Koc Holding A.s. · BIST:KCHOL
Koc Holding A.s — Investor Presentation (April 2008)
37 slides from Koc Holding A.s's investor presentation, April 2008
Slide 1: Koç Holding Investor Presentation
Koç Holding Investor Presentation April 2008
Slide 2: Best Proxy to the Growing Consumer Demand in Turkey
Best Proxy to the Growing Consumer Demand in Turkey • Total Sales / GDP : 9% Leading conglomerate in • Total Exports / Turkey’s Exports : 11% Turkey • Total Share in ISE Market Cap : 16% Largest distribution • 14,000 dealerships, after-sales network • 712 branches Largest customer • Customer databas
Slide 3: Strategic Targets
Strategic Targets Strong growth • Last 5 years CAGR : 42% in US$ terms in revenues • Last 5 years CAGR : 27% in US$ terms (organic only) • Last 5 years CAGR : 40% in exports Increase exports and • Last 5 years CAGR : 34% in international international revenues sales Maximize • 2003-2007 CAGR : 68% i
Slide 4: Main Competitive Advantages
Main Competitive Advantages Leading positioning in low Superior growth opportunities penetrated growth sectors Largest customer database Most efficient use of CRM Higher geographical diversification Better risk management Largest distribution network Highest customer satisfaction Synergies among gro
Slide 5: Focused Growth Strategy
Focused Growth Strategy Energy Automotive Consumer Durables Finance Main Companies Main companies Main Companies Main Companies Tüpraş* / Aygaz* / Opet / Entek Ford Otosan* / Tofaş* / Türk Traktör* / Arçelik* / Beko (aka Grundig) Elektronik* Yapı Kredi Bankası* / Koç Allianz Otokar* International Al
Slide 6: Energy
Energy Key Indicators 2007 US$mn 2007 YTL mn Annual Chg. (YTL) Total 20,139 26,210 9% Revenues Net Operating 1,178 1,533 51% Profit EBITDA 1,400 1,822 44% Competitive Advantages Vision & Strategies • The only refiner in Turkey, meeting 70% of total • Maximize efficiency and increase profitability th
Slide 7: Automotive
Automotive Key Indicators 2007 US$mn 2007 YTL mn Annual Chg. (YTL) Total 5,007 6,517 3% Revenues Net Operating 338 440 2% Profit EBITDA 453 589 -2% Competitive Advantages Vision & Strategies • Domestic market leader with 29% share in sales • Grow as a “Regional Production Base” in production and as
Slide 8: Consumer Durables
Consumer Durables Key Indicators 2007 US$mn 2007 YTL mn Annual Chg. (YTL) Total 5,456 7,101 -7% Revenues Net Operating 416 541 -10% Profit EBITDA 537 699 -10% Competitive Advantages Vision & Strategies • Domestic market leader with 57% share in sales • Grow globally by acquisitions and organic growt
Slide 9: Finance
Finance Key Indicators 2007 US$mn 2007 YTL mn Annual Chg. (YTL) Total 4,151 5,403 15% Revenues Net Operating 621 808 21% Profit Competitive Advantages Vision & Strategies • A financial supermarket with leading companies in • Expand branch network aggressively asset management, leasing & brokerage •
Slide 10: M&A Strategy: Strong turnaround in acquired companies
M&A Strategy Strong turnaround in acquired companies Acquired Terms Improvements companies Under new management : Higher focus on efficiency, profitibality and new investment opportunities: Profit enhancement programs, increased product yields, increased nelson complexity, increased export premiums,
Slide 11: Proactive Divestitures
Proactive Divestitures 2004 – 2007 Sector Buyer Terms Timeline Implied Value: US$299mn St.Gobain Announced on 23 June 06 Insulation Total Proceeds: US$179mn Isover & SPA signed on 5 September 06 Materials Koç Holding Share: 17.4% Alamana Ind. Closed on 29 November 06 Other Koç Share: 43.8% Implied V
Slide 12: Optimal portfolio allocation: Strong risk management against FX volatility
Optimal portfolio allocation Strong risk management against FX volatility 2004 2007 FX-denominated FX-denominated & FX-linked & FX-linked 39% Revenues YTL 62% 38% Increased share of FX and FX-linked revenues; higher YTL resilience against FX volatility 61% Exports (Combined – US$bn) International Sa
