Sabancı Holding’s Annual Sharing Meeting

26.02.2018

GÜLER SABANCI, THE CHAIRMAN OF SABANCI HOLDING: “GLOBAL ECONOMIES ENTERED A PROMISING PERIOD OF GROWTH”
MEHMET GÖÇMEN, THE CEO OF SABANCI HOLDING: “AS SABANCI, WE ARE PLANNING TO GROW TWO TIMES MORE THAN TURKEY”

Sabancı Holding announced 2017 financial results. Accordingly, 2017 combined net sales increased by 22 percent and reached 65 billion 600 million TRY and consolidated net profit increased by 31 percent and reached 3 billion 481 million TRY. The combined EBITDA grew by 34 percent and reached 15 billion TRY.

Sabancı Holding held a press conference to report its 2017 activities and explain 2018 targets and projects, and Güler Sabancı, the chairman of Sabancı Holding, and Mehmet Göçmen, the CEO of Sabancı Holding, attended to this press conference. Sabancı Holding announced its 2017 financial results. Accordingly, 2017 combined net sales increased by 22 percent and reached 65 billion 600 million TRY and consolidated net profit increased by 31 percent and reached 3 billion 481 million TRY. The combined EBITDA grew by 34 percent and reached 15 billion TRY.

Number of techno-optimists increases

“When we look at the world, we can see that 2017 was the restart of growth trend despite the global uncertainties created by the geopolitical and political events. In 2017, the global economy achieved the highest growth rate of the last 10 years. The developed countries are expected to have higher inflation rates but gradual stabilization of the money policies is on the agenda. The positive growth trend continued all around the world starting from the beginning of this year but stock exchanged experienced a relatively crucial fall. This shows us that growth performance of the real economies and developments in the financial markets might sometimes be in very different directions. There is a wide range of ideas, scenarios and uncertainties about the future and a recent debate; can technology be opportunity or a threat? The debate weighs in on opportunity. The number of people defining themselves as “techno-optimists” increases day by day. The techno-optimists argue that new technologies now trigger the long-awaited positive increase in efficiency and new business models. As a result of these, it is clear that global economies have entered a “bright” growth era” said Güler Sabancı, the chairman of Sabancı Holding, at the press conference.

Our country is the fastest growing OECD country

If we take a look at our country, we can see that global growth trend had positive reflections on our country and this was one of the best news of 2017. The growth rate increased by 11.1 percent on the Q3 according to year on year figures and we achieved the fastest growth rate of the last 6 years. We are the fastest growing OECD country. In 2017, exportation had a good performance and marked 158 billion dollars. This positive result fuels our economy but we have also witnessed inflation and high real interest rate increases in 2017! We care about taking necessary actions for assuring economic stability and assuring permanent growth with low inflation rates. Hence, we welcome Mr. Prime Minister’s announcements highlighting and prioritizing the fight against inflation. On the one hand, we are hopeful because of the high growth figures but on the other hand we profoundly experience the problems arising from our region. Our hearts are with the brave soldiers deployed for the Operation Olive Branch, a military operation testifying our country’s legitimate fight against terrorism. May God rest the souls of our causalities and I extend my condolences to the grieving families. We sincerely hope that the harmony and permanent peace can be restored in our region as soon as possible.

We are running the new stage by focusing on technology and digitalization

Today, the world revolves around digitalization; we are having a digital revolution. We are living in the midst of an extraordinary transformation from industry 4.0 to artificial intelligence, big data to robotics. This has the greatest impact on industry and production. Sectors intertwine, boundaries are removed and redefined. In such a world, as Sabancı, we are running towards a new stage. We define this new vision as “Sabancı of New Generation” and of course, we focus on technology and digitalization. For us, this vision means pioneering change at each aspect touched by the digital transformation, from value added production to new lines of business. Digitalization is not limited to improvement of what we have. Soon, we will implement a roadmap compatible with the digital world.

While pursuing our goals, we had a good start in 2018. In the recent years, our Group significantly invested in and worked very hard on Enerjisa, which was offered to public as the sector leader, and we were very pleased to receive the record breaking demand for it. Furthermore, the resources we earned through offering the energy distribution to public are invested in our energy generation company since we have faith in our country’s future and sector potential. Our goal should be the public offering of Enerjisa Generation Company. This will allow us to transparently share the value we create and to assure a healthier and more durable Group structure”.

“Dynamic Portfolio Management” Approach of Sabancı

The CEO Mehmet Göçmen gave a speech at the press conference and reported that they completed and started to implement the strategic roadmap of Sabancı in 2017. Mr. Göçmen described this new roadmap of Sabancı as follows: “We reviewed the portfolio we manage with a strategic approach and redefined the roles of our companies in this portfolio. This year, we formed the infrastructure of a high-performance culture that will feature long term return rather than short term return by focusing on creating value for all our stakeholders. We have started to reconstruct Sabancı as “Sabancı of New Generation but we do not compromise on our values that brought us success in the past.

Today, we are looking to future with “dynamic portfolio management” approach based on four pillars. This approach is based on the ‘transformation of current businesses, effective portfolio management, technology and new market investments in our current businesses and focus on new lines of business created by digitalization and data’”.

Dividend Policy

Mr. Göçmen noted that the dividend policy of Sabancı Holding has increased and added: “The dividend potentials of our Group of Companies have increased when Enerjisa Energy’s dividends became available for distribution. Based on our “value creation” mission, we revised our policy. Hence, the ratio of dividends distributable in 2018 increased by 50 percent when compared to the ratio in 2017”.

