Chairman’s Statement


We always focus on our business, taking a long-term approach, with a view toward serving our country.


Esteemed Koç Holding Investors and Shareholders, Dear Business Partners and Employees,

2014 was an eventful year across the entire globe in terms of both economic and political developments.

Favorable housing market and employment data coming out of the United States, where the global financial crisis started six years ago, suggested that much progress has been made in shaking off the effects of the downturn for good.

In response to this improving environment, the Federal Reserve Bank (Fed) gradually reduced the liquidity that it was pumping into the markets. The Fed is next expected to start raising interest rates from their current near-zero level.

On the other hand, the inability to boost growth rates to desired levels in the developed countries as well as in emerging markets topped the agenda of the G-20, the international platform that brings together the world’s 20 largest economies. The Group of 20 adopted an action plan to accelerate economic growth and step up job creation at its November meeting.

In this environment, sentiment is increasing for both the governments in the Europe Union and the European Central Bank to pursue more aggressive pro-growth policies in 2015 despite Germany’s noncommittal stance.

At this point in time, we are encouraged by and fully support the action plans for investment, growth, employment and equal opportunities for women that were announced by the G-20 presidency, which was assumed by Turkey in 2015.

I would also like to add that Corporate Turkey is fully prepared to do its part to help the country make this G-20 presidential term as successful as possible.

2014 was also an eventful year for Turkey. We experienced major events one after the other, each of which was a significant development on its own. These included local and presidential elections in Turkey, military conflicts in the Middle East and the perpetual humanitarian tragedy there with no end in sight, the Russia/Ukraine crisis, expectation of the Federal Reserve’s interest rate hike, and the sharp fall in oil prices.

Despite these challenges, Koç Group posted another year of strong results in 2014. However, the most important development for us was the initiation of the projects that we had been proudly and enthusiastically working on for some time.

As we emphasize all the time, we always focus on our business, taking a long-term approach, with a view toward serving our country. Consequently, we completed our historic investments within scheduled timelines and planned budgets.

In accordance with this philosophy, and with the valuable efforts of all our employees, we have recorded many accomplishments that enable us to say, “If not us, then who?”.

2015 will be a year in which we will reap the fruits of our new investments while continuing to develop future investment projects. We will keep on pursuing international growth opportunities as well as new product, brand, R&D and technology-related investments.

Additionally, we place particular importance on our risk management systems and policies in order to be able to successfully navigate any potential economic and geopolitical turbulence.

For the same reason, we find it indispensable to always maintain a sound financial position. As part of this effort, we prioritize each and every initiative to minimize our costs and increase efficiency. We actively manage our debt by extending its average maturity while paying close attention to our working capital management practices.

Naturally, our primary goal is to accomplish all the above while remaining committed to maintaining excellent relations with our customers, employees, dealers, suppliers and trade unions.

We continue to create value for our shareholders by emphasizing sustainability

We are pleased to see that our successful business results and long-term strategic perspective, our objective to safeguard the interests of all stakeholders while managing risks effectively, our financial stability and our focus on good corporate governance are reflected in the strong relative share performance of Koç Holding.

We continue to create significant value for our shareholders through our steadily increasing share of long-term institutional investors as well as our stock trading at a low discount or even premium to our net asset value (NAV).

The Borsa Istanbul (BIST) 30 composite index gained 29% from year-end 2013 to year-end 2014; meanwhile, Koç Holding’s market capitalization soared 43% over the same period. The share of foreign ownership in Koç Holding’s free float hovered around 80.9%, well above the average for the BIST. While holding companies in Turkey on average traded at a 39% discount to their net asset value, Koç Holding on average traded at 1% premium to its NAV.

We were represented by 5 Koç companies in the BIST Sustainability Index of 15 companies that was launched in November. The inclusion of Koç Holding, Arçelik, Tofaş, Yapı Kredi and Tüpraş in this index is a major indicator of our commitment to sustainable management.

We are also asking, “If not us, then who?” in social investments through our exemplary institutions and model projects

Koç Group maintains a pioneering role in creating social benefits in addition to generating economic value. We are proud of our exemplary institutions and model projects that allow us to ask, “If not us, then who?”

Our Vehbi Koç Foundation, which celebrated its 45th anniversary this year, was established as Turkey’s first private foundation. It has also served as a model for the establishment of many such unique foundations in Turkey. The words of appreciation we have heard for 45 years from scholars, alumni, patients and visitors, of our educational institutions, hospitals and museums, encourage us to undertake new large-scale projects.

At Koç University Hospital, which was established as a medical training and research center as part of this effort, we aim to provide students with world class specializations, help them to improve themselves in research labs, and encourage them to further enhance the academic credentials of our prestigious university.

We have also completed the preliminary work for the Contemporary Art Museum, another one of our new initiatives.

The Rahmi M. Koç Museum and Vehbi Koç and Ankara Research Center (VEKAM), both of which celebrated their 20th anniversaries during the year, are other sources of immense pride for us.

In addition to these distinguished institutions, we continue to create “shared value” both for our Group companies and for society at large with our corporate social responsibility initiatives.

We take great satisfaction in seeing that two award-winning projects, “Vocational Education: A Crucial Matter for the Nation” and “For My Country,” both administered in keeping with our long-term strategic approach and powered by our employees and dealers, are creating permanent solutions for Turkey.

I would like to take this opportunity to express my gratitude to our shareholders, customers, dealers, business partners, trade unions, executives and employees for their help in ensuring the sustainability of our economic and social accomplishments and moving us forward, toward a better world for many years to come.

Respectfully yours,

Mustafa V. Koç
Chairman of the Board of Directors