Koç Holding TURKEY S LEADING INVESTMENT HOLDING COMPANY

Transcription

1 Koç Holding TURKEY S LEADING INVESTMENT HOLDING COMPANY Investor Presentation December 2018

2 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 PROFITABLE AND HIGH GROWTH MODEL FOCUSED ON SUSTAINABILITY The only Turkish company in Fortune % CAGR in consolidated profit 2 in the last five years Combined Revenues / GDP 7% Total Exports / Turkey s Exports 10% PIONEER IN ITS SECTORS Total MCap on Borsa Istanbul 19% Leading positions with clear competitive advantages in sectors with long-term growth potential such as energy, automotive, consumer durables and finance Notes: Data as of YE17 (1) 2017 report (2) In TL terms between

3 Milestones 1940s s 1950s s s Today 2016 Ömer M. Koç becomes Chairman following the unexpected passing away of Mustafa V. Koç 2010s Turkey's largest industrial and services group Extensive investments are initiated Major acquisitions (Tüpraş & Yapı Kredi) & Proactive disposals Koç Holding signs the UN Global Compact Third generation of Koç Family takes the reins The end of an extraordinary life; Vehbi Koç passes away Exports growth accelerates Second generation of Koç Family takes over First public offering; new sectors and business lines (Tofaş, Otokar) Establishment of Koç Holding A.Ş. International partnerships; grow in new sectors (establishment of Ford Otosan, Aygaz, Setur, Tat Gıda) Grow in new sectors (establishment of Arçelik, TürkTraktör, Koçtaş, Divan) First industrial ventures The first joint stock company: Koç Ticaret A.Ş. Official foundation of Koç Group Our foremost objective is to consistently create value for our stakeholders and manage our activities according to international standards of corporate governance, customer satisfaction, social responsibility & environmental protection We carry on the journey which began more than 90 years ago according to a growth strategy rooted in efficiency and productivity 3

4 Strong, Stable and Supportive Shareholding Structure WORLD CLASS CORPORATE GOVERNANCE PRACTICES Koç Family has its own internal governance and investment vehicle which provides stability in shareholder structure (Temel Ticaret) Sustainability is key as the majority of Koç Family s wealth is invested in Koç Group Koç Family mainly assumes Board level responsibility Business run by highly experienced professional management with performance linked compensation 1/3 of BoD comprised of highly experienced international names; 1/3 of independent members 26.5% free float with 85% held by international investors Temel Ticaret % Koç Family % Free Float 26.46% Koç Pension Fund 1.99% Vehbi Koç Foundation 7.26% (1) As of YE17, total voting rights including A (2 voting rights) and B (1 voting right) shares is 55.55%. A shares do not have any other privileges (2) Includes personal holdings of 19.24% stake and 1.4% stake of RMK ve Mahdumları 4

5 Positioned to Benefit from Turkey s Growth Potential Scale and Strategy Ensuring Strong Positioning Largest Industrial Group in Turkey Largest Exporters in Turkey Largest R&D Investments in Turkey 4 of the Top 10 Industrial Enterprises 1 4 of the Top 10 Exporters 2 Largest Intellectual Property Rights Portfolio 3 of the Top 10 Companies in Patent Applications 3 #1 Tüpraş #2 Ford Otosan #4 Tofaş #6 Arçelik #1 Ford Otosan #3 Tofaş #5 Tüpraş #8 Arçelik >7,500 trademarks >4,100 patent families >9,600 patents >800 industrial design registrations >5,400 Internet domain names #1 Arçelik #3 Ford Otosan #4 Tofaş Large Distribution Network and Customer Database Allowing Significant Data Analytics Largest distribution network ~ 870 bank branches ~ 11,000 dealers and after-sales services Largest customer database Large customer database of over 27 million (21.8 mn with data sharing permission) in different business segments together with strong CRM capabilities, enabling efficient up & cross-selling (1) Istanbul Chamber of Industry, 2018; (2) Turkish Exporters Assembly, 2018; (3) Turkish Patent Institute,

6 Leading Positions in Strategic and Lucrative Business Lines Energy Automotive Consumer Durables Finance Automotive Other Sectors Main Companies Tüpraş 1 / Aygaz 1 Opet / Entek Main Companies Ford Otosan 1 / Tofaş 1 / TürkTraktör 1 / Otokar 1 / Otokoç Otomotiv Main Companies Arçelik 1 Main Companies Yapı Kredi Bankası 1 / Koçfinans Main Companies Food: Tat Gıda 1 / Retailing: Koçtaş, Bilkom / Duty Free, Tourism & Marinas: Setur / IT: KoçSistem / Innovation: Inventram / Procurement: Zer International Alliances Ford Motor Company / Fiat Chrysler Automobiles / Case New Holland International Alliances LG Electronics (in air conditioners) International Alliances UniCredit International Alliances Kingfisher / Kagome / Sumitomo / Mitsui Domestic Market Position Market Share Largest refinery in Turkey #1 in LPG distribution - 28% #2 in petroleum products distribution - 18% Domestic Market Position Market Share #1 in total automotive - 25% #3 in passenger cars - 14% #1 in light com. vehicles - 56% #1 in tractors 49% #1 in automotive retailing #1 in car rental #2 in operational car leasing Domestic Market Position Market Share #1 in white goods - c. 50% #1 in air conditioners - 51% Domestic Market Position Market Share #4 in assets among private banks c. 10% share in total loans and deposits #1 in credit cards - 22% (outstanding volume) #1 in leasing - 21% #1 in factoring - 15% #2 in mutual funds -19% Domestic Market Position Market Share #1 in tomato products, tomato paste and ketchup #1 in pasteurized milk #1 in premium pasta #1 in DIY retailing #1 in marinas (1) Listed companies Note: All data based on YE17 6

7 Portfolio Structure (I/III) Balanced Between Defensive & Growth Assets Defensive Assets 57% Growth Assets 43% Aygaz Ford Otosan Koçtaş Opet Tüpraş Tofaş TürkTraktör Arçelik Yapı Kredi Divan Düzey Entek KoçSistem Koçfinans Otokoç Otokar Marinas Setur Tat Gıda Higher dividends Higher growth Dividend Payout 60% Growth ~1.5x GDP Share in NAV 7

