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SABANCI HOLDING
ANNUAL INFORMATION SHARING MEETING
25th of February, 2010
Agenda
• Economic Outlook
• Sabancı Holding 2009 Review
•2010 & Future
• Financial Results
2
Global Economy Went Through a Difficult Period in 2009
• Global economy shrank for the first time since WW2
 Recession in developed and non-Asia Pacific emerging economies
 Slower growth in Asia Pacific emerging economies
 Speed of manufacturing shift in some industries accelerated
• After 4 consecutive quarters of negative growth, global economy is back in a
growth trend
• Growth projections for 2010 and 2011 are being revised upwards
• However, structural problems, especially at developed economies, bear risks for
sustainable growth in economic activity
 Increasing budget deficits
 High unemployment rates
 High household and corporate debt
3
Global economy, growing around 3.3% annualy since
1980, shrank for the first time since WW2
Global Economy Annual Growth Rate – IMF Expectations (%, 1980-2009E)
8%
GDP % Real
growth
6%
Average growth
since 1980 : 3.3%
4%
2%
0%
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
Global average
(2009)
-0.8%
-2%
Source: IMF World Economic Outlook Database (January 2010)
4
Global Economic Activity Has Shown Signs of Growth in
Last Quarter of 2009
Global Economic Growth for the Last 6 Quarters (%)
Global Economy
Developed Economies
Developing Economies
6.5%
4.3%
3.3%
2.6%
1.7%
1.3%
‘08
4Q
‘08 -0.2%
3Q
‘09
1Q
‘09
2Q
‘09
3Q
0.3%
‘09
4Q
‘08
3Q
‘08
4Q
‘09
1Q
‘09
2Q
‘09
3Q
‘09
4Q
-0.7%
0.4%
‘08
3Q
‘08
4Q
‘09
1Q
1.0%
‘09
2Q
‘09
3Q
‘09
4Q
-1.4%
-2.7%
-2.4%
-2.2%
-3.4%
-4.6%
Source: IMF World Economic Outlook Database (January 2010)
-4.4%
Growth driven by Asia
Pacific countries
5
Global Crisis Accelerated
The Speed of Manufacturing Shift In Some Industries
Example: Automotive
Share of developed economies and emerging
economies in global automotive production
%
18%
82%
1995
Source: OICA
30%
45%
Developing
economies
55%
Developed
economies
70%
2005
• Shift to emerging economies
in automotive production
accelerated in the last four
years, partly due to the global
crisis
−Increasing demand in
developed economies
−Lower cost base
• During this period Turkey
increased its share in global
automotive production from
0.5% to 2%
• Automotive production in
developed nations decreased
by 35-40 in 2009
• Decrease in developing
nations has been lower
2009B
6
In the Mid Run Developing Economies Expected To
Continue To Drive Global Economic Activity
Developed Economies
Growth Expectations
GDP % Real
Growth
Developing Economies
Growth Expectations
GDP % Real
Growth
6,0%
2,1%
2,4%
2010E
2011E
Pre-crisis 10 year average growth:
2.7%
Source: IMF World Economic Outlook Database (January 2010)
2010B
6,4%
2011B
Pre-crisis 10 year average growth:
5.8%
7
However, Structural Problems, Especially At Developed
Economies, Bear Risks For Sustainable Growth
Budget Deficits / GDP Ratio (%)
12,7 12,5
11,6
Unemployment Rate (%)
2008
2009E
10,0
9,6
11,2 11,0
7,8
9,3
7,2
8,3
8,0
5,9
5,0
3,5
3,4
2,7
6,5
5,5
5,1
4,9
4,4
5,7
8,0
6,9
7,3
5,9
2006
2007
2008
2009 3Q
5,5
4,03,84,0
3,4
2,7
0,5
GRE
Ire
UK
USA
SPA
POR
FRA
ITA
GER
USA
Euro Zone
Source: US Federal Reserve, Eurostat, Japan Central Bank, IMF World Economic Outlook Database (January 2010)
UK
Japan
8
