2019 6-Month Financial Results INTRODUCTION
Turkey’s the largest private and 100% domestically owned company in defense industry
A global company, intellectual property rights belong to itself and its products are in use on 5 continents as well as in more than 60 countries
Turkish Armed Forces’ leading supplier and exporter of land platforms
Turkey’s market leader in passenger bus segment with a capacity of 25 people and over for the last 10 years
1 1 VISION & MISSION
Vision
Otokar’s vision is to preserve the local and national identity of its products by developing technologies in-house, also to provide continued satisfaction for its clients, employees, and shareholders with total excellence philosophy.
Mission
Otokar’s primary mission is to design, manufacture and market commercial vehicles and various defense industry products with global competitive strength, all developed to meet customer expectations.
2 2 BRIEF HISTORY
1963 1970s 1980s 1990s 2000s 2010s
. Establishment .Turkey’s first .Production of .Military armoured .Merge with the .Establishment of Otokar . Production of interciy bus 4x4 tactical vehicles by own İstanbul Fruehauf Europe (OESAS) buses under .The first Turkish vehicle under desing A.S. .Multi-wheeled armoured the license of Armoured the license of .Turkey’s first .Production of small tactical vehicle family Magirus-Deutz Vehicle Land Rover export of tactical and mid size buses .Production of City Buses production armoured vehicle .Production of .Turkey’s first electric bus Turkey’s first hybrid .Atlas Light Truck .Partnering with .Sakarya bus .Introduced new armoured Koç Group plant/factory .The prime contractor tactical wheeled vehicle, URAL of ALTAY Project .Tracked Armoured Vehicle TULPAR .POYRAZ midibus .Establishment of Otokar Land Systems (OLS) in U.A.E .Turkey’s first electric armoured vehicle, AKREP IIe
3 OVERVIEW
Koç Holding USD 182 MILLION 45% EXPORT REVENUES IN 2019 6M FOUNDED IN 1963 SHAREHOLDING Ünver Holding A.Ş. TL 1.284 MILLION %100 LOCAL CAPITAL STRUCTURE 25% TURNOVER IN 2019 6M Other TL 1 BILLION 30% 10-YEAR R&D EXPENDITURES
5.000 BUSES& 3.700 TACTICAL MINIBUSES VEHICHLES 1.981 552.000 M2 APPROX. 300 EMPLOYEES PRODUCTION AREA SALES&SERVICE NETWORK PRODUCTION CAPACITY 900 (YEARLY) TACTICAL 1.600 ARMORED TRUCKS& VEHICLES LIGHT TRUCKS 1 OUT OF EVERY 3 BUSES SOLD 1.850 TRAILERS& IN TURKEY IN 2018 IS OTOKAR SEMI-TRAILERS
4 HUMAN RESOURCES
5 PRODUCTION PLANT
. 552.000m2 factory with an annual production capacity of 13,050 units and approximately 2000 employees in Arifiye/Sakarya
6 Number of Growth in Export Markets Countries 90 80 70 31 32 60 30 29 50 25 26 26 22 40 20 19 19 30 18 46 49 51 20 15 38 38 38 42 15 32 36 10 10 24 25 10 7 9 18 4 5 6 6 9 9 11 14 0 4 4 4 4 4 4
COMMERCIAL DEFENSE
Export (USD) Segment Based Export 250
200
45% 150
39% 40% 55% 100 72% 63% 57% 53% 65% 89% 77% 71% 55% 50 96% 61% 60% 27% 45% 37% 28% 43% 47% 23% 35% 73% 29% 0 4% 11% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
COMMERCIAL DEFENSE
7 7 AREAS OF OPERATION
2019 6M
Total revenue : 639 mn TL 12 mn TL 503 mn TL 131 mn TL Rev. contribution : 50% 1% 39% 10% Domestic : 113 mn TL 10 mn TL 43 mn TL Armoured 80 mn TL Export : 526 mn TL 1 mn TL 460 mn TL 51 mn TL *Export share : 82% (bus) 11% 91% 39% (spare part) ** Export share : 41% (total) - 36% 4% (total) * The share of exports in the relevant segment vehicle turnover. ** The share of exports in total company turnover.