Slide 13: Optimal portfolio allocation: Higher resilience against interest rate volatility
Optimal portfolio allocation Higher resilience against interest rate volatility 2004 2007 Other Non- 12% Interest - Interest Revenues Sensitive* Sensitive* 27% Non- 53% Interest Sensitive* Interest - 61% Sensitive* The portfolio is better suited to 27% Other continue to perform well in 20% robust ti
Slide 14: Global Reach
Global Reach Double digit growth in all regions* Manufacturing facilities in low cost centers such as Turkey, Romania, 7,117 Russia and China US$ mn 11% 379 6,434 277 37% 1,002 US$ mn US$ mn 15% 2006 2007 875 2006 2007 2006 2007 676 481 41% US$ mn 2006 2007 50 19% US$ mn 42 2006 2007 * The charts ab
Slide 15: Historically Overperformed the Turkish Growth Rates Continuously
Historically Overperformed the Turkish Growth Rates Continuously Revenues (Consolidated-US$bn) Turkey vs Koç 34.8 (%) 2% 42.6 G R:4 39.5 7 CA 34.5 0 02 -200 2 16.7 18.2 11.8 10.8 16.6 5.6 6.1 11.1 4.9 3.2 4.0 5.7 4.3 5.7 6.8 1980-85 1985-90 1990-95 1995-00 2000-05 2005-07 2002 2003 2004 2005 2006 20
Slide 16: Focus on Lucrative Businesses and Profitability
Focus on Lucrative Businesses and Profitability EBITDA (Consolidated-US$bn) Operating Profit (Consolidated-US$bn) 4.0 3.4 7% R:3 3.4 8% 7 CA G AG R:6 2.7 -200 07 C 2002 2.7 -20 2002 2.1 1.5 1.5 1.2 0.9 0.9 0.7 0.6 0.2 2002 2003 2004 2005 2006 2007 2008 E 2002 2003 2004 2005 2006 2007 2008 E (%) Oper
Slide 17: Strong Financial and Operational Performance in 2007
Strong Financial and Operational Performance in 2007 In 2007 • Revenues reached YTL51.4 bn (US$39.5bn), registering 5% (YTL) and 15% (US$) YoY increase • Net operating profit reached YTL3,575mn (US$2,747mn), registering 20% (YTL) and 32% (US$) YoY increase • EBITDA reached YTL4,422mn (US$3,398mn), r
Slide 18: Main Financial Indicators
Main Financial Indicators 2007 € Mn US$ Mn YTL Mn YTL Mn % 31-Dec-07 31-Dec-07 31-Dec-07 31-Dec-06 Change Revenues 28,922 39,515 51,429 49,197 5 Gross profit 4,758 6,500 8,460 7,651 11 EBITDA 2,487 3,398 4,422 3,825 16 Net Operating profit 2,010 2,747 3,575 2,977 20 FX Gain/(Loss) 588 803 1,045 -475
Slide 19: Expected Cash Flow
Expected Cash Flow Stand-alone Net Debt as of year-end 2007 SPV Net Debt as of year-end 2007 • < US$ 1bn • US$ 1.68bn • 10 year maturity • Self financing mechanism - redemption schedule linked to Tüpraş dividend stream • Resilient against FX and interest rate volatility since revenue stream is FX li
Slide 20: Potential Investment Areas
Potential Investment Areas • Residium Upgrade project • Opportunities in • New manufacturing different fields projects for export including electricity generation, nuclear markets with our JV Automotive and renewable energy partners Focus on higher ROI generating Consumer Energy businesses and Durab
Slide 21: Key Takeaways
Key Takeaways t o Agg s t p roxy r play essive Be Successful T u rkish e M& r for f t he de-leveragin Aa u o n omy g ctiv rther E c story ity o n h igh- Diversific Focus evenue ation in r of risk marg rea m s and lue st ld er va h o share 21
Slide 22: Appendix
Appendix GP Koc 22
Slide 23: Table of Contents
Table of Contents Page 1. 2007 year-end Earning Release .............................. 24 2. Shareholder Value, Corporate Governance and Social Responsibility ........................................... 31 3. Shareholder Structures ............................................. 33 4. Main Assumptions
Slide 24: Continuous Growth in Revenues
Continuous Growth in Revenues Total Revenues (YTLmn) Share of Segment Revenues (%) Automotive 13% 5% 51,429 Energy Durables 51% 14% 49,197 Finance 11% Other Food& 2% Retail 2006 2007 10% Segment Contribution to Total Revenues (YTLmn) 9% 26,210 23,961 3% 7% 15% 0.3% 7,669 7,101 31% 6,313 6,517 4,713