Turkish Economy Also Affected by the Global Economic
Crisis
• Turkish economy, affected by the global downturn, has experienced
negative growth for four consecutive quarters
• Stimulus packages and manufacturer campaigns announced during the
second quarter led to a improvement in the economic activity
• Growth will vary by industry
• Similar to other economies, increasing budget deficits and high
unemployment risks are barriers against sustainable growth
9
Turkish Economy Shrank by 8.4% in the First 3 Quarters
of 2009
Turkish Economy Growth Rates (%, 2000 – 2009 first 9 months)
GDP % Real
growth
15%
2000
6.8%
2001
-5.7%
2002
6.2%
2003
5.3%
2004
9.4%
2005
8.4%
2006
6.9%
2007
4.7%
2008
0.9%
2009 9
months
-8.4%
12%
9%
6%
3%
0%
3Q
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
-3%
-6%
-9%
-12%
-15%
Source : TUİK
10
Stimulus packages and manufacturer campaigns
announced during the second quarter led to a
improvement in the economic activity
CNBC “Consumer Confidence Index” Evolution
(2007 – 2009)
White Goods Sales (2008-2009)
Million units
2008
2009
2,5
-%5
Index
120
2,3
Tax decrease and
campaigns
2007 average:
97.1
2008 average:
66.2
2009 average:
87.5
100
%10
1,5
1,4
80
-%25
1,1
0,8
60
Tax decrease and
campaigns
40
January-March
March-June
June-November
20
Source : CNBC, TÜRKBESD
11
Post Crisis Recovery Will be Faster for Some Industries
Electricity Consumption
Electronics Retailing
Twh
Billion TL
6%
Annual
growth
198
2008
Food Retailing(1)
193
203
209E
2010E
Billion TL
9%
Annual
growth
216
232
9,0
8,0
6,9
2011E
2012E
8%
Annual
growth
2008
(1): Including both organized and unorganized retailing
Source: TEİAŞ, Teknosa, Planet Retail, Sabancı Analysis
2009E
7,4
2010E
8,1
2011E
2012E
161
161
2008
2009E
174
2010E
188
2011E
200
2012E
12
For Other Industries Despite Growth, Reaching to Precrisis Levels Will Take Time
Local Tire Sales
Million
units
16,1
2008
Local Cement Consumption
~4+
1414.5
15
2009B
2010B
Source : TÇMB, Sabancı analysis
Annual
growth
15,5
16,0
2011B
2012B
Annual
growth
Billion TL
4%
9,5
2008
8,0
8,0
2009B
2010B
9,0
9,0
2011B
2012B
13
High Budget Deficits and Unemployment Rates Are Key
Issues That Need to Resolve for Sustainable Growth in the
Economy
Budget Deficit (Billion TL)
2009 budget target
2009 Actual budget deficit
13.1%
9.4%
10.4 Billion
TL
52.2 Billion
TL
Source: Ministry of Finance, TUİK
Unemployment Rate (%)
2008 June
2009 November
14
Expectations for Turkish Economy in 2010
2009
Real Economic Growth,%
-6,0
3,8
CPI,% year end
6,53
7,5
USD/YTL, year end
1,506
1,58
EUR/USD parity
1,434
1,35
-5,6
-5.0
9.0
11,0
-2,3
-3,7
Budget Deficit/GNP,%
Gov. Bond Interest Rate,
year end,%
Current Account Def./GNP,%
Source: Sabancı Holding
2009t
2010t
15
Agenda
• Economic Outlook
• Sabancı Holding 2009 Review
•2010 & Future
• Financial Results
16
In 2009, Our Companies Focused on Their Core
Businesses and Effectively Managed Capital to Deliver
Cash Generating Profits
2009 Priorities
• Focused mandatory investments to sustain our core businesses
• Effectively managed working capital
• Reduced financial loans
• Closely monitored SG&A expenses
• Generated maximum cash from our operations
17
To Support Our Companies, We Continued To Create
Synergy From Management Platforms
•Continued Group wide 6 sigma projects. We generated 20 million TL
of income from these projects.
