Slide 1: Turkey's Leading Investment Holding Company
Koç Holding TURKEY’S LEADING INVESTMENT HOLDING COMPANY creating one common legacy for 90 years Investor Presentation – August 2016
Slide 2: A Leading Investment Holding Company
A Leading Investment Holding Company KOÇ HOLDING: TURKEY’S LEADING INVESTMENT HOLDING COMPANY Koç Group is Turkey’s largest industrial and services group in terms of revenues, exports, employees , taxes paid and market capitalization on the Borsa İstanbul. PROFITABLE AND HIGH GROWTH MODEL, FOCUSIN
Slide 3: Koç Group History
Koç Group History Today Turkey's largest industrial and services group 2006-08 Proactive disposals 2006 Koç Holding signs the UN Global Compact 2005-06 Acquisition of Tüpraş, Yapı Kredi Bank & Tansaş 2003 Third generation of Koç Family takes the reins 2001 Financial services consolidated under one r
Slide 4: Strong Beneficiary of the Growth Potential in Turkey
Strong Beneficiary of the Growth Potential in Turkey We have the right size to benefit from economies We continuously out-perform the growth rates of scale in Turkey 17 15 Combined Revenues / GDP* 7% 11 9 Total Exports / Turkey’s Exports* 9% 6 6 6 5 5 5 4 4 3 3 Total Market Cap. on Borsa İstanbul* 1
Slide 5: One of the Few Companies in Turkey with Investment Grade
One of the Few Companies in Turkey with Investment Grade Ratings Outlook Moody’s Baa3* RuRD* S&P BBB- Negative Moody’s Koç Holding's Baa3 issuer rating reflects the company's strong financial profile and balanced portfolio of investments in mature and high-growth companies, which have diversified th
Slide 6: Best Positioned to Benefit once the Economy Normalizes
Best Positioned to Benefit once the Economy Normalizes Maturing democracy with a functioning market economy Strategic location at the crossroads of continents, cultures and economies Favorable demographics: 78.7 mn people; Median age at 30 vs. 42.2 in EU Unsaturated domestic market as most o
Slide 7: Strong, Stable and Supportive Shareholder
Strong, Stable and Supportive Shareholder Koç Family has its own internal governance and Koç Family investment vehicle, which provides stability and Temel Members Ticaret* 24.86% consistency 43.65% Koç Family mainly assumes Board level responsibility Koç Pension Fund 2.0% Business run by highl
Slide 8: Leadership Positions in Strategic & Lucrative Business Lines
Leadership Positions in Strategic & Lucrative Business Lines as of year-end 2015 Energy Automotive Consumer Durables Finance Automotive Main Companies Main companies Main Companies Main Companies Tüpraş* / Opet / Aygaz* / Entek Ford Otosan* / Tofaş* / Arçelik* Yapı Kredi Bankası* TürkTraktör* / Otok
Slide 9: Large Distribution Networks & Customer Database in Low Penetrated Sectors
Large Distribution Networks & Customer Database in Low Penetrated Sectors with Strong Growth Potential ~ 1,000 bank branches Largest distribution network ~ 11,000 dealers and after-sales services Large customer database of over 26 million (16 mn with data Largest customer sharing permission) i
Slide 10: Energy: Defensive Business Profile with Significant Growth Prospects
ENERGY Defensive Business Profile with Significant Growth Prospects Competitive Advantages Low Penetration Robust Diesel Demand in Turkey Final Energy Consumption mn tones CAGR: 8.2% Strong and sustainable demand for per Head – TOE 22 20 +16% energy products with 2011-15 CAGR of 2.2 18 +4% +7% die
Slide 11: Automotive: Well-positioned Both Domestically and Globally
AUTOMOTIVE Well-positioned Both Domestically and Globally Low Penetration Robust Domestic Demand Competitive Advantages Passenger car per ‘000 New plato in annual auto sales 1,200 Low auto penetration levels in Turkey 613 Auto market average offering high growth prospects; Koç Group 1,000 857 comp
