INVESTOR PRESENTATION Q2 2018 Click to add 13.08.2018
BRISA AT A GLANCE Strong Partnership of 30 Years Best Governance with SA/BS Tyre Manufacturing and Sales with 2 Plants & 2.700+ Employees Covered area Production Capacity İzmit 361.000 m 2 11 mn units Aksaray 146.000 m 2 4.5 mn units capacity planned in 2021 Product Groups Passenger Motorcycle Truck&Bus Agriculture Off-The-Road Replacement Channels Served Export Original Equipment Brands 2
BRISA STRATEGY... Export 2.+ Working Capital Management Sales and Innovation Leadership 3
WHY INVEST IN BRISA... 6% CAGR in last 5 years Growing automotive industry and vehicle pool Leader in Turkish Replacement Market Record high operational cash flow 2018 Export Targets 15% Growth 210 million USD 5,2 million units Potential in car ownership Highest Brand Value in Turkish Tyre Market Strong Brands Strong Dealer Network Innovation Leader Technology Leader No FX and interest risk on bank debt Opportunity in stock price 4
BRISA STRATEGY... Export 2.+ 5
EXPORT DRIVEN GROWTH (32% of revenue) 6% average volume growth in last 5 years 2018 Target: Growth by 15%, $210mn, 5,4 million units 70 Countries, 600 branded shops 6000 sales points Outperforming market growth rates both in EU and in others JUNE YTD R1 (EU) R2 (NON-EU) POOL 0% 3% LASSA 13% 36% 6
BRISA STRATEGY... Sales and Innovation Leadership 7
PROMISING & GROWING INDUSTRY, DOMESTIC CHANNEL TURKEY VEHICLE PRODUCTION & SALES 9% CAGR in last 8 years Vehicle production increase trend continued in 2017. 7% CAGR in last 8 years Vehicle sales stable for the last 3 years. Source: Turksat HCV: Heavy Commercial Vehicle (Bus, truck & work machinery) LCV: Light Commercial Vehicle (Minibus, small truck 15 years continuous growth in vehicle pool Vehicle density is the major indicator for growth Tyre Demand (M Units) Passenger Car / 1000 People Source: LMC Q4 2017 In The last 5 years: 6% average Total Growth (world avg: 3,3%) Both OE (9%) and Replacement (5%) are well above world average 15% Penetration in car ownership Growth Potential in Car ownership in Turkey 8
SALES AND INNOVATION LEADERSHIP Replacement Market Share 35% 30% 25% 20% 15% 10% 5% 0% 31% 19% 15% 11% 8% 9% 10% Brisa Comp1 Comp2 Comp3 Comp4 Comp5 Other By Far The Market Leader Source: Europool Consumer Products: PSR Car, LCV, HCV Product Groups Strength in Brand Portfolio 45% market share in Best/Better segment with BS and LS Entered to fighting segment with Dayton Strongest Dealer Network ~1.400 Points of Sales Increasing geographical coverage priority Solid Increase in Sales and in Market Share Q2 JUNE YTD BRISA 2018 2017 % 2018 2017 % TOTAL 1.184 1.074 110% 2.530 1.972 128% Consumer 988 920 107% 2.157 1.663 130% Commercial 196 154 128% 373 308 121% Q2 JUNE YTD BRISA M/S% 2018 2017 % 2018 2017 % TOTAL 30% 28% 2% 31% 26% 5% Consumer 29% 27% 1% 33% 31% 2% Commercial 35% 31% 3% 31% 25% 5% * Replacement Market, Sell-in Data, Europool Market Share 9
SALES AND INNOVATION LEADERSHIP 1 Commercial Solutions Innovation Leader 100+ Profleet Consultants 2M TL saving fleet/year 1000+ vehicle/year 2 Fast Fit Service Business(Otopratik) 200 Targeted Points of Sales Preference : 3 out of 5 customers Franchise Model Battery business Digital Transformation In Replacement Business (Data Analytics) Dealer-Distributor Management 1 2 3 Demand forecasting Customer Experience Sell out focus Inventory management Innovation for customer Campaign management E-commerce and new channels Spare parts platform 4 Awards Digitalization leader of sector E-commerce for export Pioneers of digitalization Lastik.com.tr Source: Accenture digitalization index 10