8 Portfolio Structure (II/III) Sectorally Diversified -- Resilient vs Cyclicality Share in: Dividends Net Income NAV Key Risks & Sensitivities Key Strengths Automotive (PC & CV Mfg) 34% 20% 28% Turkey and European demand (main drivers: GDP & int. rates) Domestic growth potential Secured export contracts Strong positioning in JV universe Automotive (Other) 9% 6% 10% Agricultural sector trends Demand by defense industry Leading positions & brand names Strong R&D Wide distribution networks Refining 26% 31% 22% Regional crack spreads (commodity prices) Demand insensitive to GDP Turkey s diesel deficit FX and oil-linked pricing mechanism Oil & Gas Distribution 14% 4% 5% Oil & LPG prices Regulation Limited growth in cylinder market Low sensitivity to GDP Consumer Durables 13% 7% 12% Turkey and global demand (main driver: GDP) Geographic diversification Low-cost manufacturing Dynamic investment approach Finance 1% 26% 13% Domestic credit / int. rate risk Regulation Growth potential Leading position in digital Strong positioning in JV universe Other 3% 6% 10% (1) Macro risks Leading positions Turnaround potential Inorganic growth opportunities Note: Dividends, Net Income and NAV as of 2017 (1) Includes Koç Holding net cash & assets (5%) and other companies (5%) 8

9 Portfolio Structure (III/III) Geographically Diversified International Sales / Total (Combined) Regional Breakdown of International Sales (Combined-2017) 50% Including Tüpraş, c.50% of combined sales ($ 30bn) not sensitive to domestic economy 28.5% 29.2% 30.0% 22.1% $ 1.2bn $ 12.7bn $ 2.5bn 7% 70% 14% $ 1.2bn $ 0.1bn 1% 7% $ 0.1bn 1% Main Contributors: Ford Otosan: 70% Tofaş: 68% Arçelik: 61% 9

10 Strong Positioning via Diversified Structure Consolidated Net Income (TL mn) Dividend Income (TL mn) 3,832 3,827 2,484 1,228 1,291 9M17 9M18 Sustainable performance leveraging on diversified structure M18 Solid dividend flow supported by ~TL 35 bn of investments over the last 5 years 1 1 Combined Int l Revenues / Revenues NAV Breakdown by Sector Domestic Market Positioning 22% 30% 30% M18 Largest exporting group in Turkey covering 10% of Turkey s total exports ~55% incl. Tüpraş Finance 12% Cons. Durables 8% Other 11% Energy 31% Auto (PC & CV Mfg) 28% Auto (Other) 9% Resilient against sectoral cyclicality #1 in total automotive #1 in light commercial vehicles #1 in tractors #1 in automotive retailing #1 in white goods #1 in air conditioners Sole operational refinery #1 in LPG distribution Strong pricing power via leading positions (1) Excluding Ford Otosan s second dividend payment of TL 155 mn, which will be reflected in 4Q18 financials 10

11 Disciplined Approach Strong Cash Position (Solo) US$ 1.8 bn gross cash 83% in US$, 17% in TL US$ 1.5 bn total debt US$ +330 mn net cash Stable Funding (Solo) 2 eurobonds totaling US$ 1.5 bn Mar 16: US$ 750 mn, 7yrs, 5.25% coupon; Apr 13: US$ 750, 7 yrs, 3.5% coupon No repayment requirements until 2020 Proceeds generating positive carry Solid Liquidity 1.4x current ratio on a combined basis Sustainable Leverage 1.8x net financial debt / EBITDA on a combined basis No FX Position US$ +14 mn solo long FX position US$ -104 mn consolidated short FX position after natural hedge 1 US$ -20 mn consolidated short FX position after natural hedge weighted by effective ownership Notes: All data as of 9M18 (1) Net FX short position at 104 mn US$ (excluding US$ 1.3 bn of loans designating as hedging instruments (mainly Tüpraş) and US$ 1.4 bn of natural hedge due to FX linked pricing of Tüpraş and Aygaz inventory) 11

12 Group s 9M18 Financial Performance TL mn, 9M18 Energy Automotive Consumer Durables Finance Other Combined Revenues 1 111,704 46,355 22,126 30,424 9,555 y/y 57% 21% 30% 41% 21% 41% Combined Operating Profit 2 8,119 3,954 1,484 4,578 4 y/y 63% 46% 26% 34% -96% 46% Combined Profit Before Tax 2,827 2, , y/y -35% 33% 5% 34% 60% 5% Combined Net Income 2,498 2, , y/y -34% 22% -17% 31% 52% 0% Consolidated Net Income , , y/y -41% 28% -20% 31% 81% 0% Total 220,164 18,138 11,579 9,789 3,827 (1) Before revenue eliminations (2) Excluding FX gains/losses and credit finance income/charges on trade receivables and payables (Combined operating profit reported in 9M18 financial report is TL 14,521 mn) (3) Koç Holding s consolidated net income after the share of JV partners and non-controlling interests 12

13 Performance Constantly on an Inclining Trend amidst Volatility Turkey GDP Growth 8.5% 11.1% 4.8% 8.5% 5.2% 6.1% 3.2% 7.4% -4.7% 4.9 Net Profit (TL bn) ,484 1 Holding Dividend Income (TL mn) ,228 1, M18 Note: GDP growth figures based on TurkStat data (1) Excluding Ford Otosan s second dividend payment of TL 155 mn which will be reflected in 4Q18 financials 13

14 Investments (I/III) Disciplined Strategy and Clear Evaluation Process Strategy Turkey Global Standardized evaluation process for investments that require Holding Evaluation All investments treated equally based on standard metrics and methods, facilitating informed decisions Existing businesses Consolidate leading positions & improve effectiveness Expand in existing and/or adjacent sectors Main Investment Criteria IRR: Calculated based on risk adjusted cost of capital Size: Invest in assets in new sectors only if they move the needle at portfolio level Strategic fit, potential synergies & turnaround opportunities Scope New businesses Exploit potential opportunities Opportunistic plays / partnerships Portfolio company investments > predetermined thresholds Holding level investment decisions Divestitures Investment Committee CEO, CFO, Sponsoring Business Unit President, Strategy and Business Development Director, Audit President, General Counsel 14

