Koc Holding A.s. · BIST:KCHOL

Koc Holding A.s — Investor Presentation (March 2019)

45 slides from Koc Holding A.s's investor presentation, March 2019

  1. Slide 1: Koç Holding: Turkey's Leading Investment Holding Company

    Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY Investor Presentation – March 2019

  2. Slide 2: Koç Holding Overview

    Koç Holding Overview TURKEY’S LEADING INVESTMENT HOLDING COMPANY  Turkey’s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization Combined Revenues / GDP 8% PROFITABLE AND HIGH GROWTH MODEL FOCUSED ON SUSTAINABILITY  The only Turkish co

  3. Slide 3: Milestones

    Milestones Today Turkey's largest industrial and services group 2016 Ömer M. Koç becomes Chairman following the unexpected passing away of Mustafa V. Koç 2010s Extensive investments are initiated 2006-08 Major acquisitions (Tüpraş & Yapı Kredi) & Proactive disposals 2006 Koç Holding signs the UN Glo

  4. Slide 4: Strong, Stable and Supportive Shareholding Structure

    Strong, Stable and Supportive Shareholding Structure WORLD CLASS CORPORATE GOVERNANCE PRACTICES  Koç Family has its own internal governance and investment vehicle Temel Koç Family2 which provides stability in shareholder structure (Temel Ticaret) Ticaret1 20.64% 43.65%  Sustainability is key as th

  5. Slide 5: Positioned to Benefit from Turkey's Growth Potential

    Positioned to Benefit from Turkey’s Growth Potential Scale and Strategy Ensuring Strong Positioning Largest Industrial Group Largest Exporters in Largest R&D Investments in Turkey Turkey in Turkey 4 of the Top 10 4 of the Top 10 Largest Intellectual Significant R&D Industrial Enterprises1 Exporters2

  6. Slide 6: Leading Positions in Strategic and Lucrative Business Lines

    Leading Positions in Strategic and Lucrative Business Lines Energy Automotive Consumer Durables Finance Other Sectors Automotive Main Companies Main Companies Main Companies Main Companies Main Companies Tüpraş1 / Aygaz1 Ford Otosan1 / Tofaş1 / Arçelik1 Yapı Kredi Bankası1 / Food: Tat Gıda1 / Retail

  7. Slide 7: Portfolio Structure (I/III)

    Portfolio Structure (I/III) Balanced Between Defensive & Growth Assets Defensive Assets Growth Assets 55% 45% Aygaz Arçelik Koçfinans Ford Otosan Yapı Kredi Otokoç Opet Divan Otokar Tüpraş Düzey Marinas Tofaş Entek Setur TürkTraktör KoçSistem Tat Gıda Higher dividends Higher growth Dividend Payout ≥

  8. Slide 8: Portfolio Structure (II/III)

    Portfolio Structure (II/III) Sectorally Diversified -- Resilient vs Cyclicality Share in: Dividends Net Income NAV Key Risks & Sensitivities Key Strengths Total TL 2,692mn TL 5,537mn TL 41,683mn Automotive • Domestic growth potential Turkey and European demand (PC & CV Mfg) 28% 21% 24% (main drivers

  9. Slide 9: Portfolio Structure (III/III)

    Portfolio Structure (III/III) Geographically Diversified International Sales / Total (Combined) Regional Breakdown of International Sales (Combined-2018) YE18: $20 bn combined international revenues ~55% Including Tüpraş, c.55% of combined sales (US$ 36bn) not sensitive to domestic economy 30% 31% 2

  10. Slide 10: Solid 2018 Results Confirming Resilience

    Solid 2018 Results Confirming Resilience Consolidated Net Income (TL mn) Dividend Income (TL mn) +13% 5,537 2,692 4,909 2,337 1,228 1,291 1 2017 2018 2016 2017 2018 2019 1 Solid dividend flow supported by ~TL 37 bn of investments Sustainable performance leveraging on diversified structure over the l

  11. Slide 11: Disciplined Risk Approach

    Disciplined Risk Approach Strong US$ 1.9 bn gross cash → 80% in US$, 20% in TL US$ 1.5 bn total debt Cash Position (Solo) US$ +427 mn net cash Stable 2 eurobonds totaling US$ 1.5 bn as of YE18→ Mar’16: US$ 750 mn, 7yrs, 5.25% coupon; Apr’13: US$ 750 mn, 7 yrs, 3.5% coupon Funding (Solo) Mar’19: US$

