YATIRIM FINANSMAN & ING POLAND TURKEY CONFERENCE MARCH 2015

Transcription

1 YATIRIM FINANSMAN & ING POLAND TURKEY CONFERENCE MARCH

2 MAIN PILLARS OF CEMENT SECTOR IN TURKEY: HOUSING Urban Transformation: Government targets to demolish 6.5 Million housing units in earthquake-risk areas. TOKI (Housing Development Administration of Turkey) built 500,000 units in the past 10 years. Shopping Malls: 342 as of today, forecasted to reach 400 in INFRASTRUCTURE INVESTMENTS Public Investments: HPP Projects: +5,000 MW of hydro power in construction, due Turkey utilizes less than 30% of the hydro potential. Nuclear Power Plants: Ground breaking in Akkuyu Nuclear Power Plants expected in 2Q2015, project demand to top 1 Million Tons in 4 years. Sinop Nuclear Power Plant due to start in Transportation: Main investment issue of the Government: Highways: Turkey s energy import bill in 2014 is USD 55B. More and modern roads decrease fuel consumption, enables more transportation. Marmaray inaugurated in Eurasia, another tunnel under the Bosporus will be ready by Construction continues in Gebze Bridge, a 2.7 km of suspension bridge project. UNEMPLOYMENT: 9.9% as of December Construction is known to be one of the best ways to create jobs directly and indirectly. EXPORTS 13.6 Million Tons of cement and clinker exports realized in 2014: 1.3 Millions sent to Libya, 1 to Syria (about twice that of 2013) and another 0.7 to Egypt. 2

3 CEMENT SECTOR OUTLOOK IN TURKEY: Growth: Domestic sales in 2014 grew 1.5% vs 5% forecast, slowdown in 4Q was the main reason. Domestic sales growth in 2015 is anticipated to be 3%. Developing Country Effect: Turkey s estimated per capita cement consumption in 2014 was 840 kg, envisaged to grow to 1,000 kg in the medium term. Industry Sweeteners: General elections in 2015, urban transformation due to earthquake risk, reciprocity & 2B laws. COGS: Average CIF petcoke prices in 2014 was USD /Ton CIF, last shipment for OYAK Cement Group companies is as low as 75. Electricity prices were elevated in April 2012 and October 2012 ; total raise was 25 to 50%, depending on the infrastructure of the region. Another raise is expected in 3Q

4 All cement companies included, exports are cement + clinker Domestic market is expected to grow 3% in 2015, but gradually needs at least 15 Million Tons of yearly exports to keep CUR high. 4

5 TURKISH CEMENT INDUSTRY CLINKER CAPACITY 2014 Source: OYAK Cement Group, Company Releases Capacity, 2014, million tpa Clinker Share OYAK % As 4.3 6% Askale 5.4 8% Bati Group 2.4 3% Cimentas 4.1 6% Votorantim 2.6 4% Goltas 2.0 3% Heidelberg-Sabanci (Akcansa) 6.6 9% Limak % Nuh Cimento 4.4 6% Sabanci (Çimsa) 5.5 8% Sanko 4.7 7% Vicat 3.1 4% Other % TOTAL % OYAK Cement Group is the largest cement group in Turkey, 15% of total capacity. 5

6 TURKISH CEMENT INDUSTRY 2014 Black Sea Syria Iraq Integrated Cement Plant - 50 Grinding Facility - 19 Source: OYAK Cement Group Mediterranean Sea 6

7 Bolu Ankara: 1 Mil tpa Eren: 3.5 Mil tpa Source: OYAK Cement Group, Company Releases 2 brownfield and 1 greenfield investments were online in

8 SHAREHOLDING STRUCTURE 48.67% 51.33% 8 OYAK Other

9 - 100% OYAK Company. - Acquisition completed on November 10th, Million tpa clinker & 3 Million tpa cement capacity. - ~30% market share in Aegean Region. - Cementing the capacity & market leader position of OYAK Cement Group. 9

10 Established in 2004 by OYAK, Adana, Bolu and Unye Cement Companies One of the biggest RMC companies in terms of capacity (over 40 concrete batching plants, 5 Million m³ capacity) and sales (Net sales of ~95 Million TRL in 2014) MARMARAY TUBE TUNNEL, ISTANBUL GEBZE SUSPENSION BRIDGE, IZMIT POZANTI HIGHWAY, ADANA PRESIDENTIAL SYMPHONY ORCHESTRA BUILDING, ANKARA EMAAR ISTANBUL 10

