ÜLKER BİSKÜVİ SAN. A.Ş. Annual Report 2009

Transcription

1 ÜLKER BİSKÜVİ SAN. A.Ş. Annual Report 2009

2 Contents 2 Ülker Bisküvi in Brief 4 Overview of Yıldız Holding 6 Key Financial and Operational Indicators 8 Capital and Shareholder Structure 10 Performance of Ülker Bisküvi Shares 12 Message from the Chairman of the Board 14 Board of Directors 18 Message from the General Manager 22 The Food Industry Worldwide and in Turkey 25 Activities in 2009 Ülker Bisküvi in 2009 Production and Capacity Marketing and Distribution Investments Subsidiaries Birlik Pazarlama İdeal Gıda İstanbul Gıda-Birleşik Dış Ticaret Biskot Gıda Atlas Gıda Pazarlama Godiva Other Subsidiaries 42 Corporate Governance Ülker Bisküvi Family: Human Resources Environment, Quality and R&D Activities Shareholder Relations and Profit Distribution Policy Social Responsibility Projects Corporate Governance Principles Compliance Report 59 Profit Distribution Proposal 61 Audit Board Report 65 Independent Audit Report

3 For 65 years, we have been working for happy moments. Ülker Bisküvi, one of the giant food producers of the world with 280 assorted biscuit and cracker products supplied to both national and international markets, is the indisputable leader of the sector. Ülker Bisküvi s main goal is to make its customers happy and it has held a place in everyone s memory with Happy Moments since Meeting the needs and expectations of its customers at the highest level, Ülker Bisküvi will continue to carry out consumer-oriented activities to increase Happy Moments even more. 1

4 Ülker Bisküvi in Brief Ülker Bisküvi has found itself a place in everyone s life since 1944 and is always remembered with Happy Moments. Ülker Bisküvi, which started to operate in Eminönü, Istanbul 65 years ago in a small bakery with six or seven pots, a small oven and three workers, is now the flagship of Yıldız Holding in respect of both sales volume and profitability. Ülker Bisküvi produces biscuits, crackers, chocolate covered biscuits and wafers at its factories in Topkapı/ Istanbul and Ankara. As the indisputable leader of the sector, Ülker Bisküvi is one of the giant food producers of the world with 280 assorted biscuit and cracker products supplied to both domestic and international markets. In 1996, Ülker Bisküvi received the ISO 9002 certificate for quality standards in production, and in 2001, the HACCP certificate for quality standards in food safety. In 2002, it won the top mark of High Level in an analysis conducted by the Europe-based quality certification firm BRC, thus, further secured its success in the field of quality control. Ülker Quality in Global Markets Ülker Bisküvi introduces approximately 60 new products to the market annually. It constantly takes its innovative approach to higher levels with its independent laboratories and expert and experienced R&D staff. This innovative approach is the reason why Ülker has become one of the food brands most in demand. Ülker Bisküvi s products are exported mainly to the Middle East, Russia and Central Asian republics, as well as to Europe, Africa and the US. Ülker Bisküvi successfully represents Turkey s approach to quality on a global scale. Ülker Bisküvi has an effective quality control system that injects synergy into the entire process from production to consumption, and it conducts its investments based on its strategy which is focused on sustainable and profitable growth. 2 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

5 Ülker and Happy Moments Closely known by three generations from 1944 to today, Ülker Bisküvi has a place in everyone s memory with Happy Moments. The advertising campaign launched on the 65 th anniversary of the brand and incorporation of the Company was built on this concept. Surveys conducted show high levels of loyalty to the Ülker brand. In the Brands 2008 survey by AC Nielsen, Ülker ranked first in the biscuits category, and second and third in the categories of the brands that consumers feel closest to and top-of-the-mind firms and brands, respectively. According to research carried out by the Istanbul Chamber of Commerce in 2008, Ülker Bisküvi ranked 105 th among the top industrial enterprises of Turkey. Local distribution of biscuits and chocolate covered products produced by Ülker Bisküvi and its subsidiaries is undertaken by the subsidiary, Atlas Gıda Pazarlama, and other companies of Yıldız Holding, namely Esas Pazarlama, Merkez Gıda Pazarlama and Rekor Pazarlama. Ülker Bisküvi has written its industrial history with its consumers. From the very beginning up to today, from production to sales, from marketing to distribution, Ülker s management philosophy has always been to put its customers first Ülker Bisküvi was established by Sabri Ülker in 1944 in the Eminönü district of Istanbul. It started out as a small bakery with just three workers, producing 200 kg of biscuits per day. A few years later, the Company relocated to the Topkapı district of Istanbul and had four 20 m 2 ovens, which enabled it to achieve what was considered a high level of production at the time. Meeting the needs and expectations of its customers at the highest level, Ülker Bisküvi will continue to carry out consumer-oriented activities to increase Happy Moments even more. 3

6 Overview of Yıldız Holding Having created value on a global scale with the spirit of entrepreneurship, honesty, vision, innovation, determination, trust and courage Yıldız Holding, achieved a consolidated gross turnover of TL 8.8 billion in 2009 just from its food related businesses. Yıldız Holding With a total of 53 factories, seven of which are located abroad, 22,500 employees, a strong distribution network, product variety, production and sales power, Yıldız Holding is one of the leading pioneers compared with both local and international peers. The Holding attained this nature through its eight major business groups. The Ülker (Biscuit-Chocolate) Group and the Food, Beverages, Candy and Chewing Gum Group under the Holding go beyond meeting all the nutritional demands of the consumers, forecasting possible demands and planning products for the future. The Food, Frozen Food and Personal Care Group manages the subsidiaries in the areas of tea and frozen food as well as overseeing the investments undertaken in personal care products. The IT and Packaging Groups fulfill the requirements of the Yıldız Holding companies and are constantly growing within their respective sectors with a visionary approach. While the Real Estate Investments Group continues to develop as a new business area, the International Operations Group manages the investments held by the Holding abroad. 4 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

