TÜRK PRYSMIAN KABLO VE SİSTEMLERİ A.Ş. 30.06.2018 FINANCIAL RESULTS
WHO ARE WE?
PRYSMIAN GROUP – WORLD LEADER IN ENERGY, TELECOM CABLES & SYSTEMS 25 R&D 140 ~6000 €11.1 bln Center Revenue Year Patents in Experience incl. TURKEY inc. General Cable 50 Countries EMEA Prysmian core presence with limited overlapping NORTH AMERICA Increased presence resulting in improved APAC country mix Leveraging on Prysmian consolidated footprint LATAM Increased presence in attractive emerging markets BUILDINGS O&G PROJECTS ELEVATORS FIBER SUBMARINE WIND FARM UNDERGROUND TRANSPORT 1) Country with at least one facility 2) Excluding General Cable APAC and Africa operations (divestiture almost completed); General Cable figures converted in EUR using -1y average FX (USD/EUR: 1.103) as of 29/09/2017 3
ENHANCING PRYSMIAN ’ S WORLDWIDE LEADERSHIP 4
WHILE UNDERSIGNING GLOBALLY PRESTIGIOUS PROJECTS Burj Khalifa, Dubai Project Borwin2, Germany Donbass Arena, Ukraine Cable installation to world fastest and highest Connection between Germany and offshore elevators EURO 2012 on 3D televisions wind plants . Observation satellites Australia Louvre, Abu Dhabi Our customised wires & cables High speed communication cables bringing fiber 500 km of fire resistant cables in Arabian provide data for climate to 93% of Australia’s residential and business Peninsula’s biggest museum change research premises Fundy Bay, Nova Scotia, Canada St. Pancras Station, UK Horns Rev2, Denmark Our submarine composite cables help fuel tidal Our low smoke zero halogen cables provide 245 kV high voltage underground cable energy for 750,000 homes highest possible safety standards connection 5
LEADER IN INNOVATION: FIRST R&D CENTER IN TURKEY CABLE INDUSTRY R esearch & D evelopment ✓ 25 R&D Centers ✓ Innovation , research ✓ Expanding product range ✓ International standards development groups Quality Certificates ✓ Cooperation with TUBITAK, Universities etc. ISO 9001 ISO TS 16949 IRIS TL9000 6
WIDEST PRODUCT PORTFOLIO: 22,000 CABLE TYPES Specialties&OEM Energy transmission (white goods, railways, nuclear, Low voltage and building cables ✓ High voltage underground cables military industry, crane, mining, Fire resistant ✓ High voltage submarine cables ✓ vessel, hospital, and others) Environment friendly Energy distribution ✓ ✓ Automotive ✓ Medium/Low voltage cables ✓ Petrochemical plants Low smoke zero halogen (LS0H) ✓ ✓ Renewable energy Cable Accessories ✓ Railway Customised for each application Components, accessories from high ✓ ✓ Other industrial applications voltage to low voltage (plane, runway ligthing and others) Cable solutions to support the development of the world’s energy infrastructure 7
PRYSMIAN LINKS TO THE FUTURE WITH THE «FIRSTS» 1964 1984 1989 2006 2011 2013 2015 2017 1997 Turkish cable Establishment First First First Prysmian-Draka «Attention! Mudanya First 3600 Pairs merge and All Cables Are sector’s first CPR 154kV 1600 m2 R&D Center is ISO14001 Copper Telecom Energy Cable birth of Not The the first and certificate. CPR Energy Cables Certified became mandatory Cable Production Production Prysmian Group Same...» only R&D Cable Factory Production Initiative for cables on Center certified by 01.07.2017 Ministry of Science, Industry and Technology in Turkish Cable Sector 1975 2016 1985 1990 2014 2000 2007 2012 First Launch of First First Prysmian Group First First Turkey’s First Manufacturing 35kV XLPE Turkey’s 50th year Fiber Optic ISO9001 Zero Halogen 380 kV Project 380kV Submarine Academy Energy Cables Cable Certified anniversary (LS0H- Afumex) Cable Projects: Production Production Cable Factory Cable Production Dardanelles Prysmian Group Turkey | November 2017 8
LINKING TURKEY TO THE FUTURE! Kazan Soda Electric Star Refinery (SOCAR) Skyland , İ stanbul Europe's Biggest Natural Dense Soda Ash and Turkey's First Private Sector Refinery The Tallest Building in Turkey After Completion Sodium Bicarbonate Factory in Europe Gaziantep Iconova Şanlıurfa Göbeklitepe Museum İstanbul’s New Airport "Best Architecture Multiple Residence" in Turkey UNESCO World Heritage Candidate With Its At Latest technology cables worth 8M Euro and Europe - European Property Awards Least 11.600 Years History Dardanelles Strait Submarine Cable SASA Polyester Eskişehir City Hospital Projects Turkey's Unique Polyester Fiber Manufacturer Europe's Best Health Project Turkey’s 1st and 2nd 380 kV Submarine Cable Projects 9
2018 1. HALF AT A GLANCE
