Koc Holding A.s. · BIST:KCHOL

Koc Holding A.s — Investor Presentation (November 2017)

55 slides from Koc Holding A.s's investor presentation, November 2017

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

    Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY creating one common legacy for over 90 years Investor Presentation – November 2017

  2. Slide 2: Koç Holding Overview

    Koç Holding Overview TURKEY’S LEADING INVESTMENT HOLDING COMPANY  Turkey’s largest industrial and services group in terms of revenues, exports, employees, taxes paid and Borsa Istanbul market capitalization Combined Revenues / GDP 6.2% PROFITABLE AND HIGH GROWTH MODEL FOCUSED ON SUSTAINABILITY  Th

  3. Slide 3: Koç Group History

    Koç Group History Today Turkey's largest industrial and services group 2016 Passing away of Mustafa V. Koç 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 Financi

  4. Slide 4: Strong, Stable and Supportive Shareholding Structure

    Strong, Stable and Supportive Shareholding Structure WORLD CLASS CORPORATE GOVERNANCE PRACTICES Koç Family  Koç Family has its own internal governance and investment Members vehicle which provides stability and consistency Temel 20.64% Ticaret1 43.65%  Sustainability is key as the majority of Koç

  5. Slide 5: Positioned to Benefit from Turkey's Growth Potential

    Positioned to Benefit from Turkey’s Growth Potential Scale and Strategy Ensuring Strong Positioning Largest Industrial Group Largest Exporters in Largest R&D Investments in Turkey Turkey in Turkey 4 of the Top 5 4 of the Top 10 Largest Intellectual 3 of the Top 10 Companies Industrial Enterprises1 E

  6. Slide 6: Leading Positions in Strategic and Lucrative Business Lines

    Leading Positions in Strategic and Lucrative Business Lines Energy Automotive Consumer Durables Finance Other Sectors Automotive Main Companies Main companies Main Companies Main Companies Main Companies Tüpraş1 / Aygaz1 Ford Otosan1 / Tofaş1 / Arçelik1 Yapı Kredi Bankası1 Food: Tat Gıda1 / DIY Opet

  7. Slide 7: Portfolio Structure (I/III)

    Portfolio Structure (I/III) Balanced Between Defensive & Growth Assets Defensive Assets Growth Assets 48% 52% Aygaz Arçelik Koçtaş Ford Otosan Yapı Kredi KoçFinans Opet Divan Marinas Tüpraş Demir Export Otokoç Tofaş Düzey Otokar TürkTraktör Entek Setur KoçSistem Tat Higher dividends Higher growth Di

  8. Slide 8: Portfolio Structure (II/III)

    Portfolio Structure (II/III) Sectorally Diversified -- Resilient vs Cyclicality Share in: Dividends Net Income NAV Key Risks & Sensitivities Key Strengths Automotive • Domestic growth potential Turkey and Europe demand (PC & CV Mfg) 32% 21% 23% (main drivers: GDP & int. rates) • Secured export contr

  9. Slide 9: Portfolio Structure (III/III)

    Portfolio Structure (III/III) Geographically Diversified International Sales / Total (Combined) Regional Breakdown of International Sales (Combined-2016) 50% Including Tüpraş, c. 50% of combined sales (US$25 billion) not sensitive to domestic economy 28.6% 29.2% 30.0% $1.0bn $11.3bn $1.8 bn 22.1% 6%

  10. Slide 10: Risk Metrics: Prudent Risk Management in Place

    Risk Metrics Prudent Risk Management in Place Strong US$ 2.1 bn gross cash → 75% in US$, 25% in TL US$ 1.5 bn total debt → 2 Eurobonds (Mar’16: US$ 750 mn, 7yrs, 5.25% coupon; Apr’13: US$ 750, 7 yrs, 3.5% coupon) Cash Position (Solo) US$ +573 mn net cash (5-year average US$ +705 mn) Solid Liquidity

  11. Slide 11: Performance Constantly on an Inclining Trend amidst Volatility

    Performance Constantly on an Inclining Trend amidst Volatility 11.1% 8.5% 8.5% Turkey 4.8% 5.2% 6.1% 2.9% GDP Growth -4.7% 3.6 3.5 2.7 2.7 2.1 2.3 1.7 1.4 Net Profit (TL bn) 1,228 893 907 Holding Dividend 668 740 592 Income 329 (TL mn) 189 2009 2010 2011 2012 2013 2014 2015 2016 Note: GDP growth fig

