Haci Omer Sabanci Holding A.s. · BIST:SAHOL
Haci Omer Sabanci Holding A.s — Hacı Ömer Sabancı Holding A.Ş. — Q2 2019 Earnings Presentation
40 slides from Haci Omer Sabanci Holding A.s's earnings presentation, August 2019
Slide 1: Sabancı Holding Investor Presentation
Sabancı Holding Investor 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: Sabancı, Turkey's leading group
3 Introduction Sabancı, Turkey’s leading group • 90+ years of creating market leaders in large and growing business areas, evolving through dynamic portfolio management and leveraging our industrial heritage and the experience of our JV partners • Strong financial track record of real growth and r
Slide 4: Creating market leaders in large and growing business areas
4 Introduction Creating market leaders in large and growing business areas Our companies are market leaders in critical areas within their respective sectors • Banking - the best bank in Turkey in 2019 (Euromoney, Global Finance, World Finance) and World’s Best Digital Bank 2019 (Euromoney) • Cement
Slide 5: In continuous evolution
5 Introduction In continuous evolution 1940s – 1960s 1970s-2000s 2000-2010s Present and future Early Growth Phase - Proliferation of Global “New Generation’s Refocus Portfolio Initial Diversification Partnerships-Conglomeration Sabancı” JVs formed with JVs formed with, Aviva Bridgestone and and Agea
Slide 6: Consistently delivering over time
6 Introduction Consistently delivering over time Sabancı’s 2013-2018 financial performance, TL bn Double digit combined revenue growth 20% 18% Double digit combined EBITDA1 growth CAGR CAGR 88,1 15,5 14,2 65,6 10,8 47,9 53,8 44,1 7,2 8,0 36,1 6,8 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 201
Slide 7: Improved capital allocation and focus on performance has led to a favorable trend in Return on Equity
7 Improved capital allocation and focus on performance has led Introduction to a favorable trend in Return on Equity Return on Equity Sabancı Holding consolidated ROE 14-18 Equity Segment ROE1 2014 2015 2016 2017 2018 ∆ ppts Share2 14,5% Energy n.m. 0.4% 3.0% 4.6% 11.4% +13.5% 17.5% 13,7% 12,7% Ceme
Slide 8: Committed to driving value for all of our stakeholders
8 Our Value Add Committed to driving value for all of our stakeholders What makes Sabancı different? How Sabancı drives value • Active owner focused on long-term value creation • Focusing on long-term value creation as an active owner • Best-in-class domestic reputation, brand image and • Fostering
Slide 9: An effective corporate and governance structure, tailored to drive value creation
9 An effective corporate and governance structure, tailored to drive Our Value Add value creation Shareholder base Corporate structure and division of responsibilities • Evolved from a family owned group to a corporation with an effective governance structure, accelerated by our JV partners • Sabanc
Slide 10: Environment Social Governance
10 Our Value Add Environment Social Governance Creating sustainable value for all our stakeholders is one of our primary goals as Sabancı Group. • Governance – 9 BOD members (3 independent); Executive Committee includes CEO, CFO and Group Presidents. SBU presidents as the Chairman of Company BODs ar
Slide 11: Turkey - an attractive foundation and platform for global growth
11 Our Value Add Turkey - an attractive foundation and platform for global growth Turkey is one of the world’s fastest growing economies Sabancı, able to efficiently leverage the Turkish opportunity Real GDP growth, y-o-y 16% • One of the highest growth economies in the world with real GDP 12% growt
Slide 12: Driving "New Generation's" Sabancı
12 New Generation Driving “New Generation’s” Sabancı New Generation’s Sabancı Continue to invest to drive sustainable growth by investing into new geographies, new products, adjacent industries and in asset light areas such as digital and data analytics Capital allocation Technology and data Talent
Slide 13: Linking value creation to performance targets
13 Talent New Generation Linking value creation to performance targets Management Fostering performance Previous vs New Total Cash Model • Targets to implement ownership culture 300 Long term • Set of short term KPIs determined for each year at the end of (max) 50 budget process, the targets set at
Slide 14: More transparent dividend policy benefiting shareholders