11 Net Margin Ranking, 2014 Dividend yield as of March 11th ISE CEMENT UNIVERSE 2014 RESULTS Net Margin EBITDA ROE Dividend Yield 1 Adana Çimento 32.5% 34.1% 18.8% 10.6% 2 Mardin Çimento 30.7% 37.2% 24.0% 10.6% 3 Bolu Çimento 30.2% 38.9% 30.3% 3.0% 4 Aslan Çimento 26.6% 35.7% 22.2% 1.8% 5 Ünye Çimento 25.3% 36.0% 21.4% 9.1% 6 Yibitaş Yozgat 24.5% 29.8% 24.5% 2.6% 7 Batısöke Çimento 20.6% 35.4% 13.6% n/a 8 Konya Çimento 18.3% 25.2% 16.8% n/a 9 Çimsa 18.1% 27.5% 17.0% 7.9% 10 Akçansa 17.7% 27.3% 21.7% 7.1% 11 Baştaş Çimento 17.1% 26.1% 13.7% 2.0% 12 Nuh Çimento 16.9% 24.6% 17.0% 6.2% 13 Afyon Çimento 16.8% 25.1% 24.3% 0.0% 14 Çimentaş 14.9% 20.2% 10.2% 0.0% 15 Batı Çimento 14.8% 27.4% 15.0% n/a 16 Göltaş Çimento 12.8% 24.5% 13.7% 0.0% 17 Bursa Çimento 10.7% 15.4% 17.0% 3.4% OYAK FOCUSES ON AFTER TAX PROFITS AND DIVIDENDS PAID TO SHAREHOLDERS (NET MARGIN) OYAK FOCUSES ON CAPITAL ALLOCATION AND ITS RETURN TO SHAREHOLDERS (ROE) OYAK FOCUSES ON OPERATIONAL GAINS AND FINANCIAL SOUNDNESS (EBITDA) In order to provide efficient social benefits for its approximately 290,000 members, OYAK aims to raise the maximum income from 50+ companies it owns. 11

12 OYAK CEMENT GROUP & GLOBAL PEERS Million TRL, 2014FY Net Sales EBIT EBITDA Net Profit EBITDA Net Margin Adana % 32.5% Mardin % 30.7% Bolu % 30.2% Ünye % 25.3% Aslan % 26.6% OYAK 1, % 29.5% Lafarge 37,245 5,455 7, % 2.1% Heidelberg 36,581 4,582 6,647 n/a 18.2% n/a Holcim 50,450 6,117 9,892 4, % 8.5% Cemex 34,558 2,807 6, % -2.7% Italcementi 12, , % -1.2% Cementir 2, n/a 20.3% n/a Buzzi Unicem (9M) 5, % 2.9% Cimpor 7,552 1,302 1, % -0.6% Titan 3,358 n/a % 2.7% Votorantim (9M) 8,503 1,775 2, % 9.5% Total / Average 201,861 23,393 38,009 6, % 3.0% 1 Eur: 2.9 TL, 1 USD: 2.2 TL, 1 CHF: 2.64 TL, 1 Breal: 0.89 TL 12

13 COST BREAKDOWN 2014 VS 2013 BULK CEM I-42.5, 2014 average Fuel prices pegged in USD, all others TRL BULK CEM I-42.5, 2013 average OYAK Cement Group procures ca 900,000 Tons of coal and petcoke every year, economies of scale bring about better prices. SALES BREAKDOWN (2014) Exports down to as low as 11%. Libya and Middle Eastern countries are top customers 13 Source: OYAK Cement Group

14 ADANA.IS MCAP: USD Mio Free Float: 58% Foreign Ownership in FF: 10.6% ADV: 0.56 USD Mio ADBGR.IS MCAP: USD Mio Free Float: 9% Foreign Ownership in FF: 0.0% ADV: 0.04 USD Mio ADNAC.IS MCAP: USD 42.1 Mio Free Float: 49% Foreign Ownership in FF: 4.4% ADV: 0.93 USD Mio * As of Mar. 10th., last 3 months average 14

15 ADANA (A), ADANA (B) & ADANA (C) Adana shares on the ISE: Share Type Claim on Equity Claim on Dividends Free Float Voting Rights A 26% 54% 86% 2 B 25% 36% 15% 1 C 49% 10% 50% 1 Main Participations: OYAK Beton Ready Mix: 28% Omsan Logistics: 20% Adana Cement Free Port TRNC: 100% Cimsa Cement: 5.11% OYKA Paper & Packaging: 49% Adana Cement Inc TRNC: 100% Competitive Advantages: 2015 growth drivers: Nuclear power plant project expected to start in Cukurova Airport project expected to speed up, OYAK Beton is the concrete provider. PPP hospital projects in Adana & Mersin. Product diversification & alternative markets: White Cement: 350,000 Tons of capacity, whiteness +85%, Black Sea and Mediterranean Basins in focus. Ground Granulated Blastfurnace Slag & Slag Cement: Market gaining strength. Proximity to Iskenderun ports; exporting is always an option. 15

