TÜRK PRYSMIAN KABLO VE SİSTEMLERİ A.Ş. 30.09.2019 FINANCIAL RESULTS
AGENDA Prysmian Group & Türk Prysmian Kablo Overview o Macroeconomics & Business Environment o 9M 2019 Financial Results o ANALYST PRESENTATION | 01.11.2019 | 2
Prysmian Group & Türk Prysmian Kablo Overview
TURKEY IS ONE OF THE R&D CENTERS OF THE PRYSMIAN GROUP 112 25 R&D +50 ABOUT 30,000 PLANTS CENTERS COUNTRIES EMPLOYEES THE WORLDWIDE LEADER IN ENERGY AND TELECOM CABLE INDUSTRY NORTH AMERICA LATAM EMEA APAC 23 15 56 18 PLANTS PLANTS PLANTS PLANTS 6 R&D 3 R&D 14 R&D 2 R&D CENTERS CENTERS CENTERS CENTERS OVER 5,800 OVER 4,200 OVER 16,000 ABOUT 3,000 EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES ANALYST PRESENTATION | 01.11.2019 | 4
TÜRK PRYSMIAN, LINKING TURKEY TO THE FUTURE 2013 1989 2006 2015 2017 «Attention! 2011 First First Mudanya Turkish cable 1984 All Cables Are 1964 154kV 1600 m 2 R&D Center is sector’s first CPR Not The Prysmian-Draka Energy Cables Energy Cable the first and certificate. CPR Same...» First 1997 merge and Establishment Production Production only R&D became mandatory Initiative 3600 Pairs birth of Center certified for cables on Copper First Prysmian Group by Ministry of 01.07.2017 Telecom ISO14001 & Science, Cable Certified Linking Turkey Industry and Production Cable Factory to the Future Technology in Turkish Cable Sector 1975 1990 2007 2014 2018 First First First Prysmian MEAT Region 35kV XLPE ISO9001 380 kV Project Group 1985 2000 2012 established, 2016 Energy Cables Certified Turkey’s including 50 th year Production Cable Factory First First Turkey’s Turkey Launch of anniversary Fiber Optic Zero Halogen First Manufacturing Cable (LS0H- Afumex) 380kV Academy Production Cable Production Submarine Cable Projects: Dardanelles ANALYST PRESENTATION | 01.11.2019 | 5
PRESTIGIOUS PROJECTS – WORLDWIDE Baku Olympics Stadium, Azerbaijan Mercury City Tower, Russia Ashgabat Airport, Turkmenistan Dubai Metro Ayada Maldives Mecca Clock Tower, Saudi Arabia Turkmenistan Presidential Palace Shah Deniz Refinery Project, Azerbaijan Palazzo Versace Hotel, Dubai . ANALYST PRESENTATION | 01.11.2019 | 6
PRESTIGIOUS PROJECTS – IN TURKEY Istanbul’s New Airport Kayseri OSB Solar Park Avrasya Tunnel Dardanelles Strait Submarine Cable Projects Socar – Star Refinery Eskişehir City Hospital Stadiums of Beşiktaş , Fenerbahçe , Skyland Istanbul Yavuz Sultan Selim Bridge, Istanbul Yavuz Sultan Selim Bridge Galatasaray and Trabzonspor . ANALYST PRESENTATION | 01.11.2019 | 7
22,000 CABLE TYPES IN 3 BUSINESS DIVISIONS BUSINESS DIVISIONS PRODUCTS ✓ Energy transmission ✓ Energy distribution Energy Projects ✓ Low voltage and building cables ✓ Specialties & OEM White & Brown Goods • Railways • Petrochemical plants • Energy Solar • Wind Products • Marine • Mining • Nuclear • Other industrial applications • ✓ Cable Accessories Telecom ✓ Copper Telecom Solutions ✓ Fiber Optic Solutions ✓ MMS Solutions ANALYST PRESENTATION | 01.11.2019 | 8
Macroeconomics & Business Environment
MACROECONOMICS & CABLE INDUSTRY Global Markets Turkey Cable Industry Peace Spring operation in Syrian border FED and ECB cut rates /growth forecasts for 2020 • • Shrinking market due to uncertainty and slowdown • Ongoing financial crisis and effects on market US-China trade wars started to be felt globally • • Price pressure due to idle capacity of competitors • Price increases in electricity and natural gas Aramco attack – uncertainty on oil prices • • Low prices from Chinese cable and fiber producers • Downtrend in inflation Brexit is unclear, UK looking for ways to exit EU • • Long payment term in a risky environment • CBRT decisions on interest rate cuts Following IMF and OECD, the World Bank also made • • Collection issues and high bad debt risk • Highest unemployment rate since May 2009 a downward revision in 2019 growth forecasts • Delay on government projects • ANALYST PRESENTATION | 01.11.2019 | 10