Sabancı aims to grow two times more than Turkey

Mr. Göçmen announced 2018 Goals of Sabancı Holding at the meeting and added “Our companies will implement value creating projects based on data analysis in this period and continue to invest in our existing lines of business and technology”. He also mentioned that they expect to grow two times more than Turkey thorough this approach.

We are investing in “Sabancı of New Generation”

Mehmet Göçmen, the CEO of Sabancı Holding, stated that they have over 60 thousand employees and ongoing operations in 16 different countries all around the world and highlighted that the human resource is the most important asset of Sabancı Group. “When starting this new era, our greatest safety net has been our strong human resources. As one of the key elements of this transformation, we revise all processes involving people and HR practices and thus speed up our cultural transformation. We make investments for evolution of our leaders by taking into consideration both the present and future needs. While diversifying our business models to catch up with the times, we focus on hiring talents fit for the new era and business models and on improving competencies of our current personnel. We care about Group wide maximization of our digitalization and data analysis competencies since they are our primary focuses in the process of carrying out our future roadmap” said Mr. Göçmen.

In the energy segment, we carried out the largest private sector public offering on TRY basis

Mr. Göçmen noted that they successfully completed the energy operations and the process of separating energy operations on line of work basis in 2017 within the framework of market and customer oriented strategies and leaner management strategies. Mr. Göçmen explained that they were pleased to offer Enerjisa Energy to the public in February 2018 for a record-breaking demand, almost equal to 5 times of the offering, after successful completion of the restructuring process, and he added that this step, which is the largest private sector public offering so far on TRY basis, will significantly contribute to the investment climate of Turkey and set an example for all stakeholders doing business in the energy segment for access to financing resources of better quality and he underlined that this will have a pioneering position by supporting institutionalization and improvement of transparency in the sector. Mr. Göçmen reported that the resource they created will be used for increasing the capital of Enerjisa Generation and the goal is to make this company ready for public offering by the end of 2019.

Sabancı has the first Industry 4.0 compatible facilities of Turkey

Besides the public offering of Enerjisa, Mr. Göçmen mentioned in his speech other significant developments experienced in 2017 and said; “We completed a period that was the start of transformation in our Group. We revised our entire portfolio. We worked to find out how we can use the advanced technology and digital platforms to do our business more efficiently.
After the Composite Technologies Excellence Center investment we made with Kordsa, we planned an investment of nearly 100 million US dollars to make offers for buying Fabric Development Inc. (FDI) and Textile Products Inc. (TPI) companies that supply advance composite materials to the US commercial aviation sector since we hope to be one of the most influential players of the aviation sector in terms the composite technologies; we plan to close this buyout in the first quarter, following the completion of official approvals and this investment will allow us to start reinforcing wings and bodies of airplanes after strengthening the tires. This will be one of the first concrete results of our new stage.

In 2017, the Cement segment grew stronger with the new Çimsa factory in Afyonkarahisar and investments completed in Eskişehir and Niğde plants; Akçansa achieved record-high sales figures and launched innovative products. Çimsa Factory in Afyon and Brisa’s second factory in Aksaray, which is a 300-million dollar investment, are designed as Industry 4.0 compatible facilities. Our plants in Afyon and Aksaray cities will be the first and most outstanding examples of the Industry 4.0 in Turkey. Brisa R&D Center, which was certified in 2017 thanks to the incentives received from the Ministry of Science, Industry and Technology and established to commission new products with 100 % Turkish engineering within a shorter period of time, will provide a significant advantage along this path”.

“Temsa continues to work hard on buses for becoming a part of ‘smart cities’ that will soon guide public transportation all around the world. The first electrical bus we manufactured for this purpose was presented to the Mr. President during the Innovation Week” said Mr. Göçmen.

Akbank: the First Turkish Bank selected as the Best Bank of Central and Eastern Europe

Mehmet Göçmen also talked about the banking operations of Sabancı Holding at this meeting and said: “Akbank, the first Turkish Bank selected as the “Best Bank of Central and Eastern Europe”, increased its assets by 16 percent and has assets worth over 341 billion TRY. Akbank achieved a growth rate of 19.5 percent in SME and corporate loans segment and marked a total of 166 billion TRY. Total deposits increased by 15.8 percent and exceed 201 billion TRY”.

Successful results on all business segments

Mehmet Göçmen highlighted that they achieved successful results on all business segments in 2017 and shared 2017 figures individually for all business segments. Accordingly, the Energy Group’s share in the combined turnover was 43 percent, excluding the banking business, and the combined turnover increase was 31 percent according to year on year figures. In terms of the combined EBITDA, the Energy Group grew by 40 percent compared to the previous year.

The Industry Group’s share in the combined turnover was 17 percent, excluding the banking business, and the combined turnover increase was 26 percent according to year on year figures. In terms of the combined EBITDA, the Industry Group grew by 22 percent compared to the previous year.

The Cement Group’s share in the combined turnover was 8 percent, excluding the banking business, and the combined turnover increased by 14 percent according to year on year figures.
The Retail Group’s share in the combined turnover was 21 percent, excluding the banking business, and the combined turnover increased by 5 percent according to year on year figures. In terms of the combined EBITDA, the Retail Group grew by 128 percent compared to the previous year.

The Insurance Group companies’ share in the combined turnover was 8 percent, excluding the banking business, and the combined turnover increased by 40 percent according to year on year figures. In terms of the combined EBITDA, the Insurance Group grew by 72 percent in comparison to the previous year.