Haci Omer Sabanci Holding A.s. · BIST:SAHOL
Haci Omer Sabanci Holding A.s — Sabancı Holding — H1 2020 Earnings Presentation
51 slides from Haci Omer Sabanci Holding A.s's earnings presentation, August 2020
Slide 1: Sabancı Holding Investor Presentation
Sabancı Holding Investor Presentation August 2020
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, Executive Leadership
3 Introduction Sabancı, Executive Leadership Barış Oran – CFO Tamer Saka – Building Materials 24 years of US and International Experience First joined Sabancı Group in 2004 13 years within Sabancı Group Served as the CEO of Kibar Holding between 2014-2018 CFO of Holding Company since 2016 President
Slide 4: Sabancı, Turkey's leading group
4 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 5: Portfolio in Continuous Evolution
5 Introduction Portfolio 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 an
Slide 6: Creating market leaders in large and growing business areas
6 Introduction Creating market leaders in large and growing business areas Our companies are market leaders in critical areas within their respective sectors • Banking & Financial Services - The best bank in Turkey in 2019 (Euromoney, Global Finance, World Finance) and World’s Best Digital Bank 2019
Slide 7: Consistently delivering growth over time
7 Introduction Consistently delivering growth over time Sabancı’s 2014-2019 financial performance, TL bn Double digit combined revenue growth 17% Double digit combined EBITDA1 growth 19% CAGR 22% CAGR 97,6 20% 88,1 17% 18% 17% 65,6 16% 47,9 53,8 44,1 16,9 14,2 15,5 10,8 7,2 8,0 2014 2015 2016 2017 2
Slide 8: Turkey - an attractive foundation and platform for global growth
8 Turkey - an attractive foundation and platform for global Introduction 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 growth cons
Slide 9: Global Trends and their implications remain valid post-Covid
9 New Generation Global Trends and their implications remain valid post-Covid Potential Implications for Sabancı Relevancy of trend post-Covid Urbanization Need for upgrade of grid and the infrastructure Urbanization trend will prevail Enforces need for geographic diversification Geographic
Slide 10: Building "New Generation's" Sabancı
10 New Generation Building “New Generation’s” Sabancı Sabancı Holding Energy and utilities Industrials Financial Services Digital Businesses Growing ▪ Organic Regulated Asset Base (RAB) ▪ Growth in Composites ▪ Continued organic growth the Core expansion ▪ Global white cement leadership ▪ Digital ▪
Slide 11: An effective corporate and governance structure, tailored to drive value creation
11 Holding Value An effective corporate and governance structure, Performance Add tailored to drive value creation Culture Shareholder base Corporate structure and division of responsibilities • Evolved from a family owned group to a corporation with an effective governance structure, accelerated by
Slide 12: Linking value creation to performance targets
12 Holding Value Performance Add Linking value creation to performance targets Culture Fostering performance Previous vs New Total Cash Model • Targets to implement ownership and best practice sharing culture 300 Long term (max) • Set of short term KPIs determined for each year at the end of 50 budg
Slide 13: Implementation of new capital allocation policy
13 Holding Value Dynamic Portfolio Add Implementation of new capital allocation policy Management Overview • Revised capital allocation strategy to ensure disciplined use of capital Growth (~57% of NAV) • Strategically attractive markets where Sabancı can add value • Dynamic portfolio management, an
Slide 14: More transparent dividend policy benefiting shareholders
14 Holding Value More transparent dividend policy benefiting Refreshed capital Dynamic Portfolio allocation Add shareholders Management framework Dividend policy – overview Dividend policy to benefit all shareholders Before Today • Sabancı’s revised dividend policy was announced in 2018 Based on Dis
Slide 15: Value Creation Through Sabancı Ecosystem
15 Holding Value Add Value Creation Through Sabancı Ecosystem Ecosystem Strong collaboration in Bancassurance Brisa – Enerjisa Enerji Cooperation Aksigorta reached a significant premium production level in Future of mobility vision: Electrification bancassurance... continue to invest with a joint vi
Slide 16: Enerjisa: Sabancı, driving value as a strategic investor
16 Growing the Enerjisa: Sabancı, driving value as a strategic Refreshed capital allocation Energy & Utilities Core investor framework 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
Slide 17: Enerjisa: Turnaround in Energy between 2014 and 2017
17 Growing the Enerjisa: Turnaround in Energy between Refreshed capital allocation Energy & Utilities Core 2014 and 2017 framework 2014 2017 Decision to defer Separation of generation downstream investment Operational initiatives and upstream Upstream Downstream • Capacity target reduced from 7.5 GW
Slide 18: Generation: Renewables Growth Pipeline
18 Growing the Refreshed capital Core Generation: Renewables Growth Pipeline allocation Energy & Utilities 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 capacit
Slide 19: Kordsa: Growth with Composites
19 Refreshed capital Growing the Core Kordsa: Growth with Composites allocation Industrials framework Composite Footprint Composite Value Chain Composite Technologies Textile Excellence Products Inc. Fabric Center @ 2018 Development @ 2016 Inc @ 2018 Composite use in aerospace & automotive is incr
Slide 20: Çimsa: White Cement / Customer Proximity