SALES AND INNOVATION LEADERSHIP 1 Original Equipment 14% of the channel portfolio Export oriented growing sector Strategic channel for future Tandem mixer Commercial tyres golden key and impact on repl. market Technology OE MARKETS BRISA SALES Q2 JUNE YTD (TONNAGE) 2018 2017 % 2018 2017 % TOTAL 7.428 6.483 115% 14.635 11.765 124% 2 R&D Local design, Technology raw material 30 new products / year R&D capability & 17M $ İnvestment in 17 Product localization 3 Smart Internal Processes ( Supply chain, smart factory) Production efficiency Robotic systems Warehouse & logistics solutions Employee efficiency 11
SALES AND INNOVATION LEADERSHIP : AKSARAY PLANT Investment 1 st SMART PLANT in TURKEY TYRE SECTOR 300M $ Investment 146k m2 building area 4.5M Units capacity in 2021 Strong tax incentive. 4-5% effective tax rate since start of the investment. Possibility to extend to 2021 end Invest one fifth more on 278 MUSD, Decrease Cost by Two Thirds. Add 55 MUSD in 2018 onwards Increase production from 1mn units in 2018 to 4,5 units in 2021 Aksaray Story from 2018 onwards Create Sales - Exports, Invest on Tire Machines«12
WHY INVEST IN BRISA... Record high operational cash flow for the last 10 years No FX and interest risk on bank debt Opportunity in stock price 13
BENCHMARK OF CASH FLOW BRISA took high place among its competitors in cash conversion from OP & Assets in 2017 Focus on cash management resulted more cash starting from 2017 and onwards * 6 months * Drastic Increase in Working Capital Efficiency 14
DEBT STRUCTURE (1) Debt structure changed to long term in 2016 & 2017 (2) Debt increase stopped by operations Risks under Control 100% of debt is hedged to TL. Main principal debt repayment after 2 years Average cost of debt is 12,65%. Low interest rates has positive impact on WACC 15
INCOME STATEMENT Q2 Exceptional growth in revenue and EBITDA. We expect 40% growth in EBITDA in 2018 (M TL) Significant growth in revenues and nominal gross profit, thanks to higher volume. Q2 JUNE YTD 2018 2017 % 2018 2017 % Net Sales 720 535 135% 1.414 1.008 140% Gross Profit 184 127 145% 345 255 135% % 26% 24% 24% 25% Total Expenses (120) (97) 124% (214) (178) 121% EBITDA 100 56 179% 207 125 165% % 14% 10% 15% 12% EBIT 67 42 162% 145 100 145% % 9% 8% 10% 10% Net Profit 12 2 623% 23 27 88% 2% 0% 2% 3% Remarkable increase in EBITDA by 65% increase and operating profit by 45% in H1 (In Q2 79% increase on EBITDA and 62% increase on operating profit). Due to operational start of Aksaray plant, financing expenses related with Aksaray investment has started to be shown in profit/loss statement. Besides, depreciation of Aksaray plant has started since the beginning of 2018. Hence, net profit decreased. 16
BALANCE SHEET Q2 Financial ratios and working capital continues to improve Improvement in debt leverage of Brisa is continuing. 1.5 improvement in Net Debt/Ebitda in the 1st half of 2018 Improvement in working capital days of Brisa is continuing. 30 Days improvement in working capital only in 1st half Better operating cash flow and lower capex resulted a decrease in total debt of Brisa. 17
RIGHT TIME TO INVEST... 18
APPENDIX
VEHICLE PRODUCTION IS CLOSE TO LAST YEAR LEVEL VEHICLE PRODUCTION VEHICLE SALES Q2 JUNE YTD Q2 JUNE YTD 2018 2017 % 2018 2017 % 2018 2017 % 2018 2017 % TOTAL 423 449 94% 853 874 98% 207 260 80% 376 419 90% PSR 272 301 90% 557 601 93% 154 194 79% 276 306 90% LCV 135 135 100% 265 251 105% 41 55 75% 77 95 81% Midibus(LSR) 1,7 1,4 121% 3,7 3,1 119% 0,8 0,7 114% 1,5 1,3 115% Bus(TBR) 2,5 2,6 96% 4,9 5,1 96% 0,4 0,4 100% 0,7 0,9 78% Truck(TBR) 7,0 4,7 149% 13,4 8,5 158% 5,5 6,0 92% 10,9 10,2 107% Trailer(TBR) 4,9 3,4 144% 9,4 5,7 165% 4,9 3,4 144% 9,4 5,7 165% OE MARKETS Q2 JUNE YTD OE MARKETS 2018 2017 % 2018 2017 % TOTAL 1.973 2.072 95% 3.975 4.033 99% Consumer 1.846 1.978 93% 3.728 3.859 97% Commercial 126,5 94,1 134% 246,8 174 142% With the elimination of Euro-6 impact in 2016, Commercial OE market increased significantly.