MACROECONOMIC OUTLOOK ❖ Foreign trade deficit continued to expand. • Foreign trade deficit continued to widen on an annual basis and became 57.1 billion USD as total . • Exports increased by 6.3% and reached 82.3 billion USD, while import volume surged by 13.5% to 123 billion USD. ❖ Turkish inflation surges to highest since 2003 In June, inflation exceeded the expectations. In Annual CPI inflation was 15.39% in June, the highest level of this year. Annual • increase in the PPI continued in June and reached 23.71%. Annual inflation has been at its highest level both CPI & PPI since 2003. CPI PPI ❖ Cash shortage & collection risk in the market • The economic uncertainty in the country, the deterioration of the supply-demand balance, the high cost of borrowing rates in the markets and the increase in the exchange rates slowed down the cash cycle, leading to the problem of collection. ❖ Debt rating downgrade On June 13, 2018, the ratings agency Fitch downgraded Turkish sovereign debt a notch to ‘BB’ with a negative outlook, citing • inflation and widening current account deficit. 11
CABLE MARKET OUTLOOK MARKET TODAY FINANCIAL SITUATION LOOKING FORWARD • • • Volatility and uncertainity Significant liquidity problems Intensive market share fight • • • Excess capacity Increasing bad debts and Focused on hard currency • Aggressive competitors bankruptcies projects • • • Extended payment terms High financing costs Low risk customers preferred 12
ONGOING STRATEGIC PRIORITIES... Defend mar arket sh shar are in n a challe hallengin ing and nd agg ggressiv ive envi vironment Gr Grow on n val alue add dded bus busin iness Enlar Enlarge the he div diversit ity y of f cus ustomer ran ange wi with th ne new cus ustomers Exp Expand di differentia iatio ion pr proje oject «Attention! All cables are not the same…» Focus on orders with hard currency pricing ($ and €) Con ontin inue str trong Financia ial l di discip iplin line 13
DIFFERENTIATION: ALL CABLES ARE NOT THE SAME INITIATIVE SINCE 2012 Training seminars 2 countries, 12 cities Approx. 3,100 participants I-phone Application & Social Media ‘Prysmian Performance Test’ application in Apple Store Facebook, twitter, youtube, vimeo and daily motion accounts Launch of KABLOMATİK™ Easy and pratical solutionf or cable calculations Smart phone application (I-phone, Blackberry, Samsung) Online Cable Training 7 training modules & 1 final test 1,350 registered users since January 2016 Ongoing Initiatives to Raise Awareness on CPR... PPT advertisements in many publishments Direct communication with 430 sales points Window branding activities with A-Team distributors 14
QUALITY: GUIDING THE CABLE MARKET FOR BATTLE AGAINST UNFAIR COMPETITION Some cables in the market doesn’t meet requirements • We aim to fight against low quality • 7% 15% Major Defect Among the 46 samples taken from mkt.; • Minor Defects ✓ 43 of them (%93) below spec Compliant 78% ✓ 36 of them (%78) Major ✓ 7 of them (%15) Minor 15
DESPITE CHALLENGING MARKET CONDITIONS WITH CONTRACTING HOUSE SALES 16
GAINED MARKET SHARE WITH INTENSIVE FOCUS ON TRADER & INSTALLER BUSINESS ❖ Performed a survey covering all Turkey, identified areas to improve. ❖ Enforce A-Team (existing & new) New A-Team members started to perform Double digit volume growth on stock item sales Protected market share on project sales ❖ Go beyond A-Team Involving sub-dealers to differentiation activities ❖ Extended collection with credit card Online system established with multiple bank and payment term options ❖ Defined new service KPI’s to address customer needs. 17
GROWTH VIA VALUE ADDED BUSINESS UNITS: SUBMARINE Çanakkale I Submarine Project 100 % completed ➢ Final Acceptance Jan’18 ➢ Çanakkale I I Submarine Project 99% completed ➢ Operational Acceptance Aug’17 ➢ Final Acceptance Aug’19 ➢ İzmit Bay Submarine Project First Tender Tender Date 14.09.2017 ➢ Winner Price 382,3 mln TL ➢ Cancelation Date 24.10.2017 ➢ Second Tender Tender Date 27.11.2017 ➢ Winner Price 429,9 mln TL ➢ Cancelation Date 21.12.2017 ➢ 18
GROWTH VIA VALUE ADDED BUSINESS UNITS: INDUSTRIAL SPECIALITIES/RAILWAYS (2011 – 2018) Signalling Projects & 2018 on.. Prysmian Competitor 2018 projects 2019 Projects Total currently railway network is 12.532 km Target is to reach 25.030 km long railways network by 2023 High Speed Train to reach 12.915 km from 1.213 km Conventional lines to reach 12.115 km from 11.319km Additional 6000 km high speed lines btw 2023 – 2025 19
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