20 Growing the Refreshed capital Core Çimsa: White Cement / Customer Proximity allocation Industrials framework Çimsa set to become 2nd largest white cement producer globally Comp1 Comp2 Comp3 Comp4 Comp5 White cement not constrained by the economics of transportation A global niche product pref
Slide 21: One of Sabancı's key growth and value creation areas
21 One of Sabancı’s key growth and value creation Growing the Core areas Financial Services Insurance market in Turkey has a long way ahead Low penetration levels signal growth potential Total Insurance Gross Written Premiums (GWP) (2018) Penetration1 Compulsory motor third party liability insurance
Slide 22: Aksigorta: Continuous Journey of Digitalization
22 Growing the Core Aksigorta: Continuous Journey of Digitalization Financial Services Digitalization by using Next Generation Technologies, RPA, AI, Digital Twin enables to create efficiency and needs driven insurance experience for all our stakeholders including customers, distribution channels an
Slide 23: Advanced and Predictive Analytics
23 New Bets Advanced and Predictive Analytics Digital & Analytics Vision • Advanced Analytics will lead to re-innovating of business and drive with insight utilization Mission • Support the efficiency and growth need of companies and their businesses with Advanced Analytics Scale up cross-company Ne
Slide 24: Driving Digital Transformation
24 New Bets Driving Digital Transformation Digital & Analytics Analytics Transformation Verticals Output 1 Capitalize Sabancı Holding Data Assets into Existing SaaS Products Value and Products thru • E-Procurement Center of Excellence and AA programs 3.2 billion USD volume per As Digital Multiplier
Slide 25: Corporate Venture Capital
25 New Bets Corporate Venture Capital CVC Fund: Focus on Growth, Technology and Innovation • A CVC fund was formed to gain early and economical access to new technological developments/markets/innovations and to create agile and technology-driven growth platforms in line with our Next Generation Sab
Slide 26: Potential areas in line with current capabilities and business
26 Explore Potential areas in line with current capabilities Energy & Utilities Adjacencies and business Energy SBU assessed new business areas based on Sabancı Holding investment criteria, global mega trends and industry/market dynamics Solar PV • Alternative Electricity Sources Global and region
Slide 27: Flexible Printed Electronics
27 Explore Adjacencies Flexible Printed Electronics Industrials Flexible and Printed Electronics Technology penetration with benefits in OLED displays, sensors, photovoltaics, electrochromic displays and batteries are increasing Potential application areas as a Component Manufacturer are under i
Slide 28: Focus Areas and Priorities for Sustainability
28 ESG Focus Areas and Priorities for Sustainability • On an annual basis, material issues are reviewed in accordance with stakeholder expectations and priorities that we are obtaining from different channels. • While determining our priorities, ESG approaches of MSCI (Morgan Stanley Capital Interna
Slide 29: Governance - Creating sustainable value for all our stakeholders
29 Governance - Creating sustainable value for all our ESG stakeholders Board of 9 BoD members (3 independent); ; Highest level strategic Directors decision-making body Sabancı Code of Business Ethics (SA-ETHICS) Board being composed of majority non-family members. Based on the values and business p
Slide 30: Social Responsibility
30 ESG Social Responsibility • Sabancı Volunteers Program: Employees Engagement opportunity for ‘Corporate Citizenship’ • Sabancı Foundation, Sabancı University and Sakıp Sabancı Museum; the 3 pillars of social development at Sabancı Group. • Employment opportunities for +62,000 people • 31% of our
Slide 31: Social Responsibility
31 ESG Social Responsibility
Slide 32: Sabancı Foundation supports social development
32 ESG Sabancı Foundation supports social development
Slide 33: Social Responsibility
33 ESG Social Responsibility • The Sabancı Volunteers program is in progress with the participation of about 2,000 employees. • Having spent three years on gender equality projects, Sabancı Volunteers will create new projects focused on problems of the younger generation in the second three-year ter
Slide 34: Environmental Responsibility – Principles of our approach
34 ESG Environmental Responsibility – Principles of our approach Transparency in environmental performance • Our environmental consciousness is based on responsible utilization of natural resources and reduction of our impacts on climate change. • Building Materials and Energy segments are the main
Slide 35: Environmental Responsibility
35 ESG Environmental Responsibility Energy and emission management • Sabancı Group consumed a total of 18,774,462 MWh of energy in 2019. • Energy intensity is decreased 20% compared to previous year. • Our Scope 1 and Scope 2 emissions totaled 17,295,541 tons of CO2, and this figure reached 17,297,9
Slide 36: Environmental Responsibility
36 ESG Environmental Responsibility Water management • To ensure the continuity of our business, we value the efficient use of water, a fundamental natural capital. Efficient use and recovery are the main factors of water management. • We recycled 20% of the water we consumed in 2019. The amount of
Slide 37: Environmental Responsibility
37 ESG Environmental Responsibility Waste management • We joined the Business World Plastic Initiative in 2019, which guides the business community to combat against plastic pollution. • In 2020, group plastic reduction target will be announced.