•In order to provide a medium for sharing information and experience
among employees and to enhance internal sharing culture, a
functional networking project named “bilsebilse” was initiated.
•Information sharing and learning meetings were held throughout the
holding company regarding effective management and execution
during times of crisis.
18
“Sabancı Altın Yaka” Awards, Initiated For Recognizing
and Sharing of Best Practices Among Group Companies,
Were Given Last Year
• The first “Sabancı Altın Yaka” award
ceremony took place in 2009, with the
purpose of sharing best practices within
Group companies boosting Holding’s
development and sustainability.
• Awards were given in 6 categories
Categories
Recipients
Excellence
Working Capital
Management
Individual Performance
Management
Lean 6 Sigma
Innovation
Contribution to Success
19
Sabancı Holding Continued To Focus on Sectors With High
Potential
Sabancı Holding Strategic Business Units
Share of 5 SBUs In Total Investments
Finance
4%
34%
Energy
96%
Retail
66%
Cement
Tire
Reinforcement
/ Automotive
Total
investment
for 5SBUs
2004
2009
326M$
1,573M$
20
Review of 2009 - I
Sector
2009 Highlights
Energy
• BEDAŞ operations with 3 million customers taken over in January 2009.
• Signed turn key solution for Çanakkale Wind Farm with 30MW capacity
• Total portfolio capacity increased to 3.200MW (455MW of installed capacity and
2.745MW of licensed projects
Bank
• Akbank continued its healthy growth without compromising from its risk
management and asset quality
 Capital adequacy ratio of 20.6%, one of the highest among global
banks(1)
 Net loss provision of 3.9%, significantly below sector average(1)
Sigorta
• Aksigorta reorganized its management team and organizational structure in
order to be more profitable and competitive. Sabancı Holding bought Aksigorta
subsidiaries to focus management on the performance of the company’s core
insurance business
• Avivasa continued to be the market leader in the pension funds market with
22% market share in terms of AuM
1: As of September 2009
21
Review of 2009 - II
Sector
Retail
Cement
Tire / Tire
reinforcement
/ Automotive
2009 Highlights
• Teknosa market leader in customer awareness and trust grew its market
share by 4% in a shrinking market. The company reached 244 stores by
the end of the year.
• CarrefourSA achieved its biggest sales area growth by opening 4
hypermarkets and 54 supermarkets, reaching 360,000m2 of sales area.
• Although the Turkish cement demand decreased substantially with 30%
idle capacity in the industry, Sabancı Group cement companies increased
their exports by 50% exporting 4.5 million tons of clinker and cement while
maintaining their market leader position
• Both of our companies continued their investments along the value chain
• Temsa completed its product range by entering the public transportation
segment with its “Avenue” model, designed by Temsa R&D
• Sale of our shares in Toyotasa to ALJ Lubnatsi completed. (143M USD)(1)
1: Enterprise value shown as sum of equity value and debt. Does not show closing adjustments
22
Agenda
• Economic Outlook
• Sabancı Holding 2009 Review
•2010 & Future
• Financial Results
23
Carbon Economy And Environmental Sustainability Will Be
A Necessity In The Future
Global CO2 emission forecasts from energy
production
Gt
Reference
Scenario (4-6oC
increase in global
climate)
Carbon economy
and sustainability
will reshape
individuals daily
habits, and
countries’ and
companies’ focus on
sectors and
management
processes.