Slide 12: White Goods: Truly Global with Strong Brand Awareness
WHITE GOODS Truly Global with Strong Brand Awareness Competitive Advantages Strength in Turkey with c. 50% market share Nearly 60% of revenues from international sales Rising market share in EU: Beko no 2 brand in EU (7th in 2008) Competitive cost structure with low cost manufacturing center
Slide 13: Banking Offers High Growth Prospects with a Sound Structure
BANKING Offers High Growth Prospects with a Sound Structure Competitive Advantages of Yapı Kredi Bank Underpenetrated Market Loans + Deposits / GDP Mortgage loans / GDP 4th largest private bank in terms of asset size (%, 2015) (%, 2015) 221 Extensive branch network, no 2 among private banks 42 1
Slide 14: Investment Focus on Sectoral Diversification
Investment Focus on Sectoral Diversification to be Resilient to Different Risk Profiles (mn) TL 907* TL 3,389** TL 32,523 Key Risks & Sensitivites Key Strengths 100 • Strong growth potential , esp. for large banks Domestic credit and interest • Yapı Kredi has completed its physical 13 14 Finance rat
Slide 15: Balanced Portfolio Between Defensive & Growth Assets
Balanced Portfolio Between Defensive & Growth Assets Wealth preservation Bank on growth 59% Yapı Kredi 41% Tüpraş Arçelik Aygaz Otokoç Opet Otokar Tofaş Entek Ford Otosan Koçtaş TürkTraktör Tat, Düzey Demir Export KoçFinansman Setur KoçSistem Marinas Divan Highe
Slide 16: Geographical Diversification to be Resilient to Country-Specific Risks
Geographical Diversification to be Resilient to Country-Specific Risks Combined International Sales (US$ billion) 2015 regional breakdown & percentages 18.6 18.6 18.7 16.6 15.7 13.2 29.2% 28.6% $0.95 bn $10.5bn $2.4 bn 9.6 27.6% 27.6% 6% 67% 15% 25.3% 25.2% 22.1% $1.6 bn 10% $0.15 bn 1% $0.1bn 2009
Slide 17: Proven Resilience & Improving Performance Despite Volatile Domestic Market
Proven Resilience & Improving Performance Despite Volatile Domestic Market 9.2 8.8 10.0 Turkey GDP Growth (%) 4.2 4.0 5.0 3.0 2.1 Source: TurkStat 0.0 2009 2010 2011 2012 2013 2014 2015 -5.0 -4.8 Net Profit 4.0 3.6 attributable to 2.7 2.7 3.0 2.3 2.1 Equity Holders of 1.7 2.0 1.4 the Parent 1.0 (TL
Slide 18: High Resilience Against Risks: Strong B/S & Cash Position
High Resilience Against Risks Strong B/S & Cash Position Our net cash position enables us to be proactive Our combined net financial debt stands at 1.7 in new M&As times EBITDA Koç Holding Stand-Alone Consolidated Net Debt / Cash Excl. Finance Net Cash Position 1Q16 1H16 ~US$ -3.7bn ~US$ -3.9bn Tota
Slide 19: Major Portfolio Companies Have Strong Current Ratios
Major Portfolio Companies Have Strong Current Ratios Group’s(*) Current Ratio 30 June 2016 Total Current Assets: TL48.7 bn Total Current Liabilities: TL36 bn Current Ratio : 1.4 10,328 10,117 6,112 4,324 4,339 1,113 1,294 1,491 3 Current Assets (TL mn) 11,576 5,540 3,931 3,714 890 1,001 1,114 81 329
Slide 20: Average Duration of Financial Debt is 33 Months
Average Duration of Financial Debt is 33 Months 30 September 2012 30 June 2016 Combined Financial Debt Combined Financial Debt Average duration: ~22 months Average duration: ~33 months 1. Eurobond Transactions: Koç Holding issued a USD 750 mn, 7 years Eurobond in March 2016 (5.25% p.a. coupon rate
Slide 21: FX Position
FX Position Koç Holding Stand-Alone FX Position 1Q16 1H16 US$ + 42mn US$ +45mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 1Q16 1H16 1Q16 1H16 US$ -2.4bn US$ -2.4bn* US$ -1.0bn US$ -1.0bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş invento
Slide 22: Adjusted Net FX Position / Equity Ratio Meets Policy Limits