Slide 38: Environmental Responsibility
38 ESG Environmental Responsibility Protecting Biodiversity • Sabancı Group companies support the protection of biodiversity to the extent of their impact. • Since 2013, Akçansa organizes the Biodiversity Project Competition, a first in the industry, to promote fauna/flora diversity at mining sites
Slide 39: Sustained Cash Generation and Robust Holding Company
39 Performance Sustained Cash Generation and Robust Holding Company Free cash flow, Combined for Non-Bank, TL bn Commentary 7,0 • Focus on cash generation led to substantial decline in leverage 5,0 • Effective management of balance sheet linked to capital allocation approach • Lean Holding Company c
Slide 40: 2020 - Financial performance snapshot
40 Performance 2020 - Financial performance snapshot Combined Net Sales2 Combined EBITDA1 Consolidated Net Income TL mn TL mn TL mn 9.808 2.367 47.982 48.260 +1% 8.724 +12% +19% 1.991 18.641 4.431 21.363 1.280 -13% 3.804 Bank Bank Bank +16% 1.130 +13% Non-bank 29.619 5.377 +9% 26.619 +11% 4.919 Non-
Slide 41: Portfolio performance: Energy and Building Materials
41 Performance Portfolio performance Business unit financial performance, TL bn1 Combined Revenue Combined EBITDA & EBITDA margin Dividends paid to Sabancı Holding (TL mn) 283 Energy 26,0 23,6 26% 189 23% 22% 24% 16,5 15,1 20% 21% 142 11,0 11,8 12,6 12,4 13% 5,7 5,3 8% 3,5 3,3 3,6 - - - - 0,8 1,5 2,
Slide 42: Portfolio performance: Industrials and Financial Services
42 Performance Portfolio performance Business unit financial performance, TL bn1 Combined Revenue Combined EBITDA & EBITDA margin Dividends paid to Sabancı Holding (TL mn)2 Industrials 8,4 8,4 6,39,7 6,3 346 8,8 298 315 4,6 4,5 4,5 4,620% 4,5 4,5 275 6,6 18% 19% 18% 243 237 17% 15% 16% 15% 4,8 5,1 5
Slide 43: Portfolio performance: Retail and Banking
43 Performance Portfolio performance Business unit financial performance, TL bn1 Combined Revenue Combined EBITDA & EBITDA margin 2,1% without the 1,9% IFRS 16 without the 10,5 8,4 8,4 impact IFRS 16 Retail 8,7 6,3 0,8 8,0 6,3 impact 7,1 7,6 6,14,6 4,5 4,5 5,6 4,6 4,5 4,5 4,8 8% 7% 0,2 0,2 0,2 6% 3%
Slide 44: Sustained dividend payments from portfolio companies
44 Performance Sustained dividend payments from portfolio companies Sabancı Holding dividends paid and received (MTL)* TL mn Segment 2014 2015 2016 2017 2018 2019 2020 Outflows / 32% 25% 41% 46% 50% 102% 137% Akbank Banking 190 232 245 367 652 - - Inflows Dividends received Building Akçansa 57 90 10
Slide 45: Appendix
Sabancı Holding Appendix
Slide 46: Improved capital allocation and focus on performance has led to a favorable trend in Return on Equity
46 Improved capital allocation and focus on performance has led Appendix to a favorable trend in Return on Equity Return on Equity Sabancı Holding consolidated ROE1 15-19 Equity Segment ROE1 2015 2016 2017 2018 2019 ∆ ppts Share2 Energy 0.4% 3.0% 4.6% 11.4% 18.2% +17.8% 17.3% 14,5% 13,7%13,7% 13,3%
Slide 47: Sabancı Holding Discount to NAV and FX linked revenues
47 Appendix Sabancı Holding Discount to NAV and FX linked revenues Sabancı Holding Discount to NAV Share of FX linked Revenues in Total Revenues USDmn Jun-2020 Dec-2019 Direct Value of Value of Kordsa 100% Companies Stakes (%) Valuation Method Mcap Stake % of NAV Stake % of NAV Akbank 40,8% Market v
Slide 48: Overview of corporate structure
48 Appendix Overview of corporate structure Building Banking / Energy Retail Industrials Other Materials Financial Services Enerjisa Enerji Carrefoursa Çimsa Akbank Kordsa Philsa SAHOL: 40.0% SAHOL: 50.6% SAHOL: 54.5% SAHOL: 40.7% SAHOL: 71.1% SAHOL: 25.0% E.ON: 40.0% Carrefour: 46.0% Akçansa: 9.0%
Slide 49: Sabancı Holding Earnings Reporting - Combined and Consolidated Numbers
49 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 50: Sabancı Holding Greenhouse Gas Emissions
50 Appendix Sabancı Holding Greenhouse Gas Emissions
Slide 51: Investor relations key contacts
51 Appendix Investor relations key contacts investor.relations@sabanci.com Kerem Tezcan Investor Relations Director ktezcan@sabanci.com +90 212 385 81 75