2018 6M
Total revenue : 281 mn TL 37 mn TL 38 mn TL 132 mn TL Rev. contribution : 58% 8% 8% 27% Domestic : 165 mn TL 36 mn TL 28 mn TL Armoured 102 mn TL Export : 116 mn TL 1 mn TL 10 mn TL 29 mn TL Export share : 41% (bus) 2% (cargo trans.) 26% (armoured) 22% (spare part) Export share : 24% (total) - 2% (total) 6% (total)
8 8 AREAS OF OPERATIONS
• Widest product range in the Turkish bus segment with an • The leading supplier of land defense systems. offering that includes buses from 7 to 18.75 meters with varying passenger capacities suitable for urban, intercity • More than 30.000 vehicles are actively used both in and tourism transportation.. Turkey and also in over 30 allied and friendly countries across continents by their armed forces and security • Exporting buses to more than 50 countries, particularly forces. in Europe. •Products are manufactured on order basis depending on • Working on alternative fuelled vehicles. inteded purposes, capacity and production levels.
• In light truck segment, manufacturing light truck with 8.5- ton weight capacity under license since 2013.
9 9 COMMERCIAL VEHICLES
10 DEFENSE INDUSTRY VEHICLES
11 11 COMMERCIAL VEHICLES
1 OUT OF EVERY 3 BUSES SOLD IN TURKEY IN 2018 IS OTOKAR
1 out of every 3 buses sold in Turkey in 2018 is Otokar
In the all segments in which operates as a market leader, became the most sold brand in Turkey.
Otokar accelerated its export activities, doubled its exports.
Total vehicle park rose to 2.850 levels in key target export markets, namely France, Italy and Spain.
Won the 400 bus tender of the Municipality of Bucharest and signed the largest bus export agreement for Turkish bus brand.
12 12 OTOKAR 2019
Won the bus tender of the Municipality of Bucharest for 400 units of 98.3 million Euro. The tender is featured to be the biggest bus export agreement of a Turkish bus brand. Deliveries started in 2018 and were completed in the first half of 2019.
We won the bus tender of Amman Municipality, received a total of 135 bus orders. Deliveries were completed in the first quarter of 2019.
Vectio C buses serving in Berlin were exhibited at the BUS2BUS exhibition in Berlin, Germany.
13 13 OTOKAR 2019
Otokar has risen up 38 positions this year, in the survey of ISO 500 Top Industrial Enterprises organized by Istanbul Chamber of Industry (ISO) for 51 years. According to 2018 results of the survey where gaint Turkish companies listed, Otokar took 49th place and continued its success.
Sultan Comfort has been renewed. Sultan's Comfort model is equipped with new features. Sultan Comfort, which attracts attention with its low operating expenses, superior performance and durability and has a passenger capacity of 29+1, can now be used in tourism, as well as student and personnel transportation with its new features.
Busworld fair, which was organized for the first time in Almaty, Kazakhstan, Otokar exhibited its Kent city bus suitable for disabled passenger transportation. In addition, users were informed about the wide range of buses from 7 meters to 18.75 meters and its large bus family.
14 14 OTOKAR 2019
About the supply of 8x8 armored vehicles; the first batch deliveries of the export order began at the end of 2018. The project continues in 2019 as planned.
Otokar attended to IDEX 2019 with its ARMA 6x6, COBRA II 4x4 as well as BOZOK turret, KESKIN turret systems.
Otokar participated in LAAD Defense & Security exhibition in Brazil. Otokar promoted its own design and production, different versions of its wide range armoured vehicles from 4x4 to 8x8 and tracked armoured vehicle which are capable of superior mobility, as well as turret systems.
15 16 OTOKAR 2019
Otokar introduced the country's first domestically developed electric-powered armored combat vehicle Akrep IIe at a news conference at the Otokar compound in Sakarya province.
A unique product of Otokar's innovative approach, URAL Special Operations Vehicle (SOV), the new variant of the versatile modular URAL platform, exhibited at IDEF 2019
Otokar, global land defense systems manufacturer of Turkey, exhibited 10 military armoured vehicles and its own design turret systems at IDEF 2019
16 16 BACKLOG
Million Backlog 3000 2720
2500 2165
2000
1500
1000
500 430 367
76 8 0 2013 Year End 2014 Year End 2015 Year End 2016 Year End 2017 Year End 2018 Year End 2019 6M TL USD EUR Total TL Appx.
. The above backlog amounts and deliveries will be held directly by Otokar Otomotiv ve Savunma Sanayi A.Ş., is related to important projects. . Backlog consists of the 8x8 armored vehicle order. . Balance orders amount to US $ 367 million and € 8 million.
