Haci Omer Sabanci Holding A.s. · BIST:SAHOL
Haci Omer Sabanci Holding A.s — Investor Day (July 2018)
58 slides from Haci Omer Sabanci Holding A.s's investor day presentation, Jul 4, 2018
Slide 1: Sabancı Holding Industrials SBU
Sabancı Holding Industrials SBU
Slide 2: Develop leadership positions through Sabanci's longstanding industrial heritage
2 Develop leadership positions through leveraging Sabanci’s Industrials SBU longstanding industrial heritage Sabanci has a longstanding industrial heritage • The early foundations of Sabancı were based in the industrials sector - it’s in our DNA • Sabancı has driven growth in a number of long-term k
Slide 3: Industrials SBU Current Group Companies
3 Industrials SBU Current Group Companies • Turkeys Leading Tire Company • Turkeys Leading Tire Company • Leader in commercial vehicle • Strong tyre manufacturing brands - • Global Leader in Reinforcement Bridgestone, Lassa, Dayton manufacturing and distribution Materials − Bus, minibus and coach (o
Slide 4: Technology leader across the Group Companies
4 Industrials SBU Technology leader across the Group Companies Proprietary technology Creation of innovative products… 1st R&D certified company in Turkey Inventions All-Season tire project 94 Approved patents Patent Applications (MULTIWAYS) Turkey’s first 100% Electrical Bus and Battery Patents
Slide 5: Operational Excellence is in our DNA
5 Industrials SBU Operational Excellence is in our DNA Global Operations Benchmark in Bridgestone Cost Leader Continuous cost and quality Strong Operational Excellence Culture Strong manufacturing cost position improvements developed through 30 years JV in Adana experience of Sabancı and Bridg
Slide 6: Continuous growth and consistent dividend generator
6 Industrials Segment Continuous growth and consistent dividend generator Combined Revenues Combined EBITDA* TLbn TLbn 6,6 5,1 5,2 20% 4,9 19% 4,6 18% 16% 17% 1,1 1,0 1,0 0,9 0,7 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Combined Net Income* Dividends paid TLm TLm 639 627 634 631 346 320 288
Slide 7: Strong growth trends for mobility and material technologies
7 Industrials SBU Strong growth trends for mobility and material technologies Reinforcement market expected to enjoy continued growth Strong demand for advanced composites kton Global reinforcement market Million $ 5577 1177 1142 5164 1107 4763 1073 1040 4417 1009 4087 978 3787 949 3507 3256 2016 20
Slide 8: Key Global Trends Affecting the SBU
8 Industrials SBU Key Global Trends Affecting the SBU Strategic Financial TREND Implication Implication Rise of Autonomous Vehicles Smart Cities IoT and Smart Devices Big Data and Data Mining Electrification Energy Storage Demand for Alternative Energy Robotics and Automation Light weighting (New Ma
Slide 9: Developing next generation Industrials – Industry 4.0
9 Industrials SBU Developing next generation Industrials – “Industry 4.0” Industry 4.0 Project Portfolio New Tyre Plant in Aksaray / Turkey Smart Mobility - Robotics Future TCF Digital Plant Turkey’s 1st Smart Tyre Plant Fleetics (Smart Mobility System) ASRS (Automated Storage and Retrival S
Slide 10: Leveraging our platform to take advantage of trends
10 Leveraging our platform to take advantage of trends Industrials SBU both at home and abroad Current Future • Building upon the industrial knowhow generated • “Continued focus on mobility and energy storage, through partnerships with world’s known industrial renewable energy equipment and material
Slide 11: New Generations Sabancı