7 The Financial Subsidiaries Division facilitates coordination between the subsidiaries of the Holding in the area of financial services. Godiva, one of the world s leading producers of premium brand chocolate, became a member of Yıldız Holding at the end of Yıldız Holding is one of the enterprises favored by the giant global brands for strategic partnership and is in cooperation with important global companies such as Kellogg s, Hero Baby, Cargill, Gumlink and Laurens Spethmann Holding. Having strengthened its long-established reputation thanks to its social awareness, reflected in various projects in such areas as the environment, sports, education, health and the arts, Yıldız Holding contributes to the development of society with social responsibility and sponsorship projects Producing a total of 75 tons of biscuits in 1944, Ülker Bisküvi tripled its capacity at its Topkapı factory, built in 1948 specifically in order to increase the production volume. Representing a system of values that reaches from the first half of the 20 th century into the 21 st century, Yıldız Holding creates value on a global scale with the spirit of entrepreneurship, honesty, vision, innovation, determination, trust and courage. 5

8 Key Financial and Operational Indicators The gross real operating profit of Ülker Bisküvi in 2009 was TL million; whereas the net profit for the year was TL million. With the investment made in the wafer production facility at the Ankara Factory in 2009, the total production capacity increased by 4,800 tons. The total production amount in the Istanbul and Ankara factories was 120,621 tons and the total capacity utilization was 72%. Key Financial Indicators (TL) Shareholder s Equity 708,417,130 1,125,668,600 Gross Profit 306,330, ,735,490 Operating Profit 97,272, ,079,597 EBITDA 120,673, ,941,880 Net Profit for the Year 15,685, ,917,554 Production Amount (*) 127, ,621 Sales Volume (*) 128, ,137 (*) Amounts are given in tons. Net Profit for the Year (TL) Production Amount (Tons/Year) 116,054,667 15,685, ,917, , , , ÜLKER BİSKÜVİ ANNUAL REPORT 2009

9 1955 Gross Real Operating Profit (TL) 321,792, ,330, Sales Volume (Tons/Year) ,735,490 Ülker Bisküvi decided to distribute its products throughout Turkey at factory prices and achieved a huge production increase with this innovation. The Company s marketing efforts with door-to-door vendors in big cities had revolutionary characteristics in terms of the presentation strategy of biscuits, chocolates and similar products. 131, , ,

10 Capital and Shareholder Structure The shareholder structure of Ülker Bisküvi as of December 31, 2009 is as below. No real person owns more than 10% of the shares of the Company directly. 32% of the shares of Ülker Bisküvi are open to public as of December 31, Shareholder Amount (TL) % Yıldız Holding A.Ş. 113,049, Others 155,550, Total 268,600, Yıldız Holding A.Ş % Other 57.91% 8 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

11 1970 In line with the growth strategy of Ülker Bisküvi, Anadolu Gıda Sanayii A.Ş. was founded in Ankara as a multiple-shareholder company. As a result of this, the production capacity of Ülker Bisküvi was doubled. 9

12 Performance of Ülker Bisküvi Shares Company Ülker Bisküvi Reuters & Foreks Code ULKER.IS ISIN Code TREULKR00015 Industry Food XU100 XU050 ISE Index Listings XUTUM XUSIN XGIDA XSANK Price (TL) (December 31, 2009) 3.54 Free Float (%) Market Value (US$ thousand) 950,844 Free Float Market Cap (US$ thousand) 304,270 Average Trading Volume (US$ thousand) ( ) 9,775 Beta 0.61 Source: Reuters and Bizim Menkul Değerler Ülker Bisküvi January 2, 2009-December 31, 2009 XU100 ÜLKER February March April May June July August September October November December ÜLKER BİSKÜVİ ANNUAL REPORT 2009

13 1974 The first biscuit export was made after choosing the Middle East as the target market. Opportunities for international competition were increased with the creation of the R&D department in the same year. 11

14 Message from the Chairman of the Board Ülker Bisküvi successfully finished 2009 with its determination and resilience, gained through long-standing experience, its commitment to quality and innovation, and the importance it attaches to its consumers. The net sales of Ülker Bisküvi were TL 1,552 million and the operating profit was TL 147 million in Dear Shareholders, The course of the global economy in 2009 was set in the last quarter of 2008, with the onrush of the harsh conditions of an inevitable global crisis. Starting from the financial systems of the developed economies, the global crisis affected the real economy and spread to the whole world in While the developed and developing economies were suffering from these negative effects, the Asian countries resisted the crisis, which was among the spectacular events of the last year. Although their growth rate decreased, China and India were the national economies which did not contract and they were the first to emerge from the global crisis. The indicators tell us that we have taken a turn for the better and that the global economy will enter a positive growth phase in Turkey was among the countries that weathered the global crisis with relatively less damage than the European economies. The greatest problem that the global crisis caused across the world as well as in Turkey was unemployment. Estimates for the year 2010 agree that Turkish economy will enter into a growth process. It is very important that this growth be supported with investments that will create new employment opportunities. 12 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

