Slide 1: Koç Holding – Being One
Koç Holding BEING ONE creating one common legacy for 85 years Investor Presentation – May 2011
Slide 2: Why Koç Holding?
Why Koç Holding? Slide # 3 Best Proxy to the Turkish Market Winning Through Continuous Growth 4 Continuous Leadership Setting the Benchmarks in Core Sectors 5 High Resilience Against Risks Well Diversified & Defensive Portfolio 6 High Flexibility & Execution Power Adaptability to Changing Market Con
Slide 3: Best Proxy to the Turkish Market - Winning Through Continuous Growth
Best Proxy to the Turkish Market - Winning Through Continuous Growth We have the right size to benefit from We are the best proxy to the growing Turkish economies of scale… market… 17 15 11 9 Total Sales / GDP 7% 6 5 6 5 5 Total Exports / Turkey’s Exports 10% 3 4 3 Total Share in ISE Market Cap. 15%
Slide 4: Continuous Leadership - Setting the Benchmarks in Core Sectors
Continuous Leadership - Setting the Benchmarks in Core Sectors Energy Automotive Consumer Durables Finance Automotive Main Companies Main companies Main Companies Main Companies Tüpraş* / Aygaz* / Opet / Entek Ford Otosan* / Tofaş* / Türk Arçelik* Yapı Kredi Bankası* Traktör* / Otokar* International
Slide 5: High Resilience Against Risks – Well Diversified & Defensive Portfolio
High Resilience Against Risks – Well Diversified & Defensive Portfolio Our diversified portfolio enables us to balance Our net cash position enables us to be proactive out cyclicalities in new M&As EBITDA Breakdown - 2010 Koç Holding Stand-Alone Automotive Net Cash Position 16% Energy Durables 33% 1
Slide 6: High Flexibility & Execution Power – Adaptability to Changing Market Conditions
High Flexibility & Execution Power – Adaptability to Changing Market Conditions Acquisitions: US$ 6.6 billion Opportunistic M&A strategy to strengthen (Merged with Migros and divested) our market leadership in core sectors Disposals: US$ 3.0 billion Proactive disposals ahead of the 2008 crisis when
Slide 7: Focus on Shareholder Value Creation – Performance Culture
Focus on Shareholder Value Creation – Performance Culture We are committed to principles of good corporate We endeavor to maximize the value we create for governance our shareholders Separate CEO and Chairman roles Executive compensation based on economic profit and share performance 1/3 of th
Slide 8: 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 9: Leader in R&D and Technology Investments
Leader in R&D and Technology Investments Koç Group makes the highest Koç Group’s share in R&D investments in Turkey private sector R&D compared to any other investments in Turkey is corporation 12-15% each year with around TL450 million Ratio of annual R&D spent in 2010 With over 250 filings, Koç sp
Slide 10: Operational Excellence and Leadership in Core Business Segments
Operational Excellence and Leadership in Core Business Segments Slide # 11 Energy Sector Strongest Player in the Turkish Energy Sector 16 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 22 Consumer Durables Sector Strong Global Network 24 Finance Sector Focus on Lucrative Busin
Slide 11: Why Energy Sector?
Why Energy Sector? High growth potential Strong demand dynamics Per Capita Energy Consumption – Toe Among the fastest growing energy markets in the 3.7 world parallel to its economic growth Demand for electricity is estimated to grow at an annual rate of 6% between 2009-2023 1.4 Total installe
Slide 12: Tüpraş – Turkey's Sole Refining Company
Tüpraş – Turkey’s Sole Refining Company 4 refineries with 28.1 MT total capacity 7th largest refinery in One of the most complex refineries in the Europe and Mediterranean. Nelson Complexity: 7.25 30th largest in the world Among the most profitable refineries in Europe and the U.S. : Integrate
Slide 13: Aygaz – Turkey's Undisputable Market Leader in LPG for 50 years
Aygaz – Turkey’s Undisputable Market Leader in LPG for 50 years Fully integrated LPG services Europe’s 5th largest Highest efficiency per station in Turkey LPG distributor Best inventory turnover globally Serves 100,000 homes with cylinder LPG everyday Unmatched Turkey’s largest brand LPG st
Slide 14: Opet – Turkey's Fastest Growing Fuel Distribution Company
Opet – Turkey’s Fastest Growing Fuel Distribution Company Unrivaled leader in customer satisfaction in its sector for 5 consecutive years 3rd in white products with 17% Retail and wholesale activities in fuel distribution Production and marketing of lubricants Turkey’s highest Aviation fuel
Slide 15: Entek – Ambitious Investment Plans in Electricity Generation
Entek – Ambitious Investment Plans in Electricity Generation ENTEK Power generation company 6th largest private sector electricity producer 302MW installed capacity 2 natural gas combined cycle plants 50-50% JV established Gas turbine based cogeneration facility with AES in 2010, targeting A
Slide 16: Why Automotive Sector?
