US$ - 3.6bn US$ -3.4bn* US$ - 1.5bn US$ -1.4bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş & A
Slide 17: 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 18: 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 19: 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 – US$bn New manufacturing and R&D Opportunistic projects for export markets buyouts in with our JV partners international 2.7 markets a
Slide 20: 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 20
Slide 21: 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 22: 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 23: 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 24: Leading Positions in R&D and Technology Investments
Leading Positions in R&D and Technology Investments Koç Group makes the highest Koç Group’s share in R&D investments in Turkey private sector R&D compared to any other investments in Turkey is corporation 12-16% each year with around TL506 million Ratio of annual R&D spent in 2012 With 310 filings,
Slide 25: 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 26: 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 Grassroots initiative organized annually Matter for the Nation since 2006, to s
Slide 27: 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 3.37 million GJ invested TL203.5 million savings in energy consumption a
Slide 28: Key Takeaways : Value Propositions
Key Takeaways : Value Propositions Strong top-line growth Leading positions in enabling the benefits of Best proxy to core sectors and new economies of scale the Turkish investment and M&A Economy opportunities Strong commitment to Corporate Governance, Corporate Social Superior and sustainable Resp
Slide 29: Operational Excellence and Leadership in Core Business Segments
Operational Excellence and Leadership in Core Business Segments Slide # 30 Energy Sector Strongest Player in the Turkish Energy Sector 35 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 37 Consumer Durables Sector Strong Global Network 39 Finance Sector Focus on Lucrative Busin
Slide 30: 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 Demand for electricity is estimated to grow at an 2.2 annual rate of 6% between 2009-2023 1.1 Growing do
Slide 31: 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. Nelson Complexity: 7.25 29th largest in the world Among the most profitable refineries in Europe and the U.S. : Integrate
Slide 32: Aygaz – Turkey's Undisputable Market Leader in LPG
Aygaz – Turkey’s Undisputable Market Leader in LPG for 50 years Generic brand in Turkey for LPG Leading LPG Fully integrated LPG services distributor of Turkey (2nd largest LPG market in Serves 100,000 homes with cylinder LPG everyday Europe) More than 1 million vehicles use Aygaz autogas da
Slide 33: 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 7 & station consecutive years 2nd in white products satisfaction Retail and wholesale acti
Slide 34: AES Entek – Investing to become a Leading Player in Electricity Generation
AES Entek – Investing to become a Leading Player in Electricity Generation AES ENTEK 50-50% JV established Power generation company with AES, targeting 3000MW total installed capacity Over 350 MW installed capacity 2 natural gas combined cycle plants Gas turbine based cogeneration facility I
Slide 35: Automotive Sector: A Global Manufacturing and Distribution Hub
Automotive Sector : A Global Manufacturing and Distribution Hub Dynamic market with high growth potential Well-supplied manufacturing hub Car Ownership per ‘000 473 5th largest labor force compared with the EU Over 24.7 million young and well-educated professionals 141 High growth in labor pro
Slide 36: 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 High profitability Present in high growth segments both in Turkey & in EU vis-a-vis global peers Opportunities in new Segments such as HCVs Highest quality and
Slide 37: Consumer Durables Sector: Low Penetration Levels and Strong Margins
Consumer Durables Sector : Low Penetration Levels and Strong Margins Underpenetrated segments and renewals drive Strong value proposition growth White Goods Penetration – % 92 Strong R&D focus and innovative products 70 Efficient and cost-effective outlet to multiple markets with over 1.5 billio
Slide 38: Arçelik – Provides Products and Services to Over 100 Countries Worldwide
Arçelik – Provides Products and Services to Over 100 Countries Worldwide Privilidged position in Turkey with superior exclusive dealer Turkey’s market leader in network (Extensive sales and after-sales network in Turkey) white goods (50%), Highest level of brand recognition in Turkey TVs and air
Slide 39: Why Finance Sector?