15 Investments (II/III) Focus on Scale and Returns Investments (Combined, TL bn) Growth Opportunities ~TL 35 bn over the last 5 years with major capex cycle now finalised for main group companies Energy Existing Businesses Domestic & int l growth opportunities across different segments such as renewables, LNG and mining Automotive New manufacturing and R&D projects for export markets with JV partners Consumer Durables Opportunistic buyouts in international markets Finance Growth opportunities in Turkey Dividend payout ratio of KH remained ~20% throughout this period; Group companies financed investments mainly via their own balance sheets New Businesses Exploit potential opportunities both locally and internationally 15

16 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 Metal May 08 Migros FMCG 1975 BC Partners 51% sold for $ 1.65bn Oct 07 DemirDöküm Heating and Cooling Appliances 1955 Vaillant Group Jul 07 BOS Industrial Gas Manufacturing 1987 Linde Dec 06 Döktaş Iron Casting 1973 Componenta Nov 06 Izocam Insulation Materials 1965 ACQUISITIONS Investments (III/III) Track Record of Profitable Portfolio Rotation St.Gobain Isover & Alamana Ind. Oct 06 Yapı Kredi Banking - Saving Deposit Insurance Fund 57.4% bought for $ 1.4bn and additional $ 464mn collected from market. Merged with Koçbank Jan 06 Tüpraş Refining - Privatisation 51% bought for $ 4.1bn Aug 05 Tansaş FMCG - 71% bought for $ 0.4bn, merged with Migros, divested together in May 08 16

17 Ratings Above the Sovereign Standard & Poors Moody s BB- One notch above Turkey sovereign Ba2 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 BBB Baa2 BBB- BB+ Investment Grade Threshold Baa3 Ba1 Investment Grade Threshold BB BB- B+ B Stable Negative Negative Negative Stable Negative Stable Negative Negative Stable Stable Ba2 Ba3 B1 B Positive Stable Negative Negative Stable Negative Stable Negative Apr Feb Apr Apr May Nov Dec 2015 Mar May 2016 Jul Nov 2016 Jan Feb May Nov May Aug Apr 2013 May 2013 Apr 2014 Jun 2015 Dec 2015 Mar 2016 Sep 2016 Nov 2016 Mar Feb Mar Aug 2018 Koç Holding Turkey Moody s: Rating reflects the company's strong financial profile and balanced portfolio of investments in mature and high-growth companies, which have diversified the entity's dividend income. The holding company has a track record of maintaining solid liquidity and follows a prudent approach in managing its investment portfolio 17

18 Maximizing Shareholder Value Structure Ensuring Robust Performance Performance Based Executive Compensation System Shareholder Value Comprehensive executive compensation system, one of few in Turkey also linked to share performance Proactive investor relations management Economic Profit Relative Stock Performance L-T Strategic Targets to Maximize Future Shareholder Value Cash dividend pay-out Strong risk management focus Aggressive Growth Sustainable Profitability Executive Effectiveness Asset Efficiency Customer Satisfaction Employee Dev.&Satis. Technology Development Other Strategic Targets Track record of timely and value accretive investments and portfolio management Relative Stock Performance Consistently Low NAV Discount Sustainable Institutional Investor Base Stock Performance (TL) Koç Holding BIST ytd -16% -18% % +48% % +9% % -16% % +26% % -13% NAV Discount Koç Holding Peer Group ytd -9% -43% % -39% % -36% % -35% % -39% % -42% 67% Share of foreign holdings in free float 56% % 64% 82% 62% 84% 63% Koç Holding 87% 65% 2017 BIST 85% 63% 2018 ytd Notes: 2018 share performance and NAV discount figures are update as of (1) Peer Group: Sabancı Holding and Doğan Holding 18

19 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 and arts Assets: TL 5.6 bn 1 Education Healthcare Culture & Arts The Koç School (1988) Koç University (1993) Koç Primary Schools ( ): 17 schools across Turkey Semahat Arsel Nursing Education and Research Center (SANERC, 1992) VKV American Hospital (1995) Koç University School of Nursing (1999) Koç University School of Medicine (2010) Koç University Hospital (2014) Sadberk Hanım Museum (1980): Turkey s first private museum Vehbi Koç Ankara Studies Research Center (1994) Suna-İnan Kıraç Research Institute for Mediterranean Civilizations (AKMED,1996) Antalya Kaleiçi Museum (2000) Koç University Research Center for Anatolian Civilizations (ANAMED, 2005) TANAS Art Gallery, Berlin ( ) ARTER (2010) VKV Ford Otosan Gölcük Culture & Community Center (2011) Ankara University Mustafa V. Koç Marine Archaeology Research Center (2015) (1) Market value as of YE17 Further information can be obtained from 19

20 Initiatives for Social Advancement Our projects commonalities are unity, synergy and leadership established through our companies, employees and dealers For My Country project Since 2006: >1 mn tree saplings planted in 7 For My Country forests 18k children embraced environmental awareness 84k units of blood donated 126k individuals participated in the Right Approach To Disability training programs I Support Gender Equality For My Country program launched to create gender-sensitive workplaces Vocational Education: A Crucial Matter for the Nation Since 2006: 8k students in 81 provinces and 264 schools have been provided with active scholarships Coaching support for students was provided by 579 Koç Group employees in 76 provinces One of the first Turkish companies to sign the United Nations Global Compact Partnership with the United Nations Entity for Gender Equality and the Empowerment of Women Sponsorship of the Biennial between , an arts event organised by the Istanbul Culture and Art Foundation Further information can be obtained in our «Sustainability Report» available on 20

