Koc Holding A.s. · BIST:KCHOL

Koc Holding A.s — Investor Presentation (October 2014)

64 slides from Koc Holding A.s's investor presentation, October 2014

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

    Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY creating one common legacy for 88 years Investor Presentation – October 2014

  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 and market capitalization on the Borsa İstanbul. PROFITABLE AND HIGH GROWTH MODEL, FOCUSING ON SUSTAINA

  3. 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

  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* 8% 11 11 9 Total Exports / Turkey’s Exports* 10% 6 6 5 5 5 5 4 3 3 Total Market Cap. on Borsa İstanbul*

  5. 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

  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: 76.7 mn people; Median age at 29.7 vs. 41.5 in EU  Unsaturated domestic market as most

  7. 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

  8. 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* / AES Entek Ford Otosan* / Tofaş* / Arçelik* Yapı Kredi Bankası* TürkTraktör* / Otokar* / Otokoç I

  9. 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 42 million (approximately 12.5 mn CRM card holders with data sharing Large customer database permission) in different business segments together with stron

  10. Slide 10: Strongest Beneficiary of the High Growth Environment

    Strongest Beneficiary of the High Growth Environment Combined Revenues – TL billion Combined Operating Profit* – TL billion 123.5 8.3 116.6 +6% 6.8 +22% +7% 2012 2013 2012 2013 Combined Profit Before Tax – TL billion Combined Net Income – TL billion +20% 7.5 +4% 7.2 6.9 6.3 +5% -11% 2012 2013 2012 2

  11. Slide 11: Resilience Through Diversification Across Assets with Different Risk Profiles

    Resilience Through Diversification Across Assets with Different Risk Profiles (mn) TL1,262* TL2,399** TL25,147 Key Risks & Sensitivites Key Strengths 100 • Strong growth potential , esp. for large banks 8 Domestic credit and interest • Robust profitability with RoATE: 16.7% Finance rate risk, regula

  12. Slide 12: Balanced Portfolio Between Defensive & Growth Assets

    Balanced Portfolio Between Defensive & Growth Assets Wealth preservation Bank on growth 54%  KFS (Yapı Kredi) 46%  Tüpraş  Arçelik  Otokar  Otokoç  Aygaz  AES Entek  Opet  Koçtaş  Tofaş  Tat, Düzey  Ford Otosan  Demir Export  Türk Traktör  Setur  Koç Finansman  KoçSistem  Marinas 

  13. Slide 13: Further Diversification via Geographic Coverage

    Further Diversification via Geographic Coverage: International Sales Continues To Grow Despite Weak Demand in EU Combined International Sales (US$ billion) 2008  2013 regional breakdown and percentages 18% CAGR 18.6 18.6 16.6 13.2 $0.6b  $0.8b $10.7b  $11.2b $2.6b  $3.4b 9.6 4%  5% 71%  60% 18

  14. Slide 14: Strong & Improving Performance Despite Volatile Domestic Market

    Strong & Improving Performance Despite Volatile Domestic Market 9.2 8.8 10.0 5.0 4.0 Turkey GDP Growth 2.1 (%) 0.0 2009 2010 2011 2012 2013 Source: TurkStat -5.0 -4.8 4.0 CAGR: 17% 3.0 2.7 Net Profit attributable 2.1 2.3 to Equity Holders of 1.7 2.0 1.4 the Parent 1.0 (TL billion) 0.0 2009 2010 2011

  15. 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 financial debt remains at 2.1 in new M&As times EBITDA* Koç Holding Stand-Alone Consolidated Net Debt / Cash Excl. Finance Net Cash Position FY13 1H14 ~US$ -3.1 bn ~US$ -3.9 b

  16. Slide 16: Major Portfolio Companies Have Strong Current Ratios

    Major Portfolio Companies Have Strong Current Ratios Group’s(*) Current Ratio 31 December 2013 Total Current Assets: TL 37.0 bn Total Current Liabilities: TL 27.5 bn Current Ratio : 1.3 9,764 7,659 3,350 2,444 2,784 867 798 1,086 Current Assets (TL mn) 10,396 4,091 2,397 2,061 197 667 687 386 Curren

  17. Slide 17: Average Duration of Financial Debt is Lengthened by ~15 Months

    Average Duration of Financial Debt is Lengthened by ~15 Months 30 September 2012 30 June 2014 Combined Financial Debt Combined Financial Debt Average duration: ~22 months Average duration: ~37 months 1. Eurobond Transactions:  Koç Holding - US$ 750 mn, 7 yrs in April 13 (3.5% p.a. - coupon rate) 

  18. Slide 18: FX Position

    FX Position Koç Holding Stand-Alone FX Position FY13 1H14 US$ + 187mn US$ +155mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership FY13 1H14 FY13 1H14 US$ - 3.5bn US$ -4.0bn* US$ - 1.6bn US$ -1.7bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş & A