11 Industrials SBU New Generations Sabancı Capital Allocation Kordsa: Transformation to a Reinforcement Company • Tire Reinforcement to Composites and Construction • Balanced Footprint: Tire-West to East, Composites-North America and Europe • Innovation and Technology Temsa: Bus Manufacturer to
Slide 12: Kordsa Investor Presentation
Kordsa Investor Presentation July, 2018
Slide 13: Disclaimer
Disclaimer The information and opinions contained in this document The Company does not undertake any obligation, and have been compiled by KORDSA Teknik Tekstil Anonim disclaims any duty to update or revise any forward Şirketi (the “Company”) from sources believed to be reliable looking statements,
Slide 14: We Reinforce Life
Global Footprint 715 patent applications* 4 continents ~4,000 2 R&D 218 patents 8 facilities employees Centers 172 inventions WE REINFORCE LIFE *as of 2018YTD External 3
Slide 15: Kordsa in Brief
Kordsa in Brief T L F i n anc ials ( M T L ) 2017 1Q 2018 1Q D Sales 631 713 + 12.9% EBITDA* 110 120 + 9.0% EBITDA* margin (%) 17.4% 16.8% - 0.8 bp U S D F i n anc ials ( M $ ) 2017 1Q 2018 1Q D Sales 171 187 + 9.4% EBITDA* 30 31 + 5.6% EBITDA* margin (%) 17.4% 16.8% - 0.8 bp 2 0 1 8 Gu i d an c e S
Slide 16: Kordsa in Brief
Kordsa in Brief Tire cord fabrics (“TCF”) Next generation fabrics Composite Construction • Nylon and polyester based • Textile reinforcement • Carbon fiber, aramid, • Macro and micro fibers for tire reinforcement fibers materials for green tires hybrid fabrics, and pre- concrete and soil and fabrics
Slide 17: Milestones
Milestones Second R&D Center Brezilya @Composite Global Start up of GPTW Technology AS9100 Merging The Best Technology Indonesia Export 2 years Center of RevD Acqusitions Reinforcer expansion R&D Centre in Izmit Champion in a row Excellence Certified Center 1973 - 2005 2006 2008 2010 2014 2015 2016
Slide 18: Overview of The Tire Cord Fabric Value Chain
Overview of The Tire Cord Fabric Value Chain Raw materials Manufacturing Process Products Kordsa Products NY66 and Polymerisation PET HMLS Spinning Yarns Oil Derivative Twisting Ingredients For NY66 yarns: • Hexamethylenediamine (HMD) • Adipic Acid • NY66 Salt • NY66 Flake • A tire is a highly compl
Slide 19: Overview of The Composites Value Chain
Overview of The Composites Value Chain Raw materials Intermediates Composite Parts Precursors & Fibers: Weaving • PAN Precursor • Carbon Fiber • Aramide • Glass Fiber • ... Resins: • Phenolic Prepregging • Epoxy • Cyanate ester • Composites use in aerospace & automotive is incresing, due to improved
Slide 20: Overview of The Construction Reinforcement Value Chain
Overview of The Construction Reinforcement Value Chain Raw materials Manufacturing Process Reinforced Concrete Structures NY66 and Polymerisation PP Spinning Fibers Oil Derivative Ingredients Twisting For NY66 Fibers: • Hexamethylenediamine (HMD) • Adipic Acid • NY66 Salt • NY66 Flake Major • Screed
Slide 21: Strategy House
Strategy House Pillar Initiatives •Reinforcements for •Competitive Cost •Profitable Growth for Tire Composites Industry Industry •Product and Service Quality Leadership •Reinforcements for •New Products for High Construction Industry •Lean and Agile Processes Performing Tires and Teams •Fibers for A
Slide 22: Must Win Battles
Must Win Battles a. Continue TPM implementation at every site for zero 1. incident, zero defect, zero downtime Operational b. High capacity utilization and/or optimisation at all Excellence entities c. Local Talent Development for cost and productivity 2. d. Focus on high value add segments e. Inves