16 k Tons Source: Company Data Satisfactory domestic market, Middle Eastern exports gaining strength. 16

17 Operational results higher and net profit more than doubled Million TL vs 2013 Domestic Sales % Exports % Net Sales % Cost of Goods Sold (-) % Operational Income % Net Income % EBITDA % EBITDA 22.0% 26.0% 25.2% 29.5% 34.1% Net Margin 33.3% 24.5% 30.5% 17.1% 32.5% Source: Public Disclosure Platform ADANA A Average Cash Dividends (Mio TL) Payout Ratio 57.2% 82.2% 55.9% 93.2% 75.7% 73% Dividend Yield 9.2% 10.0% 7.7% 10.0% 10.5% 11% ADANA B Average Cash Dividends (Mio TL) Payout Ratio 57.2% 82.2% 55.9% 93.2% 75.7% 73% Dividend Yield 9.3% 10.1% 7.7% 10.0% 11.0% 11% High pay out ratio policy prevails due to OYAK strategy ADANA C Average Cash Dividends (Mio TL) Payout Ratio 57.2% 82.2% 55.9% 93.2% 75.7% 73% Dividend Yield 6.2% 6.7% 5.2% 6.7% 9.8% 8% 2014 Dividend yield = Gross Dividends for the year / MCAP 11 March 2015 Source: ISE 17

18 MRDN.IS MCAP: USD Mio Free Float: 45% Foreign Ownership in FF: 10.1% ADV: USD 0.39 Mio. * As of Mar. 10th, last 3 months average 18

19 k Tons Source: Company Data All time record domestic sales despite shrinking exports 19

20 Competitive Advantages & Domestic Market: - The biggest capacity in Southeast Anatolia, fixed costs down, no major investment need in medium term. - Dam projects prevail, focus on Ilısu. - Region developing with residential construction, 3 new / renovated airports and irrigation channels - High dividend payout ratio and attractive yield in line with OYAK policy. Export Markets: - Middle East exports slowed down due to heavy competition from new capacity in Iran, Mardin is USD 5-10/Ton more expensive than other companies as it is regarded as a brand. - Reconstruction following a stability in Syria would substantially increase exports. 20

21 Highest domestic sales to date in 2014, exports down Million TL vs 2013 Domestic Sales % Exports % Net Sales % Cost of Goods Sold (-) % Operational Income % Net Income % EBITDA % EBITDA 40.2% 39.5% 27.8% 42.0% 37.1% Net Margin 33.0% 33.6% 18.6% 26.3% 30.7% Source: Public Disclosure Platform MARDIN Average Cash Dividends (Mio TL) Payout Ratio 90.9% 89.4% 92.1% 95.8% 93.2% 85% Dividend Yield 14.5% 15.4% 6.9% 10.3% 10.6% 15% 2014 Dividend yield = Gross Dividends for the year / MCAP 11 March 2015 Exceptionally high pay out ratio and dividend yield 21

22 BOLUC.IS MCAP: USD Mio Free Float: 26% Foreign Ownership in FF: 13.70% ADV: USD 1.1 Mio * As of Mar. 10th., last 3 months average 22

23 k Tons Source: Company Data Increasing cement and ground slag sales, highly vibrant Marmara and Central Anatolian markets 23

24 Domestic Market: Unconventional cement types, tailor-made products for colossal projects: Eurasia Tunnel: Under water tunnel for vehicles, utilizing a special type of cement with low heat of hydration. Gebze Suspension Bridge: 2,800 m long, same unique cement type being used. GGBS: Ground granulated blast furnace slag, produced with Eregli Plant s high-end technology, a new and popular product among RMC producers, strengthening concrete and replacing cement partially. Western Black Sea region envisaged to keep vibrant with HPP and divided highway projects Ankara investment: 1 Million tpa clinker, operational in May 2015, totalling 75 Million Research and Development power house of OYAK Cement Group: First patent in Turkish cement industry; waste incineration system in operation. 6MW capacity of electricity production out of waste heat is operational. RDF (refuse derived fuel) facility operational since November Oil well (G type) cement lab built and license obtained in