Why Automotive Sector? Dynamic market with high growth potential Well-supplied manufacturing hub Car Ownership per ‘000 473 5th largest labor force compared with the EU Over 24.7 million young and well-educated professionals High growth in labor productivity 99 Strong local supply base Low
Slide 17: Koç Group in the Automotive Sector
Koç Group in the Automotive Sector Largest distribution network High profitability Highly skilled and experienced workforce vis-a-vis global peers Strong R&D focus Highest quality and Spread of best Long-standing JV partnerships safety of production practices and among the Benefits of larg
Slide 18: Ford Otosan – Leader in Total Automotive Sales for 9 Consecutive Years
Ford Otosan – Leader in Total Automotive Sales for 9 Consecutive Years 50-50% JV with Ford Highest market share of Strong distribution network Ford in Europe in total automotive and Best Ford assembly plant in Europe since 2002 commercial vehicle market Best Ford powertrain manufacturer worl
Slide 19: Tofaş – Leader in Automotive Production with 312,000 units
Tofaş – Leader in Automotive Production with 312,000 units 50-50% JV with Fiat The only domestic manufacturer of both PCs and LCVs Leader in LCV segment Extensive dealer and after-sales network with 25.8% The first Fiat company among 170 companies to reach silver status in WCM with the highe
Slide 20: Other Automotive Companies
Other Automotive Companies TÜRK TRAKTÖR – Turkey’s Largest Farm Tractor Manufacturer Undisputable market 50-50% JV with Case New Holland leader Undisputable market leader with 52% market share with 52% share First in Turkey to use “flexible manufacturing system” in tractors, Profitability leve
Slide 21: Why Consumer Durables Sector?
Why Consumer Durables Sector? Underpenetrated segments and renewals drive Strong value proposition growth White Goods Penetration – % 92 Strong R&D focus and innovative products 70 Efficient and cost-effective outlet to multiple markets with over 1.5 billion customers Competitive labor cost
Slide 22: Arçelik – Provides Products and Services to Over 100 Countries Worldwide
Arçelik – Provides Products and Services to Over 100 Countries Worldwide Most extensive sales and after-sales network in Turkey’s market leader in Turkey white goods (50%), 3rd largest white goods company in Europe TVs (42%) and Unsurpassed brand recognition for 12 consecutive air-conditioners
Slide 23: Why Finance Sector?
Why Finance Sector? Low penetration levels providing an opportunity for rapid growth Loans + Deposits / GDP – % Branches per million inhabitants Mortgage loans / GDP – % 459 305 39.6 17.0 90 125 4.5 Eurozone Turkey Eurozone Turkey MU16 Poland Turkey Source : ECB,BRSA - 2009 Strong economic recovery
Slide 24: Yapı Kredi Bank – Above Sector Growth and Profitability
Yapı Kredi Bank – Above Sector Growth and Profitability 50-50% JV with UniCredit 4th among private sector banks in asset size Strong capital ,liquidity and funding Highest improvement Leader in credit cards with 19.3% share in in asset quality outstanding volume Lowest cost growth ~ 860 Bran
Slide 25: Yapı Kredi Subsidiaries and Other Finance Companies
Yapı Kredi Subsidiaries and Other Finance Companies YAPI KREDİ YAPI KREDİ YAPI KREDİ YAPI KREDİ LEASING FACTORING ASSET MANAGEMENT PENSION Leader with 19.2% Leader with 23.1% 2nd in the market with 3rd in private pension share share 18.4% share funds with 15.5% 14% RoE 34% RoE 141% RoE
Slide 26: Operating Environment and Financial Results
Operating Environment and Financial Results Slide # 28 Operating Environment Sustainable Growth and Disinflationary Trends 32 Financial Results Solid Performance Driven by Lucrative Business Lines www.koc.com.tr 26
Slide 27: Domestic Demand-led Strong Economic Growth, Supported by Increasing Confidence and Surge in Bank Loans
