Ford Otomotiv Sanayi A.s. · BIST:FROTO

Ford Otomotiv Sanayi A.s — Investor Presentation (March 2015)

57 slides from Ford Otomotiv Sanayi A.s's investor presentation, March 2015

  1. Slide 1: Investor Presentation March 2015

    Investor Presentation March 2015

  2. Slide 2: Contents

    Contents  About Ford Otosan 3  Plants and Facilities 9  Products 16  Investment Case 23  Operating and Financial Performance 41  2015 Guidance 56  Contacts 57 Page 2

  3. Slide 3: About Ford Otosan

    GA Koc About Ford Otosan Page 3

  4. Slide 4: Company Profile

    Company Profile Key Performance Indicators, 2014 Revenues $5.5 billion Export Revenues $3.5 billion EBITDA $387 million Ford Motor Co. Koç Group Profit Before Tax $179 million Ford Otosan 41.04% 41.04% Net Profit* $272 million ROE 21.6% Free Float EBITDA margin 7.1% 17.92% Annual Production Capacity

  5. Slide 5: Ford Otosan at a Glance

    Ford Otosan at a Glance First Turkish passenger car Anadol (1966) Pioneer of Turkish Turkey’s first domestic diesel engine Erk (1986) automotive Turkey’s first private R&D center in automotive (1961) First export of Turkish automotive to the US (2009) Strong value Export leader in Turkish automotive

  6. Slide 6: Key Player in Ford Motor Company Universe

    Key Player in Ford Motor Company Universe Robust sales Highest commercial vehicle market share of Ford in Europe performance Ford’s 5th biggest market in Europe (UK, Germany, Italy, France, Turkey) Lead manufacturing plant of Ford Transit globally Leading Single source of Ford Transit Custom & Tourn

  7. Slide 7: Vision, Mission and Strategy

    Vision, Mission and Strategy Vision Mission To become Turkey’s customer-focused, To be Turkey’s leading automotive leader company in automotive products company with optimal automotive products and services. and services to fit customer needs and expectations and to be the commercial vehicle center

  8. Slide 8: Brief History

    Brief History First automotive Turkey takes first Customs Union is Turkey becomes a major Turkey is the 17th production starts in steps to liberalize signed with the EU hub in automotive largest auto Turkey under its economy and in 1996. Exports production and moves up manufacturing hub in license a

  9. Slide 9: Plants and Facilities

    GA Koc Plants and Facilities Go Further

  10. Slide 10: Locations

    Locations Sancaktepe Parts Distribution Center (1998) Sancaktepe Engineering Center (2015) İnönü Plant (1982) Kocaeli Plants: Gölcük Plant: Transit (2001), Custom (2012) Yeniköy Plant: Courier (2014) Page 10

  11. Slide 11: Gölcük Plant - Lead manufacturing plant of the new generation Transit

    Gölcük Plant - Lead manufacturing plant of the new generation Transit Port Yeniköy Plant Assembly Shop Paint Shop Tool & Die Body Shop Press Shop Opened in 2001 1,600,000 m2 total area; 340,000 m2 covered area Transit 160k Custom 130k Page 11

  12. Slide 12: Yeniköy Plant - The single production center of Ford Courier in the world

    Yeniköy Plant - The single production center of Ford Courier in the world New production facility at Gölcük plant site opened on 22 May 2014 70,000 m2 covered area Environment and disabled-friendly plant Courier 110k

  13. Slide 13: İnönü Plant - One of the two global production centers for Ford Cargo

    İnönü Plant - One of the two global production centers for Ford Cargo Opened in 1982 79,000 m2 covered area 66k units engine, 140k units powertrain production capacity - 7.3L / 9.0L I6 Diesel engines for Cargo heavy truck - 2.2L 4-cyl. Duratorq TDCI engines for Transit Cargo 15k Page 13

  14. Slide 14: Sancaktepe Parts Distribution Center - 96% Fill rate

    Sancaktepe Parts Distribution Center - 96% Fill rate Opened in 1998 25,000 m2 warehouse: Largest of its kind in Turkey 4th largest warehouse capacity among Ford’s parts distribution centers in Europe Page 14

  15. Slide 15: Sancaktepe Engineering Center – Turkey's largest R&D Center

    Sancaktepe Engineering Center – Turkey’s largest R&D Center Center of Excellence for heavy trucks and heavy duty diesel powertrain for large trucks Global engineering lead for Ford Cargo heavy trucks and related powertrains Global support for diesel powertrain engineering Global support for light co

