On the Right Track to the Future 2013 Annual Report Ford Otosan has been the best selling automotive brand in Turkey for 12 FORD OTOSAN consecutive years. It is IN BRIEF Turkey’sin automotive export champion thanks to an extensive export program supported by its competitive production. It accounts for 57% of Turkey’s commercial The vehicle productionand 61% of The exports. Pioneer Leader in Force Automotive “Go Further” is Ford’s Go Further global brand promise launched in 2012. It is our global brand 1 - Ford Otosan in Brief With a capacity of 330,000 By supporting social promise for providing 2 - Summary Results great products, building 3 - Main Indicators Founded in 1959 as “Otosan A.Ş.”, Ford Otosan was responsibilityfor the benefitprojects of commercial vehicles and 66,000 4 - Ford Otosan by Numbers the first automotive company in Turkey. In 1966, it a stronger business and engines at the Kocaeli and İnönü 6 - Vision, Mission and Strategies manufactured the first domestic passenger car society in the areas a better world. 7 - Our Values CONTENTS Anadol, which was designed by Turkish engineers, of education, health, Plants, Ford Otosan will reach a capacity and in 1986 the first diesel engine ERK. environment, culture, of 415,000 units at the end of 2014. The In 2009, it was the first Turkish company arts and sports, Ford Otosan strives to to export automotives to the USA. Kocaeli Plant hascompany’s its own port, logistical and resides superiority. in 01 8 - Chairman’s Statement to society. fulfill its responsibility proximity to the supplier park, giving rise to the Ford Otosan 12 - Board of Directors at a Glance 16 - Executive Management Corporate Citizenship 20 - 2013 Highlights 29 - Exports 08 and Achievements 31 - Production and Capacity Management and 22 - Awards 33 - Investments and Assessments 24 - Investor Relations Growing Capacity Ford Otosan 26 - The Turkish 40 - Extensive Product Range has the biggest rd 1 Automotive 42 - Plants R&D center of the Industry and 47 - R&D R&D Ford Otosan Turkish automotive Logistical Proficiency industry, and the 3 largest R&D center of Ford Superiority 48 - Quality Motor Company, with 49 - Occupational Health and Safety 1,277 engineers developing 20 50 - Human Resources Ford Otosan 55 - Environment advanced technologies in 2013 57 - Corporate Social Responsibility and products to dominate in global competition. It is the global design and engineering center for 61 - Agenda of the Ordinary General Assembly Ford’s heavy commercial 62 - Board of Directors’ Report 48 72 - Dividend Distribution Proposal vehicles and diesel engines. Sustainability 73 - Corporate Governance Principles Compliance Report 80 - Risk Management and Report on the Activities of the Early Determination and Management of Risk Committee 82 - Legal Disclosures 83 - Report on Related Party Transactions for 2013 60 84 - Remuneration Policy for the Board of Directors and Senior Executives Reports 85 - Independent Auditor’s Report on Annual Report 87 - Independent Auditor’s Report and Financial Statements as of December 31, 2013 th of March 2014 Tuesday at 15:00 in Divan Hotel Legal Disclaimer: This Annual Report (“Report”), including the Board of Directors’ Report about the operations and financials of 2013, Auditors’ Report, Financial Statements and the Independent Audit Report, was prepared in compliance with the legal regulations in force, to be presented to the Ordinary General Assembly of Ford Otosan A.Ş. (Company) to take place on the 25 Istanbul, Elmadağ at the address Asker Ocağı Caddesi No. 1, 34367 Şişli, Istanbul. The Report was written only to inform the shareholders, and does not serve the purpose to lay the ground for any investment decision. The opinions stated in the Report regarding the future and projections reflect the Company Management’s view on the future situation; their materialization may differ depending on the variables and assumptions that yield the projections. Accordingly, the Company or Members of the Board of Directors, advisors or employees cannot be held liable for any information or communication conveyed as part of this Report or for any direct or indirect loss and damages that may be incurred on any individual because of information based on/omitted from the content of this report. It is believed that all information in the Report was accurate at the time of preparation. The Company rejects any responsibility for errors that may occur during writing or printing. SUMMARY MAIN RESULTS INDICATORS Total Sales (1000 Units) Retail Sales (1000 Units) Financial