21 Energy Sector Brent Crude Oil & LPG Prices Crack Margins Diesel Q1 Q2 Q3 Q Jet Fuel Q1 Q2 Q3 Q Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Latest Growth Trends Crude Oil (Brent) $/bbl Sales Units, Domestic Market (mn tons) +7% % LPG (Algeria) $/ton +2% +3% Gasoline Q1 Q2 Q3 Q Competitive Advantages High Sulphur Fuel Oil Q1 Q2 Q3 Q Underpenetrated market with growing oil demand and diesel deficit; 9% CAGR for diesel demand over the last 5 years 5 th largest LPG market in Europe, 11 th globally; 2 nd biggest autogas market globally Strategically located between Asia and Europe; close to Middle East Diesel Jet Fuel Gasoline LPG Sept'17 Sept'18 Source: Energy Market Regulatory Authority Note: Crack margins based on Tüpraş data Structured legal framework and independent regulator Government incentives for renewable energy 21

22 Koç Group in the Energy Sector Diversified and Synergetic Positioning Koç Positioning Coverage of Domestic Fuel Demand Koç ~60% 40% Imports Koç Share of Turkey s Storage Capacity ~70% 30% Others Largest refinery in Turkey and the largest LPG distribution company Market Position / Share Tüpraş Aygaz Turkey s largest refinery 7 th largest in EU 26 th largest in the world #1 in LPG distribution - 28% #1 in cylinder - 41% #1 in autogas - 24% Integrated refining company with downstream operations Covers ~60% of domestic fuel demand One of the most complex refineries globally (Avg. Nelson Complexity 9.5; Izmit 14.5) Most preferred LPG brand in Turkey since its foundation more than 55 years ago Market leader with 3 brands - Aygaz, Mogaz, Lipetgaz Largest dealer and fleet network Opet #2 in white products - 18% Retail and wholesale operations in fuel distribution Highest customer and station satisfaction Entek Growing player in power generation Electricity generation with 421 MW total installed capacity Strong focus on renewable assets with high profitability 22

23 Tüpraş Turkey s Largest Refinery (TL thousands) 9M17 9M18 y/y Sales Volume (k, tons) % Domestic % Exports % Total Production (k, tons) % Capacity Utilisation 112.6% 95.0% pp Revenues 39,344 63,749 62% EBITDA 4,645 7,021 51% EBITDA Margin 11.8% 11.0% -0.8 pp Net Income 3,318 1,947-41% Net Refining Margin ($/bbl) Med Complex Margin ($/bbl) Net Debt / EBITDA Mcap ($ bn) % 7 th largest refinery in Europe and 26 th largest globally Wide range of crude oil processing capacity (28.1 MT via 4 well-positioned refineries) One of the most complex refineries globally (Nelson Complexity index of avg. 9.5; İzmit 14.5) ~70% of Turkey s total storage capacity together with Opet Access to cheaper sources of crude oil with ability to use heavier and sour crudes Operational flexibility Energy efficiency programs Large scale capex finalised İzmir 11 MT NC: 7.7 İzmit 11 MT NC: 14.5 Kırıkkale 5 MT NC: 6.3 Batman 1.1. MT NC: 1.8 Diversified Supply Base 25 different sources Main sources constitute Iraq, Turkey, Russia, Iran, S. Arabia, Kuwait Focus on Higher Margin Products Light 25% Heavy 22% 9M18 White Product Yield: %77 Middle 52% Initiatives / Developments Jul 18: Announced opening of a trading office in London by YE18 1H18: Planned maintenance schedule to prepare for the high season and better position for the 2020 IMO opportunity Jun 15: All units of RUP (Residuum Upgrade Project - US$ 3bn investment) operational leading to positive impact on complexity, capacity utilisation, white product yield and hence profitability Notes: All figures as of 2017 unless otherwise stated. Financials based on CMB publicly announced IFRS data. EBITDA as per company calculation (1) Mcap increase compared to YE17 23

24 Aygaz Market Leader in LPG for more than 55 years (TL thousands) 9M17 9M18 y/y Sales Volume (k, tons) 1,640 1,553-5% Auto % Cylinder % Wholesale, Bulk & Exports % Revenues 6,162 7,191 17% EBITDA % EBITDA margin 4.6% 3.7% -0.9 pp Net Income % Generic brand in Turkey for LPG with 28% market share in total LPG market 24% market share in autogas 41% market share in cylinder LPG Fully integrated LPG services Serves 100k homes with cylinder LPG daily More than 1mn vehicles use Aygaz autogas daily Synergies with Koç Group energy companies Net Debt / EBITDA Mcap ($ bn) % Sector Dynamics Wide Distribution Network 2,368 cylinder LPG dealers 1,727 autogas stations High Logistics Competency Largest fleet operator Reduces costs Provides flexibility in sourcing and inventory management Over 1 MT filling capacity Direct import to 5 different locations Autogas: CAGR of ~5% over the last 3 years; 2017: -1% y/y due to rising LPG prices 40% of 11.2 mn cars in Turkey run on LPG, largest fleet globally 30%+ price advantage vs gasoline ~200k conversions from gasoline to LPG per year Cylinder gas: Relatively stable demand over the last 4 years Slowing expansion of natural gas grid Low LPG prices Population upsurge due to Syrian refugees (~3 mn) Notes: All figures as of 2017 unless otherwise stated. Financials based on CMB publicly announced IFRS data. EBITDA as per company calculation (1) Mcap increase compared to YE17 24

25 Other Energy Companies Opet Station Numbers 1,553 1, ,110 1,150 White Product Market Share Opet Position #2 17.9% 17.9% Second biggest distribution company by volume Unrivalled leader in customer satisfaction in its sector for 10 years 1.1 million m 3 storage capacity via 5 terminals 21 stations owned via Aygaz-Opet Gayrimenkul JV with THY on jet fuel distribution JV with Fuchs 1 on production and marketing of mineral oils 40% owned by Tüpraş and 10% by other Koç (18% total indirect KH stake) 9M17 9M18 Aug'17 Aug'18 Opet Sunpet Entek Energy Sector Dynamics Excess capacity leading to pressure on profitability Turkey s total installed generation capacity: 83,275 MW (Stateowned 24%; Build-Operate and Build-Operate-Transfer model selling to TETAŞ 2 11%; Private sector 65%) Increasing focus on renewable energy Breakdown of installed capacity by fuel type: hydro 33%; natural gas 32%; imported and domestic coal-fired 22%; other renewable and thermal 11%, solar 2% Entek 421 MW total installed capacity: 1 natural gas (157 MW), 6 hydro power plants (264 MW) Possibility to purchase electricity and sell via wholesale company Eltek allows hedging against drops in system prices Strong focus on strengthening renewable energy portfolio Mar 18: Completed the acquisition of 2 hydro power plants with 178 MW installed capacity for TL 1.3bn Dec 17: Acquired 3 hydro plants with 24 MW installed capacity (Azmak) Note: White products market share is based on EMRA (Energy Market Regulatory Authority of Turkey) data as of YE17 (1) German lubricant producer; World s largest independent manufacturer of lubricants, operates in more than 40 countries (2) State-owned electricity wholesale company 25