Adjusted Net FX Position / Equity Ratio Meets Policy Limits for Major Portfolio Companies 30 June 2016 Group’s Combined Group’s Adj. Net FX Position/Equity Adjusted Net Long FX Position 3.9% US$383 mn 30 June 2016 45 0 6 1 Net FX Position (US$ mn) (Reported) -20 -18 -681 -691 -2,273 45 0 137 25 13 1
Slide 23: Active Player in M&As and Privatizations
Active Player in M&As and Privatizations Opportunistic M&A strategy to consolidate leadership positions and reach optimal portfolio diversification Acquisitions ahead of 2008 Koç Holding Share: US$ 6.6 billion 51% for US$ 4,140mn Consolidated as of January 2006 Through privatization Turkey’s
Slide 24: Profitable Disposals
Profitable Disposals Divested Companies Sector Held Since Buyer Closing Date IT 2000 Vodafone 30 November 2011 Auto Supplies 1963 Continental A.G. 28 August 2008 Insurance 1974 Allianz SE 21 July 2008 2003 Heating & Ventilation (spin-off of Ada Metal 26 June 2008 Demirdöküm) Retailing 1975 BC Partne
Slide 25: 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 Combined Investments – TL bn New manufacturing and R&D Opportunistic projects for export markets buyouts in with our JV partners international 7.6 markets a
Slide 26: Disciplined Investment Strategy
Disciplined Investment Strategy Existing Consolidate leading Expand globally in businesses positions to benefit the sectors we are already most from the growth present or/and adjacent potential sectors New Exploit new growth business opportunities Only consider very (Privatizations, secondary M&A op
Slide 27: Systematic Investment Evaluation
Systematic Investment Evaluation Strategy Main Investment Criteria Standardized investment evaluation process for IRR Criteria: risk adjusted cost of capital applied to investments that require Holding Evaluation calculate IRR threshold in different projects Treating all investments on the sam
Slide 28: Proactive Investor Relations Management
Proactive Investor Relations Management We Endeavor to Maximize the Value We Create for our Shareholders Executive compensation based on economic profit and share performance Proactive investor relations management Cash dividend payout Strong share performance Strong Relative Stock Performan
Slide 29: 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 30: Leading Positions in R&D and Technology Investments
Leading Positions in R&D and Technology Investments Turkey’s largest intellectual property portfolio with more than: 7,000 trademarks 3,600 patent families 8,400 patents 800 industrial design registrations 4,800 Internet domain names Koç Holding and three other Koç Koç Group made TL 1.3 billion Grou
Slide 31: 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, cultur
Slide 32: 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 “For My Country” project Vocational Education: A Crucial Matter Grassroots initiative organized annually since 2006, to for the Nation sp
Slide 33: 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 With practices in water management, over 96 Koç Group companies million m³ of water was reused in production, invested TL 242 million co
Slide 34: Key Takeaways: Value Propositions
Key Takeaways : Value Propositions Largest investment Robust top-line growth holding company in Leading positions in enabling the benefits of Turkey sectors with strong economies of scale Best proxy to growth potential Well-proven track record in the Turkish Strong commitment portfolio restructuring
Slide 35: Operational Excellence and Leadership in Core Business Segments
Operational Excellence and Leadership in Core Business Segments Slide # 36 Energy Sector Strongest Player in the Turkish Energy Sector 41 Automotive Sector Undisputable Leaders of Turkish Automotive Industry 48 Consumer Durables Sector Strong Global Network 50 Finance Sector Focus on Lucrative Busin
Slide 36: Why Energy Sector?