15 Whilst the economy was struggling under such harsh conditions, Ülker Bisküvi celebrated a happy event: its 65 th anniversary. Ülker, a source of pride for Turkish industry since 1944, has always stood for Happy Moments for its consumers. For this reason, we emphasized at our 65 th anniversary that we have been working and will continue to work to increase these happy moments even more. Another pleasing event for Ülker Bisküvi in 2009, was the positive echo of our global experience with Godiva. The Godiva acquisition story was presented in the December 2009 issue of Harvard Business Review, one of the most prestigious academic publications in the world, as a successful business model. The article entitled Don t integrate your acquisitions, partner with them, which examined the strategy we pursued, focused on the success of the period following the acquisition of Godiva. In our projections for 2009, we foresaw growth for Ülker Bisküvi despite the negative environment that might be created by the macroeconomic conditions and the anticipated increase in costs. Ülker Bisküvi successfully finished 2009 with its determination and resilience, gained through long-standing experience, its commitment to quality and innovation, and the importance it attaches to its consumers. The net sales of Ülker Bisküvi were TL 1,552 million and the operating profit was TL 147 million in The facts underlying our success can be listed as; keeping our prices at the optimum level for our customers, continuing production and investment with new launches, developing new products and associations in harmony with the time, and implementing models that will increase efficiency. Ülker Bisküvi has accepted environmentally friendly production as one of its corporate priorities since its establishment and will continue to operate in awareness of its responsibilities towards the society. Ülker Bisküvi will carry on creating value for its shareholders, consumers, employees and its country in the forthcoming period. With my best regards, Murat Ülker Chairman of the Board 13

16 Board of Directors Murat Ülker Chairman of the Board Murat Ülker was born in Istanbul in He began his business career in 1982, after graduating from the Management Department Faculty of Economics and Administrative Sciences at Boğaziçi University. He worked as the Control Coordinator in the Group in 1984, and afterwards, attended various training courses (AIB and ZDS) abroad and worked as a trainee at the Continental Baking Company in the US. Mr. Ülker worked in the export field for two years in the Middle East. He also oversaw about 60 factories and facilities operating in the biscuit, chocolate and food industry in the US and Europe for three years. Mr. Ülker participated in various IESC projects, and undertook many investments keeping in line with the principle of vertical integration. After working as Assistant General Manager for Enterprises, General Manager, Executive Committee Member and Board Member in various companies of the Group, Murat Ülker was elected the Chairman of the Board of Yıldız Holding in Murat Ülker speaks English and German and his hobbies include sailing, as well as traveling with his family. He is married with three children. Orhan Özokur Deputy Chairman of the Board Orhan Özokur was born in Balıkesir in Having begun working during his high school years, Orhan Özokur pursued his academic and business life hand in hand. He graduated from the Academy of Economic and Business Studies. Mr. Özokur joined the Group as a Commercial Manager in 1973, and served as Chairman of the Board and Board Member in different companies of the Group. He was appointed Deputy Chairman of the Board of Directors of Yıldız Holding in Orhan Özokur speaks English, has a special interest in basketball, and his hobbies include tennis, listening to music and playing the guitar. He is married with three children. 14 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

17 Ali Ülker Board Member (Executive Director) Born in Istanbul in 1969, Ali Ülker graduated from the Economics and Business Management Department Faculty of Economics and Administrative Sciences at Boğaziçi University. He began his business career in 1985 as a trainee in the Quality Control Department of Ülker Gıda A.Ş. Ali Ülker attended various academic programs at IMD, Harvard and Wharton. Mr. Ülker took part in the De Boccard & Yorke consultancy company s Internal Kaizen Study (1992) and the IESC Sales System Improvement and Internal Organization Project (1997). He served as a trainee, Sales Executive, Sales Coordinator, Product Group Coordinator and Product Group Manager during at the chocolate production facilities and Atlas Gıda Pazarlama A.Ş. He served as the General Manager of Atlas Gıda Pazarlama A.Ş. in 1998, Deputy Chairman of the Consumer Group for Marketing and Chain Stores in 2000, General Manager of Merkez Gıda Pazarlama A.Ş. in 2001 and Deputy Chairman of the Food Group in In 2005, he was appointed Chairman of the Ülker (Biscuit, Chocolate, Candy) Group. Ali Ülker speaks English and German and his hobbies include fishing, watching movies, reading books, and playing basketball and billiards. He is married with three children. Necdet Buzbaş Board Member Born in Samsun in 1948, Necdet Buzbaş graduated from the Faculty of Chemistry at Istanbul University. He began his business career at Adeka İlaç Sanayii in Samsun. Mr. Buzbaş joined the Ülker Group in 1975 for a new chapter in his professional career. He worked as Plant Chief Officer, Production Manager, Assistant General Manager and General Manager at Ülker Gıda Sanayi A.Ş. before being appointed Chairman of the Ülker Group as part of the 2000 reorganization of the Company. He was appointed a member of the Advisory Committee in Mr. Buzbaş has also served as a member of the Governing Body of the Confederation of Turkish Employers Associations (TİSK), Chairman of the Turkish Food Industry Employers Association, member of the Assembly of the Istanbul Chamber of Industry (ICI), and member of the Executive Committee of the Association of the Sugar Products Industry (ŞEMAD). Mr. Buzbaş speaks English, and has also served in nongovernmental organizations including the Educational Volunteers Foundation of Turkey (TEGEV), KalDer (Quality Association) and Katek (Quality and Technology Advisory Committee of ISO). 15