26 Automotive Sector Competitive Advantages Domestic Market Dynamics 5 th largest auto manufacturing hub in Europe; 14 th largest globally with a production capacity of c. 2 million units Underpenetrated domestic market with ongoing growth (191 PC & CV/ 000 vs 615 Western Europe and 306 Eastern Europe) Sales ( 000) Production ( 000) 1,486 1,359 1,011 1, , ,696 Strong local supply with low cost production capabilities 632 High export volume ensuring resilience vs domestic demand volatility 4 th largest tractor market globally with 48% of 1.8mn tractor park >24 years indicating high replacement potential Latest Growth Trends '07-'10 '11-'14 Avg Avg Sales Units, Domestic Market ( Cumulative) % % 502 Export Units, Turkey ( Cumulative) 1,103 flat -0% 1, % % 17 Passenger Cars Light Commercial Heavy Commercial Oct'17 Oct'18 TOTAL Oct'17 Oct'18 Source: Automotive Manufacturing Association, LMC Automotive 26

27 Koç Group in the Automotive Sector Undisputed Leader in Turkey Production Others 55% Koç Positioning Koç 45% Widest sales and after-sales network Highly skilled and experienced workforce Highest number of R&D employees in Turkish automotive Long-standing JV partnerships Large scale procurement contracts via JV partners Focus on efficiency and product diversification Strong R&D focus Leading positions and ongoing growth Market Position / Share Exports Sales Others 57% Koç 43% Koç 25% Ford Otosan Tofaş Türk Traktör Otokar #1 in CV - 30% #2 in Trucks - 28% #8 in PC - 5.5% #2 in LCV - 25% #3 in PC 9% #1 in tractors - 49% #1 in Buses 28% Leading Supplier of Land Vehicles for Turkish Armed Forces 50-50% JV with Ford - Ford s biggest CV manufacturing hub in Europe Turkey s largest commercial vehicle manufacturer and export champion Best manufacturing plant by Ford Production System Standards 50-50% JV with Fiat Chrysler Automobiles (FCA) Sole domestic manufacturer and exporter of both PCs & LCVs 2 nd largest R&D capability of FCA in Europe 50-50% JV with Case New Holland Turkey s largest tractor manufacturer and exporter Flexible Manufacturing System providing high degree of flexibility Largest private sector defense company in Turkey 1 out of every 3 busses sold in Turkey carry Otokar brand 96% of turnover from Otokar designed vehicle sales Others 75% Otokoç Turkey s leading automotive retailing and car leasing company Main brands: Otokoç, Birmot, Avis, Budget 8% market share in new vehicle sales; #1 in second-hand sales International operations in 7 countries Source: Automotive Manufacturers Association, Company data (YE17) PC = Passenger Car; CV = Commercial Vehicles; LCV = Light Commercial Vehicles 27

28 Ford Otosan Turkey s Leader in Commercial Vehicles with Strong R&D Power (TL thousands) 9M17 9M18 y/y Total Unit Sales (000 k) % Domestic % PC % LCV % MCV % Trucks % Exports % Total Production (000 k) % Revenues 17,138 23,244 36% Domestic 4,728 4,465-6% Exports 12,411 18,780 51% % of Exports 72.4% 80.8% 8.4 pp EBITDA 1,482 2,286 54% EBITDA margin 8.6% 9.8% 1.2 pp Net Income 980 1,272 30% Net Debt / EBITDA Mcap ($ bn) % Europe s largest commercial vehicle manufacturer; 80% share in Ford Europe s Transit family sales Strong positioning in Ford universe: Lead manufacturing plant of Ford Transit globally Single source of Custom & Courier Center of excellence for Ford Cargo heavy trucks Notes: All figures as of 2017 unless otherwise stated. Financials based on CMB publicly announced IFRS data. EBITDA as per company calculation (1) Ford Otosan Analyst Presentation wholesale figures (2) Mcap increase compared to YE17 EUR denominated cost-plus export agreements with volume guarantees Technology licensing & engineering agreements delivering royalty fees Major export markets: UK & Germany (~50% of export sales) Initiatives / Developments 3Q18: Capacity increase of 15k to 455k is completed 1H18: Completion of facelift of Ford Custom and Ford Courier F-Max truck: F-Max truck with IP rights owned 100% by Ford Otosan is launched in Oct 18 in Turkey and to be launched in 2019 globally Hybrid vehicles: Plug-in hybrid (PHEV) derivative of the refreshed Transit Custom to be launched in : Capacity increase from 415K up to 440k completed Best manufacturing plant by Ford Production System Standards 2016: Start of in-house developed Euro 6 Ecotorq engine production - the first & only truck engine designed and manufactured in Turkey : $1.4bn investment to increase capacity and renew entire product portfolio 28