  12. Slide 12: Group's FY18 Financial Performance

    Group’s FY18 Financial Performance Consumer TL mn, FY18 Energy Automotive Finance Other Total Durables Combined Revenues 1 153,250 65,716 30,244 43,227 13,837 306,275 y/y 57% 18% 29% 46% 25% 41% Combined Operating Profit2 9,620 5,614 2,211 6,039 119 23,602 y/y 52% 41% 50% 43% -35% 46% Combined Profi

  13. Slide 13: Performance Constantly on an Inclining Trend amidst Volatility

    Performance Constantly on an Inclining Trend amidst Volatility 11.1% 8.5% 8.5% 7.4% 5.2% 6.1% 4.8% Turkey 3.2% 2.6% GDP Growth -4.7% 5.5 4.9 3.6 3.5 2.7 2.7 Net Profit 2.1 2.3 1.4 1.7 (TL bn) 2,692 Holding Dividend 1,238 1,291 Income 592 667 893 740 907 (TL mn) 189 329 2009 2010 2011 2012 2013 2014

  14. Slide 14: Investments (I/III)

    Investments (I/III) Disciplined Strategy and Clear Evaluation Process Strategy  Standardized evaluation process for investments that require Holding Evaluation  All investments treated equally based on standard metrics Turkey Global and methods, facilitating informed decisions Consolidate Main Inv

  15. Slide 15: Investments (II/III)

    Investments (II/III) Focus on Scale and Returns Investments (Combined, TL bn) Growth Opportunities ~TL 37 bn Existing Businesses over the last 5 years with major capex cycle now finalised for main group companies Domestic & int’l growth opportunities across Energy different segments such as renewabl

  16. Slide 16: Investments (III/III)

    Investments (III/III) Track Record of Profitable Portfolio Rotation Date Company Sector Held Since Buyer / Seller Notes DISPOSALS Nov’11 Koç.net IT 2000 Vodafone Aug’08 Oltaş Auto Supplies 1963 Continental A.G. Jul’08 Koç-Allianz Insurance 1974 Allianz SE Jun’08 Demrad Heating & Ventilation 2003 Ada

  17. Slide 17: Ratings

    Ratings Above the Sovereign Standard & Poors Moody’s BB- Ba2 One notch above Turkey sovereign One notch above Turkey sovereign Stable Stable Stable Stable Positive Stable Negative Stable Negative Negative Stable Stable Positive Positive Positive Positive Stable Stable Negative Stable Negative Negati

  18. Slide 18: Maximizing Shareholder Value

    Maximizing Shareholder Value Structure Ensuring Robust Performance Performance Based Executive Compensation System  Comprehensive executive compensation Shareholder Value system, one of few in Turkey also linked to share performance  Proactive investor relations management Relative L-T Strategic T

  19. Slide 19: Leading Corporate Citizen

    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 projects and programs in education, healthcare, culture

  20. Slide 20: Initiatives for Social Advancement

    Initiatives for Social Advancement Our projects’ commonalities are unity, synergy and leadership established through our companies, employees and dealers ‘For My Country’ project Vocational Education: A Crucial Matter for Since 2006: the Nation  >1 mn tree saplings planted in 7 ‘For My Country’ Sin

  21. Slide 21: Energy Sector

    Energy Sector Brent Crude Oil & LPG Prices Crack Margins Diesel Jet Fuel 16 16 17 14 15 15 14 13 14 12 11 12 12 539 12 13 15 13 11 11 10 11 10 11 9 55 64 11 9 9 9 8 8 54 8 7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 370 2015 2016 2017 2018 321 371 2015 2016 2017 2018 32 Gasoline High Sulphur Fuel Oil 19 19 Feb-16 Sep

  22. Slide 22: Koç Group in the Energy Sector

    Koç Group in the Energy Sector Diversified and Synergetic Positioning Koç Positioning Coverage of Domestic Share of Turkey’s Fuel Demand Storage Capacity Largest refinery Imports Others & 43% 40% largest LPG distribution ~60% ~57% company in Turkey Koç Koç Market Position / Share Turkey’s largest re