Slide 23: Market Dynamics
Market Dynamics Glo b al A u t o mo tiv e M ark e t Global LV Assembly – M Units / Year 2018-2023E CAGR: +2,5% • AP Exc. China: +2.4% ASEAN region expected to grow 102 105 107 109 • China: +3.4% Demand expected to grow parallel with 97 100 GDP increase, effects of tariff wars • EMEA: +2.2% Middle Ea
Slide 24: Market Dynamics
Market Dynamics T ire R e in f o rc e me nt M ark e t ( N Y 6 . 6) 2018-2023 CAGR: +2.5% 600 100% 95% Nylon 6.6 500 91% 90% 85% 400 80% 300 76% 75% • Limited number of suppliers & increasing demand for 70% another market, Engineering Plastics category, drive 200 65% NY66 raw prices higher. Engineeri
Slide 25: Kordsa Highlights
Kordsa Highlights Market leadership based on longstanding strategic partner status with all 1 global tire players 2 Global footprint with large presence at growth regions Volume growth supported by favourable OE and replacement tire 3 demand 4 Technology leadership at the cutting edge of reinforceme
Slide 26: Market Leadership Based on Longstanding Strategic Partner Status
Market Leadership Based on Longstanding Strategic Partner Status with All Global Tire Players Nature of customer relationship as key barrier to entry Leading market shares Length of Typical length of Co-development relationship approval period(a) projects Other %17 Global Tire Player 1 Since 1986 ~
Slide 27: Capitalize on Global Footprint and Entrenched Supplier Status
Capitalize on Global Footprint and Entrenched Supplier Status with All Key Tire Manufacturers - Segmental Progress Global Players Regional Players Emerging Players Others 17% 17% 16% 22% 22% 26% 6% 6% 5% 6% 4% 5% 11% 12% 11% 7% 12% 12% 66% 66% 67% 66% 57% 60% 2014 2015 2016 2017 2017Q1 2018Q1 Extern
Slide 28: Global Footprint (Revenue)
Global Footprint (Revenue) 2013 2014 2015 2016 2017 2017 Q1 2018 Q1 41% 39% 36% 39% 36% 37% 36% 31% 32% 31% 29% 28% 30% 22% 22% 25% 17% 18% 17% 17% 19% 15% 13% 13% 14% 15% 15% 14% EMEA NA SA APAC Kordsa • #1 NY TCF producer • The only PET yarn, TCF • #1 NY TCF • #2 NY TCF producer and SEC producer i
Slide 29: Well-Positioned to Enable Volume Growth
Well – Positioned to Enable Volume Growth Co m m e n ts Light Vehicle Tire manufacturing market evolution SA SA %6 %4 • Fabric form contributes the highest value add NA • Disciplined approach to optimizing footprint NA APAC %13 %21 • 2015 investment in Indonesia has increased polyester tire %41 APAC
Slide 30: Technology Leadership at The Cutting Edge of Reinforcement
Technology Leadership at The Cutting Edge of Reinforcement S t ro n g f o c u s o n R & D Cu t t ing ed ge n ew p ro d u c ts 52 61* *2018 expected Rolling resistance improvements through 41 42 45 higher modulus for high performance tires Sales from new products Protection layer for truck & bus ti
Slide 31: Further Growth Opportunities: Composite
Further Growth Opportunities: Composite M i d - t e rm o p p o rtun ity : c o m p o site s re i n f o rc e me nt Cu rre n t s t at us Buy & Build • Composite Technologies Center of Excellence opened in 2016 (~30 • Initial step of acquiring FDI & TPI in the US MM$ investment) • Regulatory approvals a
Slide 32: Growth Opportunities: Construction
Growth Opportunities: Construction Co n s t ruc tion R e i n f o rce me n t Samsun 2nd and 3rd 3rd Bosphorus Bridge Stage Light Railway Toll Booths and Track Slab Electronic Pass Areas Asyaport (Non- Conductivity (Non-Conductivity Tekirdağ Port Concrete Concrete KraTos Macro Reinforcement) Reinforce
