INVESTOR PRESENTATION February 2019
CONTENT A - Overview G - Other participations B - World LPG market H - Financial highlights C - Turkish LPG market & Aygaz I - Appendix D - The LPG value chain J - Glossary E - Participation portfolio K - Disclaimer F - Natural gas L - Contacts
3 A Aygaz overview 2018 9.6 billion REVENUE SALES OF LPG 2 m tons LEADING 26%* LPG MARKET SHARE LPG DISTRIBUTOR of TURKEY NATURAL GAS REFINERY DIVERSIFIED PARTICIPATION PORTFOLIO IN ENERGY *EMRA December POWER GENERATION
4 > Overview SUMMARY FINANCIALS (Cons. in m TL) 2018 2017 2016 2018-2017 change 13% 9,554 Revenue 8,469 6,749 -55% 160 EBITDA 352 394 -60% 228 Net Profjt 577 416 -2 2% EBITDA Margin 4% 6% -5 2% Net Profjt Margin 7% 6% SHAREHOLDERS (%) -7% 2,000 Volume (000 tons) 2,154 2,109 As of 31/12/2018 PUBLICLY TRADED 24 .3 51 .2 24 .5 KOÇ GROUP LIQUID PETROLEUM GAS DEVELOPMENT CO.
5 > Core business - LPG distribution Generic brand for LPG 11th largest industrial company of Turkey, as of 2017 Most preferred LPG brand in Turkey since its foundation Market leader with 3 brands AYGAZ VOLUMES (000 tons) MARKET SHARES (%) 35 42 72 47 1.025 933 54 865 22 907 42 707 792 777 759 688 730 26 AUTOGAS CYLINDER 342 343 342 335 315 2017 2018 2014 2015 2016 CYLINDER BULK GAS* AUTOGAS OTHER (wholesale & export) TOTAL EMRA, Aygaz EMRA 2018 December * With petrochemical sales
6 B World LPG market WORLD LPG CONSUMPTION (m tons) 303 2017 298 2016 Fastest - growing energy source after 285 2015 renewable energy 2014 275 300 billion USD business size worldwide 2013 268 2012 257 Sources of LPG production; 2011 256 2010 249 39% 61% 2009 240 2008 240 NATURAL GAS CRUDE OIL 2007 236 LPG AS A COMMODITY Mixture of Portable and Low GHG Diversity of Cleaner, safer hydrocarbons versatile emission; supply sources; and cheaper (Butane and Eco-friendly Abundant at home & Propane) reserves transportation WLPGA Statistical Review of Global LP Gas Report, 2018
7 > World LPG consumption World LPG Consumption World LPG Consumption By Sectors 2017 (%) By Regions 2017 (%) 44 43 Domestic Asia Pasifjc 15 1 28 4 North America Chemical Agriculture Africa 17 10 10 8 Europe&Eurasia S.&C. America Refjnery Industry 11 9 Autogas Middle East WLPGA Statistical Review of Global LP Gas Report, 2018
8 > Prices of LPG and brent 140 1.200 113 1.100 108 120 1.000 900 100 977 894 800 $/Barrel 79 $/Ton 80 700 69 600 48 56 58 60 500 599 32 400 536 40 421 378 368 300 321 200 20 JAN 13 JUN 13 NOV 13 APR 14 SEP 14 FEB 15 JUL 15 DEC 15 MAY 16 OCT 16 MAY 17 AUG 17 JAN 18 JUN 17 NOV 18 SP (Algeria) Crude oil (Brent) • There is a correlation between LPG and oil price • Seasonality can also affect LPG price • December 2018 Sonatrach LPG price is at USD 378 and 30% lower than December 2017 price. Sonatrach / Market data
9 C Turkish LPG market 4.1 m tons #2 in Europe #11* in the World LPG consumption in Europe (m ton) 4.5 RUSSIA ~90 distribution companies Leading 3 players in the cylinder market and fjrst 8 players TURKEY 4.1 in the autogas market hold over 80% of the total market ITALY 3.4 Liberal market with regulatory body-EMRA POLAND 2.5 FRANCE 1.8 * when p. chemical and refjnery is excluded GERMANY 1.7 EVOLVING FROM CYLINDER TO AUTOGAS (000 tons) UKRAINE 1.6 42% 18% SPAIN 1.5 1,557 3,283 ENGLAND 1.0 750 2018 10% 2005 383 1,752 113 DOMESTIC INDUSTRY TRANSPORT 48% 3% 79% WLPGA Statistical Review of Global LP Gas Report, 2018 EMRA data
10 > LPG market ranking 1- ITALY 1.4 m tons 2- SPAIN 1.3 m tons 3- FRANCE 1.1 m tons 1.1 m tons 4- RUSSIA 0.8 m tons 5- TURKEY THE 5th BIGGEST DOMESTIC LPG MARKET IN EUROPE 1- SOUTH KOREA 3.3 m tons 2- TURKEY 3.1 m tons 3.1 m tons 3- RUSSIA 4- POLAND 1.9 m tons 1.7 m tons 5- ITALY THE 2nd BIGGEST AUTOGAS MARKET IN THE WORLD WLPGA Statistical Review of Global LP Gas Report, 2018
12 > > Cylinder market starting to stabilize CYLINDER MARKET RATES OF CHANGE (YoY) 4% Turkish 821 816 812 801 market 2% 750 0 -2% (000 tons) 2014 2015 2016 2017 2018 -4% -6% 342 342 343 335 Aygaz -8% 315 -10% 2014 2015 2016 2017 2018 TURKISH MARKET AYGAZ With the effects of the on-going natural gas conversions, urban transformation and contraction in commercial sales, the cylinder gas market shrank 8% year on year in 2018. Factors affecting cylinder market; • Pressure on demand due to rising LPG prices • Continuation of natural gas grid expansion despite deceleration EMRA data