  12. Slide 12: Ratings Above the Sovereign at Investment Grade

    Ratings Above the Sovereign at Investment Grade Standard & Poors Moody’s BBB- Baa3 Two notches above Turkey sovereign One notch above Turkey sovereign A+ A1 A A2 Stable Stable Stable Stable Positive Stable Negative Stable Negative Negative Positive Positive Positive Positive Stable Stable Negative A

  13. Slide 13: Value Creation for Shareholders: Robust Stock Performance

    Value Creation for Shareholders Robust Stock Performance Strong Relative Stock Performance Consistently Low Levels of NAV Discount Sustainability via Institutional Investor Base Share of foreign investment in Koç Holding's free float Stock Share of foreign investment in BIST Koç Koç Holding Peer Gro

  14. Slide 14: Investments (I/IV): Systematic Investment Evaluation

    Investments (I/IV) 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 inv

  15. Slide 15: Investments (II/IV): Disciplined Investment Strategy

    Investments (II/IV) Disciplined Investment Strategy Existing Consolidate leading Expand globally in businesses positions to benefit the sectors we are already most from the growth present or/and adjacent potential sectors New Exploit new growth business opportunities Only consider very (Privatizatio

  16. Slide 16: Investments (III/IV): Focus on Large Investments with High Returns

    Investments (III/IV) Focus on Large Investments with High Returns Ongoing Investments to Increase Efficiency Focus on Value Added M&A Opportunities  New manufacturing and R&D  Opportunistic Total of US$ 14 bn investments projects for export markets buyouts in over the last 5 years with our JV part

  17. Slide 17: Investments (IV/IV): Track Record of Profitable Portfolio Rotation

    Investments (IV/IV) Track Record of Profitable Portfolio Rotation Date Company Sector Held Since Buyer / Seller Notes DISPOSALS Nov’11 Koç.net IT 2000 Vodafone Aug’08 Oltaş Auto Supplies 1963 Continental A.G. Jul’08 Koç-Allianz Insurance 1974 Allianz SE Jun’08 Demrad Heating & Ventilation 2003 Ada M

  18. Slide 18: Main Goal: Maximizing Shareholder Value

    Main Goal: Maximizing Shareholder Value Performance Linked Compensation Shareholder Value L-T Strategic Targets Economic Profit Market Cap to Maximize Future Shareholder Value Customer Technology Satisfaction Development Aggressive Sustainable Executive Asset Growth Profitability Effectiveness Effic

  19. Slide 19: 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, cultur

  20. Slide 20: 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 Grassroots initiative organized annually since 2006, to for the Nation sp

  21. Slide 21: 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 With practices in water management, over 96 Koç Group companies million m³ of water was reused in production, invested TL 242 million co

  22. Slide 22: 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

  23. Slide 23: Operational Excellence and Leadership in Core Business Segments

    Operational Excellence and Leadership in Core Business Segments Slide # 24 Energy Sector Strongest Player in the Turkish Energy Sector 29 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 33 Consumer Durables Sector Strong Global Network 35 Finance Sector Focus on Lucrative Busin

  24. Slide 24: Energy Sector

    Energy Sector High Growth Potential Strong Demand Dynamics Final Energy Consumption per Head – TOE 2.2  Among the fastest growing energy markets in the world parallel to its economic growth  Growing domestic oil demand coupled with 1.1 insufficient diesel capacity  Offers a wide range of opportun

  25. Slide 25: TÜPRAŞ: Turkey's Sole Refining Company

    TÜPRAŞ Turkey’s Sole Refining Company  4 refineries with 28.1 MT total capacity  Tüpraş Izmit Refinery is one of the most complex refineries in the 7th largest refinery in Mediterranean and globally with 14.5 (Avg Nelson Complexity: 9.5) Europe and  All units of Residuum Upgrade Project (US$ 3bn

  26. Slide 26: AYGAZ: Turkey's Undisputable 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 Leading LPG distributor of in total LPG market Turkey  42% market share in cyclinder LPG (3nd largest LPG market in Europe,  26% market share in autogas as of 1H17 2nd la

  27. Slide 27: 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

  28. Slide 28: Automotive Sector

    Automotive Sector Dynamic Market with High Growth Potential Strong Domestic Demand Passenger car per ‘000 A new plato of annual auto sales 1,200 Auto market ('000) average 613 1,000 1,000 857 800 336 632 600 1,011 1,008 183 400 793 911 818 893 807 634 576 527 200 Western Europe Eastern Europe Turkey

  29. Slide 29: 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

  30. Slide 30: FORD OTOSAN: Turkey's Leader in Commercial Vehicle Industry

    FORD OTOSAN Turkey’s Leader in Commercial Vehicle Industry  50-50% JV with Ford  Turkey’s commercial vehicle industry leader with 30% share Highest Ford Largest R&D  €-denominated export revenues, including non-€ countries market share in center in Turkish  Single global source for Ford Custom &