18 Board of Directors Cengiz Solakoğlu Board Member (Independent) Cengiz Solakoğlu was born in Erzurum in After graduating from the Istanbul Academy of Economic and Business Studies in 1964, Cengiz Solakoğlu began his business career as a salesman at Beko Ticaret A.Ş in He became an Area Sales Manager in 1969, and Sales Director in After serving as the General Manager in Beko Ticaret A.Ş. between and in Atılım A.Ş. between , Mr. Solakoğlu was appointed Deputy Chairman in 1991 and Chairman in 1994 of the Consumption Group of Koç Holding. Also serving as a member of the Executive Committee of the Koç Group in , he was appointed Chairman of the Durables Consumption Group of Koç Holding in Having worked in the Koç Group continuously for 37 years and 8 months, Mr. Solakoğlu retired due to the Group s policy of mandatory retirement at age 60. He was one of the founders of the Educational Volunteers Foundation of Turkey and has been a Board Member since its foundation, serving as Chairman of the Board between He was elected a Leader of Civil Society by the Ekonomist magazine in In 2007, he reassumed the role of Chairman of the Board of the Educational Volunteers Foundation of Turkey. Mr. Solakoğlu is a Board Member of Ülker Çikolata A.Ş., Ülker Bisküvi A.Ş., Atlas Gıda Pazarlama A.Ş., Atlantik Gıda Pazarlama A.Ş., Fresh Cake San. A.Ş., İdeal Gıda A.Ş. and Anadolu Gıda San. A.Ş. He is married with two children and three grandchildren. Mahmut Mahir Kuşculu Board Member (Independent) Born in Istanbul in 1950, Mr. Kuşculu graduated from Istanbul Erkek Lisesi, and then the Faculty of Economics, Istanbul University. He completed his postgraduate education in international marketing in Georgia, the US. Mr. Kuşculu served as Executive Manager and Board Member in the family glass industry businesses, Tamcam A.Ş. and Arsal Cam Sanayii. He established Kutaş Dış Ticaret ve Pazarlama A.Ş. in 1982, and Erdem Dış Ticaret A.Ş. in 1985, also taking part in their management. Mr. Kuşculu continues to work as a Board Member in these companies and other companies. Mr. Kuşculu has served on the Professional Committees of the Istanbul Chamber of Commerce and the Istanbul Chamber of Industry for 20 years, and as a member of the Assembly of Istanbul Chamber of Industry for 14 years. He is also a Board Member of Ülker Çikolata A.Ş., Ülker Bisküvi A.Ş., Atlas Gıda Pazarlama A.Ş., Atlantik Gıda Pazarlama A.Ş., Fresh Cake San. A.Ş., İdeal Gıda A.Ş., Anadolu Gıda San. A.Ş., Polinas Plastik San. A.Ş., Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş. and Godiva Chocolatier Inc. He is married and has two children. 16 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

19 Güven Obalı Board Member (Independent) Born in Cihanbeyli in 1943, Mr. Obalı graduated from Finance and Economics Department Political Sciences Faculty at Ankara University in He was appointed Assistant Tax Inspector in the same year and became a Tax Inspector in He was sent to Germany in order to study Value Added Tax Regulation and application for one year in In 1975, he left the Ministry of Finance and began working at the Industrial Development Bank of Turkey (Türkiye Sınai Kalkınma Bankası). Starting his career as a Financial Analyst, he continued with managerial positions in various units. During his tenure, he also acted as a representative of the bank in the management and audit boards of various companies, including Şişe Cam Group, Koruma Tarım İlaçları A.Ş., Çelik Halat A.Ş. and Bakırsan A.Ş. After retiring, he founded ABC Sworn Financial Advisor Company in He retired as Sworn Financial Advisor in Mr. Obalı continues to serve as Audit Board Member in Kuveyt Türk Katılım Bank and as a Board Member of Ülker Çikolata A.Ş., Ülker Bisküvi A.Ş., Atlas Gıda Pazarlama A.Ş., Atlantik Gıda Pazarlama A.Ş., Bizim Toplu Tüketim A.Ş. and Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş. He is an honorary member of various associations and foundations. He is married with two children. Audit Committee Ataman Yıldız Member of the Audit Committee Nurettin Aliz Member of the Audit Committee 17