13 > > Aygaz; leader in cylinder market since its foundation CYLINDER MARKET SHARES Generic brand Market maker 41.9% AYGAZ Largest dealer network with high SHV 29.5% sales effjciency 60% market share in residential use Demirören Group 17.5% Fully integrated production cycle; Cylinder Other 11.1% and gas appliances factory in Gebze plant Aygaz Ekspres; digital solutions for optimizing dealers’ business&delivery Aiming to maximize customer satisfaction&loyalty 2017 Number of Dealers Sales Volume (tons) Avg dealer sales (tons) Aygaz cylinder dealers 2,359 334,866 142 Total cylinder dealers 7,985 812,208 102 *EMRA data
15 > World’s second biggest autogas market RATES OF CHANGE (YoY) 14% AUTOGAS MARKET 12% 3,283 10% 3,142 3,117 8% 3,069 Turkish 2,838 6% market 4% (000 tons) 2% 792 0 777 759 730 -2% Aygaz 688 -4% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 TURKISH MARKET AYGAZ Autogas market that showed a steady growth since 2003, after contracting nearly by 1% in 2017 due to the pressure of rising LPG prices, it grew by 5% in 2018. Factors affecting autogas market; • 30% more economic on average compared to gasoline • Fierce price competition among national and local players • Continuation of growth in autogas car park • Increasing interest of car manufacturers to LPG and conversions with car guarantees EMRA data
16 > Price economy of autogas 50% 40% 30% 20% 10% 0 -10% price advantage -20% to gasoline -30% JAN-14 APR-14 JULY-14 OCT-14 JAN-15 APR-15 JULY-15 OCT-15 JAN-16 APR-16 JULY-16 OCT-16 JAN-17 APR-17 JULY-17 OCT-17 JAN-18 APR-18 JULY-18 OCT-18 To gasoline To diesel PUMP PRICE OF AUTOGAS ACROSS THE WORLD (%)* 39 Ratio of autogas NETHERLANDS 50 pump price to gasoline 39 GERMANY 46 39 ITALY 44 Ratio of autogas 42 POLAND pump price to diesel 44 52 SOUTH KOREA 62 62 UNITED KINGDOM 61 FRANCE 54 64 56 TURKEY 66 JAPAN 65 *WLPGA Statistical Review of Global LP Gas Report, 2017 77
17 > > Autogas; most widely-used passenger car fuel of Turkey RATIO OF CARS REGISTERED TO TURKISH CAR PARK (m cars) TRAFFIC ACC. TO FUEL TYPE 4.7 4.6 4.4 4.3 4.1 4.6 3.8 4.3 37% 3.3 3.1 3.1 3.1 75% 2.9 2.9 5% 38% 2.9 15% 25% 2014 2015 2016 2017 2018 2018 GASOLINE DIESEL AUTOGAS 2004* GASOLINE DIESEL AUTOGAS * Fuel type unknown: 5% CAR OWNERSHIP PER PERSON • Most widely-used passenger car fuel since 2011 575 /1000 150 /1000 • With 4.7 million cars, 4 out of 10 passenger cars run on LPG EUROPE TURKEY • Largest LPG vehicle fmeet in the world; 16% of the world • Approx. 11,000 autogas stations all over Turkey Turkstat, ACEA
18 > > Aygaz; leader of the second biggest autogas market in the world AUTOGAS MARKET SHARES MARKET SHARE & STATION NUMBER SHARE (%) 22.3 MARKET SHARE 22.2% AYGAZ STATION NUMBER SHARE OMV PO 12.1% 16 SHELL 13 12.1 11.7% 11.7 10.5 9 9 DEMİRÖREN GROUP* 10.5% 8 6.9 6.8 5.1 5 4 4 BP 6.9% 2.8 SHV GROUP** 6.8% AYGAZ OMV PO SHELL DEMİRÖREN GROUP BP SHV GROUP AYTEMİZ AKPET AYTEMİZ 5.1% AKPET 2.8% OTHER 21.9% *Milangaz & Total ** İpragaz & Yıldırım Number of Sales Volume Avg dealer Largest dealer network with high sales effjciency 2018 Dealers (tons) sales (tons) Creating network synergy with sister company Opet Aygaz autogas dealers 1,718 730,105 425 Total autogas dealers Core business is LPG unlike other fuel distributors 10,644 3,283,197 308 EMRA data
19 > > Autogas car park growth 1,000+ conversion points 177,000 OEM ; original equipment $500 average cost of conversion manufacturer conversions Payback in 15,000 km • Some major car manufacturers per year are providing guaranteed conversion currently AUTOGAS CONVERSIONS (m cars) 12.4 12 10.6 11.3 9.9 4.7 4.6 4.3 4.4 4.1 2014 2015 2016 2017 2018 PASSENGER CAR PARK AUTOGAS CAR PARK Turkstat
20 D The LPG value ~ 200 1,718 auto gas stations tankers 1,000,000 vehicles chain using Aygaz Otogaz Moving&fmoating Fixed storage storage capacity capacity of AUTOGAS of 37,000 m3 178,400 m3 ~ 2,500 bulk gas customers BULK 3 LPG ships CYLINDER belonging to 2 million the fmeet of tons of LPG Anadoluhisarı supply Tankercilik Gebze Facility; exports of cylinders and gas devices ~ 190 cylinder 2,406 cylinder gas vehicles dealers As of end of 2018
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