  31. Slide 31: TOFAŞ: Defensive Portfolio via Take-or-pay Contracts

    TOFAŞ Defensive Portfolio via Take-or-pay Contracts  50-50% JV with Fiat Chrysler Automobiles  The only domestic manufacturer and exporter of both PCs & LCVs 2nd Largest R&D capability of FCA in  Extensive dealer and after-sales network Europe  Owns the intellectual and industrial property right

  32. Slide 32: 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

  33. Slide 33: Consumer Durables Sector

    Consumer Durables Sector Underpenetrated segments, renewals, rapid Rising domestic demand household formation & urbanization drive growth White Goods Penetration – % Turkish White Goods market : New plato of annual sales Refrigerator Washing machine Dishwasher 92 Oven average 7.5 70 8.0 6.6 7.1 6.0

  34. Slide 34: ARÇELİK: 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 network (Extensive sales & after-sales network) white goods (c. 50%) and  Highest level of brand recognition in Turkey air-conditioners U.K

  35. Slide 35: Finance Sector

    Finance Sector Low Penetration Levels, Providing an Opportunity for Rapid Growth Loans + Deposits / GDP – % (2016) Branches per million inhabitants Mortgage loans / GDP – % (2016) 218 41 394 121 21 136 6 EU-28 Turkey EU-28 Turkey EU-28 Poland Turkey Source: European Central Bank, BRSA, CBRT Note: Lo

  36. Slide 36: Yapı Kredi Bank: Significant Improvement in Profitability

    Yapı Kredi Bank Significant Improvement in Profitability Significant Profitability Acceleration Strong Operational Performance Net Income2 (TL mn) ROATE2 Cost/Income2,3 CoR Revenues +10% Costs +5% (vs 11% CPI) +27% 2,735 +124 bps 14.0% 43% 2,153 41% 1.40% 12.7% 1 1.11% 9M16 9M17 9M16 9M17 9M16 9M17

  37. Slide 37: Yapı Kredi Subsidiaries & Other Finance Companies

    Yapı Kredi Subsidiaries & Other Finance Companies YAPI KREDİ YAPI KREDİ YAPI KREDİ LEASING FACTORING ASSET MANAGEMENT  Leader with 20% share  Leader with 18% share  2nd in the market with 17% share YAPI KREDİ KOÇFİNANS INVEST  Turkey’s first consumer finance  3rd in in equity transaction compan

  38. Slide 38: Table of Contents

    Table of Contents Page 1. 9M17 Operational & Financial Results 39 2. Annex 45 3. Disclaimer 53 4. Contacts 54 www.koc.com.tr 38

  39. Slide 39: Energy

    Energy Sales Volume, Domestic Market (mn tons) Aygaz (mn tons) +8% Sales Volume Ranking: #1 Energy Segment +3% 1,595 1,640 Share in Share in Combined Consolidated 697 764 Operating Profit1 Net Income +2% -1% 29 27 +4% 609 591 40% 39% Diesel Jet Fuel Gasoline LPG 261 258 8M16 14.5 2.9 1.5 2.7 9M16 9M

  40. Slide 40: Automotive

    Automotive Sales Units, Domestic Market (‘000) Export Units, Turkey (‘000) Koç Share 13% 15% 54% 54% 27% 28% 22% 24% Automotive Segment -2% +24% 984 -3% Share in Share in 796 Combined Consolidated Operating Profit1 Net Income +2% -6% 22% 24% Passenger Light Heavy TOTAL Cars Commercial Commercial 9M1

  41. Slide 41: Consumer Durables

    Consumer Durables Sales Units, Market (mn) Export Units, Turkey (mn) +2% Consumer Durables Segment +6% 14.9 Share in Share in 14.0 Combined Consolidated +6% Operating Profit1 Net Income +23% +3% 9% 8% Western Eastern Turkey S. Africa Europe Europe 9M16 5.6 38.3 11.5 1.4 9M16 9M17 9M17 6.9 39.0 12.2

  42. Slide 42: Finance

    Finance YKB Profitability YKB Operational Performance Net Income2 (TL mn) ROATE2 Cost/Income2,3 CoR Finance Segment Revenues +10% Costs +5% (vs 11% CPI) Share in Share in +27% 2,735 +124 bps 14.0% 43% Combined Consolidated 2,153 41% 12.7% 1.40% Operating Profit1 Net Income 1 1.11% 27% 26% 9M16 9M17