Why Energy Sector? High Growth Potential Strong Demand Dynamics Final Energy Consumption per Head – TOE 2.2 Among the fastest growing energy markets in the world parallel to its economic growth Growing domestic oil demand coupled with 1.1 insufficient diesel capacity Offers a wide range of opp
Slide 37: 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 and globally with Nelson Complexity of 9.5 28th largest in the world Competitive advantages: Access to cheaper sources of
Slide 38: Residuum Upgrade Project (RUP) of Tüpraş
Residuum Upgrade Project (RUP) of Tüpraş All units of RUP are working at full capacity since June 2015: Not only will RUP have a US$ 1bn positive impact on the Turkish C/A balance, but also will bring significant improvement for Tüpraş in terms of Nelson complexity, capacity utilization, white produ
Slide 39: Aygaz: Turkey's Undisputable Market Leader in LPG
AYGAZ Turkey’s Undisputable Market Leader in LPG for more than 50 years Generic brand in Turkey for LPG with 29% market share Leading LPG distributor of in total LPG market Turkey 42% market share in cyclinder LPG (5th largest LPG market in Europe, 3rd largest autogas market in the world) 25%
Slide 40: Opet: Turkey's Fastest Growing Fuel Distribution Company
OPET Turkey’s Fastest Growing Fuel Distribution Company Fastest growing player of its sector while maintaining profitability Highest customer Unrivaled leader in customer satisfaction in its sector for 9 & station 2nd in white consecutive years products in Turkey satisfaction Retail and wholes
Slide 41: Automotive Sector: A Global Manufacturing and Distribution Hub
Automotive Sector A Global Manufacturing and Distribution Hub Dynamic Market with High Growth Potential Strong Domestic Demand Passenger car per ‘000 A new plato of annual auto sales 1,200 613 Auto market average 1,000 857 800 632 336 600 1011 911 818 893 400 793 807 183 634 527 576 200 455 451 0 1H
Slide 42: Koç Group in the Automotive Sector
Koç Group in the Automotive Sector Almost half of the Turkish manufacturing and export of motor vehicles are realized by Koç Companies Present in high growth segments both in Turkey & in EU Highest quality and safety Largest distribution network of production among the Highly skilled and exp
Slide 43: Ford Otosan: Turkey's Largest Installed Production Capacity
FORD OTOSAN Turkey’s Largest Installed Production Capacity 50-50% JV with Ford – Ford’s center of excellence for heavy trucks and heavy duty diesel powertrains Largest R&D staff Highest Ford in the Turkish market share in Export champion of Turkish Automotive Industry (65% of Turkey’s CV exports
Slide 44: Ford Otosan: Major Investment Plan is Completed
FORD OTOSAN Major Investment Plan is Completed US$ 1.4bn investment of Ford Otosan is finalized with its capacity increase & complete new product portfolio Investments of Ford Otosan US$ mn Ford Otosan achieved in 2015 700 682 Market share gains in the domestic market 600 523 Rising exports on E
Slide 45: Tofaş: Defensive Portfolio via Take-or-pay Contracts
TOFAŞ Defensive Portfolio via Take-or-pay Contracts 50-50% JV with Fiat Chrysler Automobiles The only domestic manufacturer and exporter of both PCs & LCVs Among Fiat’s 3 main R&D Extensive dealer and after-sales network centers globally Owns the full intellectual and industrial property rig
Slide 46: Tofaş: Investing in New Models
TOFAŞ Investing in New Models Tofaş entered a new investment phase in 2014 Investment of Tofaş Capex (US$) Period Adaptation of New Doblo is complete and its export to US Total Investment 1.4 bn 2014-2016 & Canada markets has started in 4Q14 PC – Sedan 520 mn completed in 4Q15 US$ 1.04bn investm
Slide 47: Other Automotive Companies
Other Automotive Companies TÜRK TRAKTÖR – Turkey’s Largest Farm Tractor Manufacturer 50-50% JV with Case New Holland Undisputable market Utilising “flexible manufacturing system” in tractors, providing a high degree leader of flexibility with c. 50% share Strong dealership network and reputabl
Slide 48: Consumer Durables Sector: Low Penetration Levels and Strong Margins
Consumer Durables Sector Low Penetration Levels and Strong Margins Underpenetrated segments, renewals, rapid Rising domestic demand household formation & urbanization drive growth White Goods Penetration – % Turkish White Goods market : New plato of annual sales Refrigerator Washing machine Dishwash
Slide 49: Arçelik Provides Products and Services to Over 100 Countries
ARÇELİK Provides Products and Services to Over 100 Countries Worldwide Privileged position in Turkey with superior exclusive dealer Turkey’s market leader in white network (Extensive sales & after-sales network) goods (c. 50%), Highest level of brand recognition in Turkey TVs and air-conditioner
Slide 50: Why Finance Sector?