450 ppm1 scenario
(2oC increase in
global climate)
(1): PPM= “Parts per million”, an indicator that shows CO2 level in atmosphere; In the base scenario, this number is expected to reach
1,000 by 2030 Source: International Energy Agency “World Energy Outlook 2010”
24
In the Future, We Will Seek The Sustainability of The
Environment & The Society To Create Value For All Of Our
Stakeholders
Sustainable Development Cycle
Economy
Society
• We are evaluating sustainable new
business opportunities that will
create value for all of our
stakeholders and the environment
Sustainable
Developmen
t
– Renewable Energy Resources
o Hydroelectric
o Wind
– Waste Management
o Solid
o Liquid
Environment
25
In Addition to Electricity Production, We Are Seeking
Other Opportunities Within Wind Value Chain
Significant increase in Turkish wind power installed
capacity is expected within next 10 years
~9,00010,000
MW
~11,50012,500
Growth to ~10 times the current value is possible in
wind turbine market resulting from increase in capacity.
10,00011,000
Million $
~2,500
~1,000
777
Existing
installed
capacity
Licensed Additional
Total
but unbuilt capacity
expected
capacity expected to additional
be licensed new turbine
capacity
We are investigating strategic opportunities in Turkey and regional markets
Source: EPDK, TÜREB, Sabancı Holding analyses
26
In line with EU Alignment Process, Proper Disposal Of
Solid Waste Will Require Significant Investment
Waste disposal ratios by country
%
Unprocessed disposing
• Conrolled landfill
• Uncontrolled landfill
• Dumping to sea, river, lake
Processed disposing
• Recycling
• Inceneration
• Compositng
• 70% of the waste in Turkey is disposed without any form of processing
• EU member states by 2020 need to achieve 50% re-use and recycling of waste materials from households
70% from non hazardous construction and demolition waste
• We are seeking opportunities within solid waste management area to ensure the sustainability of the
environment
Note: Sold or donated waste in Turkey are assumed to be processed
Source: The Boston Consulting Group, TUİK
27
We Are Also Giving High Priority to Institutional
Environmental Issues
GROUP and the Group Companies Work Together
INSTITUTIONAL ENVIRONMENT PLATFORM: Sabancı Group CEO (The President),
Human Resources Group President, Strategy & Business Development Group President,
Institutional Investor Relations Director, SA Environment Group Head
ENVIRONMENT GROUP: Sabancı Group, 13 companies, 34 members, 5 subgroups
(Waste Management, Air Quality , Water Management, Chemicals, Industrial Pollution)
• Pre-screening: Pro-active participation in EU conformity process
• Current Inventory: Assessment of each companies’ current situation
• Projects: Clean production applications, waste management practices
ENVIRONMENT PORTAL
Online tracking of our environmental performance for each of our Group companies by using
“Global Reporting Initiatives” protocols
28
Agenda
• Economic Outlook
• Sabancı Holding 2009 Review
•2010 & Future
• Financial Results
29
In 2010, Our Companies Will Be Back On Track For
Profitable Growth
Focus on mandatory
investments
Optimize working
capital management
Monitor SG&A
expenses
Cash generation priority
We expect the uncertainty in the economy in 2010 to be
comparatively lower than the previous year
30
In 2010 Consolidated Net Revenues is planned
to Grow by %6
Kons satış
(Billion TL)
19
2008
21
%2
20
2009
%6
2010B
31
In 2010, Consolidated Operational Income is Expected to
Reach 4.0 Billion TL
4.0
(Billion TL)
3.9
%3
%47
2.7
2008
2009
2010B
32
In 2010 Planned Exports Amount to $1.1 Billion
İHRACAT
İTHALAT
(Billion $)
1.4
1.1
1.2
1.1
0.9
2008
0.8
2009
2010B
33
In 2010 Planned Investment Amount $1.6 Billion
(Billion $)
1.6
%46
1.1
0.8
2008
%40
2009
2010B
34
Our Total Assets Reached 105 Billion TL
by the End of 2009
(Billion TL)
Toplam
101
105
%4
%28
79
2007
2008
2009
35
In 2010 The Number Of The Personnel
Will Be Around 58,000
58,000
55,200
50,900
2008
%5
%8
2009
2010B
36
In 2010, We will Continue to
Create Value for All of Our
Stakeholders
Thank You