29 Tofaş Defensive Portfolio with Take-or-Pay Contracts (TL thousands) 9M17 9M18 y/y Total Unit Sales (000 k) % Domestic % PC % LCV % MCV % Exports % Total Production (000 k) % Revenues (TL) 12,400 13,824 11% Domestic 3,644 2,848-22% Exports 8,756 10,977 25% % of Exports 71% 79% 8.8 pp EBITDA 1,353 1,881 39% EBITDA margin 10.9% 13.6% 2.7 pp Net Income 859 1,004 17% Net Debt / EBITDA Mcap ($ bn) % Only company which produces both passenger and commercial vehicles with the largest production capacity in Turkey Intellectual and industrial property rights for MiniCargo, New Doblo as well as its PC models (Egea/Tipo) Export contracts with cost-plus and take-or-pay clauses ensure sustainable profitability Consumer financing activities via its fully owned subsidiary, Koç Fiat Kredi Large scale capex finalised solidifying importance of Tofaş for FCA Major export markets: Italy, France & Spain (~55-60% of exports) 2 nd largest R&D capability of FCA in Europe Initiatives / Developments Gold level in World Class Manufacturing 2 YE17: Capacity expansion by 50k units for Egea/Tipo branded passenger cars completed; production capacity reached 450k units : Fiat Egea is the best selling passenger car in the domestic market : $ 1bn investment to produce 1.3 mn passenger cars by Start of serial production for different models as of YE15 and 1H16 Notes: All figures as of 2017 unless otherwise stated. Financials based on CMB publicly announced IFRS data. EBITDA as per company calculation (1) Mcap increase compared to YE17 (2) As of 2017, there are only 5 plants of FCA globally that have achieved Gold level 29

30 TürkTraktör Largest Tractor Manufacturer in Turkey (TL thousands) 9M17 9M18 y/y Tractor Unit Sales (000 k) % Domestic % Exports % Total Production (000 k) % Revenues 3,062 3,001-2% Domestic 2,225 1,687-24% Exports 837 1,314 57% % of Exports 27% 44% 16.5 pp EBITDA % Market leader for the last 11 consecutive years. Covers c. 70% of total Turkish tractor production, 90% of total exports Largest tractor producer with 50k capacity JV structure with CNH: The only design and production center for certain products globally Widest sales and after sales network Flexible Manufacturing System State of the art manufacturing processes with the first robotized paintshop in the Turkish tractor sector Exports to more than 130 countries with US & Europe being major ones EBITDA margin 11.6% 12.9% 1.3 pp Net Income % Net Debt / EBITDA Mcap ($ bn) % Diversified product range The first R&D center in its sector Initiatives / Developments Oct 17: Introduction of TürkTraktör Finance, a first in the Turkish agriculture to enable farmers a practical and easy loan experience at the dealers, with the motto all financial transactions under one roof 2Q15: Movement of the paint shop and assembly line of all product groups to Erenler was completed (currently component manufacturing in Ankara, assembly in Erenler) 2014: Erenler plant was opened. Capacity increased by 15K to 50k units 2013: Entered a new business line - the construction equipment market with Case and New Holland brands Notes: All figures as of 2017 unless otherwise stated. Financials based on CMB publicly announced IFRS data. EBITDA as per company calculation (1) Mcap increase compared to YE17 30

31 Other Automotive Companies Otokar - Largest private sector defense company in Turkey (TL thousands) 9M17 9M18 y/y Revenues 1, % EBITDA nm EBITDA margin 10.1% nm nm Net Income nm Mcap ($ bn) % Turkish Armed Forces leading supplier and exporter of land platforms Products with Otokar IP rights used on 5 continents and >60 countries Market leader in 25+ passenger bus segment for the last 7 years Initiatives / Developments Jun 18: Signed a bus order contract with Bucharest Municipality in Romania. Order includes delivery of 400 buses by YE19 and 8-year after sales services Feb 17: Signed the largest single export contract ($ 661mn) in the Turkish defense sector with Tawazun for production of 8x8 armored vehicles in UAE to be delivered in Otokoç - Turkey s leading automotive retailing and car rental company (TL thousands) 1H17 1H18 y/y Revenues 2,481 3,165 28% EBITDA % EBITDA margin 9.5% 14.7% 5.1 pp Net Income % Sales and post-sales activities with more than 35 branches 30% share in Ford & Fiat CV sales; 7% share in total auto market Rent-a-car & operational leasing via >43k vehicles (Avis, Budget) Services also in 7 countries: Kazakhstan, Azerbaijan, N. Iraq, Hungary, Georgia, N. Cyprus and Greece Initiatives / Developments Dec 17: Acquired the licensee Company of Avis, Budget and Payless brands in Greece together with Avis Budget Group for EUR 81mn Notes: All figures as of 2017 unless otherwise stated. Financials based on CMB publicly announced IFRS data. EBITDA as per company calculation (1) Mcap increase compared to YE17 31

32 Consumer Durables Sector Competitive Advantages Domestic Market Dynamics Sales (mn) Production (mn) Efficient and cost-effective production hub for multiple markets Solid domestic market growth potential driven by favourable demographics, lower penetration compared to EU, renewals, rapid household formation and urbanization Competitive labour costs and strong local supply Channels: 85% dealers; 15% chain retailers for durables Latest Growth Trends '07-'10 Avg '11-'14 Avg Sales Units 1 ( Cumulative) Export Units, Turkey ( Cumulative) -1% % % % % 1.5 Turkey Western Europe Eastern Europe S. Africa Oct'17 Oct'18 Oct'17 Oct'18 Source: White Goods Manufacturing Association, Arçelik (1) Sales units for Turkey as of Oct 18; for Western Europe and S.Africa as of Sep 18; for Eastern Europe as of Aug 18 32

33 Arçelik (I/II) Truly Global with Sales to Over 100 Countries Worldwide (TL thousands) 9M17 9M18 y/y Revenues 15,135 19,490 29% Domestic 6,222 6,581 6% Exports 8,913 12,909 45% % of Exports 59% 66% 7.3 pp White Goods 11,089 14,750 33% Electronics 1,841 1,998 9% Other (mainly A/C) 1,807 2,523 40% EBITDA 1,527 1,890 24% EBITDA margin 10.1% 9.7% -0.4 pp Net Income % Net Debt / EBITDA Working Capital / Sales 35% 37% 1.7 pp Mcap ($ bn) % ~60% of revenues from international markets The first and only Turkish company in the Top 200 List of World Intellectual Property Organization Domestic leader (50% m. share in white goods & ACs; c. 25% in TVs) Leading positions in key international markets. Beko as the flagship brand Extensive & exclusive dealer network (~3,000 dealers, 600+ after-sales points) Production in low-cost regions, proximity to key markets and economies of scale Production centers in 7 countries (2): Turkey, S. Africa, Romania, Russia, China, Pakistan, Thailand Sector Positioning Turkey : #1 EU : #2 E. Europe : #1 UK : #1 Romania : #1 Poland : #1 Pakistan : #1 S. Africa : #1 Regional Breakdown of Revenues Pakistan 5% Middle East 2% Africa 7% CIS & Eastern Europe 15% Other 6% Turkey 34% Western Europe 31% Notes: All figures as of 2017 unless otherwise stated. Financials based on CMB publicly announced IFRS data. EBITDA as per company calculation (1) Mcap increase compared to YE17 (2) A refrigerator plant in India will be operational by YE18; increasing the number of countries of production to 8 33