Slide 25: Increase in EBITDA
Increase in EBITDA EBITDA Consumer Food & Consolidated Energy Automotive Finance Other YTL mn Durables Retail Total 2007 1,822 589 699 895 394 24 4,422 Total EBITDA (YTL mn) Segmental EBITDA Breakdown (%) Automotive Energy 13% 16% 41% 4,422 Durables 16% 3,825 Other 1% Food& Finance Retail 20% 2006 2
Slide 26: EBITDA and EBITDA Margin by Segments
EBITDA and EBITDA Margin by Segments Segment Contribution to EBITDA (YTL mn) 44% 1,822 1,264 10% 17% 2% 895 773 763 699 10% 599 589 359 394 65% 67 24 Ene rgy Autom otive Durable s Finance Food & Re tail Othe r 2006 2007 EBITDA Margin by Sectors (%) 16.2 16.6 10.1 9.8 9.5 9.0 7.0 6.7 7.3 5.3 5.7 2.9
Slide 27: Strong Net Operating Profit
Strong Net Operating Profit Net Operating Consumer Food & Consolidated Energy Automotive Finance Other Profit Durables Retail Total YTL mn 2007 1,533 440 541 808 270 -16 3,575 Total NOP (YTL mn) Segmental NOP Breakdown (%) Automotive 12% 20% 3,575 Energy Durables 2,977 43% 15% Other Finance 0% Food&
Slide 28: Net Operating Profit and NOP Margin by Segments
Net Operating Profit and NOP Margin by Segments Segment Contribution to Net Operating Profit (YTL mn) 51% 1,533 1,014 21% 10% 808 2% 670 600 541 11% 430 440 243 270 180% 20 -16 Ene rgy Autom otive Durable s Finance Food & Re tail Othe r 2006 2007 NOP Margin by Sectors (%) 14.2 14.9 7.8 7.6 6.8 6.7 5
Slide 29: Significant Improvement in Margins
Significant Improvement in Margins Gross Margin (%) EBITDA Margin (%) 16.4 8.6 15.6 7.8 2006 2007 2006 2007 Net Operating Profit Margin (%) Net Income Margin (%) 7.0 4.5 6.1 1.1 2006 2007 2006 2007 29
Slide 30: Stronger Return on Average Equity
Stronger Return on Average Equity Net Income (YTL mn) 2,295 561 RoAE (%) 2006 2007 35.5 11.5 Average Equity (YTL mn) 2006 2007 6,470 4,887 2006 2007 30
Slide 31: 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 32: Commitment to Corporate Governance and Social Responsibility
Commitment to Corporate Governance and Social Responsibility A Pioneer in Corporate Citizenship • Voluntary commitment and proactive approach to principles of good corporate governance • Corporate Governance Committee to actively monitor changes in the regulation and ensure adaptation of the highest
Slide 33: Strong Underlying Companies: Shareholder Structures as of year-end 2007
Strong Underlying Companies Shareholder Structures as of year-end 2007 Koç Holding Koç Family: 70.60% Free Float: 20.25% Vehbi Koç Foundation: 7.17% Koç Pension Fund: 1.97% MV US$9,562mn Energy Automotive Consumer Durables Finance Food & Retailing Ford Otosan Arçelik Tüpraş Koç Financial Services Mi
Slide 34: Main Assumptions
Main Assumptions Base-Case Macroeconomic Assumptions 2008 GDP Growth (real, %) 3.9 CPI (%, year-end) 7.2 Borrowing Cost In Auctions (%, average) 17.5 YTL/$ (year-end) 1.33 YTL/$ (average) 1.28 YTL/€ (year-end) 2.06 $/€ Parity (year-end) 1.55 34
Slide 35: For Further Questions, Please Contact
For Further Questions, Please Contact: Funda Güngör, Coordinator Investor Relations & Economic Research Strategic Planning Group fundag@koc.com.tr +90 216 531 0535 Aslı Selçuk, Manager Investor Relations Strategic Planning Group aslii@koc.com.tr +90 216 531 0537 Neslihan Aycıl, Specialist Investor R
Slide 36: Major Group Companies' Contacts
Major Group Companies’ Contacts Tofaş Yapı Kredi Bank Tat Gökhan Tezel, Finance Director Hale Tunaboylu, Head of IR Tamer Soyupak, CFO gokhant@tofas.com.tr hale.tunaboylu@yapikredi.com.tr tamer.soyupak@tat.com.tr +90 212 216 7233 +90 212 339 7647 +90 216 430 1192 Ford Otosan Tüpraş Migros Tuncay Sel
Slide 37: Disclaimer
Disclaimer This presentation contains 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 affec