Why Finance Sector? Low Penetration Levels, Providing an Opportunity for Rapid Growth Loans + Deposits / GDP – % (2015) Branches per million inhabitants Mortgage loans / GDP – % (2015) 221 434 42 137 20 142 7 EU-27 Turkey EU-27 Turkey Euro Area Poland Turkey Source: European Central Bank, BRSA, CBRT
Slide 51: Yapı Kredi Bank: Significant Profitability Acceleration
YAPI KREDİ BANK Significant Profitability Acceleration Phase 1 Complete: Invest (2014 & 2015) Phase 2: Harvest 1H16 Profitability Acceleration +433 +77 new branches to 1,000 +1.2 million Investments complete bps Invest customers 14.0% & +2,661 headcount to 19,345 acquired in Continued pace of 9.
Slide 52: Yapı Kredi Subsidiaries and Other Finance Companies
Yapı Kredi Subsidiaries and Other Finance Companies YAPI KREDİ YAPI KREDİ YAPI KREDİ LEASING FACTORING ASSET MANAGEMENT Leader with 20% share Leader with 18% share 2nd in the market with 17.5% share YAPI KREDİ KOÇFİNANS INVEST Turkey’s first consumer finance 2nd in in equity transaction co
Slide 53: Table of Contents
Table of Contents Page 1. 1H16 Earnings Review 54 2. Shareholder Structures 65 3. Disclaimer 66 4. Contacts 67 www.koc.com.tr 53
Slide 54: Group's Overall Financial Performance
Group’s Overall Financial Performance Consumer 1H16 Change Over TL million Energy Automotive Finance Other Durables Total 1H15 Total Combined Revenues * 28,996 19,920 8,425 11,993 4,616 73,949 7% Combined Gross Profit 2,241 2,439 2,615 5,243 835 13,373 16% Combined Operating Profit ** 1,125 1,370 68
Slide 55: Combined Revenues
Combined Revenues Combined Revenues – TL mn Segmental Combined Revenues Breakdown – % +7% 69,279 73,949 Automotive 27% Consumer Durables Energy 11% 39% Finance 1H15 1H16 16% Other 6% Segment Contribution to Combined Revenues – TL mn -9% 31,921 28,996 +22% +22% 19,920 16,371 +20% +13% 11,993 8,425 9,
Slide 56: Combined Operating Profit
Combined Operating Profit * Combined Operating Profit – TL mn Segmental Combined Operating Profit Breakdown – % +16% Automotive 5,243 26% Energy 4,539 +10% 21% 5,012** Consumer Durables 13% Other -2% 1H15 1H16 Finance 41% Segment Contribution to Combined Operating Profit – TL mn +49% +26% +33% 2,157
Slide 57: Combined Net Income
Combined Net Income Combined Net Income – TL mn Segmental Combined Net Income Breakdown – % +11% 4,011 Automotive 3,608 30% +5% 3,806* Energy Consumer 14% Durables 10% Other 1% 1H15 1H16 Finance 44% Segment Contribution to Combined Net Income – TL mn +52% +29% 1,772 +37% -42% 1,215 1,599* 1,166 992
Slide 58: Consolidated Net Income
Consolidated Net Income Consolidated Net Income – TL mn Segmental Consolidated Net Income Breakdown – % +8% 1,433 Automotive 1,322 34% +1% 1,332* Energy 14% Consumer Other Durables 0% 11% 1H15 1H16 Finance 41% Segment Contribution to Consolidated Net Income – TL mn +52% +30% 589 -47% 486 +34% 520* 3