20 Message from the General Manager 2009 came with the excitement of our 65 th anniversary. We aim to reach our consumers with a series of events that started in 2009 and will continue in Factory tours are organized to show children how our products, each of which has had its happy moments within the memories of three generations, are produced. Dear Shareholders, 2009 was a special year for Ülker Bisküvi, for it was the 65 th anniversary of our incorporation. In this respect, we aim to reach our consumers with a series of events that started in 2009 and will continue in Factory tours are organized to show children how our products, each of which has had its happy moments within the memories of three generations, are produced. These tours are organized in our Istanbul and Ankara factories and in the İdeal Gıda factory in Gebze, one of our subsidiaries, in coordination with the Provincial Directorates of Education. They are invaluable experiences for our children. Though its importance for our Company, 2009 was also the year in which the effects of the global crisis that started in 2008 were felt at their worst. The Turkish economy kept contracting from the last quarter of 2008 to the third quarter of In the first quarter of 2009, the Turkish economy shrank by 14.7%, in the second quarter by 7.9%, and in the third by 3.3%. In 2009, our Company continued to implement the precautions introduced in 2008 without any compromises, and succeeded in increasing its turnover despite these difficult conditions. It demonstrated the same performance in operating profit and reached TL 147 million with a 51% increase over the previous year. I would like to share the progress, our Company made in 2009, with our esteemed shareholders. Strategic Business Unit In 2009, an important step was taken at Yıldız Holding, to which we are affiliated, and a Strategic Business Unit, which is responsible for gathering interrelated companies and organizations under the same roof and managing them, was set up. In this respect, a Vice Presidency (Biscuits-Cakes) was established under the Ülker Division. Our Company has been restructured under this division with all the other related organizations. With this change, our target is to increase our competitiveness by creating synergy and functioning in a more coordinated manner. Institutionalization Efforts Our institutionalization efforts continue at a fast pace. Under the guidance of the Corporate Governance, Audit and Risk Committees, established within this scope, Corporate Risk Management efforts were initiated in our Company in 2009 and began to be implemented in April The aims of the Corporate Risk Management are to provide early diagnosis of factors that may endanger the existence, development and continuity of our Company, to take the necessary precautions, to create and implement solutions, and to manage all risks. Thus, our Company has taken another important step towards realization of the Corporate Governance Principles, namely justice, transparency, accountability and responsibility. Production and Capacity Utilization Despite the severe crisis conditions in 2009, production reached 120,621 tons in total in our Istanbul and Ankara factories. Capacity utilization was 76% in the Istanbul factory and 69% in the Ankara factory. With these results, our capacity utilization was 72% overall. 18 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

21 One of the precautions we have taken against the global crisis is to review the investments that are not urgent. Heading this precaution, our Company made investments amounting to TL 8.5 million in 2009 in the areas of capacity increase, renewal, modification of production lines and increased efficiency. TL 1 million of this was in the Topkapı Factory and the remaining TL 7.5 million in the Ankara Factory. Constant Efficiency The Lean Production Project, which was initiated in our Ankara Factory in 2007, continued throughout 2009 in both the Ankara and Istanbul factories with new facilities. Its target is to simplify all processes and to prevent unnecessary expenditure in our Company. In 2009, we worked on 68 new projects in total in the R&D departments of our Istanbul and Ankara factories and ten of these projects were turned into products and offered to the market. Among our efforts within the scope of constant efficiency are best practice share applications between companies sharing the best practices to increase operational efficiency, cost reduction as a result of cooperation with suppliers, and rewarding improvement efforts in production-efficiency parameters. R&D and New Products As always, developing products in accordance with the expectations of our customers and consumers was among our main targets in In 2009, we worked on a total of 68 new projects in the R&D departments of our Istanbul and Ankara factories and 10 of these projects were turned into products and offered to the market. Hero Baby İyi Geceler Baby s Biscuit, Gogly Milk Baby s Biscuit, Mini Halley, Rondo Dark, Mavi Yeşil Cacao Cream Biscuit and Mavi Yeşil Wholewheat Cinnamon Biscuit are just a few of our new products introduced to the market. 19

22 Message from the General Manager The Lean Production Project, which was initiated in our Ankara factory in 2007, continued throughout 2009 with new facilities in both the Ankara and Istanbul factories. Our target is to simplify all processes and to prevent unnecessary expenditure in our Company. Quality, Environment and Social Contribution 2009 was a year in which all the quality certificates in both of our Company s factories were reviewed and renewed with an awareness of occupational safety, high quality production and environmental responsibility. We continued to maintain our high quality production philosophy, confirmed by the quality certificates we received, in every aspect of our operations in The ISO 9001:2000 Quality Management System, ISO Food Safety Management System, TS Occupational Health and Safety Management System, BRC and IFS certificates can be listed as some of the quality certificates that our factories received. As usual, with our awareness of social responsibility, we continued to provide our support to the social responsibility and sponsorship projects realized throughout Turkey in We gave special support to Bingöl Sabri Ülker Soup Kitchen project. Our Employees: Our Most Valuable Asset As of the end of 2009, the number of our employees reached 1,280. Despite the global crisis, we maintained the number of our employees and proceeded with our work without compromising our workforce. Training procedures to increase the personal competencies of our employees, whom we deem our most valuable assets, continued throughout 2009, and 28,229 hours of training were provided in total achieving maximum value in terms of quality and efficiency. We are committed to maintaining our training approach in 2010, focused on personal development and increasing the quality of work of our employees. Mind Cube, a personal suggestion system devised to benefit from the ideas of our employees and applied in our Company for years, was reviewed in 2009 with a new project entitled General Suggestion System. This extends the scope of our personal suggestion system and updates the process, and we believe we shall be able to see its outcome better in Our employees made 1,009 suggestions towards increasing efficiency in all of our processes during 2009, and 236 employees were rewarded for their suggestions. The Smile Group, carrying out activities aimed to increase the motivation and satisfaction of our employees, continued to operate in both our factories. In Industrial Relations Board meetings, regularly held with employee and union representatives, requests and suggestions were made at first hand and information about company policies was shared. This enabled trust, cooperation and empathy with our employees to rise to the highest level. With an application entitled Collective Communication Platform initiated in 2009, we made efforts to understand the requests and expectations of personnel who are not included in the collective bargaining agreements, and to implement solutions on our agenda. Within the scope of this application, half-time work on Saturdays was cancelled in The intention was to increase the time that our employees, especially women workers, whose number is increasing day by day, spend with their families. Also in 2009, the Career Planning 20 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

