Slide 1: Sabancı Holding Q2 2019 Earnings Presentation
Sabancı Holding Q2 2019 Earnings Presentation
Slide 2: Disclaimer
2 Disclaimer The information and opinions contained in this document have been compiled by Hacı Ömer Sabancı Holding A.Ş. (“Holding”) from sources believed to be reliable and in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correct
Slide 3: 2019 Q2 Highlights
3 2019 Q2 Highlights Resilient operational and financial performance Non-bank Combined Net Sales and EBITDA* grew 30% and 53% YoY, respectively Temsa bus business stake divested Our partner in Temsa İs Makinaları to assume full control Buyout of Axiom stake by Kordsa completed 500MW Wind Tender won
Slide 4: Remarkable cash generation supports deleveraging
4 2019 Remarkable cash generation supports deleveraging Free Cash Flow, Combined for Non-Bank* 5.000 3.490 OPERATIONAL CASH FLOW (MTL)* 3.000 Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change 1.795 1.578 1.667 Energy 970 1.473 52% 1.263 2.884 128% 1.000 Cement 125 212 70% 118 122 3% Retail 90 216 14
Slide 5: Continual Outstanding Non-Bank Performance
5 2019 Continual Outstanding Non-Bank Performance Combined Net Sales MILLION TL Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change High renewable generation volume and TOTAL* 19.990 24.688 24% 38.709 47.982 24% BANK 9.210 10.665 16% 17.172 21.363 24% regulated electricity sales NON-BANK* 10.779 14.02
Slide 6: Revenues Energy, Insurance and Industrials top-line drivers
6 Revenues Energy, Insurance and Industrials top-line drivers TOTAL BEFORE CONSOLIDATION ADJUSTMENTS (COMBINED) MILLION TL Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change Higher FX linked renewable TOTAL* 19.990 24.688 24% 38.709 47.982 24% volume at Generation and higher regulated electricity BAN
Slide 7: EBITDA Significant contribution from Energy segment
7 EBITDA Significant contribution from Energy segment TOTAL BEFORE CONSOLIDATION ADJUSTMENTS (COMBINED) MILLION TL Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change TOTAL* 3.600 4.454 24% 7.304 8.708 19% Generation business has driven BANK 1.819 1.733 -5% 4.076 3.804 -7% growth in Energy NON-BANK* 1
Slide 8: Consolidated Net Income Energy accounts for more than two thirds of bottom-line
8 Consolidated Net Income Energy accounts for more than two thirds of bottom-line MILLION TL Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change CONSOLIDATED NET INCOME* 940 963 2% 1.834 1.991 9% Solid operational profitability and BANK 543 514 -5% 1.235 1.130 -8% hedged FX position in Energy NON-BANK
Slide 9: Energy Extraordinary results in Generation led to another strong quarter
9 Energy Extraordinary results in Generation led to another strong quarter BEFORE CONSOLIDATION ADJUSTMENTS (COMBINED) MILLION TL Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change SALES 4.754 6.569 38% 9.912 12.400 25% EBITDA* 1.124 1.762 57% 2.019 3.265 62% NET INCOME* 251 662 164% 350 1.362 289% E
Slide 10: Generation Sector Spot prices dipped with jump in hydro generation
10 Generation Spot prices dipped with jump in hydro generation Sector Electricity consumption (GWh) Electricity generation by source in Q2 (TWh) 85 Natural Gas 2017 2018 2019 80 Hydro -0,8% 0,9% Coal 75 70 Lignite Geothermal+wind 65 Q2'18 Q2'19 Other 60 Q1 Q2 Q3 Q4 0 5 10 15 20 25 30 35 Source: TEİA
Slide 11: Enerjisa Üretim Santralleri: Exceptional hydrology, excellent results
11 Enerjisa Üretim Santralleri A.Ş. Exceptional hydrology, excellent results MILLION TL Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change In Q2 19, hydro generation volume Net sales 997 1.726 73% 2.085 3.073 47% jumped by 53% YoY EBITDA* 344 880 156% 627 1.536 145% Positive impact of FX based fe