14 More transparent dividend policy benefiting Refreshed capital allocation Capital allocation New Generation shareholders framework Dividend policy – overview Dividend policy to benefit all shareholders Before Today • Sabancı’s revised dividend policy was announced in 2018 Based on Distributable Ne
Slide 15: Implementation of new capital allocation policy
15 New Generation Implementation of new capital allocation policy Capital allocation Overview New policy for capital allocation • Revised capital allocation strategy to ensure disciplined use of capital • Dynamic portfolio management, an important pillar of the capital allocation strategy Value crea
Slide 16: Capital allocation framework
16 New Generation Capital allocation framework Capital allocation Growth (~58% of NAV) • Strategically attractive markets where Sabancı can add value • Build a sustainable competitive advantage (organically / inorganically) • New product development (R&D) Cash generators (~32% of NAV) • Strong cash
Slide 17: Sabancı, driving value as a strategic investor
17 Enerjisa example Sabancı, driving value as a strategic investor 2009 2013 2016 Baskent distribution Partnership with EON New February 2018 region acquisition Regulatory Enerjisa Enerji IPO Ayedas and Toroslar Period valued at 1.9 bn USD distribution region acquisitions (Downstream) 2006 2017 Ener
Slide 18: Turnaround in Energy between 2014 and 2017
18 Enerjisa example Turnaround in Energy between 2014 and 2017 2014 2017 Decision to defer Separation of generation downstream investment Operational initiatives and upstream Upstream Downstream • Capacity target reduced from 7.5 GW to 3.5 GW • Implementation of existing operational excellency to th
Slide 19: The 4 Quadrants of Growth
19 Refreshed capital New Generation The 4 Quadrants of Growth allocation Capital allocation framework - High growth / high margin - Leader in Turkish Grey Cement business - Global player in White Cement, #2 by - Kordsa chosen as the growth capacity after Bunol Acquisition vehicle International - Low
Slide 20: Kordsa: Growth Opportunities with Composites
20 New Generation Kordsa: Growth Opportunities with Composites Capital allocation Overview of the Composites Value Chain Current Status • Composite Technologies Center of Excellence opened in 2016 with ~USD30m of investment. Raw materials Intermediates Composite Parts • Ongoing development programs
Slide 21: Kordsa: Growth Opportunities with Composites
21 New Generation Kordsa: Growth Opportunities with Composites Capital allocation Advanced Composite Market to grow by 8% CAGR until 2023 6,0 CAGR: 8% Composite Market Segmental breakdown of Advanced Composite Market 5,0 4,0 Metal; 4% CAGR: 10% Ceramic; Hybrid&Others 3,0 Carbon; 13% 9% ; 6% 2,0 CAGR
Slide 22: Renewables Growth Pipeline
22 Refreshed capital New Generation Renewables Growth Pipeline allocation Capital allocation framework Well Balanced Generation Portfolio with Strong Renewables Current Growth Pipeline in Renewables Installed Capacity (3.607 MW) • In May 2019 two wind tenders (YEKA) with 500 MW capacity won by Enerj
Slide 23: International Cement
23 Refreshed capital New Generation International Cement allocation Capital allocation framework White Cement Çimsa set to become 2nd largest white cement producer globally White cement not constrained by the economics of transportation Regarded as a global niche product that is the preferred fo
Slide 24: Driving Digital Transformation
24 Technology and New Generation Driving Digital Transformation data Advance Analytics - AA Verticals Output 1 Capitalize Sabancı Holding Data Assets into Existing SaaS Products Value and Products thru • E-Auction Center of Excellence and AA programs 3.2 billion USD volume per Catalyzing digital tra
Slide 25: Advanced and Predictive Analytics
25 Technology and New Generation Advanced and Predictive Analytics data • Embed advanced predictive analytics across functions of Sabancı Holding in all decision making processes by the end of 2022 to Vision create competitive advantage supporting both the development of topline and bottomline Scale
Slide 26: Corporate Venture Capital
26 Refreshed capital New Generation Corporate Venture Capital allocation Capital allocation framework CVC Fund: Focus on Growth, Technology and Innovation • A CVC fund is planned be established to gain early and economical access to new technological developments/markets/innovations and to create ag
Slide 27: Strong Cash Generation and Robust Holding Company