  19. Slide 19: Adjusted Net FX Position / Equity Ratio Meets Policy Limits

    Adjusted Net FX Position / Equity Ratio Meets Policy Limits* for Major Portfolio Companies 31 December 2013 187 51 Net FX Position (US$ mn) (Reported) -69 -1 -14 -417 -806 -3,287 187 43 2 22 36 51 Net FX Position (US$ mn) (Adjusted) -61 -1 FX position / Equity (%): - 2% 0% -6% 3% 0% 10% 3% (Adjusted

  20. Slide 20: 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

  21. Slide 21: 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

  22. Slide 22: 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 6.4 markets a

  23. Slide 23: 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 23

  24. Slide 24: 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

  25. Slide 25: 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

  26. Slide 26: 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

  27. Slide 27: 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: 6,500 trademarks 2,500 patent families 5,500 patents 700 industrial design registrations 4,000 Internet domain names 4 Koç Group companies ranked in the top 10 on the Turkish Koç Grou

  28. Slide 28: 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

  29. Slide 29: 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

  30. Slide 30: 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 5.44 million GJ invested TL248.5 million savings in energy consumption a

  31. Slide 31: Key Takeaways: Value Propositions

    Key Takeaways : Value Propositions Largest investment Robus 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 Track record in the Turkish Strong commitment portfolio restructuring Economy to C

  32. Slide 32: Operational Excellence and Leadership in Core Business Segments

    Operational Excellence and Leadership in Core Business Segments Slide # 33 Energy Sector Strongest Player in the Turkish Energy Sector 39 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 45 Consumer Durables Sector Strong Global Network 47 Finance Sector Focus on Lucrative Busin

  33. Slide 33: 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

  34. Slide 34: 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 28th largest in the world  Among the most profitable refineries in Europe and the U.S. : Integrate

  35. Slide 35: Residuum Upgrade Project (RUP) of Tüpraş

    Residuum Upgrade Project (RUP) of Tüpraş  Upon completion in Nov’14, RUP will CUR Complexity  Raise Tüpraş’s annual EBITDA by c. US$550mn White Product Implies +63% rise over the last 3-year avg EBITDA of US$870mn Yield  Make İzmit refinery the most complex refinery in Mediterranean and one of th

  36. Slide 36: 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 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 integrated LPG se

  37. Slide 37: 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 8 & station consecutive years 2nd in white satisfaction products with  Retail and wholesale

  38. Slide 38: AES Entek – Investing in Electricity Generation

    AES Entek – Investing to benefit from the upside potential in Electricity Generation AES ENTEK  Power generation company  364 MW total installed capacity 50-50% JV established with AES  2 natural gas combined cycle plants  Gas turbine based cogeneration facility  3 hydroelectric power plants In

  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 Well-supplied manufacturing hub Motorization Rate per ‘000 563  5th largest labor force in EU  Over 25.3 million young and well-educated professionals  High growth in labor productivity 173 

  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 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

  41. Slide 41: Investments: Automotive

    Investments: Automotive FORD OTOSAN Investment of c. US$ 1bn in tangible assets will be completed in Investments of Ford Otosan 2014 $ mn 682 700  All products will be renewed by 2014 year-end; production capacity will rise from 330K to 415K 600 523 500  New product portfolio is expected to improv

  42. Slide 42: Ford Otosan – Leader in Total Automotive Sales

    Ford Otosan – Leader in Total Automotive Sales for 12 Consecutive Years  Leader in Turkish Automotive Industry Largest R&D staff  50-50% JV with Ford - Global engineering center for Ford’s 2nd highest Ford in the Turkish diesel engines and heavy trucks market share in automotive  Strong distribut

  43. Slide 43: Tofaş – Production for Global Brands

    Tofaş – Production for 5 Global Brands  50-50% JV with Fiat  The only domestic manufacturer and exporter of both Among Fiat’s 3 main R&D PCs and LCVs centers globally  Extensive dealer and after-sales network  Owns the full intellectual and industrial property rights 3rd in total Take-or-pay for

  44. Slide 44: Other Automotive Companies

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

  45. Slide 45: 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

  46. Slide 46: Arçelik – Products and Services to Over 100 Countries

    Arçelik – Provides Products and Services to Over 100 Countries Worldwide  Privilidged position in Turkey with superior exclusive Turkey’s market leader in white dealer network (Extensive sales & after-sales network goods (50%), TVs and air-conditioners in Turkey) Manufacturing in low U.K.’s market

  47. Slide 47: Why Finance Sector?

    Why Finance Sector? Low Penetration Levels, Providing an Opportunity for Rapid Growth Loans + Deposits / GDP – % (2013) Branches per million inhabitants Mortgage loans / GDP – % (2013) 460 44 234 125 20 145 6 EU-27 Turkey EU-27 Turkey Euro Area Poland Turkey Source: European Central Bank Note: Expec

