CEO’s Letter


The Group’s organic investments reached the highest level in our corporate history during 2014.


Koç Holding’s Esteemed Shareholders and Stakeholders,

Koç Group closed 2014, a year of major economic and political turbulence across the world and in Turkey, with strong results. Consolidated revenues climbed to TL 68.6 billion while net profit attributable to equity holders of the parent reached TL 2.7 billion.

Sustained leadership in investments, exports, R&D and innovation

The Group’s organic investment reached the highest level in our corporate history during 2014. We carried out growth-oriented, large-scale investments as planned. As a result, we launched new products, opened new factories and inaugurated new facilities one after another. In the end, we set a record with a total of TL 7.6 billion in combined investments for the year.

One of our top priorities is to be a pioneering and leading force in technology and innovation investments in line with our sustainable growth objectives. To this end, we maintained our leadership positions in R&D investments and intellectual property development. Arçelik was deemed worthy of the “Most Innovative Company” and “Leadership in Technology Development” awards at Turkish Innovation Week, which was held by the Turkish Exporters’ Assembly. Our companies also chalked up major accomplishments at the Inovalig Innovation Leaders Awards. Arçelik and Tofaş placed first and second, respectively, in the “Innovation Strategy” category. Meanwhile, Tüpraş, Ford Otosan and Yapı Kredi also ranked within the top five in other award categories.

Our companies once again dominated the Exports Awards of the Turkish Exporters Assembly this year. Tüpraş retained its enviable position as the country’s top exporter, while Ford Otosan, Tofaş and Arçelik followed close behind the leader, placing second, fifth and sixth, respectively.

“If not us, then who?” -scale projects

While maintaining our leading positions in the energy industry in 2014, we also had the pleasure of completing large-scale investments that we had been working on enthusiastically for some time.

We proudly held the opening ceremony for Tüpraş’s US$ 3 billion Residuum Upgrade investment, which includes port construction, railroad connection and financing costs, on December 15, 2014 with the attendance of our Honorable President Recep Tayyip Erdoğan.

This single largest industrial investment ever undertaken by the Turkish private sector is expected to reduce Turkish energy imports by US$ 1 billion annually.

The Tüpraş R&D Center Campus, the first and only one of its kind in the energy and oil industry, commenced operation in early 2014.

Meanwhile, Opet held onto its number two position by again recording the fastest growth in the fuel oil distribution sector.

Aygaz Group, operating the Aygaz-Mogaz-Lipet brands, maintained a commanding lead in its sector.

Demir Export completed the development of Soma Eynez underground “fully mechanized” longwall coal mine with the highest level of occupational safety standards; the facility will commence production operations 2015.

During the year, Koç Holding and Aygaz acquired the shares held by AES in Entek.

Koç Holding, which was a pioneer in the establishment of the Turkish automotive industry, continued to lead by example by being a strong representative of the industry in global markets.

We opened our second factory in Gölcük for the manufacture of Ford Courier, a brand new model developed by Ford Otosan, on May 22, 2014, with the Honorable Recep Tayyip Erdoğan, who was Prime Minister at that time, in attendance. This additional facility raised our total annual production capacity up to 415,000 vehicles. In addition, we rolled out new models for our Transit line, which are manufactured at the Kocaeli plant. In total, Ford Otosan completed its US$ 1.4 billion new model and factory investments during the year.

In addition, Ford Otosan launched the largest R&D center in the Turkish automotive industry.

Tofaş started exporting Doblo vehicles to the US and Canada in October. The ceremony marking the initiation of exports to North America was held on December 3, 2014 with the Honorable Prime Minister Ahmet Davutoğlu present. The investment project for the new B-segment sedan model that will commence production in second half 2015 is ongoing.

We also initiated two new C-segment passenger car projects, a hatchback and a station wagon, which are scheduled to start production in 2016. With these additional vehicles, Tofaş’s total investment spending will amount to US$ 1.4 billion.

Otokoç Otomotiv has steadily expanded to become the second largest Avis licensee in the Asia, Europe, and Africa region with a fleet of 30,000 vehicles. In 2014, the Company entered the Kazakhstan market. In the domestic market, Otokoç Otomotiv ranks first with the “Avis” brand and second under the “Budget” banner in the daily car rental segment.

Otokar continued to perform tests in Altay National Tank Project in line with the scheduled timeline and completed the manufacturing of the last two prototypes. The market leader in the minibus and midi-bus segments, Otokar is also increasing its sales to Europe.

RMK Marine successfully completed the project for the manufacture of four coastguard vessels. In the commercial vessel segment, the Company built and launched two ships that are the world’s largest asphalt tankers with independent cargo tanks.

Celebrating its 60th year, TürkTraktör became one of the largest tractor manufacturers in Europe with the inauguration of its new production facility in Erenler, Adapazarı on June 17, 2014. The Honorable Minister of Economic Affairs Nihat Zeybekçi and the Honorable Minister of Science, Industry and Technology Fikri Işık attended this gratifying event.

Maintaining a leading position in Turkey, Arçelik continued to be the market leader with the Arctic brand in Romania and Defy brand in South Africa. Launching operations in Singapore and Thailand as well, the Company boosted its strong market position in this key region. Construction of the US$ 100 million refrigerator manufacturing facility in Thailand commenced in January 2015.

Celebrating its 70th anniversary, Yapı Kredi expanded its distribution network to include more than 1,000 branches and 3,600 ATMs. Additionally, the Bank further solidified its 24-year market leadership in credit cards this year. Yapı Kredi remains by far and away the leader in financial leasing while also leading the market in factoring, investment fund management and stock trading.

Koçtaş, another dominant market leader, opened three new retail stores, expanding the Company’s portfolio to 43 locations.

Pursuant to the Company’s focused growth strategy, Tat Gıda divested Harranova Tarım and Maret businesses while strengthening the dairy products lineup by acquiring Moova facilities, a renowned cheese brand in the Aegean region.

Meanwhile, Setur Marinas was awarded a 30-year concession to operate the Fenerbahçe and Kalamış marinas for the sum of US$ 664 million. Moreover, an agreement was signed regarding the acquisition of the 3 marinas (one in Istanbul, two in Göcek) from Marintürk Group; we are awaiting the decision of the Competition Authority.

Divan Group undertook six new projects in 2014, expanding its portfolio to 18 hotels.

I would like to take this opportunity to extend my heartfelt gratitude to our stakeholders, shareholders, customers, dealers, suppliers, trade unions and employees whose great support has cultivated our achievements at Koç Holding. Our core objective has always been to use our resources in the best way possible and turn them into sustainable, high-yielding investments for our stakeholders. We will continue to channel all our efforts into making the greatest possible contribution to our shareholders, our stakeholders and our country.

Respectfully yours,

Osman Turgay Durak
CEO