27 Performance Strong Cash Generation and Robust Holding Company Free cash flow, Combined for Non-Bank, TLm Commentary 5.000 • Focus on cash generation led to substantial decline in leverage • Effective management of balance sheet linked to capital allocation approach 3.000 • Lean Holding Company co
Slide 28: 2018 performance delivered
28 Performance 2018 performance delivered 2018 performance against guidance 2019 financial performance guidance Commentary Combined1 Combined1 • Majority of Sabancı’s growth targets 45% set for 2018 were exceeded with sizeable outperformance of the initial 35% guidance. 20% 20% • Combined non-bank r
Slide 29: 2019 - Continual outstanding non-bank performance
29 Performance 2019 - Continual outstanding non-bank performance Combined Net Sales2 Combined EBITDA1 Consolidated Net Income TLm TLm TLm 4.454 24.688 +24% +24% 940 963 +2% 19.990 3.600 1.733 -5% 10.665 +16% 514 543 -5% 9.210 Bank Bank Bank 1.819 14.023 2.721 +53% +30% 10.779 448 +13% Non-bank Non-b
Slide 30: Portfolio performance: Energy and Cement
30 Performance Portfolio performance Business unit financial performance, TL bn1 Combined Revenue Combined EBITDA & EBITDA margin Dividends paid to Sabancı Holding (TL m) 189 23,6 Energy 27% 142 16,5 23% 24% 12,6 20% 21% 11,0 11,8 6,7 6,6 13% 5,3 4,8 10% 3,5 8% 2,5 0,7 0,8 1,5 1,1 1,8 - - - - - 2013
Slide 31: Portfolio performance: Industrials and Insurance
31 Performance Portfolio performance Business unit financial performance, TL bn1 Combined Revenue Combined EBITDA & EBITDA margin Dividends paid to Sabancı Holding (TL m)2 Industrials 8,4 8,4 6,3 6,3 346 8,8 298 315 288 275 4,6 4,5 4,5 6,6 4,6 4,5 4,5 243 237 18% 20% 19% 4,8 5,1 5,2 16% 17% 18% 4,6
Slide 32: Portfolio performance: Banking and Retail
32 Performance Portfolio performance Business unit financial performance, TL bn1 Combined Revenue Combined EBITDA & EBITDA margin 3.1% without the IFRS 16 impact 8,4 8,4 0,2 0,2 8,7 0,2 Retail 7,6 8,0 0,2 0,2 7,1 6,3 6,3 5,6 4,6 6,1 8% 4,5 4,5 4,6 4,5 4,5 0,1 0,1 2,1 2,6 3% 3% 3% 0,0 2% 2% 1% 1% 201
Slide 33: Sustained dividend payments from portfolio companies
33 Performance Sustained dividend payments from portfolio companies Sabancı Holding dividends paid and received (MTL) TLm Segment 2013 2014 2015 2016 2017 2018 2019 Outflows / 32% 32% 25% 41% 46% 50% 102% Inflows Akbank Banking 232 190 232 245 367 652 - Dividends received Akçansa Cement 44 57 90 102
Slide 34: Sabancı, Turkey's leading group
34 Wrap-up Sabancı, Turkey’s leading group • 90+ years of creating market leaders in large and growing business areas, evolving through dynamic portfolio management and leveraging our industrial heritage and the experience of our JV partners • Strong financial track record of real growth and retur
Slide 35: Appendix
Sabancı Holding Appendix
Slide 36: Sabancı Holding Discount to NAV and FX linked Revenues
36 Appendix Sabancı Holding Discount to NAV* and FX linked Revenues Sabancı Holding Discount to NAV* Share of FX linked Revenues in Total Revenues USDmn June-2019 Dec-2018 Kordsa 100% Direct Value of Value of Companies Stakes (%)* Mcap Stake % of NAV Stake % of NAV Akbank 40,8% 6.139 2.502 46,7% 2.1
Slide 37: Overview of corporate structure
37 Appendix Overview of corporate structure Banking / Energy Retail Cement Industrial Other Insurance Enerjisa Enerji Carrefoursa Çimsa Cement1 Akbank Kordsa Philsa SAHOL: 40.0% SAHOL: 50.6% SAHOL: 49.4% SAHOL: 48.9% SAHOL: 71.1% SAHOL: 25.0% E.ON: 40.0% Carrefour: 46.0% Akçansa Çimento: 9.0% Free f
Slide 38: Earnings Reporting - Combined and Consolidated Numbers
38 Sabancı Holding Earnings Reporting - Combined and Appendix Consolidated Numbers Combined Net Sales EBITDA Net income Subsidiaries (1) line by line line by line line by line Joint Ventures (2) line by line line by line line by line Associates (3) Not included Proportion of ownership interest * Net
Slide 39: Greenhouse Gas Emissions
39 Appendix Sabancı Holding Greenhouse Gas Emissions GREENHOUSE GAS EMISSIONS 2017 2018 CHANGE (t CO2e) Scope 1 Scope 2 Scope 1 Scope 2 Scope 1 Scope 2 Sabancı Holding 1.359 5.671 733 3.632 -46% -36% Akbank 7.515 36.115 6.970 33.153 -7% -8% Akçansa 6.052.352 272.269 5.611.429 246.137 -7% -10% Aksigo
Slide 40: Investor relations key contacts
40 Appendix Investor relations key contacts investor.relations@sabanci.com Şermin Mutlu Finance Director Investor Relations smutlu@sabanci.com +90 212 385 81 50 Cenk Erdal Investor Relations Manager Investor Relations cerdal@sabanci.com +90 212 385 81 87
Hacı Ömer Sabancı Holding A.Ş. — Q2 2019 Earnings Presentation on 6ix