Highlights 2013 2012 2011 2010 2009 2013 341 2013 114 Revenues (Million TL) 11,405 9,768 10,445 7,649 5,574 227 Domestic Revenues 4,106 3,832 4,591 3,544 2,411 2012 316 2012 Export Revenues 7,299 5,936 5,854 4,105 3,164 205 112 Gross Profit (Million TL) 1,128 1,087 1,202 985 667 2011 354 2011 Operating Profit (Million TL) 670 631 729 610 389 213 142 EBITDA (Million TL) 856 772 875 785 561 2010 303 2010 124 Profit Before Tax (Million TL) 452 654 800 619 409 177 Net Profit (Million TL) 641 685 662 505 333 2009 214 2009 87 Capex (Million TL) 1,312 935 377 85 73 129 Financial Debt (Million TL) 2,291 1,260 877 528 388 Net Cash / (Debt) (Million TL) -2,053 -958 -68 -7 -16 Total Export Net Financial Debt / Tangible Equity 1.13 0.55 0.04 - 0.01 Gross Margin 9.9% 11.1% 11.5% 12.9% 12.0% EBITDA Margin 7.5% 7.9% 8.4% 10.3% 10.1% Operating Margin 5.9% 6.5% 7.0% 8.0% 7.0% Net Profit Margin 5.6% 7.0% 6.3% 6.6% 6.0% Revenues (Million TL) (Billion US$) Return on Equity 28.7% 34.3% 34.9% 28.8% 20.2% Export Revenues Dividend Payment (Million TL) 300 579 519 400 397 2013 11,405 2013 Year-End Market Cap. (Billion US$) 3.7 4.1 2.5 2.4 1.5 3.8 2012 9,768 2012 3.3 2011 10,445 2011 3.5 2010 7,649 2010 2.6 Revenues Sales Volume 2009 2013 2013 5,574 2009 2.0 Domestic 36% Domestic 33% Export 64% Export 67% Ford Otosan Market Shares Production (1000 Units) Employment Turkish Automotive Ford Otosan Market 2013 281 2013 9,444 Segments Industry Sales Share (%) Ranking 2012 272 2012 9,527 Passenger Cars 664,655 58,405 8.8 3 Light Commercial Vehicles 103,446 21,402 20.7 2 2011 296 2011 9,581 Medium Commercial Vehicles 85,277 28,348 33.2 1 Trucks 28,159 5,986 21.3 2 2010 242 2010 8,413 Total 885,180* 114,141 12.9 1 2009 173 2009 7,593 * Covers all heavy commercial vehicles excluding buses and midibuses. 2 3 FORD OTOSAN BY NUMBERS Stock Performance 1,204,600 72% foreign share Ford vehicles sold in Turkey over the last 12 years 834 FROTO US$ 3.7 billion market capitalization Market Shares 251 US$ 4.9 million average daily 8.8 BIST-100 21 % 12.9 100 trading volume 26 .3 % .4 % % 2009 2010 2011 2012 2013 C 01 T 02 P 03 T 01 r a o o u m s t c s a m k e l s n I e g nd rc les e u ial Vehic r Cars stry 5.7 million kwh Ford’s global design and Energy saving obtained engineering center for heavy trucks The leader of the Turkish automotive industry for 12 consecutive years through energy efficiency projects and diesel engines Germany rd 16% Ford’s 3 largest R&D center globally 79 countries France W. Europe 2,843 tons N. America 6% E. Europe CO2 reduction 17% 8% export vehicles 6% 227,000 Turkey’s biggest R&D organization UK Spain 28% 3% with 1,277 engineers US$ 3.8 billion export revenue Turkey’s automotive Other 16% export champion Number of Patent Applications 377,000 tons US$ 1.9 billion net exporter waste water treatment in the last 5 years 2013 80 2012 73 Our share Our share in Efficient production 2011 63 in Turkey’s Turkey’s with a capacity commercial commercial utilization rate vehicle vehicle above European 1,543 tons 2010 50 production 57% exports 61% and Turkish 85% hazardous waste recycling industry averages 2009 39 5 4 VISION, OUR VALUES MISSION AND STRATEGIES Strong shareholder structure is among the topmost strengths of Ford Otosan. We have ties with Ford Motor Company built on trust, harmony and friendship. This reliable partnership has been maintained for three The foundations were generations. laid for the Koç - Ford partnership. Rahmi M. Koç 1956 Vision Mission Our Values To be the leading consumer-oriented company in To be the leader of the Turkish automotive market, and Turkey in automotive products and services. the production center of Ford of Europe, by offering Our Employees: Are the source of our strength. the most suitable automotive products and services in It is our goal to boost the skills and contentment of our employees by providing them with response to customer needs and expectations. opportunities to self-improve. It is our principle to accomplish “teamwork” that will ensure their participation in all areas. Strategies nt Business elle M xc od Our products and services: Are the upshots of our efforts. E el 1. To generate superior returns for our The more our customers appreciate our products and services, the higher our value will rise. Sales and Exports shareholders Marketing Vehicle R&D and 2. To raise the perception of our brand and create Our earnings: Are an indication of the extent to which our products and services meet customer and Engine Engineering customer loyalty Production Power expectations.