This report has been published using recycled paper and www.fordotosan.com.tr environment-friendly technologies. Annual Report 2014 Taking firm strides Ford Otosan towards from Past the future to Present 1997* 2014 At Ford Otosan, we made the biggest investment in the Production Capacity Turkish automotive industry, with capital expenditure (units) exceeding US$ 1.6 billion in the last 4 years. 47,000 415,000 9 times As the pioneering force of the Turkish automotive industry, Production (units) we continue to steadily create value for our country, our 43,000 245,000 shareholders and all other stakeholders, and take firm steps 6 times th Exports towards the future on our 55 anniversary. (units) 667 192,000 288times Contents Exports (US$) 4 Ford Otosan at a Glance 48 Sustainability 4 Summary Results 48 Quality 16 million 3.5 billion 5 Main Indicators 49 Occupational Health and Safety times 6 Vision, Mission and Strategies 50 Human Resources 219 7 Our Values 52 Environment Revenues 56 Corporate Social Responsibility 8 Management and Assessments (US$) Chairman’s Statement 8 59 Reports Board of Directors 12 59 Agenda of the Ordinary General Assembly 660 million 5.5 billion 20 Executive Management times 60 Board of Directors’ Report 8 24 Ford Otosan in 2014 68 Dividend Distribution Proposal 24 Awards 69 Corporate Governance Compliance Report Number of Employees 26 Investor Relations 77 Risk Management and Report on the Activities of the Early 28 The Turkish Automotive Industry and Determination and Management of Risk Committee Ford Otosan 79 Legal Disclosures 3,406 9,762 30 Exports 80 Report on Related Party Transactions for 2014 times 32 Production and Capacity 81 Remuneration Policy for the Board of Directors 3 34 Vehicles We Produce and Senior Executives 38 Extensive Product Range 82 Independent Auditor’s Report on Annual Report Market Capitalization 40 Plants 83 Independent Auditor’s Report and Financial (US$) Statements as of December 31, 2014 44 R&D 1.1 billion 4.9 billion 4.5 times About the cover page “Türkiye’nin Ford’u” is the motto used in Ford Otosan’s current advertising campaign and means “Turkey’s Ford”. * The shares of Koç Holding and Ford Motor Company in Otosan became equal. We completed the biggest investment in the We launched Turkey’s Turkish automotive industry, reaching the newest commercial highest installed manufacturing capacity vehicle range we grow we change Gölcük Plant Upon completion of the US$ 850 million investment in Ford Courier the Gölcük Plant in 2014, and Ford Courier, the design opening of the Yeniköy Plant, and development process the total capacity of Kocaeli of which was conducted Plants rose to 400,000 units by Ford Otosan was from 320,000 units (290,000 launched in May. units in Gölcük and 110,000 units in Yeniköy). Yeniköy Plant Ford Transit Yeniköy Plant, which is the world’s only Ford Transit has sold manufacturing center of Ford’s new light commercial more than 7 million units since its launch in 1965. vehicle, Courier, was constructed in 16 months. The Ford Custom plant was designed to be fully ‘disabled friendly’, The all-new Transit is manufactured only in Exports of Ford Custom, and was opened on May 22, 2014. Among Ford’s which was launched at the foremost light commercial vehicle manufacturing the Ford Otosan Gölcük Plant in Europe, and was end of 2012, maintained bases worldwide, Yeniköy has a manufacturing robust progress in 2014, capacity of 110,000 units per annum. The Plant launched in March for global markets. growing by 106% per is equipped with advanced technology and annum and reaching environment friendly applications. 109,000 units. Ford Connect New Transit Connect and Tourneo Connect, the tophat engineering of which were conducted İnönü Test Center Ford Cargo by Ford Otosan engineers, was launched in Ford Cargo 1846T, our Our test center is the first plant in Turkey capable of November. testing engines over 13 liters. first product within the scope of the Global Gölcük Test Center Cargo program, was Ford Otosan, the R&D leader of the automotive industry launched in 2013. in Turkey, opened the Exhaust Emission Systems Test Center in the Gölcük Plant. This is Ford’s first plant in the entire world to provide service in this area. İnönü Test Center Opening Ceremony We created new opportunities We have been the leader to support our future and pioneering force of the profitable growth Turkish automotive industry since we develop our establishment Engine, cabin and chassis agreement with JMC By means of an agreement signed with Chinese JMC in 