Slide 59: Combined Exports & International Sales
Combined Exports & International Sales Combined Exports – US$ mn Combined International Sales – US$ mn -2% -2% 6,694 6,588 7,750 7,576 1H15 1H16 1H15 1H16 www.koc.com.tr 59
Slide 60: Combined Investments
Combined Investments Combined Investments – TL mn Segmental Investments Breakdown – % Automotive 60% 3,110 3,114 Consumer Energy Durables 24% Other 9% Finance 1H15 1H16 2% 5% www.koc.com.tr 60
Slide 61: Koç Holding Net Cash Position
Koç Holding Net Cash Position Koç Holding Stand-Alone 30.06.2016 Net Cash Position Total Debt: ~US$ 1.5bn* Total Cash: ~US$ 2.1bn** Net Cash: ~US$ 572mn Consolidated Net Debt / Cash Excl. Finance 1Q16 1H16 ~US$ -3.7bn ~US$ -3.9bn * The total debt of US$ 1.5bn consists of two Eurobond issuances by Ko
Slide 62: SPV Debt
SPV Debt Initial Loan Amount US$ 1.8 billion Remaining Debt TL 322 million Maturity of the Debt April 2017 www.koc.com.tr 62
Slide 63: FX Position
FX Position Koç Holding Stand-Alone FX Position 1Q16 1H16 US$ + 42mn US$ +45mn Koç Holding Consolidated FX Position FX Position Weighted by Effective Ownership 1Q16 1H16 1Q16 1H16 US$ -2.4bn US$ -2.4bn* US$ -1.0bn US$ -1.0bn * The natural hedging mechanisms due to FX linked pricing of Tüpraş invento
Slide 64: Consolidated Main Financial Indicators
Consolidated Main Financial Indicators € Mn* US$ Mn* TL Mn TL Mn Change Change 30.Jun.2016 30.Jun.2016 30.Jun.2016 30.Jun.2015 %, TL %, US$ Revenues 9,558 10,664 31,122 32,129 q -3 q -15 Gross Profit 1,581 1,764 5,147 4,757 p 8 q -5 Operating Profit 846 944 2,755 2,490 p 11 q -3 Profit Before Tax 66
Slide 65: Shareholder Structures as of 30 June 2016
Shareholder Structures as of 30 June 2016 Koç Holding Koç Family: 68.51% Free Float: 22.24% Vehbi Koç Foundation: 7.26% Koç Pension Fund: 1.99% Consumer Energy Automotive Finance Other Durables Tüpraş Ford Otosan Arçelik Tat Gıda SPV share: 51.00% KH share: 38.46% Koç Financial Services KH share: 40
Slide 66: 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
Slide 67: For Further Questions, Please Contact
For Further Questions, Please Contact : www.koc.com.tr IR Application investorrelations@koc.com.tr Funda Güngör Akpınar, Coordinator Investor Relations fundag@koc.com.tr +90 216 531 0535 Gizem Bodur, Manager Investor Relations gizemb@koc.com.tr +90 216 531 0533 Neslihan Aycıl, Manager Investor Relat
Slide 68: Main Group Companies' Contacts
Main Group Companies’ Contacts Arçelik Otokar Tüpraş Hande Sarıdal, Finance Director Hüseyin Odabaş, AGM Finance Tuncay Önbilgin, Head of IR hande.saridal@arcelik.com hodabas@otokar.com.tr tuncay.onbilgin@tupras.com.tr +90 212 314 3185 +90 264 229 2244 Ext. 6000 +90 262 316 3085 Orkun İnanbil, IR Ma