  16. Slide 16: Products

    GA Koc Products Go Further

  17. Slide 17: Ford Transit

    Ford Transit  Longest-running model in Ford of Europe’s product range  Over 7 million units produced globally since its launch in 1965 2001 2007  Manufactured by Ford Otosan since 1967  Ford Otosan is the lead manufacturing plant of Transit globally  160k units annual production capacity  All-

  18. Slide 18: Ford Custom

    Ford Custom  Ford Otosan is the single global source of Ford Custom  130k units annual production capacity  Launched in October 2012  First vehicle in its segment to achieve a maximum five-star Euro NCAP rating Tourneo Custom (People Mover) Long and Short Chassis 8+1 Seating Capacity 4.97m – 5.3

  19. Slide 19: Ford Courier

    Ford Courier  Ford’s first vehicle in the compact van segment  Ford Otosan is the single global source of Ford Courier  110k units annual production capacity  Launched in May 2014 Tourneo Courier Transit Courier Combi Van Transit Courier Van (People mover) (Commercial) (Commercial) Market share

  20. Slide 20: Ford Trucks

    Ford Trucks  Manufactured at Ford Otosan’s İnönü Plant since 1983  Road truck, construction and trailer series available  Cargo 1846T – 2013 International Truck of the Year 3rd place Market share details available on page 45 Page 20

  21. Slide 21: A Full Line of Cars

    A Full Line of Cars Page 21

  22. Slide 22: Major Product Acceleration

    Major Product Acceleration 2014 Focus Courier Connect Transit 2015 Mondeo Galaxy C-Max Mustang 2016 EcoSport Edge Page 22

  23. Slide 23: Investment Case

    GA Koc Investment Case Go Further

  24. Slide 24: Ford Otosan's Value Proposition

    Ford Otosan’s Value Proposition Domestic industry leader for 12 consecutive years (2002-2013) Scale & growth Largest manufacturer and exporter of commercial vehicles in Turkey Increased capacity and fully revamped products to grow volumes and profitability Technology licensing agreements delivering

  25. Slide 25: Relatively Favorable Taxes on Commercial Vehicles

    Relatively Favorable Taxes on Commercial Vehicles Passenger Cars Commercial Vehicles Engine Model VAT SCT Total Engine Model VAT SCT Total Size Size <1600 cc Courier (PC) <3000cc Transit Van 18% 4% 23% Fiesta Transit Minibus (16+1) (17+1) B-Max Transit Chassis Cab Focus Transit Custom Van 18% 45%* 7

  26. Slide 26: Turkey's Export Leader in Automotive

    Turkey’s Export Leader in Automotive Exports (000 units) US$ 3.5 billion export revenues in 2014 227 222 219 213 205 Turkey’s export leader in automotive for 185 192 177 164 4 consecutive years 141 129 US$ 2.0 billion net exporter in the last 75 five years (2010-2014) 2003 2004 2005 2006 2007 2008 2

  27. Slide 27: Best Proxy to European Recovery

    Best Proxy to European Recovery Export breakdown by units UK 35% Germany 18% 2014 W. Europe 13% France 9% Other 8% Spain 4% E. Europe 7% Belgium 3% Italy 3% Page 27

  28. Slide 28: Export Performance

    Export Performance Courier 10% European commercial vehicle market (Up to 3.5 tons) In February, the European market grew for the 18th consecutive month. Van segment grew by 9.5% yoy. (www.acea.be) Custom 57% 2014 Transit 32.5% export units FY14 Jan ‘15 Feb ’15 YTD UK 18.7% 21.7% 17.9% 20.2% Germany

  29. Slide 29: Large Scale Investment Program >US$1 Billion (2010-2014)

    Large Scale Investment Program >US$1 Billion (2010-2014) Transit Courier US$ 75 million + Ford Trucks Custom € 370 million Yeniköy US$ 850 million Page 29

  30. Slide 30: Favorable Financing Terms

    Favorable Financing Terms  €150 million loan agreement signed with EBRD in 2010 5-year loan with 2-years grace period Euribor + 2.75%  €190 million loan agreement signed with EIB in 2012 8-year loan with 2-years grace period €100 million in Q3 at 2.06% €90 million in Q4 at 1.47%  €100 million loa

  31. Slide 31: Highest Production Capacity in Turkish Automotive

    Highest Production Capacity in Turkish Automotive Old: 330,000 (pre-investments) New: 415,000 (2014) Page 31

  32. Slide 32: Technology Licensing & Engineering Agreements

    Technology Licensing & Engineering Agreements  The agreements with JMC have a 12-year term, starting with 2016 model year, to be extended every 3-years.  Ford Otosan will be generating royalty fees with strong long-term growth potential. Ecotorq engines  Signed on April 24th, 2013.  JMC branded