Domestic Demand-led Strong Economic Growth, Supported by Increasing Confidence and Surge in Bank Loans… High growth potential Strong economic growth GDP Growth (%) GDP Growth (qoq, %) 10 8.9 9 28 8 9 26 7 5.3 5.4 6 4.5 3 24 4.4 Billion TL 5 4.3 22 % 4 -3 3 1.5 20 2 -9 18 1 0 -15 16 2011-2016* 1982-1
Slide 28: Historically Low Interest Rates and Strong Capital Inflows
0 10 20 30 40 50 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.0 2001 1.45 2002 50.0 2002 1.64 2003 1.39 2003 40.4 2004 1.34 2005 1.34 2004 27.8 2006 1.41 2005 17.7 2007 1.16 2008 1.52 2006 18.2 2009 1.49 2010 1.54 2007 18.3 2008 18.6 2011 1.58 Decline in interest rates Interest Rate on Mortgages (%) 2012 1
Slide 29: Solid Fiscal Performance Supports Positive Economic Outlook
Solid Fiscal Performance Supports Positive Economic Outlook Significant decline in budget deficit and continous surplus in primary balances Jan - Feb (Billion TL) 2010 2011 % Chg. Budget and Primary Balances (% of GDP) Revenues 39,5 48,1 21,5 5.2 4.9 6.0 5.4 7 3.3 4.0 4.1 3.5 Tax Revenues 33,4 40,9
Slide 30: Widening Current Account Deficit amid Sound Financing
Widening Current Account Deficit amid Sound Financing Increasing trade volume Widening current account deficit Foreign Trade Volumes (USD bln) Current Account Balance (% of GDP) 1.9 208 250 202 1 186 170 200 141 -1 139 130 -0.3 132 117 114 107 150 102 -3 98 86 -2.5 -2.3 69 73 100 -3.7 63 -5 52 47 -4
Slide 31: Koç Holding: Strongest Beneficiary of the High Growth Environment
Koç Holding : Strongest Beneficiary of the High Growth Environment and Strong Margins Despite Global Turmoil Revenues – Consolidated-US$bn EBITDA – Consolidated-US$bn 43.0 3.6 3.4 3.1 3.2 34.5 36.0 35.9 36.5 2.8 2.7 29.0 18.2 1.6 1.5 16.6 1.2 11.1 6.9 0.7 2002 2003 2004 2005 2006 2007 2008 2009 2010
Slide 32: Strong Global Reach
Strong Global Reach International Sales 2010 Regional Breakdown Exports –US$bn 8.6 7.6 US$7,422mn 64% 5.9 US$874mn US$2,366mn 7% 20% US$937mn 8% US$84mn 1% 2009 2010 2011F www.koc.com.tr 32
Slide 33: Focus on Large Investments with High Returns
Focus on Large Investments with High Returns Ongoing investments to increase efficiency Opportunistic M&A activities in core business lines Investments – US$bn New manufacturing projects Opportunistic for export markets with our buyouts in 1.7 JV partners international markets as a consolidator
Slide 34: Strong Liquidity and Well-Managed Risk
Strong Liquidity and Well-Managed Risk Koç Holding Stand-Alone 31.12.2010 Net Cash Position Total Debt: ~US$ 0.23 bn Total Cash: ~US$ 1.03 bn Net Cash: ~US$ 798 mn 2011-2013 Redemption Schedule US$ 225 mn – to be paid in equal annual installments of US$ 75 mn each January Consolidated Net Debt / Cas
Slide 35: Resilient Against FX Volatility
Resilient Against FX Volatility Koç Holding Stand-Alone FX Position 2009 2010 US$ + 327mn US$ + 323mn Koç Holding Consolidated FX Position Weighted by Effective FX Position Ownership 9M08 2008 2009 9M10 2010 2009 9M10 2010 US$ - 4.2bn US$ - 2.2bn US$ - 1.7bn US$ - 2.4bn US$ - 2.9bn* US$ - 1.1bn US$
Slide 36: Key Takeaways: Value Proposition to Investors
Key Takeaways : Value Proposition to Investors Strong top-line growth enabling the benefits of Best proxy to Leading positions in economies of scale the Turkish core sectors and new Economy investment and M&A opportunities Strong commitment to Corporate Governance and Corporate Social Superior and s
Slide 37: Corporate Social Responsibility
Corporate Social Responsibility Slide # 39 Vehbi Koç Foundation Contribution to Turkey’s Development through Sustainable and Replicable Models 40 Social Responsibility Projects Leveraging Koç Group Synergies to Address Social Issues 41 Environmental Policies Safeguarding the Environment for Future G
Slide 38: Our Country's Future is Our Future – Koç Holding as a Leading Corporate Citizen
Our Country’s Future is Our Future – Koç Holding as a 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