23 application, with recording on an electronic medium, was initiated within the HR department for launch in 2010, as requested by our employees on our communication platform for career management. Within the scope of the Employee Satisfaction Survey, completed in 2008, we started a Training and Development Program for foremen in Our activities for our employees will continue without even losing sight of our notion that our employees are our most valuable assets. Balanced Scorecard Activities Within the scope of the Balanced Scorecard Project, finalized in 2008 in order to transform our company strategies into operational objectives, the project of transferring the corporate and departmental scorecard to the SAP environment was completed at the end of Hence, from the beginning of 2010, we started to monitor the corporate and departmental scorecards on SAP. We shall make Corporate Risk Management, which holds an important place in our Company s institutionalization efforts, one of our essential processes. In 2010, we shall continue to work with all our power by dedicating ourselves to keeping our financial and operational results at the highest possible level, following budgetary and strategically planned objectives. Our driving forces are, as they have always been, your support as our valued shareholders and the efforts of our employees. We hope to see many years to come with our shareholders, employees and consumers. With my best regards, Dr. Cafer Fındıkoğlu General Manager Our Objectives for 2010 Our activities will continue in 2010 without compromising our customer-oriented and innovative approach and our high standards of quality and hygiene. We shall finalize the projects foreseen for the year 2010 in order to realize our strategic objectives as determined within the scope of our strategic plans. We will proceed with our efforts for transformation to the Lean Production philosophy, which we aim to extend to all of our facilities. 21

24 The Food Industry Worldwide and in Turkey After high expectations following 2007 and 2008; the long awaited 2009 finished as a very difficult year. In an environment where interest rates decreased and credit facilities were extremely restricted, the prices of the agricultural products increased due to global demand-supply disequilibrium. The Food Industry Worldwide The negative events in the economy, which started in the US and were observed in the global finance markets in the last quarter of 2008, increased in 2009 and affected the real economies. In 2009, when unemployment increased and demand continually decreased due to the global crisis, especially in the US, the EU member states and Japan supplied large sums of funds to the market in order to save their own financial spheres. In the food sector, the economic crisis, which began with the extreme increase in the prices of raw materials for food in 2007, escalated to recession in the first quarter of After high expectations following 2007 and 2008; the long awaited 2009 finished as a very difficult year. Besides the major movements of capital, weather conditions and investments delayed by the crisis caused a supply shortage. Under these circumstances, the financial investors headed towards agricultural food products, also called the soft commodities, which caused an increase in prices. In an environment where interest rates decreased and credit facilities were extremely restricted, agricultural products became a center of attraction. In the last days of 2009, the price of cacao beans increased by 28.6%, sugar increased by 165.1%, coffee increased by 30.2%, tea increased by 83.5% and orange juice increased by 88.8% when compared to the beginning of the year. Most of these products are produced in a few developing countries. Interruption of supply due to the causes such as the credit crunch because of the economic crisis, as well as political disturbances in these countries, negatively impacts the prices. 22 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

25 The Food Sector in Turkey In Turkey, which was affected by the global crisis, manufacturing industry shrank by 10.9% in 2009; whereas the food and beverages industry finished the year with a shrinkage of 1.3%. In the food sector, where product prices failed to reflect the rise in the prices of raw materials, costpush inflation was seen and the companies had to give up their profits. Besides the worldwide increase in the prices of unprocessed foods, the GMO Regulation enacted in Turkey on October 26, 2009 caused price movements especially in inputs based on import. Ups and downs in the prices of milk and meat were also discussed at length in the food industry Ülker products began to be packed in cellophane-based packaging. We hope that 2010 will be a year when relative stability will be assured with the positive effects of emergence from the global crisis, and that demand will increase, the installed capacity will be reasonably utilized and raw material prices will be stabilized. 23

26 24 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

27 Activities in 2009 Despite the severe crisis conditions in 2009, production reached 120,621 tons in total in our Istanbul and Ankara factories. Capacity utilization was 76% in the Istanbul Factory and 69% in the Ankara Factory. With these results, our capacity utilization was 72% overall. Surveys conducted show high levels of loyalty to the Ülker brand. In the Brands 2008 survey by AC Nielsen, Ülker ranked first in the biscuits category, and second and third in the categories of the brands that consumers feel closest to and top-of-the-mind firms and brands, respectively. 25

28 Ülker Bisküvi in 2009 In factories owned by Ülker Bisküvi, all of the production processes incorporate high technology. Most of the boxing, box handling, packaging and storage processes providing logistical support are carried out using robot technology and automation. The Risk Committee was established under the scope of the Corporate Governance Principles published by the Capital Market Board and the Articles of Incorporation of the Company, and work was initiated to establish a Corporate Risk Management System. Best practice share application between companies sharing the best practices continued throughout the year. Collective Communication Platform meetings were held with all employees. Business analysis and permanent staff work were implemented to increase operational efficiency. Industrial Relations meetings were held with the workers union. 26 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