Slide 33: Well-Positioned for Strong Cash Generation and Dividends
Well-Positioned for Strong Cash Generation and Dividends Co s t d e v e l o p me nt ( U S $ ) • Demonstrates value-based pricing model • Ability to pass through raw material price TCF NY Yarn PET Yarn volatility: 100 98 (Revenue – raw material costs) tracked as a KPI by 96 91 sales team Cost per ton
Slide 34: Well-Positioned for Strong Cash Generation and Dividends
Well-Positioned for Strong Cash Generation and Dividends Gro s s p ro f i t Co m m e n ts % margin 200 Price is a function of 21.1% • Value Proposal of Product including services 21.6% offered (TLm) • Product type (nylon vs polyester or fabric vs yarn) 150 • Raw Material Price Movement (formula ba
Slide 35: Kordsa's Guidance & Financial Policy
Kordsa's Guidance & Financial Policy Our company guidance for financial year 2018 is as follows: EBITDA Kordsa is targeting progressive improvement in EBITDA margins over the medium term Revenue : 15-25% margins EBITDA: 15-25% (These growth rates do not include the effects of acquisition of Dist
Slide 36: Update on The 2018 Q1 Results
Update on The 2018 Q1 Results Ke y F i n an ci als (in TL million, unless otherwise stated) 2017 Q1 2018 Q1 Sales 631 713 Gross profit 136 150 Gross profit margin 21,6% 21,1% EBITDA* (b) 110 120 EBITDA* margin (b) 17,4% 16,8% SARM margin 8,2% 8,4% Net income (a) 61 61 Effective Tax Rate 15,5% 16,7%
Slide 37: We Reinforce Life
We Reinforce Life Reinforcing 2 out of every 3 aircraft tires and 26 1 out of every 3 automobile tires produced in the world
Slide 38: Appendix
Q) bd XXX XK KIO Xs 7X K2 y x) «: =e 4: > x XXX xXXX KZ Appendix.
Slide 39: Kordsa in Brief
Kordsa in Brief 2018 Q1 Revenue Split Asia EMEA Tire Cord Fabric %29 %39 %73 SA By Region By Product %13 NA Adjacents Nylon Yarn %19 %6 %21 2017 Revenue Split Asia EMEA Tire Cord Fabric %32 %37 %76 By Region By Product SA NA Adjacents Nylon Yarn %14 %17 %4 %20 External 28
Slide 40: FX Rates
FX Rates F X R at e s as o f M ar, 1 8 Monthly Avr Mar YTD 2017YE $/TRY 3,88 3,81 3,65 EUR/$ 1,23 1,23 1,13 $/BRL 3,28 3,24 3,19 $/IDR 13.757 13.576 13.557 $/THB 31,28 31,54 33,94 Month End Mar YTD 2017YE $/TRY 3,95 3,95 3,77 EUR/$ 1,23 1,23 1,20 $/BRL 3,32 3,32 3,31 $/IDR 13.756 13.756 13.548 $/THB
Slide 41: Sabancı Industrial Day July 2018
SABANCI INDUSTRIAL DAY 4 JULY 2018 Confidentiality Level
Slide 42: Brisa at a Glance
BRISA AT A GLANCE Strong Partnership of 30 Years Best Governance with SA/BS ------------------------------------------------------------------------------------------------------------------------------- Covered area Production Capacity Tyre Manufacturing and Sales İzmit 361.000 m2 11 mn units with
Slide 43: Brisa Strategy
BRISA STRATEGY... Export 2.+ Working Capital Management Sales and Innovation Leadership 3
Slide 44: Why Invest in Brisa
WHY INVEST IN BRISA... 6% CAGR in last 5 years Growing automotive Leader in Turkish Record high industry and vehicle pool Replacement Market operational cash flow 2018 Export Targets Potential in car ownership Highest Brand Value in No FX and interest risk on 15% Growth Turkish Tyre Market bank debt
Slide 45: Brisa Strategy: Export
BRISA STRATEGY... Export 2.+ 5
Slide 46: Export Driven Growth
EXPORT DRIVEN GROWTH (32% of revenue) 6% average volume growth in last 5 years 2018 Target: Growth by 15%, $210mn, 5,4 million units 70 Countries, 600 branded shops 6000 sales points Growth with Focused EU Countries: Bridgestone ------------------------------- ------------------------------- -------