2013, Ford Otosan agreed upon the production of Ecotorq engines, the intellectual property rights of which are wholly owned by Ford Otosan, to be used in JMC branded vehicles in the world’s largest truck market, China. Another achievement was obtained in July 2014 by signing a license agreement with the same company regarding the technology for the chassis, cabin and parts of our Cargo trucks. Ford Otosan’s Truck FIRSTs manufacturing agreement with 1961 – First private R&D center in Turkish automotive 1966 – First domestic passenger car, Anadol Avtotor in Russia 1986 – First domestic diesel engine, Erk A Memorandum of 2009 – First automotive export to the USA Understanding was 2013 – Technology export to China signed with Avtotor Holding for the manufacturing of Ford Trucks in Russia. Sancaktepe Engineering Center Ford Otosan R&D Department exports engineering with more than 1,350 engineers, and is the biggest R&D organization in the Turkish automotive sector. Our Sancaktepe R&D Center, which became operational with TL 70 million investment, is Turkey’s biggest R&D center at a single location. As the global engineering center for Ford’s heavy Ford Otosan’s TOPs trucks and related diesel engine and engine systems, Ford Otosan also serves as the support center for the development of Ford’s light commercial vehicles. Turkey’s 2 nd biggest industrial enterprise Turkish Automotive Industry’s: Highest installed manufacturing capacity Highest employment Ford Trucks dealer network Most extensive product range Ford Otosan strengthened its dealer network through its new Biggest R&D center Middle East office, and new Ford Trucks showrooms that it opened in the within the scope of its growth strategy. Patent champion Export champion R&D leader Ford Otosan Annual Report 2014 Ford Otosan at a Glance Management and Assessments Ford Otosan in 2014 Sustainability Reports Summary Results Main Indicators Total Sales (1000 Units) Retail Sales (1000 Units) Financial Highlights 2014 2013 2012 2011 2010 Revenues (Million TL) 11,925 11,405 9,768 10,445 7,649 2014 192 283 2014 94 Domestic Revenues 4,238 4,106 3,832 4,591 3,544 Export Revenues 7,687 7,299 5,936 5,854 4,105 2013 2013 114 Gross Profit (Million TL) 1,131 1,128 1,087 1,202 985 227 341 Operating Profit (Million TL) 541 670 631 729 610 EBITDA (Million TL) 846 856 772 875 785 2012 205 316 2012 112 Profit Before Tax (Million TL) 390 452 654 800 619 Net Profit (Million TL) 595 641 685 662 505 2011 2011 142 Capex (Million TL) 858 1,312 935 377 85 213 354 Financial Debt (Million TL) 2,350 2,291 1,260 877 528 2010 Net Debt (Million TL) (1,773) (2,053) (958) (68) (7) 177 303 2010 124 Net Financial Debt / Tangible Equity 0.79 1.13 0.55 0.04 0 Gross Margin 9.5% 9.9% 11.1% 11.5% 12.9% Total Export EBITDA Margin 7.1% 7.5% 7.9% 8.4% 10.3% Operating Margin 4.5% 5.9% 6.5% 7.0% 8.0% Net Profit Margin 5.0% 5.6% 7.0% 6.3% 6.6% Revenues (Million TL) Export Revenues (Billion US$) Return on Equity 21.6% 28.7% 34.3% 34.9% 28.8% Dividend Payment (Million TL) 175 300 579 519 400 2014 11,925 2014 3.5 Year-End Market Cap. (Billion US$) 4.9 3.7 4.2 2.8 3.0 2013 11,405 2013 3.8 Revenues Sales Volume 2012 9,768 2012 3.2 2011 10,445 2011 3.5 36% Domestic 32% Domestic 2010 7,649 2010 2.7 64% Export 68% Export Production (1000 Units) Employment Ford Otosan Market Shares 2014 245 2014 9,762 Turkish Automotive Ford Otosan Market Segments Industry Retail Volume Share (%) Ranking 2013 281 2013 9,444 Passenger Cars 587,331 37,292 6.3 6 2012 272 2012 9,527 Light Commercial Vehicles 95,798 22,703 23.7 2 Medium Commercial Vehicles 84,552 26,838 31.7 1 Trucks 31,063 6,761 21.8 2 2011 296 2011 9,581 Total 803,089* 93,594 11.7 3 2010 242 2010 8,413 * Covers all heavy commercial vehicles excluding buses and midibuses. 4 5 Ford Otosan Annual Report 2014 Ford Otosan at a Glance Management and Assessments Ford Otosan in 2014 Sustainability Reports Vision, Mission And Strategies Our Values Our Employees: Are the source of our strength. It is our goal to boost the skills and contentment of our employees by providing them with opportunities to self-improve. It is our principle to accomplish “teamwork” that will ensure their participation in all areas. Our Products and Services: Are the upshots of our efforts. The more our customers appreciate our products and services, the higher our value will rise. Our Earnings: Are an indication of the extent to which our products and services meet customer expectations. We aim to profit so as to provide the resources necessary towards improving our products and services.