  43. Slide 43: Group's Overall Financial Performance

    Group’s Overall Financial Performance Consumer TL mn Energy Automotive Finance Other Total Durables Combined Revenues1 70,993 38,318 17,034 21,545 7,900 155,790 y/y 50% 32% 32% 19% 13% 36% 2 Combined Operating Profit 4,993 2,716 1,176 3,408 106 12,400 y/y 133% 41% 10% 5% 165% 47% Combined Profit Bef

  44. Slide 44: Consolidated Net Income

    Consolidated Net Income Consolidated Net Income1 (TL mn) Normalized +65% y/y +218% +31% +14% +20% +104% - +59% 166 53 216 38 3,832 1,019 -76 2,414 9M16 Energy Auto Cons. Durables Finance Other One-Offs 9M17 Other Other 2% 3% Energy 20% Finance Finance 26% Energy 36% 39% Cons. Durables Auto 8% 30% Co

  45. Slide 45: Annex

    ANNEX www.koc.com.tr | 45

  46. Slide 46: Consolidated Main Financial Indicators

    Consolidated Main Financial Indicators 9M17 TL mn 9M16 9M17 Y/Y € mn $ mn Revenues 49,758 71,348 43% 17,862 19,838 Gross Profit 8,256 12,120 47% 3,034 3,370 Operating Profit 4,691 8,159 74% 2,042 2,268 Profit Before Tax 3,743 6,801 82% 1,703 1,891 Taxes (net) -161 -428 166% -107 -119 Net Income Befo

  47. Slide 47: Unlisted Companies Summary Financials

    Unlisted Companies Summary Financials (1) 1H17 Koç Holding Revenues Operating Profit (2) EBITDA Book Value (SHE) TL mn Direct Share 1H17 1H16 1H17 1H16 1H17 1H16 1H17 1H16 Arçelik LG Klima 5.00% 415 283 15 18 19 23 263 237 Bilkom 69.94% 790 654 29 17 29 17 72 51 Düzey 31.15% 796 791 5 10 6 11 64 67

  48. Slide 48: Shareholding Structures

    Shareholding Structures (30 September 2017) Koç Holding Koç Family: 64.29% Free Float: 26.46% Vehbi Koç Foundation: 7.26% Koç Pension Fund: 1.99% Consumer Energy Automotive Finance Other Durables Tüpraş Ford Otosan Arçelik Tat Gıda SPV share: 51.00% KH share: 38.46% Koç Financial Services KH share:

  49. Slide 49: Energy: Defensive Business Profile with Significant Growth Prospects

    ENERGY Defensive Business Profile with Significant Growth Prospects Competitive Advantages Low Penetration Robust Diesel Demand in Turkey Final Energy Consumption mn tones CAGR: 9% per Head – TOE  Strong and sustainable demand for 22 20 energy products with 2012-16 CAGR of 2.2 18 diesel at 9% and j

  50. Slide 50: Automotive: Well-positioned Both Domestically and Globally

    AUTOMOTIVE Well-positioned Both Domestically and Globally Low Penetration Robust Domestic Demand Competitive Advantages New plato in annual auto sales Passenger car per ‘000 1,200 Auto market ('000) average  Low auto penetration levels in Turkey 613 1,000 1,000 857 offering high growth prospects; K

  51. Slide 51: White Goods: Truly Global with Strong Brand Awareness

    WHITE GOODS Truly Global with Strong Brand Awareness Competitive Advantages  Strength in Turkey with c. 50% market share  Nearly 60% of revenues from international sales  Rising market share in EU: Beko no 2 brand in EU (7th in 2008)  Competitive cost structure with low cost manufacturing center

  52. Slide 52: Banking: High Growth Prospects with a Sound Structure

    BANKING Offers High Growth Prospects with a Sound Structure Competitive Advantages of Yapı Kredi Bank Underpenetrated Market Loans + Deposits / GDP Mortgage loans / GDP  4th largest private bank in terms of asset size (%, 2016) (%, 2016) 218  Extensive branch network, no 2 among private banks 41 1

  53. Slide 53: 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

  54. Slide 54: For Further Questions, Please Contact

    For Further Questions, Please Contact : investorrelations@koc.com.tr www.koc.com.tr IR Application Gülsevin Tunçay, Coordinator Investor Relations gulsevint@koc.com.tr +90 216 531 0428 Gizem Bodur, Manager Investor Relations gizemb@koc.com.tr +90 216 531 0533 Neslihan Aycıl, Manager Investor Relatio

  55. Slide 55: Main Group Companies' Contacts

    Main Group Companies’ Contacts Arçelik Otokar Tüpraş Hande Sarıdal, Finance Director Hüseyin Odabaş, AGM Finance Tuncay Önbilgin, IR & Reporting Director hande.saridal@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 Orkun İ

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