Slide 12: Deleveraging momentum does not lose steam
12 Enerjisa Üretim Santralleri A.Ş. Deleveraging momentum does not lose steam Free Cash Flow Generation (MTL) Net Debt (MEUR Equivalent) 1.500 1.700 1.000 1.400 500 1.100 1.678 0 800 1.042 2014 2015 2016 2017 2018 1H 2018 1H 2019 934 -500 500 2017 2018 Q2 2019 -1.000 Net Debt / EBITDA ratio (TL base
Slide 13: Cement Weak domestic demand persists
13 Cement Weak domestic demand persists BEFORE CONSOLIDATION ADJUSTMENTS (COMBINED) Current Assessment MILLION TL Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change Weakness in domestic demand prevails; SALES 955 959 0% 1.703 1.702 0% domestic volumes declined by 42% year-to-date EBITDA* 248 166 -3
Slide 14: Retail Higher operational profitability in Food and Electronics
14 Retail Higher operational profitability in Food and Electronics MILLION TL BEFORE CONSOLIDATION ADJUSTMENTS (COMBINED) Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change Current Assessment SALES 2.132 2.564 20% 4.089 4.781 17% EBITDA* 27 196 618% 35 326 823% − Stronger LfL revenue growth in food a
Slide 15: Insurance Both businesses delivering strong financial and net income
15 Insurance Both businesses delivering strong financial and net income BEFORE CONSOLIDATION ADJUSTMENTS (COMBINED) Current Assessment MILLION TL Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change SALES 889 1.276 44% 1.961 2.511 28% − 46% growth in non-life insurance premiums, driven by EBITDA 103 15
Slide 16: Industrials FX linked revenues ensure resilience
16 Industrials FX linked revenues ensure resilience BEFORE CONSOLIDATION ADJUSTMENTS (COMBINED) MILLION TL SALES Q2 2018 Q2 2019 % Change H1 2018 H1 2019 % Change 2.010 2.547 27% 3.771 5.030 33% Current Assessment EBITDA* 293 448 53% 584 763 31% − Increased exports and FX linked revenues BRİSA 102 1
Slide 17: FX Position Long FX
17 FX Position Long FX MILLION EURO CONSOLIDATED NET FX POSITION (excl. Bank) Dec 31, 2018 Jun 30, 2019 ENERGY -43 31 INDUSTRIALS 16 2 CEMENT 0 5 RETAIL 1 -1 INSURANCE 20 26 HOLDING & OTHER 284 234 TOTAL CONSOLIDATED FX POSITION AFFECTING PL 278 296 Holding Only Cash Position by the end of Q2 2019
Slide 18: Guidance unchanged despite positive outlook
18 2019 Guidance unchanged despite positive outlook Growth Guidance SABANCI HOLDING SALES 10-20% COMBINED NON-BANK * EBITDA 10-20% * Excludes one off items ** Sabanci Group plans to invest approximately 6 Billion TL in 2019, excluding any strategic M&A opportunities that may arise within the year
Slide 19: Conclusion
19 2019 Conclusion Exceptional operational and financial performance sustained in Q2 2019 Capital allocation strategy executed effectively as planned Our focus will continue to be on selective growth, cash generation, and quality of earnings
Slide 20: Q&A
Q&A OQBANc!
Slide 21: Net Income: Non-operational and Non-recurring items
21 2019 Net Income: Non-operational and Non-recurring items Non-Operational and Non-Recurring Items Q2 2018 Q2 2019 H1 2018 H1 2019 CONSOLIDATED NET INCOME EXCLUDING NON OPERATIONAL & NON RECURRING ITEMS 940 963 1.834 1.991 Gain on sales of Enerjisa Enerji shares (IPO proceeds) 0 0 123 0 Carrefoursa
Slide 22: Sabancı Holding Discount to NAV
22 2019 Sabancı Holding Discount to NAV* USDmn June-2019 Dec-2018 NAV* Discount Direct Value of Value of June-2019 Dec-2018 Dec-2017 Companies Stakes (%)* Mcap Stake % of NAV Stake % of NAV Akbank 40,8% 6.139 2.502 46,7% 2.117 39,6% Enerjisa Enerji 40,0% 1.130 452 8,4% 456 8,5% Aksigorta 36,0% 236 8