34 Arçelik (II/II) Strong Growth Trends Utilising Organic and Inorganic Opportunities Initiatives / Developments May 17: Agreement to create a JV with Voltas (part of the Tata Group) in India with equity of $ 100mn. A refrigerator production facility will open by YE18. Other domestic appliances started be imported to India in 1H18 totaling TL 10mn May 17: Greenfield investment for a new washing machine plant in Romania ($ 105mn capex) in addition to the existing refrigerator plant to commence in 2019 Jun 16: Acquisition of Dawlance in Pakistan for $ 258mn. Dawlance is the white goods market leader in Pakistan (#1 in cooling & MW with 45% market share; #2 in AC & laundry) 1Q16: New refrigerator plant in Thailand becomes operational ($ 100mn capex). Creation of sales network for neighbouring countries Jul 11: Acquisition of Defy in South Africa for $ 230mn. Defy is the market leader in South Africa with 40% market share Growth Strategy Overview Organic Turkey: Grow in lower penetrated premium segments, built-in products and small domestic appliances (SDA); further strengthen dealership network International: Improve market share of more profitable built-in; strengthen SDA position; grow Grundig in the more premium segment ASEAN: Leverage Beko brand Europe & North America: Exploit organic growth opportunities Inorganic Higher-end brands in developed markets Emerging market growth via acquisitions, partnerships and greenfield investments in MENA and ASEAN 34

35 Q Q18(1) Q18 Finance Sector Low Penetration Levels Providing an Opportunity for Rapid Growth Loans + Deposits / GDP Branches per million inhabitants Mortgages / GDP 223% % 120% % 6% EU-28 Turkey EU-28 Turkey EU-28 Poland Turkey Source: European Central Bank, BRSA, CBRT Figures as of YE2017, Branches per mn inhabitants as of YE16 Growing, Healthy and Profitable Banking Sector Asset Quality NPL Ratio (%) GDP Growth (%) Household Liabilities to GDP (%) Turkey EU Capital Adequacy Ratio (%) Bank Return on Equity (%) Source : ECB, BRSA, BAT (1) Including regulatory forbearances 35

36 Yapı Kredi Bank Sustained Profitability Sustained Profitability Strong Operational Performance Net Income (TL mn) 31% 3,586 2,735 ROATE 23 bps 14.0% 14.3% 15.4% Excluding IRS m-t-m 1 Cost/Income 2 41% Revenues +44% Costs +13% (vs. 25% CPI) 33% CoR 2.09% 1.08% 1.88% 9M17 9M18 9M17 9M18 9M17 9M18 9M17 9M18 Controlled Volumes Solid Fundamentals TL bn, consolidated 9M18 q/q y/y Loans % 31% TL % 8% FC ($) % -2% Deposits % 34% TL % 25% FC ($) % -16% NPL Ratio 3.7% -0.1pp -0.5pp Provisions / Gross Loans 4.6% 0.2pp -0.1pp CAR CET1 3 Capital Ratios % 13.3% 10.0% 9.8% M18 LDR 114% 112% M18 Notes: ROATE indicates Return on Average Tangible Equity CoR= Total specific + generic provisions net of collections. 9M18 adjusted for provision reversals related to cheques due to regulation change in 2Q18 CET1= Common Equity Tier-1; LDR= Performing Loans / (Deposits + TL Bonds) (1) TL 4.1bn IRS m-t-m valuation gain that is booked under equity but not considered in capital calculations (2017: TL 838mn) (2) 9M18 Income adjusted for trading income to hedge FC ECL (3) Capital ratios are presented without forbearance actions (with forbearance: CET-1: 12.1%, CAR: 16.1%) 36

37 Other Main Companies Tat Koçtaş Zer Setur Koç Sistem Inventram Sector Food DIY Retailing Central Procurement Duty Free, Tourism, Marinas IT Innovation Production of tomato products, dairy products and pasta. #1 in tomato products, pasteurized milk and premium pasta KH distribution company Düzey performs logistics for Tat Gıda products as well as some external leading brands Strong focus on end-to-end efficiency and innovative product launch especially in dairy Leader in Do-it-Yourself market in Turkey with total sales area of over 236k m 2 (42 Koçtaş & 17 Koçtaş Fix stores) JV structure with Kingfisher, a leading European DIY company with over 1,200 stores in 10 countries Focus on ensuring omni-channel shopping experience with continuous developments in digital channels and capabilities Strategic and operational procurement via access to a large pool of suppliers Start of expansion to clients outside of the Koç Group since 2016 Initiatives to enhance digital channels and e-trade platform for SMEs A range of tourism related services (incl. ticket sales, tours, events) via 45 authorized and 256 online agencies Duty-free sales operations at 40 shops in 4 airports, 5 land border gates and 7 seaports Setur Marinas is the leader in Turkey with 24% market share and 11 marinas Special emphasis on corporate tourism. Focus on process automation and CRM integration Leading player in the IT sector with large-scale projects and 3 data centers Provider of innovative services such as IoT platforms and business solutions Preferred partner of Koç Group companies, also with c.50% of revenues from external companies Evaluation and investment into start-ups, innovative products and ideas 35% owned by Koç Holding, 35% by Koç University and 30% acquired by Mitsui as of 2016 Facilitation of suitable project integration into Koç Group companies 37