17 19 WHY OTOKAR
Leader Strong export performance Significant compliance to corporate governance The most preferred brand in and a global company principles the 25 or more people Increased Corporate capacity bus for the last 10 In addition to its strong export Governance Rating to 94.02 years in Turkey performance, Otokar strengthened its global (9.4 out of 10) as a sign that it presence with its subsidiaries in has achieved significant Sustainable growth and profitability France, Romania and the compliance with corporate Total turnover increased by 13% in the United Arab Emirates. Export governance principles last 15 years, Net profit increased by revenue increased by 21% on average in the last 10 years. Products that are 15% in the last 15 years, with the intellectual property rights annual compound growth rate. Otokar
The share of Otokar design Consistent dividend R & D capabilities and flexible vehicle sales in turnover is distribution production capability 99%. Regular dividend distribution New product development and speed of The number of patents and within the framework of delivery to market. Ability to develop industrial designs has reached profit distribution policy. products according to market needs. to 279.
18 24 FINANCIAL INDICATORS
Balance Sheet (000 TL) 31.03.2019 Current Assets 2.375.810 S.T. Liabilities 1.329.782 Fixed Assets 566.871 L.T. Liabilities 1.126.672 Shareholders Equity 486.227
Total Assets 2.942.681 Total Liabilities 2.942.681
Income St. (000 TL) 2019 6M 2018 6M Change (%) Net Sales 1.283.896 488.159 %163 Gross Profit 478.060 102.188 %368 Operating Profit 266.265 (39.445) %775 Profit Before Tax 189.149 (86.020) %320 Net Profit 195.330 (78.719) %348
. With the effect of exports, 163% increase in total turnover compared to last year’s same period.
19 25 FINANCIAL INDICATORS
Million 1800 REVENUE
1600
1400
1200
1000
800
600
400
200
0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
TL USD
20 18 FINANCIAL INDICATORS
Million Revenue (Quarterly) Million Revenue (Cumulative) 1800 1800 1.679 1600 1600
1400 1400 1284 1200 1200
1000 870 865 1000 809 800 800
600 600 488 419 400 320 400 337 252 236 252 225 167 170 200 147 200 120 66 54 50 78 66 0 0 2018 1Q 2018 2Q 2018 3Q 2018 4Q 2019 1Q 2019 2Q 2018 3M 2018 6M 2018 9M 2018 Year End 2019 6M TL USD TL USD
21 FINANCIAL INDICATORS
Million TL NET PROFIT NET PROFIT Million TL 200 300 175 164 195 250 150 200 125 150 250 100 100 206
75 50
50 0 -28 -11 25 -50 -51
0 -100 -7 2018 2019 -25 1 Quarter 2 Quarter 3 Quarter 4 Quarter Total 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
22 27 FINANCIAL INDICATORS
SALES
Million TL 2.000 1.800 1.679 1.600 1.400 1.200 1.092 1.000 800 600 586 400 200 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Domestic Export Total
. Export revenues amounted to 1 billion 92 million TL, doubled its last year's exports.
23 29 FINANCIAL INDICATORS
Revenue (Quarterly) Revenue (Cumulative) Million TL Million TL 2.000 2.000 1.800 1.800 1.600 1.600
1.400 1.400 1.284 1.200 1.200 1.036 1.000 1.000 865 800 731 800 600 600 400 400 248 200 134 200 0 0 2018 1Q 2018 2Q 2018 3Q 2018 4Q 2019 1Q 2019 2Q 2018 3M 2018 6M 2018 9M 2018 End of 2019 3M 2019 6M the Year Domestic Export Total Domestic Export Total
24 29 FINANCIAL INDICATORS
Sales (000 TL) 2019 6M 2018 6M Change (%) Domestic 246.376 331.870 %(26) q Export 1.037.520 156.289 %564 p Total 1.283.896 488.159 %163 p
2018 2018 6M 2019 6M
Domestic Domestic Export 19% 35% 32% Domestic Export 68% 65% Export 81%
. Otokar domestic sales 25% lower than last year’s same period due to the contraction in domestic market, export sales 563% higher than last year’s same period. . The share of exports in turnover was 81% in the first quarter of 2019.