29 We are working for a happy moment when you understand that laugh is everlasting 27

30 Production and Capacity In the Topkapı and Ankara factories of Ülker Bisküvi, equipped with the highest technology, 120,621 tons of biscuits were produced in total in The total quantity of the Company s sales amounted to 120,137 tons. The market share of Ülker Bisküvi, which carries out its production in factories in Topkapı/Istanbul and Ankara, is 53.3%. Besides these two main factories, Ülker Bisküvi also conducts production activities in the facilities of its subsidiaries, namely İdeal Gıda/Gebze and Biskot Gıda/ Karaman. In the Topkapı and Ankara factories of Ülker Bisküvi, equipped with the highest technology, 120,621 tons of biscuits were produced in total in Biscuits, chocolate covered biscuits and wafers are produced in 9 facilities in the Topkapı Factory and in 14 facilities in the Ankara Factory. Topkapı/Istanbul Factory The Topkapı Factory operated at high capacity in 2009, producing 48,655 tons of biscuits, and sold net 48,889 tons of biscuits. The actual average capacity utilization of the Factory, operating in three shifts, was 76% in In factories owned by Ülker Bisküvi, all of the production processes incorporate high technology. Most of the boxing, box handling, packaging and storage processes providing logistical support are carried out using robot technology and automation. Main Products Produced in the Topkapı Factory Pötibör (plain, with cacao, double baked) Çizi (with sesame seed) Aro Kraker Haylayf Çubuk Kraker Hanımeller (with hazelnut, chocolate chips, özbesi, negrita) Bebe Bisküvisi (iyi geceler, googly, with honey-banana) Biskrem (with chocolate, apple, fig, dark, hazelnut cream, duo) 28 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

31 Ankara Factory The Ankara Factory, which operates in an 80,000 m 2 enclosed space located on a total area of 110,000 m 2, has the biggest biscuit production and storage complex in the Middle East. For more than 39 years, the Ankara Factory has brought dynamism to the economy of the region. The Ankara Factory s 2009 production quantity was 71,966 tons and its net sales quantity was 71,248 tons. The actual average capacity utilization of the Factory, operating in three shifts, was 69% in In 2003, Ülker Bisküvi merged with Anadolu Gıda, taking important steps towards further institutionalization. Main Products Produced in the Ankara Factory Pötibör (plain, two colors) Krim Kraker Probis Çokoprens As Kraker Başak (plain, with chocolate, linseed) İkram (with chocolate, hazelnut, cheese) Canpare Rondo (with banana, strawberry, plain, coconut, orange, raspberry, cheesecake flavors) Altınbaşak Wafers (with hazelnut, banana, orange, strawberry, coconut, vanilla, cacao, chocolate flavors) Halley Kat Kat Tat Çubuk Kraker Alpella Ring Mavi Yeşil branded products Hasat Hanımeller Kurabiyem (with hazelnut, chocolate) 29

32 Marketing and Distribution Thanks to its powerful distribution network, customers can easily access Ülker Bisküvi products at anytime and anywhere. Ülker s distribution network has been specially designed on every level to respond to the demands of its consumers in the best possible manner. With two weeks production, Ülker Bisküvi and its subsidiaries are capable of providing a biscuit to everyone in the world. The domestic marketing and distribution of the biscuits and chocolate covered products of Ülker Bisküvi and its subsidiaries are performed by its subsidiary, Atlas Gıda Pazarlama, as well as Yıldız Holding companies Pasifik Pazarlama, Esas Pazarlama, Merkez Gıda Pazarlama and Rekor Pazarlama. Atlas Pazarlama performs nationwide distribution through its Regional Offices in Istanbul, Ankara, Izmir, Thrace region, Bursa, Samsun, Gaziantep, Adana and Erzurum, with 129 experienced, reputable and efficient distributors across Turkey. Atlas Pazarlama provides regular and high quality service to 181,000 points of sale weekly, with a total of more than 1,150 delivery vans. This powerful distribution network ensures that customers can easily access Ülker Bisküvi products at anytime and anywhere. Ülker s distribution network has been specially designed on every level to respond to the demands of its consumers in the best possible manner, in accordance with prevailing market conditions. 30 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

33 2007 The Company name was changed from Ülker Gıda to Ülker Bisküvi in 2007 as part of a move to provide a clearer definition of its field of business. 31

34 Investments In 2009, Ülker Bisküvi made investments in the Topkapı/Istanbul and Ankara factories in the areas of new facility establishments, capacity increase, renewal, modification of production lines, efficiency increase, hygiene and storing. Ülker Bisküvi fully achieved the investments foreseen in its strategic development plan in The common objective of the investments is to reinforce Ülker Bisküvi s leading position in the market, increase customer satisfaction, improve product quality, and contribute to efficiency and productivity so as to make the cost basis more competitive. In 2009, Ülker Bisküvi made investments in the Topkapı/ Istanbul and Ankara factories in the areas of new facility establishment, capacity increase, renewal, modification of production lines, efficiency increase, hygiene and storing. Whilst an investment in the amount of TL 1 million was made in the Topkapı Factory for enlargement and modernization purposes, the investment made in the Ankara Factory amounted TL 7.5 million. 32 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

35 We are working for a happy moment in which your life is at just the right consistency. 33

36 Subsidiaries Benefiting effectively from different Group companies, each holding a leading position in its sector, Ülker Bisküvi, besides the biscuit facilities in different cities in Anatolia, has formed a dynamic value production process that includes all the branches of the food industry, such as obtaining good quality flour, butter and packaging. Ülker Bisküvi Sanayi A.Ş. Subsidiary List as of 12/31/2009 Subsidiary Share (%) Field of Business Birlik Pazarlama 99.0 Flour production İdeal Gıda San. ve Tic. A.Ş Biscuit and cracker production İstanbul Gıda Dış Ticaret A.Ş International marketing Atlas Gıda Paz. San. ve Tic. A.Ş Domestic marketing Birleşik Dış Ticaret A.Ş Foreign trade Biskot Bisküvi San. ve Tic. A.Ş Biscuit and chocolate covered biscuit production G-New Inc. (Godiva) 25.2 International investment Godiva Belgium BVBA (Godiva) 25.2 Chocolate production and marketing PNS Pendik Nişasta A.Ş Starch and starch-based sugar production Netlog Lojistik A.Ş Logistics and transportation BİM Birleşik Mağazalar A.Ş Retail Sağlam GYO A.Ş REIT Fresh Cake A.Ş Cake production Besler Gıda A.Ş. 7.0 Oil and margarine production Tire Kutsan A.Ş. 1.9 Paper and cardboard box production 34 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