38 Annex 38

39 Unlisted Companies 1H18 TL mn Koç Holding Direct Share Revenues Operating Profit 1 EBITDA Book Value (SHE) Arçelik LG Klima 5.00% Bilkom 69.94% 790 1, Düzey 31.15% Entek 49.62% ,037 Koç Finansman 44.50% KoçSistem 41.11% Koçtaş 37.13% Marina / Ayvalık 7.72% Marina / Tek Art Kalamış 75.92% Opet -- 12,866 19, ,916 2,416 Otokoç Otomotiv 96.32% 2,481 3, Ram Dış Ticaret 39.74% RMK Marine 40.53% Setur 24.11% Zer 39.00% 1,135 1, Notes: Financials for unlisted companies disclosed semi-annually (1) Excluding FX gains/losses and credit finance income/charges on trade receivables and payables 39

40 Summary Combined Financials by Segment Energy Segment Automotive Segment Consumer Durables Segment Finance Segment Share in Combined Operating Profit 1 Share in Consolidated Net Income Share in Combined Operating Profit 1 Share in Consolidated Net Income Share in Combined Operating Profit 1 Share in Consolidated Net Income Share in Combined Operating Profit Share in Consolidated Net Income 45% 23% 22% 30% 8% 6% 25% 34% TL mn, combined 9M18 y/y TL mn, combined 9M18 y/y TL mn, combined 9M18 y/y Revenues 111,704 57% Revenues 46,355 21% Revenues 22,126 30% TL mn, combined 9M18 y/y Operating Profit 2 8,119 63% Profit Before Tax 2,827-35% Operating Profit 1 3,954 46% Profit Before Tax 2,944 33% Operating Profit 1 1,484 26% Profit Before Tax 733 5% Operating Profit 4,578 34% Profit Before Tax 4,656 34% Cons. Net Income % Cons. Net Income 1,160 28% 16% 2 Cons. Net Income % Cons. Net Income 1,309 31% (+) Inventory gains (+) Solid international revenues (+) Solid international revenues Improving cost / income (-) Impact of planned shutdowns on CUR and volumes (-) Impact of sudden TL depreciation (+) Higher /TL (+) Pricing focus in domestic market (+) Cost discipline (-) Significant decline in domestic market volumes (+) Pricing focus (-) Financial expenses (-) Contraction in domestic market also including high base impact Conservative CoR approach Controlled volumes and focus on liquidity (1) Excluding FX gains/losses and credit finance income/charges on trade receivables and payables (2) Including bargain purchase gain (negative goodwill) of Otokoç on acquisition of car rental business in Greece in 2Q18 (Consolidated net income impact TL 109 mn) 40

41 Consolidated Net Income Consolidated Net Income (TL mn) Normalized 1 +16% Normalized 1-2% y/y -41% +28% -20% +31% +81% 0% 3, , M17 Energy Auto Cons. Durables Finance Other 9M18 9M17 9M18 Finance 26.2% Other 3.4% Cons. Durables 8.0% Auto 23.6% Energy 38.8% Finance 34.2% Other 6.2% Cons. Durables 6.4% Energy 22.9% Auto 30.3% Note: Consolidated net income indicates Koç Holding share after the share of JV partners and non-controlling interests (1) Excluding (i) bargain purchase gain (negative goodwill) of Otokoç on acquisition of car rental business in Greece (cons. net income impact TL 109 mn) in 2018; (ii) fair value gain of Koç Holding s asset exchange transaction in 2017 (cons. net income impact TL 26 mn) 41

42 Shareholding Structures Koç Holding Koç Family: 64.3% 1 Free Float: 26.5% Vehbi Koç Foundation: 7.3% Koç Pension Fund: 2% Energy Automotive Consumer Durables Finance Other Tüpraş SPV: 51% Free float: 49% KH: 43.7% 2 SPV KH : 77% Aygaz: 20% Opet: 3% Aygaz KH: 41% Other Koç: 10.5% Liquid Pet. Co.: 24.5% Free float: 24% Opet Tüpraş: 40% Other Koç: 10% Öztürk Group: 50% KH: 18% 2 Ford Otosan KH: 38% Ford: 41% Other Koç: 3% Free float: 18% Tofaş KH: 38% FCA: 38% Free float: 24% TürkTraktör KH: 37.5% CNH : 37.5% Free float: 25% Otokar KH: 45% Ünver Hold.: 25% Other Koç: 3% Free float: 27% Arçelik KH: 41% Other Koç: 17% Burla Group: 18% Free float: 25% Koç Financial Services KH: 42% Other Koç: 8% UniCredit: 50% Yapı Kredi Bank KFS: 82% Free float: 18% KH: 35% 2 Tat Gıda KH: 44% Other Koç: 10% Sumitomo & Kagome: 5% Free float: 41% Koçtaş KH: 37% Kingfisher: 50% Other Koç: 13% Setur KH: 24% Other Koç: 76% Zer KH: 39% Other Koç: 60% Other: 1% Notes: Updated as of Sep 18 (1) Temel Ticaret (family-owned investment vehicle) 43.65%, Koç Family Members 20.64% (2) Effective stake indirectly through subsidiaries 42

43 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 affected by a variety of variables and changes in underlying assumptions that could cause actual results to differ materially. Neither Koç Holding nor any of its directors, managers or employees nor any other person shall have any liability whatsoever for any loss arising from the use of this presentation. 43

44 Koç Holding Contacts IR Application Gülsevin Tunçay, Coordinator Investor Relations Gizem Poyraz, Manager Investor Relations Neslihan Aycıl, Manager Investor Relations

45 Main Group Companies Contacts Arçelik Hande Sarıdal, Finance Director Orkun İnanbil, IR Manager Otokar Doğan Seçkinler, Finance Manager Ext Gülşah Mutlu, IR Manager Ext Tüpraş Aslı Gülçur, Head of Strategic Planning Levent Bayar, IR Manager Aygaz Şebnem Yücel, Finance Director Selin Sanver, IR Manager +90 (212) Tat Ahmet Çağaşan Yılmaz, CFO TürkTraktör Ahmet Canbeyli, CFO Ahmet Görpeoğlu, IR Manager Ford Otosan Oğuz Toprakoğlu, CFO Aslı Soyubol, IR Manager Tofaş Erman Tütüncüoğlu, IR & Risk Management Manager Yapı Kredi Bank Kürşad Keteci, Head of Corporate Strategy and IR Hilal Varol, IR Manager