  23. Slide 23: Tüpraş

    Tüpraş Turkey’s Largest Refinery (TL thousands) 2017 2018 y/y  7th largest refinery in Europe and 26th largest globally Sales Volume (k, tons) 31.5 29.8 -5%  Wide range of crude oil processing capacity (28.1 MT via 4 well-positioned Domestic 25.7 25.6 0% refineries) Exports 5.8 4.2 -28%  One of t

  24. Slide 24: Aygaz

    Aygaz Market Leader in LPG for more than 55 years (TL thousands) 2017 2018 y/y  Generic brand in Turkey for LPG with 27% market share in total LPG market Sales Volume (k, tons) 2,154 2,000 -7% ‐ 22% market share in autogas Auto 759 730 -4% ‐ 42% market share in cylinder LPG Cylinder 335 315 -6%  F

  25. Slide 25: Other Energy Companies

    Other Energy Companies Opet Station Numbers White Product Market Share  Second biggest distribution company by volume Opet Position #2  Unrivalled leader in customer satisfaction in its sector for 10 years 1,615 17.7% 17.7%  1.1 million m3 storage capacity via 5 terminals 1,560 434 463  21 stati

  26. Slide 26: Automotive Sector

    Automotive Sector Competitive Advantages Domestic Market Dynamics Sales (‘000) Production (‘000)  5th largest auto manufacturing hub in Europe; 14th largest globally with a production capacity of c. 2 million units 1,696 1,486 1,550  Underpenetrated domestic market with ongoing growth 1,359 1,019

  27. Slide 27: Koç Group in the Automotive Sector

    Koç Group in the Automotive Sector Undisputed Leader in Turkey Koç Positioning  Widest sales and after-sales network Production  Highly skilled and experienced workforce Koç  Highest number of R&D employees in Turkish automotive Leading positions 44% and ongoing  Long-standing JV partnerships St

  28. Slide 28: Ford Otosan

    Ford Otosan Turkey’s Leader in Commercial Vehicles with Strong R&D Power  Europe’s largest commercial vehicle manufacturer; 80% share in Ford (TL thousands) 2017 2018 y/y Europe’s Transit family sales Total Unit Sales (000 k) 1 412.9 394.7 -4%  Strong positioning in Ford universe: Domestic 115.5 6

  29. Slide 29: Tofaş

    Tofaş Defensive Portfolio with Take-or-Pay Contracts (TL thousands) 2017 2018 y/y  Only company which produces both passenger and commercial vehicles Total Unit Sales (000 k) 393 316 -20% with the largest production capacity in Turkey Domestic 122.7 72.7 -41%  Intellectual and industrial property

  30. Slide 30: TürkTraktör

    TürkTraktör Largest Tractor Manufacturer in Turkey (TL thousands) 2017 2018 y/y  Market leader for the last 12 consecutive years. Covers ~70% of total Tractor Unit Sales (000 k) 49.6 32.2 -35% Turkish tractor production, 90% of total exports Domestic 37.6 17.7 -53%  Largest tractor producer with 5

  31. Slide 31: Other Automotive Companies

    Other Automotive Companies Otokar - Largest private sector defense company in Turkey  Turkish Armed Forces’ leading supplier and exporter of land platforms (TL thousands) 2017 2018 y/y  Products with Otokar IP rights used on 5 continents and >60 countries Revenues 1,785 1,679 -6%  Market leader i

  32. Slide 32: Consumer Durables Sector

    Consumer Durables Sector Competitive Advantages Domestic Market Dynamics Sales (mn) Production (mn)  Efficient and cost-effective production hub for multiple 28.4 28.5 markets 26.2 8.5 24.6 7.5 21.9 22.6  Solid domestic market growth potential driven by favourable 6.6 7.1 7.1 demographics, lower p

  33. Slide 33: Arçelik (I/II)

    Arçelik (I/II) Truly Global with Sales to Over 100 Countries Worldwide (TL thousands) 2017 2018 y/y  Domestic leader (50% m. share in white goods, 51% in Acs, c. 25% in Revenues 20,841 26,904 29% TVs) Domestic 8,125 8,425 4% Exports 12,716 18,479 45%  Leading positions in key international markets

  34. Slide 34: Arçelik (II/II)

    Arçelik (II/II) Strong Growth Trends Utilising Organic and Inorganic Opportunities Initiatives / Developments Growth Strategy Overview  May’17: JV agreement with Voltas (part of the Tata Group) in India Organic with equity of $ 100mn. A refrigerator production facility will open by YE19. Other dome