  48. Slide 48: Yapı Kredi Bank – Balanced Growth and Sustained Profitability

    Yapı Kredi Bank – Balanced Growth and Sustained Profitability  Well-positioned to capture benefits of sector Capital Adequacy (Bank) growth as a Top-4 privately owned bank 4th among private 17.1%  Committed and strong shareholders: 50-50% JV with UniCredit sector banks in 16.3% 16.0% 15.9%  Wides

  49. 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 15% share  Leader with 17% share  2nd in the market with 18% share YAPI KREDİ YAPI KREDİ KOÇFİNANS INVEST INVESTMENT TRUST  3rd in in equity  2nd largest investme

  50. Slide 50: Table of Contents

    Table of Contents Page 1. 1H14 Earnings Review 51 2. Shareholder Structures 61 3. Disclaimer 62 4. Contacts 63 www.koc.com.tr 50

  51. Slide 51: Group's Overall Financial Performance

    Group’s Overall Financial Performance Consumer 1H14 Change Over TL million Energy Automotive Finance Other Durables Total 1H13 Total Combined Revenues * 32,220 11,916 6,175 7,967 3,988 62,266 10% Combined Gross Profit 1,082 1,499 1,929 3,594 655 8,758 2% Combined Operating Profit 478 761 468 1,288 5

  52. Slide 52: Consolidated Main Financial Indicators

    Consolidated Main Financial Indicators € Mn* US$ Mn* TL Mn TL Mn Change Change 30.Jun.2014 30.Jun.2014 30.Jun.2014 30.Jun.2013 %, TL %, US$ Revenues 10,850 14,873 32,188 29,562 p 9 q -9 Gross Profit 1,141 1,564 3,385 2,978 p 14 q -5 Operating Profit 559 767 1,659 1,524 p 9 q -9 Profit Before Tax 553

  53. Slide 53: Combined Revenues

    Combined Revenues Combined Revenues – TL mn Segmental Combined Revenues Breakdown – % +10% 62,266 56,846 Automotive 19% Energy 52% Durables 10% 1H13 1H14 Finance Other 13% 6% Segment Contribution to Combined Revenues – TL mn +11% 32,220 29,095 -1% +11% +19% +15% 12,037 11,916 6,692 7,967 5,562 6,175

  54. Slide 54: Combined Operating Profit

    Combined Operating Profit Combined Operating Profit – TL mn Segmental Combined Operating Profit Breakdown – % 3,278 -7% Automotive 3,050 25% Energy 16% Durables 15% Other 2% 1H13 1H14 Finance 42% Segment Contribution to Combined Operating Profit – TL mn -23% 1,682 +156% 1,288 -12% 869 761 +0.1% 478

  55. Slide 55: Combined Net Income

    Combined Net Income Combined Net Income – TL mn Segmental Combined Net Income Breakdown – % +15% 3,382 2,935 Energy Automotive 28% 24% +7% 3,142* Durables Other 8% 9% 1H13 1H14 Finance 30% Segment Contribution to Combined Net Income – TL mn -28% +230% 1,419 -3% 1,021 963 853 824 -5% +262% 292 289 27

  56. Slide 56: Consolidated Net Income

    Consolidated Net Income Consolidated Net Income – TL mn Segmental Consolidated Net Income Breakdown – % +38% 1,435 Automotive Energy 23% 1,038 +15% 27% 1,195* Durables 7% Other 19% Finance 1H13 1H14 24% Segment Contribution to Consolidated Net Income – TL mn -27% 472 +437% -3% 382 343 333 344 +511%

  57. Slide 57: Combined Exports & International Sales

    Combined Exports & International Sales Combined Exports – US$ mn Combined International Sales – US$ mn 7,955 -8% 9,233 -4% 8,895 7,328 1H13 1H14 1H13 1H14 www.koc.com.tr 57

  58. Slide 58: Combined Investments

    Combined Investments Combined Investments – TL mn Segmental Investments Breakdown – % +8% 2,842 2,644 Automotive 46% Energy 43% Durables 1H13 1H14 Other 7% 2% Finance 3% www.koc.com.tr 58

  59. Slide 59: Koç Holding Net Cash Position

    Koç Holding Net Cash Position Koç Holding Stand-Alone 30.06.2014 Net Cash Position Total Debt: ~US$ 0.75bn Total Cash: ~US$ 1.55bn Net Cash: ~US$ 800mn Consolidated Net Debt / Cash Excl. Finance 1Q14 1H14 ~US$ -3.7bn ~US$ -3.9bn www.koc.com.tr 59

  60. Slide 60: FX Position

    FX Position Koç Holding Stand-Alone FX Position 1Q14 1H14 US$ + 180mn US$ +155mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 1Q14 1H14 1Q14 1H14 US$ - 3.7bn US$ -4.0bn* US$ - 1.5bn US$ -1.7bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş & A

  61. Slide 61: Shareholder Structures as of June 2014

    Shareholder Structures as of June 2014 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

  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 : 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@

  64. Slide 64: 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

Koç Holding — Investor Presentation (October 2014) on 6ix