25 Ongoing growth for the past 5 years, very high EBITDA margin Million TL vs 2013 Net Sales % Cost of Goods Sold (-) % Operational Income % Net Income % EBITDA % EBITDA 13.7% 19.2% 20.8% 27.7% 38.9% Net Margin 10.0% 11.3% 12.3% 17.4% 30.2% Source: Public Disclosure Platform BOLU Average Cash Dividends (Mio TL) Payout Ratio 81.1% 89.1% 88.8% 0.0% 23.7% 82% Dividend Yield 3.3% 5.3% 6.3% 0.0% 3.0% 6% 2014 Dividend yield = Gross Dividends for the year / MCAP 11 March 2015 Dividend pay out ratio down in 2014 due to Ankara investment, totalling 75 Million Euros 25

26 UNYEC.IS MCAP: USD Mio Free Float: 8% Foreign Ownership in FF: 2.1% ADV: USD 0.11 Mio * As of Mar. 10th., last 3 months average 26

27 k Tons Source: Company Data New capacity in the region decreases domestic sales. 27

28 Competitive Advantages & Domestic Market: Biggest capacity in Black Sea Region, no significant competitors, isolated Black Sea market. One of the highest domestic cement prices of Turkey. Demand remains strong; 6th highest dam worldwide, Deriner, built with Unye s cement, more dam projects, roads and tunnels, power plant constructions forecasted to prevail in Artvin & Ayvalı dams are the new strong projects. Export Market: Russia still remains one of the biggest customer of Turkish cement companies with 1.1 despite the region s problems. Unye is closest to the region and is the most well known brand in Russia. Unye Cem SRL, the subsidiary in Romania, serves Romanian & Bulgarian markets. Unye spanning +700 km. sales market 28

29 Exports down due to tension in Black Sea countries Million TL vs 2013 Domestic Sales % Exports % Net Sales % Cost of Goods Sold (-) % Operational Income % Net Income % EBITDA % EBITDA 31.9% 34.5% 36.2% 36.9% 36.0% Net Margin 23.9% 23.3% 24.3% 23.7% 25.3% Source: Public Disclosure Platform UNYE Average Cash Dividends (Mio TL) Payout Ratio 98.5% 90.4% 91.9% 91.9% 91.8% 73% Dividend Yield 7.0% 7.4% 8.4% 7.9% 9.1% 9% 2014 Dividend yield = Gross Dividends for the year / MCAP 11 March 2015 Payout ratio and dividend yield above sector averages 29

30 ASLAN.IS MCAP: USD 1,126.1 Mio Free Float: 2% Foreign Ownership in FF: 0.7% ADV: USD Mio * As of Mar.10th., last 3 months average 30

31 Chronology: The first cement plant of Turkey, established in % of shares sold by Lafarge to OYAK on December 30th, Cost control procedures effective immediately in the areas of RMC, administrative offices etc. Company eventually initiated OYAK Cement Group philosophy. (profit orientation, sound cash flow, high dividend pay out ratio etc) 2009 net loss 36 Mil, 2010 profit 1 Mil, 2014 profit 62 Mil. TRL Highlights: Exceptionally located just outside Istanbul, 40 km to Bosphorus, loyal customer base. 1.5 Million m2 of valuable land by the sea, some separate deeds in growing Istanbul (Kurtkoy, Yenibosna) Aslan owns a port of 153 meters, as deep as 26 meters, harbouring ships up to 60,000 DWT. 31

32 FURTHER COST CUTTING Aslan Cimento RDF (Refuse Derived Fuel) Facility: Operational since 2011, the facility makes use of industrial and municipal waste as an alternative fuel. The facility operates at a +25% heat replacement rate. WHR (Waste Heat Recovery) Facility: The company inaugurated WHR facility in order to obtain more than 25% electricity need out of waste heat, with a designed capacity of 7 MW.. RDF Facility 32

33 Domestic demand and local prices up in Marmara Million TL vs 2013 Net Sales % Cost of Goods Sold (-) % Operational Income % Net Income % EBITDA % EBITDA 10.1% 23.0% 25.0% 32.8% 35.7% Net Margin 0.7% 10.0% 27.2% 18.6% 26.6% Source: Public Disclosure Platform ASLAN Average Cash Dividends (Mio TL) Payout Ratio 0.0% 119.8% 88.4% 91.0% 84.2% 56% Dividend Yield 0.0% 0.7% 1.4% 1.2% 1.8% 1% 2014 Dividend yield = Gross Dividends for the year / MCAP 11 March 2015 All margins growing since OYAK acquired the company in Dec 30th,

34 WEB SITE: Guney Arik Coordinator - OYAK Cement Group garik@oyak.com.tr 34