ECONOMIC CRISIS CONTINUES TO TAKE A TOLL ON THE CONSTRUCTION SECTOR 60.0% DECREASE IN CONSTRUCTION PERMITS -12.7 CONTRACTION IN CONSTRUCTION 38.5% DECLINE IN CEMENT SALES IN TURKEY Thousand Tons GDP Construction 72.2 160.4 66.8 63.8 64.0 134.1 125.0 5% 101.5 0% -1.5 -5% -12.7 33.5 56.2 20.6 22.5 2015 2016 2017 2018 2Q 2018 2Q 2019 6.1 3.2 7.5 2.8 5.6 -1.5 2015 2016 2017 2018 2Q18 2Q19 2015 2016 2017 2018 2Q18 2Q19 Annualized Estimate Annualized Estimate 4.9 5.4 9.0 -2.1 1.5 -12.7 ANALYST PRESENTATION | 01.11.2019 | 11
GROWING REVENUES AND PROFITABILITY IN A CONTRACTING MARKET Focus on Financial Discipline Defending Market Share Improving Revenues • Enlarging customer portfolio • Increasing hard currency • Minimizing credit risk, orders focusing on low risk profile • Becoming more aggressive in a • Exports (Algeria) selective way • Collection days=64 Days • Growing IC business • Enhancing regional coverage • New IC flows on energy • Effective NWC management Higher number of sales • New project in Europe points throughout Turkey • Ongoing telecom flows • Capital increase ZERO 0.8% POINT INCREASE IN 6.1% POINT INCREASE IN BAD DEBT MARKET SHARE THE SHARE OF INTERCOMPANY BUSINESS ANALYST PRESENTATION | 01.11.2019 | 12
CAPITAL INCREASE TO OPTIMIZE FINANCIAL COSTS ✓ Decreasing financial costs by reducing the need for forward contracts ✓ Increasing the profitability of the company 2016 2017 2018 9M 2017 9M 2018 9M 2019 Forward Contracts USD (Buy) 42,710,000 61,762,780 33,550,000 Forward Contracts USD (Buy) 44,678,750 47.900.000 35.091.330 Forward Contracts EUR (Buy) - 2,750,000 2,850,000 Forward Contracts EUR (Buy) 9,500,000 9.050.000 - Forward Contracts EUR (Sell) 8,800,000 6,000,000 Forward Contracts EUR (Sell) - - - 3.500.000 (1,000 TRY) 9M 2017 9M 2018 9M 2019 (1,000 TRY) 2016 2017 2018 Forward Agreement Costs 17,969 31,186 39,871 Forward Agreement Costs 18,828 22,472 47,395 Issued capital increase of 75 mln TL (52.9%) to 216.7 mln TL ANALYST PRESENTATION | 01.11.2019 | 13
9M 2019 Financial Results
REVENUES BY DISTRIBUTION CHANNEL 9M 2018 9M 2019 3% 9% 22% 24% 1,040 mln TL 1,021 mln TL 67% 75% Domestic Export Prysmian Group Domestic Export Prysmian Group Domestic volume contraction compensated by exports and IC sales ANALYST PRESENTATION | 01.11.2019 | 15
REVENUES BY SEGMENT 9M 2018 9M 2019 8% 9% 10% 12% 1,021 mln TL 1,040 mln TL 83% 78% Energy projects Energy products Telecom Energy projects Energy products Telecom New business flows on energy projects and telecom through IC channel ANALYST PRESENTATION | 01.11.2019 | 16
CONTRIBUTION MARGIN BY SEGMENT 9M 2018 9M 2019 11% 15% 22% 22% 91 mln TL 98 mln TL 67% 63% Energy projects Energy products Telecom Energy projects Energy products Telecom Contribution margin up 0.4 p.p. with value added telecom projects ANALYST PRESENTATION | 01.11.2019 | 17
REVENUE, EBITDA & EBITDA MARGIN AND NET INCOME REVENUE (MTL) EBITDA & EBITDA MARGIN (MTL) NET INCOME (MTL) 64.4 70 008% 1,021 1,040 19.8 007% 60 7.1% 6.9% 006% 50 41.9 6.2% 5.6% 005% 40 004% 25.9 24.8 4.1% 30 377 348 347 003% 19.6 6.5 5.9 5.2 20 002% 1.9 10 001% 0 000% 9M 2018 9M 2019 3Q 2018 2Q 2019 3Q 2019 9M 2018 9M 2019 3Q 2018 2Q 2019 3Q 2019 9M 2018 9M 2019 3Q 2018 2Q 2019 3Q 2019 • 1.9% YoY increase in 9M 2019 due to • 53.9% YoY EBITDA increase in 9M 2019 (2.1 • Net income more than doubled in 9M p.p. increase in EBITDA margin) 2019 despite increasing fx expense of ✓ Increasing intercompany revenues forward contracts on all business segments ✓ Royalty + service fee waiver (23.5 mln TL) ✓ Improved operational ✓ Value added telecom projects performance ✓ Royalty + service fee waiver ANALYST PRESENTATION | 01.11.2019 | 18
PRYSMIAN GROUP SUPPORT DURING FINANCIAL CRISIS EBITDA & EBITDA MARGIN (MTL & %) EBITDA & EBITDA MARGIN (MTL & %) 64.4 75.3 (6.2%) (5.5%) 41.9 25.6 23.5 (4.1%) 7,5 26.2 8.9 (2.2%) 41.9 40.9 40.8 26.2 9M 2018 9M 2019 2017 2018 One-time Impact One-time Impact Royalty + Service Fee Waiver Royalty + Service Fee Waiver 2018= 25.6 mln TL 9M 2019=23.5 mln TL Permanent Impact: 2018=8.9 mln TL ANALYST PRESENTATION | 01.11.2019 | 19
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