  35. Slide 35: Finance Sector

    Finance Sector Low Penetration Levels Providing an Opportunity for Rapid Growth Loans + Deposits / GDP Branches per million inhabitants Mortgages / GDP 353 41% 195% 108% 21% 131 4% EU-28 Turkey EU-28 Turkey EU-28 Poland Turkey Source: European Central Bank, BRSA, CBRT Figures as of YE2018, GDP figur

  36. Slide 36: Yapı Kredi Bank: Sustained Profitability

    Yapı Kredi Bank Sustained Profitability Sustained Profitability Strong Operational Performance Net Income (TL mn) ROATE Cost/Income1 CoR Revenues +45% 58 bps Costs +13% 29% 4,668 (vs. 16% CPI) 44% 2.74% 14.2% 3,614 13.6% 34% 2 2.56% 1.08% 2017 2018 2017 2018 2017 2018 2017 2018 Controlled Volumes So

  37. Slide 37: Other Main Companies

    Other Main Companies Sector • Production of tomato products, dairy products and pasta. #1 in tomato products, tomato paste and pasteurized milk Tat Food • KH distribution company Düzey performs logistics for Tat Gıda products as well as some external leading brands • Strong focus on end-to-end effic

  38. Slide 38: Annex

    Annex www.koc.com.tr 38

  39. Slide 39: Unlisted Companies

    Unlisted Companies FY18 Koç Hol di ng Revenues Opera ting Profi t1 EBITDA Book Va l ue (SHE) TL mn Di rect Sha re 2017 2018 2017 2018 2017 2018 2017 2018 Arçel i k LG Kl i ma 5.00% 793 955 21 55 31 70 259 277 Bi l kom 69.94% 1,728 2,331 50 107 51 108 83 116 Düzey 31.15% 1,688 1,759 17 -3 18 1 69 17

  40. Slide 40: Summary Combined Financials by Segment

    Summary Combined Financials by Segment Energy Segment Automotive Segment Consumer Durables Segment Finance Segment Share in Share in Share in Share in Share in Share in Share in Share in Combined Consolidated Combined Consolidated Combined Consolidated Combined Consolidated Operating Profit1 Net Inc

  41. Slide 41: Consolidated Net Income

    Consolidated Net Income 1 1 1 Consolidated Net Income (TL mn) Normalized -10% Normalized +12% Normalized +13% y/y -16% +23% +7% +35% +52% +13% 134 5,537 24 440 4,909 307 - 276 2017 Energy Auto Cons. Durables Finance Other 2018 2017 2018 Other Other 5.3% 7.1% Energy Finance 25.9% Energy 25.7% Finance

  42. Slide 42: Shareholding Structures

    Shareholding Structures Koç Holding Koç Family: 64.3%1 Free Float: 26.5% Vehbi Koç Foundation: 7.3% Koç Pension Fund: 2% Consumer Energy Automotive Finance Other Durables Tüpraş Ford Otosan Arçelik Yapı Kredi Bank Tat Gıda SPV: 51% KH: 38% KH: 41% KFS: 81.9% KH: 44% Free float: 49% Ford: 41% Other K

  43. Slide 43: Disclaimer

    Disclaimer This presentation does contain forward-looking statements that reflect the Company management’s current views with respect to certain future events based on the base-case assumptions. Although it is believed that the expectations reflected in these statements are reasonable, they may be a

  44. Slide 44: Koç Holding Contacts

    Koç Holding Contacts investorrelations@koc.com.tr www.koc.com.tr IR Application Gülsevin Tunçay, Coordinator Investor Relations gulsevint@koc.com.tr +90 216 531 0428 Nursel Ilgen, CFA, Coordinator Investor Relations nurseli@koc.com.tr +90 216 531 0414 Gizem Poyraz, Manager Investor Relations gizemb@

  45. Slide 45: Main Group Companies' Contacts

    Main Group Companies’ Contacts Arçelik Otokar Tüpraş Hande Sarıdal, Finance Director Doğan Seçkinler, Finance Manager Aslı Gülçur, Head of Strategic Planning hande.saridal@arcelik.com dseckinler@otokar.com.tr asli.gulcur@tupras.com.tr +90 212 314 3185 +90 264 229 2244 Ext. 6300 +90 262 316 3087 Orku

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