25 28 FINANCIAL INDICATORS
600 Production & Sales Units 500
400
300
200
100
0 Production Sales Production Sales Production Sales Production Sales Bus Trailer L.Trucks Armoured 2018 1Q 2018 2Q 2018 3Q 2018 4Q 2019 1Q 2019 2Q
Revenue Distribution
L.Truck L.Truck L.Truck 1,4% Trailer Trailer 3,0% 0,9% 1,5% 4,6% Other Other 10,2% 14,5% Bus Other 47,7% 22,1%
Bus 49,7% Bus Tank 57,6% 4,9%
Armoured Armoured Armoured 2018 34,9% 2018 6M 7,8% 2019 6M 39,2%
26 31 FINANCIAL INDICATORS
Gross Profit Operating Profit Million TL Million TL 700 40,0% 250 16,0% 600 35,0% 14,0% 200 30,0% 500 12,0% 25,0% 10,0% 400 150 20,0% 8,0% 300 15,0% 100 6,0% 200 10,0% 4,0% 50 100 5,0% 2,0% 0 0,0% 0 0,0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Gross Profit Gross Profit Margin Operating Profit Operating Profit Margin
EBITDA Million TL Million TL Net Profit 250 16,0% 180 12,0% 14,0% 160 10,0% 200 12,0% 140 120 8,0% 150 10,0% 100 8,0% 6,0% 80 100 6,0% 60 4,0% 4,0% 50 40 2,0% 2,0% 20 0 0,0% 0 0,0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EBITDA EBITDA Margin Net Profit Net Profit Margin
27 33 FINANCIAL INDICATORS
Gross Profit Operating Profit Million TL Million TL 450 50,0% 300 35,0% 400 45,0% 30,0% 250 350 40,0% 25,0% 35,0% 200 300 20,0% 30,0% 15,0% 250 150 25,0% 10,0% 200 20,0% 100 5,0% 150 15,0% 50 0,0% 100 10,0% -5,0% 0 50 5,0% -10,0% 0 0,0% -50 -15,0% 2018 1Q 2018 2Q 2018 3Q 2018 4Q 2019 1Q 2019 2Q 2018 1Q 2018 2Q 2018 3Q 2018 4Q 2019 1Q 2019 2Q
Gross Profit Gross Profit Margin Operating Profit Operating Profit Margin
EBITDA Million TL Million TL Net Profit 250 30,0% 300 40,0% 25,0% 250 200 30,0% 20,0% 200 15,0% 20,0% 150 10,0% 150 10,0% 100 5,0% 100 0,0% 0,0% 50 50 -5,0% -10,0% 0 -10,0% 0 -20,0% -15,0% -50 -50 -20,0% -100 -30,0% 2018 1Q 2018 2Q 2018 3Q 2018 4Q 2019 1Q 2019 2Q 2018 1Q 2018 2Q 2018 3Q 2018 4Q 2019 1Q 2019 2Q
EBITDA EBITDA Margin Net Profit Net Profit Margin
28 33 FINANCIAL INDICATORS
Ratios 2014 2015 2016 2017 2018 2018 6M 2019 6M
ROE 29,8% 32,4% 28,7% 35,1% 42,2% (58,4)% 40,2% EBITDA Margin 12,8% 10,8% 10,4% 10,4% 13,5% (7,1)% 17,9% Net Margin 5,9% 5,5% 4,3% 5,6% 9,8% (16,1)% 15,2% Net Debt/Equity 1,2 2,3 1,6 1,7 1,4 5,6 2,1 Net Debt/EBITDA 1,9 3,6 2,3 2,5 2,4 11,5 2,1 ST. Borrowing/T.Borrowings 0,52 0,49 0,60 0,53 0,38 0,52 0,45 Equity/Total Assets 0,20 0,15 0,14 0,14 0,17 0,06 0,17 Current Ratio 1,5 1,3 1,4 1,5 2,1 1,6 1,8
29 34 FINANCIAL INDICATORS
Thousand TL Capital Expenditures 30.000 28.002 25.838 25.000 21.510
20.000
16.363 15.838 16.016 15.100 15.000 12.421 10.264 10.000 8.785 8.108
5.000
0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 6M
30 35 FINANCIAL INDICATORS
Net Debt/EBITDA (rhs) 1.200Million TL 4,00
3,59 1.016 3,50 1.000 3,00 800 2,55 2,50 2,36 2,30 556 2,07 600 1,93 534 2,00 473 491 391 1,50 400 303 227 1,00 186 200 157 155 170 0,50
0 0,00 2014 2015 2016 2017 2018 2019 6M Net Debt EBITDA Net Debt/EBITDA
31 36 FINANCIAL INDICATORS
BORROWINGS Million TL 700
600
575 500 553 514 509 500 400 425
300
274 200 207 190 100 106 76 5 0 2014 2015 2016 2017 2018 2019 6A S.T. Borrowings L.T. Borrowings
. Exchange rate risk and liquidity are monitored actively and the maturity of the borrowings and the currency type is determined by taking into consideration ofthe foreign currency position and liquidity risk. . In the last 5-year period, borrowings are realized mainly in TL and long-term.