  33. Slide 33: Focus on Shareholder Value

    Focus on Shareholder Value Strong relative share performance Commitment to corporate governance 1400 FROTO 1,269  Separate CEO and Chairman roles 1200  Independent BoD members 1000  Audit Committee 800  Corporate Governance Committee 600  Early Determination and Management of Risk 400 BIST-100

  34. Slide 34: Dividend History

    Dividend History 579 519 446 451 439 402 397 400 300 200 175 113 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Dividend (TL mn, gross) 113 446 451 402 439 397 400 519 579 300 175 200 Dividend (US$ mn, gross) 74 332 319 319 332 261 271 321 325 166 79 78 Yield (%) 2,4 10,3 9,1 9,5 14,6 1

  35. Slide 35: Dividend Policy

    Dividend Policy Our Company conducts a dividend policy within the framework of the provisions of the Turkish Commercial Code, Capital Markets Legislation, Tax Regulations and other relevant legislation as well as the provisions of the Articles of Association governing the distribution of profits. In

  36. Slide 36: Strong & Committed JV Partner Support

    Strong & Committed JV Partner Support  Turkey’s largest industrial and services group in terms of revenues, exports, employees and market capitalization on the Borsa İstanbul.  Following an average annual growth rate of 18% in consolidated profit in US$ terms between 2003-2013, Koç Holding ranks a

  37. Slide 37: Large Distribution Network

    Large Distribution Network Ford Otosan provides maintenance, servicing and repairs Sales: 140 through its customer-focused and innovative sales and after- After-Sales: 153 sales network that spans the whole country. Total Dealers: 194 Page 37

  38. Slide 38: Efficient Production Hub

    Efficient Production Hub 400 Ford Otosan Kocaeli Plants (Gölcük & Yeniköy) 320 320 320 320 320 320 300 250 200 200 140 140 40 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year-end Capacity ('000 units) 40 140 140 200 200 250 300 320 320 320 320 320 320 400 Kocaeli Plants (Gö

  39. Slide 39: R&D Focused on Excellence

    R&D Focused on Excellence  The largest R&D center in Turkey  Capability and infrastructure to design, develop and test a complete vehicle end-to-end, including its engine and engine systems Gölcük R&D Center Sancaktepe R&D Center İnönü PD  Located in Gölcük  1,153 R&D engineers  57 R&D engineer

  40. Slide 40: Experienced and Skilled Workforce

    Experienced and Skilled Workforce High School B.Sc. – B.A. 69% 16% M. Sc. 23% Technical High School 58% Primary & Secondary School 6% PhD 1% University 2% Blue White Others 7% Collar Collar Vocational College 18% Page 40

  41. Slide 41: Operating & Financial Performance

    Operating & Financial Performance Page 41

  42. Slide 42: Turkish Automotive Industry (000 units)

    Turkish Automotive Industry (000 units) SCT increase (-) SCT increase (-) 907 885 Global SCT financial incentives 812 803 crisis (-) (+) 792 766 741 668 633 574 524 Turkish financial 393 crisis (-) 203 177 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HCV 12 18 34 30 34 34 27

  43. Slide 43: Domestic Market (000 units)

    Domestic Market (000 units) Total Industry, February 2015 YTD Ford Otosan, February 2015 YTD 94 13 71 7 2014 2015 2014 2015 Total Industry Sales Ford Otosan Retail Sales 895 803 119 94 2014 2015F 2014 2015F Page 43

  44. Slide 44: Turkish Market Shares (2014)

    Turkish Market Shares (2014) Total Industry Passenger Cars 15.3% 13.5% 14.4% 12.3% 11.7% 11.1% 7.6% 6.2% 6.7% 6.7% 6.3% VW Renault Ford Fiat Mercedes Renault VW Hyundai Fiat Opel Ford Light Commercial Vehicles Medium Commercial Vehicles Heavy Trucks 43.1% 53.7% 31.7% 23.7% 16.4% 21.8% 10.6% 9.8% 9.3

  45. Slide 45: Turkish Market Shares (February'15 YTD)

    Turkish Market Shares (February’15 YTD) Total Industry Passenger Cars 17.5% 16.2% 13.0% 13.8% 11.1% 10.2% 8.0% 7.1% 6.3% 5.7% VW Ford Fiat Renault Hyundai VW Renault Hyundai Fiat Ford Light Commercial Vehicles Medium Commercial Vehicles Heavy Trucks 33.9% 38.1% 47.3% 29.1% 21.0% 29.9% 11.2% 7.7% 6.5