Why Finance Sector? Low Penetration Levels, Providing an Opportunity for Rapid Growth Loans + Deposits / GDP – % (2012) Branches per million inhabitants (2011) Mortgage loans / GDP – % (2012) 371 40.4 531 20.8 111 137 6.0 Euro Area* Turkey** Euro Area * Turkey ** Euro Area* Poland** Turkey*** Source
Slide 40: Yapı Kredi Bank – Balanced Growth and Sustained Profitability
Yapı Kredi Bank – Balanced Growth and Sustained Profitability Well-positioned to capture benefits of sector growth as a Top-4 privately owned bank 4th among private sector Committed and strong shareholders: 50-50% JV with banks in asset size UniCredit Continuation of Widespread network with 92
Slide 41: Yapı Kredi Subsidiaries and Other Finance Companies
Yapı Kredi Subsidiaries and Other Finance Companies YAPI KREDİ YAPI KREDİ YAPI KREDİ YAPI KREDİ LEASING FACTORING ASSET MANAGEMENT PENSION Leader with 17.2% Leader with 15% share 2nd in the market with 3rd in private pension share 17.6% share funds with 17.1% share YAPI KREDİ YAPI KREDİ YAPI
Slide 42: Appendix
Appendix www.koc.com.tr 42
Slide 43: Table of Contents
Table of Contents Page 1. 9M13 Earnings Review 44 2. Latest Macroeconomic Developments 53 3. Shareholder Structures 54 4. Disclaimer 55 5. Contacts 56 www.koc.com.tr 43
Slide 44: New Financial Reporting Framework
New Financial Reporting Framework Combined Financial Results: All P&L line items of subsidiaries and joint ventures are included “Koç Group’s Operating Segments’ by full consolidation method (i.e.100%) after intra-group profit Financial Performance” eliminations. Consolidated Financial Results (Af
Slide 45: Group's Overall Financial Performance
Group’s Overall Financial Performance Consumer 9M13 Change Over TL million Energy Automotive Finance Other Durables Total 9M12 Total Combined Revenues * 48,034 17,894 8,551 10,173 5,432 90,083 4% Combined Gross Profit 2,206 2,226 2,526 5,642 947 13,547 10% Combined Operating Profit 768 1,279 805 2,4
Slide 46: Consolidated Main Financial Indicators
Consolidated Main Financial Indicators € Mn* US$ Mn* TL Mn TL Mn Change Change 30.Sep.2013 30.Sep.2013 30.Sep.2013 30.Sep.2012 %, TL %, US$ Revenues 19,655 25,882 48,171 48,367 q -0.4 q -4 Gross Profit 2,078 2,736 5,092 5,000 p 2 q -2 Operating Profit 1,331 1,753 3,262 3,137 p 4 p 0.3 Profit Before
Slide 47: Combined Revenues
Combined Revenues Combined Revenues – TLmn Segmental Combined Revenues Breakdown – % +4% 86,542 90,083 Automotive Energy 20% 53% Durables 9% 9M12 9M13 Finance Other 11% 6% Segment Contribution to Combined Revenues – TLmn +1% 47,426 48,034 +12% +1% +7% +5% 15,951 17,894 8,484 8,551 9,516 10,173 5,165
Slide 48: Combined Operating Profit
Combined Operating Profit Combined Operating Profit – TLmn Segmental Combined Operating Profit Breakdown – % 5,357 +2% 5,456 Automotive 23% Energy Durables 14% 15% Other 3% 9M12 9M13 Finance 45% Segment Contribution to Combined Operating Profit – TLmn +26% 2,458 -50% 1,945 +13% 1,533 1,279 +34% 1,12
Slide 49: Combined Net Income
Combined Net Income Combined Net Income – TLmn Segmental Combined Net Income Breakdown – % +36% 6,242 Automotive 18% Durables 4,582 +9% Energy 7% 4,988 19% Excl. one-off items Other 3% 9M12 9M13 Finance 52% Segment Contribution to Combined Net Income – TLmn +97% 3,271 -8% +22% +4% 1,659 +3% 2,017* 1
Slide 50: Consolidated Net Income
Consolidated Net Income Consolidated Net Income – TLmn Segmental Consolidated Net Income Breakdown – % +31% 2,240 Automotive 21% 1,707 Durables +7% Energy 8% 1,827 Excl. 18% one-off items Other 5% 9M12 9M13 Finance 48% Segment Contribution to Consolidated Net Income – TLmn +96% 1,085 -18% +5% 553 +2
Slide 51: Combined Exports & International Sales
Combined Exports & International Sales Combined Exports – US$mn Combined International Sales – US$mn 11,640 11,642 13,698 13,657 9M12 9M13 9M12 9M13 www.koc.com.tr 51
Slide 52: Combined Investments
Combined Investments Combined Investments – TLmn Segmental Investments Breakdown – % +58% 4,616 2,922 Automotive 38% Energy 50% Durables 9M12 9M13 Other Finance 8% 2% 2% www.koc.com.tr 52
Slide 53: Macroeconomic Assumptions
Macroeconomic Assumptions 2013 2014 2014 Koç Holding Koç Holding Government GDP (TL billion) 1,558 1,718 1,719 GDP ($ billion) 820 846 867 Growth (GDP, %) 3.5 4.0 4.0 Inflation (CPI, year-end, %) 7.5 6.5 5.3 USD/TL (year-end) 2.00 2.06 --- USD/TL (average) 1.90 2.03 1.98 EUR/TL (year-end) 2.70 2.72
Slide 54: Shareholder Structures as of September 2013
Shareholder Structures as of September 2013 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 Tüpraş Ford Otosan Arçelik Tat Konserve SPV share: 51.00% KH share: 38.46% Koç Financial Services KH sha
Slide 55: 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 56: 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 57: Main Group Companies' Contacts
Main 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. 6000 +90 262 316 3085 Doğan Korkmaz, Finance Dire