32 38 FINANCIAL INDICATORS
Dividend Yield
Thousand TL 100.000 100.000 9% 8% 8% 80.000 7% 8% 80.000 72.000 7% 72.000 70.000 64.000 6% 60.000 5% 60.000 5% 4% 48.000 4% 3% 4% 40.000 3% 3% 3% 2% 2% 20.400 20.000 15.000 2% 7.200 1% 0 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Dividend Dividend Yield
. Consistent dividend distribution is an indication of the importance given to creating shareholder value.
33 40 STOCK PERFORMANCE Stock Performance
Market Capitalization
34 41 R&D AND TEST CAPABILITIES
35 43 R&D AND TEST CAPABILITIES
Number of Patents and Industrial Designs Patents and Industrial Designs Owned 300 273 279
250 240 209 200 173
150
100 84 55 45 50 22 29 8 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
In addition to six different digital As the project partner of Otokar and Koç Motor oil, transmission oil, axle oil transformation projects, Otokar mobile Sistem, the development of the cloud- and antifreeze products for application was developed for based platform including the Appstacle Otokar branded commercial and commercial vehicle users. project and the smart vehicle applications defense vehicles were introduced that will form the next generation to the market under the brand automotive standards are in progress. Otokar Spectra.
Total of 422 R&D center employee Total R & D spending over the 10-year R & D expenditures in last 10 years 1 billion TL turnover 8%
36 44 ALTERNATIVE FUELED BUSES
DORUK HIBRA DORUK DG KENT DG DORUK ELECTRA Turkey’s first hybrid bus Turkey’s first natural gas 12 m CNG bus Turkey’s first electric bus powered mid-sized bus
AKREP IIe Turkey’s first electric armoured vehicle
37 11 SUSTAINABILITY
Otokar listed in the BIST Sustainability Index for the fourth consecutive time
Otokar is strictly bound to the 10 principles of the UN Global Compact signed by Koç Holding in 2006
Otokar is also a signatory of UN Women's Empowerment Principles (WEPs) along with 30 Koç Group Companies
Otokar provided 19,068 hours of training to 1,589 employees on occupational health and safety.
Otokar's proposal was awarded in the MESS Golden Glove and Golden Glove Recommendations Occupational Health and Safety competition which organized by Turkey Metal Industrialists' Union (MESS). Otokar received this award for the fourth time.
38 45 CORPORATE GOVERNANCE
56th Ordinary General Assembly of Otokar Otomotiv ve Savunma Sanayi A.Ş. held on 18.03.2019
Rating of Adaptation to Corporate Governance Principles Weight Rating Otokar, as publicly disclosed with the Shareholders 25% 95.41 material disclosure dated 21.03.2018, stated Public Disclosure & Transparency 25% 93.94 that SAHA Corporate Governance and Stakeholders 15% 97.13 Rating Services A.Ş. (SAHA) increased its Board of Directors 35% 91.76 Corporate Governance Rating to 94.02 Total 100% 94.02 (9.40 out of 10)
39 45 CONTACT
Please visit www.otokar.com.tr Doğan Seçkinler Finance, Risk Management & IR Director +90 264 229 22 44 – 6300 [email protected]
H. Gülşah Mutlu IR &Corporate Governance Manager +90 264 229 22 44 – 6320 [email protected]
Emre Altuğ IR & Corporate Governance Responsible +90 264 229 22 44 – 6322 [email protected]
Disclaimer: This presentation contains forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by a variety of variables and changes in underlying assumptions that could cause actual results to differ materially.
Neither OTOKAR nor any of its directors, managers or employees nor any other person shall have any liability whatsoever for any loss arising from use of this presentation.