  46. Slide 46: Production Volume by Segment (000 units)

    Production Volume by Segment (000 units) 296 286 281 269 272 258 243 242 245 207 174 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Heavy Truck 6 10 8 6 6 2 5 9 7 6 8 Light Commercial Vehicle 95 102 112 113 85 83 85 102 105 76 40 Medium Commercial Vehicle 106 131 138 167 178 89 152 185 160 1

  47. Slide 47: Wholesale Volume – Domestic & Export (000 units)

    Wholesale Volume – Domestic & Export (000 units) 354 341 325 316 295 298 294 303 283 255 214 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Domestic 114 131 113 103 76 85 127 141 112 114 91 Export 141 164 185 222 218 129 176 213 205 227 192 Share of Exports 55% 56% 62% 68% 74% 60% 58% 60% 65

  48. Slide 48: Sales Volume by Model

    Sales Volume by Model 4Q14 3Q14 QoQ % 4Q13 YoY % 2014 2013 YoY % Domestic sales continued to rise QoQ in Domestic 36.268 25.145 44% 37.740 -4% 91.038 113.971 -20% 4Q14 following the completion of product PC 11.123 10.323 8% 20.940 -47% 33.650 58.618 -43% launches and ramp-up. Transit Connect 0 1 6.6

  49. Slide 49: Revenues - Domestic & Export

    Revenues - Domestic & Export 6,208 6,254 5,992 5,450 5,454 4,640 4,844 4,948 4,516 4,142 3,702 2,109 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Export (US$ bn) 965 1.957 2.114 2.543 3.846 3.450 2.101 2.655 3.505 3.312 3.835 3.516 Domestic (US$ bn) 1.144 2.185 2.402 2.097 2.362 1.394

  50. Slide 50: Operating Profit and Margin (2004-2014)

    Operating Profit and Margin (2004-2014) 530 472 435 437 392 407 342 352 352 252 247 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Operating Profit, US$ mn 342 392 435 530 472 252 407 437 352 352 247 Operating Profit, TL mn 487 538 569 690 613 389 610 729 631 670 541 Operating Margin (%) 8,8

  51. Slide 51: EBITDA and EBITDA Margin (2004-2014)

    EBITDA and EBITDA Margin (2004-2014) Changing business mix, industry trends and macro drivers leading to declining margins:  Declining share of the domestic business  Highly competitive pricing landscape in the domestic market  Industry shift towards passenger cars leading to a less favorable sal

  52. Slide 52: Margins in 2014

    Margins in 2014 EBITDA Margin Operating Margin Despite the rise in vehicles prices and cost reduction actions, margins remained under pressure due to:  TL depreciation and volatility 7.5% 7.1% 6.7% 7.0% 5.9%  Lower unit sales 5.3% 4.5% 4.7%  Lower other operating income  Higher financial expense

  53. Slide 53: Net Income (2004-2014)

    Net Income (2004-2014) 396 382 372 350 336 337 337 306 297 272 216 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Net Income (Million $) 306 297 350 372 336 216 337 396 382 337 272 Net Income (Million TL) 436 398 501 484 436 333 505 662 685 641 595 Net Income Margin (%) 7,8% 6,6% 7,7% 6,7% 6

  54. Slide 54: Financial Risk Management

    Financial Risk Management Receivables from domestic vehicle sales to dealers are collected using a Direct Debit System Domestic spare part sales are guaranteed with collateral from dealers (bank guarantee letters) Credit Risk Receivables from Ford Motor Company and its subsidiaries are collected wit

  55. Slide 55: Main Financial Indicators

    Main Financial Indicators Cash Position (TL mn) 31.12.2014 31.12.2013 Cash & Cash Equivalents 577 238 Total Financial Debt (2.350) (2.291) Net financial debt (1.773) (2.053) Financial Ratios 31.12.2014 31.12.2013 Current ratio 1.00 1.02 Liquidity ratio 0.74 0.71 Net Financial Debt / Tangible Net Wor

  56. Slide 56: 2015 Guidance

    2015 Guidance Turkish Industry Volume Tı 895K Ford Otosan Retail Sales Volume 119K Exports 232K Wholesale Volume 351K Production Volume 305K Capex (fixed assets) US$230 mn Guidance updated in February 2015. According to the Capital Markets Board, companies are allowed to provide guidance 4 times a y

  57. Slide 57: Contacts

    Contacts Aslı Selçuk Investor Relations Manager +90 216 564 7499 aselcuk@ford.com.tr Burak Çekmece Treasury & Risk Manager (Responsible for compliance with Capital Markets Law) +90 262 315 69 60 bcekmece@ford.com.tr Gülçin Öztitiz Investor Relations Officer +90 216 564 7495 goztitiz@ford.com.tr www.

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