37 Birlik Pazarlama Birlik Pazarlama, one of the most important subsidiaries of Ülker Bisküvi Sanayi A.Ş., was incorporated in Birlik Pazarlama, which produces not only flour from every kind of grain based on the needs of the Group but also pasta, semolina, packaged wheat flour and rice flour for the market, moved its headquarters to Ankara in Located on the same site as Ülker Bisküvi s Ankara Factory on an area of 37,000 m 2, Birlik Pazarlama operates in an enclosed area of about 24,000 m 2. Together with three flour factories in Ankara, Birlik Pazarlama has a factory processing soya, oats and other grains and a rice plant, a Branch Office and a flour factory in Karaman, in addition to a rented pasta, flour and semolina factory in Hendek. Birlik Pazarlama has undertaken contractual planting in cooperation with agrarian research institutes, for the improvement, development and increased cultivation of varieties of wheat necessary for biscuit production, currently not sufficiently produced in Turkey Within the scope of Corporate Governance, the Articles of Incorporation were amended and Corporate Governance and Audit Committees were set up. At the beginning of 2008, Ülker Bisküvi took part in the acquisition of the premium chocolatier brand, Godiva, with a 25.23% share. Birlik Pazarlama holds TSE (Turkish Standards Institute) ISO-EN 9000, TSE TS and ISO certificates. In 2007, the HACCP certificate was replaced by ISO certificate. The subsidiaries of Birlik Pazarlama include Hero Gıda, PNS Pendik Nişasta and Birleşik Dış Ticaret. The Company s actual wheat processing capacity is 930 tons per day in total, including 730 tons per day in Ankara and 200 tons per day in Karaman. Birlik Pazarlama s rice processing capacity is 19 tons per day, its soya processing capacity is 7.5 tons per day and its oat processing capacity is two tons per day. In a survey published by the Istanbul Chamber of Industry in 2008, Birlik Pazarlama was listed as 427 th among the top 500 industrial enterprises in Turkey. With a total grain storage capacity of 35,000 tons, Birlik Pazarlama will continue its investments in 2010 to ensure higher quality production with more competitive prices. 35

38 Subsidiaries Having actively engaged in the production of biscuits and crackers since 2000, İdeal Gıda s capacity utilization in 2009 was 86%. Ideal Gıda, which continuously invests to develop its equipment pool and facilities and increase its production capacity, raised its biscuits and crackers production from 30,654 tons in 2003 to 43,902 tons in İdeal Gıda İdeal Gıda, which was established in the Gebze Organized Industrial Zone in 1997, operates on an area of 85,000 m 2 that includes 41,000 m 2 of enclosed space. İdeal Gıda has actively produced biscuits and crackers since 2000 and its capacity utilization was 86% in In İdeal Gıda, which has 433 employees, the production is carried out for four main product groups for domestic and international markets in nine production lines. Ideal Gıda, which continuously invests to develop its equipment pool and facilities and to increase its production capacity, raised its biscuits and crackers production from 30,654 tons in 2003 to 37,770 tons in 2004 and to 41,338 tons in The total production in 2006 was 37,337 tons, due to the fact that production had to stop for a month during the conversion of ovens to natural gas. The production in 2008 reached 42,166 tons, up from 40,205 tons in 2007, and it was 43,902 tons in The production is carried out in compliance with ISO , ISO 22000, ISO , OHSAS , BRC and IFS certification standards. İdeal Gıda was listed as 395 th in the Istanbul Chamber of Industry list of Turkey s Top 500 Industrial Enterprises in ÜLKER BİSKÜVİ ANNUAL REPORT 2009

39 İstanbul Gıda-Birleşik Dış Ticaret İstanbul Gıda was established in 1987 to undertake the international sales and marketing of all Ülker products. Birleşik Dış Ticaret undertakes exportation of the products of other brands. Established in 1999, Birleşik Dış Ticaret has a branch in the Atatürk Airport Free Trade Zone. Both of these companies finished 2009 with turnovers close to those of İstanbul Gıda and Birleşik Dış Ticaret, with the powerful sales and distribution channels they own, export Ülker products to more than 80 countries, including the Balkans and the Middle East in particular, and also the Turkic Republics, the United States, Europe, Africa and the Far East. İstanbul Gıda-Birleşik Dış Ticaret, which ranked 303 rd in the 500 Top Private Companies of Turkey in Capital magazine, made optimization efforts in order to reduce the logistics costs and thus ensured an increase of efficiency The article entitled Don t integrate your acquisitions, partner with them published in the December 2009 issue of Harvard Business Review, one of the most prestigious academic publications in the world, presented the process that followed Ülker s purchase of Godiva as a successful business model. An advertising campaign was launched for the 65 th anniversary celebrations of Ülker with the concept Happy Moments. 37