Slide 47: Brisa Strategy: Sales and Innovation Leadership
BRISA STRATEGY... Sales and Innovation Leadership 7
Slide 48: Promising & Growing Industry, Domestic Channel
PROMISING & GROWING INDUSTRY, DOMESTIC CHANNEL TURKEY VEHICLE PRODUCTION & SALES Source: Turksat HCV: Heavy Commercial Vehicle (Bus, truck & work machinery) LCV: Light Commercial Vehicle (Minibus, small truck 9% CAGR in last 8 years 7% CAGR in last 8 years 15 years continuous growth in vehicle pool
Slide 49: Sales and Innovation Leadership: Replacement Market Share
SALES AND INNOVATION LEADERSHIP Replacement By Far The Market Leader Market Share Source: Europool Consumer Products: PSR Car, LCV, HCV Product Groups 45% market share in Entered to fighting Strength in Brand Portfolio Best/Better segment segment with Dayton with BS and LS Q1 RL MARKETS * 2018 2017
Slide 50: Sales and Innovation Leadership: Commercial Solutions
SALES AND INNOVATION LEADERSHIP 1 Commercial Solutions 100+ Profleet 2M TL saving 1000+ Consultants fleet/year vehicle/year Innovation Leader ------------------------------------------------------------------------------------------ 2 Fast Fit Service Business(Otopratik) 200 Targeted Preference : 1
Slide 51: Sales and Innovation Leadership: OE Markets, R&D
TOTAL 426 424 100% 162.208 160.361 101% PSR 285 300 95% 122.310 114.923 106% SALES AND INNOVATION LEADERSHIP LCV 130 116 112% 36.120 40.521 89% HCV 11 8 134% 3.778 4.917 77% 1 Original Equipment OE MARKETS 14% of the channel portfolio Q1 Export oriented growing Commercial tyres golden key OE MARKETS
Slide 52: Sales and Innovation Leadership: Aksaray Plant
SALES AND INNOVATION LEADERSHIP : AKSARAY PLANT ------------------------------------------------------------------------------------------------------------------------------- 1st SMART PLANT in TURKEY TYRE SECTOR 300M $ Investment 146k m2 building area Investment 4.5M Units capacity in 2021 Strong
Slide 53: Why Invest in Brisa
WHY INVEST IN BRISA... Record high operational cash flow for the last 10 years No FX and interest risk on bank debt Opportunity in stock price 13
Slide 54: Benchmark of Cash Flow
BENCHMARK OF CASH FLOW BRISA took high place among its peers in cash conversion from OP & Assets in 2017 Focus on cash management resulted more cash starting from 2017 and onwards Fantastic Increase in Working Capital Efficiency 14
Slide 55: Debt Structure
DEBT STRUCTURE (1) Debt structure changed to long term in 2016&2017 (2) Debt increase stopped Risks under Control Main principal debt 100% of debt is hedged to TL. repayment after 2 years Average cost of debt is 12,65%. Low interest rates has positive impact on WACC 15
Slide 56: Income Statement Q1
INCOME STATEMENT Q1 Exceptional growth in revenue and EBITDA. We expect 30-40% growth in EBITDA in 2018 Q1 (M TL) 2018 2017 % Net Sales 694 473 147% Gross Profit 161 128 126% % 23% 27% Total Expenses (94) (81) 116% EBITDA 106 70 152% % 15% 15% EBIT 78 58 134% % 11% 12% Net Profit 11 25 46% % 2% 5% S
Slide 57: Balance Sheet Q1
BALANCE SHEET Q1 (M TL) 31.03.2018 Financial ratios and working31.12.2017 capital continues to improve TWC 726 638 Short Term Financial Debt 406 229 (M TL) 31.03.2018 31.12.2017 Long Term Financial Debt 1.448 1.651 Improvement in debt leverage of Brisa TWC 726 638 Net Financial Debt 1.692 1.686 Shor
Slide 58: Right Time to Invest
RIGHT TIME TO INVEST... Peak Price : 11.4 TL Average YoY Price : 7.08 TL Improving Net Debt Strong EBITDA Growth Expectation * Based on guidance disclosed to the public 18
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