Slide 39: 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 Vocational Education: A Crucial Matter “For My Country” project for the Nation Grassroots initiative organized annually Supporting voc
Slide 40: 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 Koç Group made water savings of close to 14 million m3 - equivalent to the annual Koç Group companies water consumption of 100,000 people
Slide 41: Appendix
Appendix www.koc.com.tr 41
Slide 42: Table of Contents
Table of Contents Page 1. FY10 Earnings Review 44 2. Shareholder Structures 50 3. Macro Assumptions and Disclaimer 51 4. Contacts 52 www.koc.com.tr 42
Slide 43: Financial Performance
Financial Performance Revenues TL53,812mn (US$35,865mn) 20% YoY increase in TL terms and 24% in US$ terms Operating Profit TL4,105mn (US$2,736mn) 18% YoY increase in TL terms and 22% in US$ terms EBITDA TL5,073mn (US$3,381mn) 15% YoY increase in TL terms and 19% in US$ terms Profit Befor
Slide 44: Main Financial Indicators
Main Financial Indicators € Mn* US$ Mn* TL Mn TL Mn Change Change 31.Dec.2010 31.Dec.2010 31.Dec.2010 31.Dec.2009 %, TL %, US$ Revenues 27,050 35,865 53,812 44,841 p 20 p 24 Gross Profit 4,620 6,126 9,192 8,876 p 4 p 7 EBITDA 2,550 3,381 5,073 4,401 p 15 p 19 Operating Profit 2,063 2,736 4,105 3,476
Slide 45: Revenues Continued to Grow
Revenues Continued to Grow Revenues – TLmn Share of Segment Revenues – % 20% 53,812 44,841 Energy Automotive 58% 14% Durables 13% FY09 FY10 Other Finance 5% 9% Segment Contribution to Revenues – TLmn 28% 31,412 24,488 31% 4% -7% 17% 7,767 6,810 7,052 5,948 5,382 4,990 2,213 2,592 Energy Automotive D
Slide 46: Balanced EBITDA
Balanced EBITDA EBITDA – TLmn Segmental EBITDA Breakdown – % 15% Automotive 5,073 16% 4,401 Energy Durables 33% 17% Other 4% Finance FY09 FY10 31% Segment Contribution to EBITDA – TLmn EBITDA Margin by Segment – % -3% 49% 1,701 1,652 31.3 1,560 3% 31% 1,046 19.4 788 826 853 602 -3% 12.1 12.1 10.1 10
Slide 47: 18% Increase in Operating Profit
18% Increase in Operating Profit Operating Profit Consumer Energy Automotive Finance Other Consolidated Total TL mn Durables FY10 1,285 564 652 1,465 140 4,105 Operating Profit – TLmn Segmental Operating Profit Breakdown – % 18% 4,105 Automotive 3,476 14% Energy 31% Durables 16% Other 3% Finance FY0
Slide 48: Strong Margin Performance
Strong Margin Performance EBITDA Margin – % Operating Margin – % 7.8 7.6 9.8 9.4 6.1 7.5 FY08 * FY09 FY10 FY08 * FY09 FY10 Profit Before Tax Margin – % 7.0 7.2 2.5 FY08 * FY09 FY10 * Normalized www.koc.com.tr 48
Slide 49: Shareholder Structures as of December 2010
Shareholder Structures as of December 2010 Koç Holding Koç Family: 68.51% Free Float: 22.35% Vehbi Koç Foundation: 7.15% Koç Pension Fund: 1.99% Consumer Energy Automotive Finance Other Durables Tüpraş Ford Otosan Arçelik Tat Konserve SPV share: 51.00% KH share: 38.46% Koç Financial Services KH shar
Slide 50: Main Macro Assumptions and Disclaimer
Main Macro Assumptions and Disclaimer This presentation does contain 2011 2011 forward-looking statements that 2010 Government Koç Holding LT Program Plan reflect the Company management’s current views with respect to certain GDP (USD billion) 736 781 773 future events based on the base-case assumpt
Slide 51: For Further Questions, Please Contact
For Further Questions, Please Contact : Winner 2010 Best IR Website Award investorrelations@koc.com.tr Funda Güngör Akpınar, Coordinator Investor Relations fundag@koc.com.tr +90 216 531 0535 Aslı Soyubol, Manager Investor Relations aslii@koc.com.tr +90 216 531 0537 Neslihan Aycıl, Associate Investor
Slide 52: Main Group Companies' Contacts
Main Group Companies’ Contacts Arçelik Otokar Tüpraş Fatih Ebiçlioğlu, CFO Hüseyin Odabaş, AGM Finance Tuncay Önbilgin, Head of IR fatih.ebiclioglu@arcelik.com hodabas@otokar.com.tr tuncay.onbilgin@tupras.com.tr +90 212 314 3434 +90 264 229 2244 Ext. 6000 +90 262 316 3085 M. Türkay Tatar, EVP Yasemi