TOFAŞ 31.12.2017 RESULTS WEBCAST PRESENTATION 02.02.2018
AGENDA Highlights Turkish Automotive Industry Production Domestic Market Developments Tofaş Domestic Market Performance Export Markets & Tofaş Performance Financial Performance Investments Expectations 2
HIGHLIGHTS Tofaş concluded FY17 on a high note, with all-time-record Net Revenues of TL17.5B, EBITDA of TL 2.0B and Consolidated Net Profit of TL 1.3B. Tofaş achieved the highest production volume in the history of Turkish Automotive Industry, manufacturing 384k units in FY17. In 2017 Fiat climbed to the 2nd position in the domestic market, achieving 12,6% market share and marking a considerable improvement over last year s 4th position, For the second consecutive year, Fiat Egea is the best-selling passenger car in Turkey, reaching 6,6% market share with over 48K units. Tofaş climbed to the to 3rd position from 5th in the «Turkey s Top 500 Industrial Enterprises» list issued by the Istanbul Chamber of Industry (ISO).
TURKISH AUTOMOTIVE INDUSTRY Turkish Auto Production - Cumulative 25.6% 25.8% 2,000,000 22.9% 23.0% 22.1% 22.8% 1,800,000 1,600,000 1,543,587 1,485,927 1,400,000 1,223,838 1,200,000 1,033,225 1,000,000 869,158 800,000 600,000 424,219 400,000 200,000 25.0% 20.0% 15.0% 10.0% 5.0% Turkish Auto Exports - Cumulative 24.5% 24.5% 1,800,000 units 22.1% 21.5% 1,600,000 21.0% 20.7% 1,400,000 1,200,000 1,141,382 1,215,977 1,000,000 984,474 800,000 797,130 714,283 600,000 400,000 355,399 200,000 25.0% 20.0% 15.0% 10.0% 5.0% 0 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Nov-17 0.0% 0 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Nov-17 0.0% Source: OSD Turkey Tofaş % Source: OSD Turkey Tofaş % YTD Nov 2017, total Turkish motor vehicle production volumes increased by +16.1% Y-o-Y, reaching 1,544ku. Tofaş is the largest manufacturer of the industry in the first 11 months of the year, with 352ku. Export volume of Turkish auto industry grew by 18.9% Y-o-Y, reaching 1,216k units. Thanks to Tipo Family, Tofaş export volumes reached 251.5k units YTD November 2017 (FY17: 271k). 4
TOFAŞ PRODUCTION Tofaş Production Volume - Quarterly units 125,000 118,651 102,859 104,920 103,249 100,000 93,763 79,103 82,878 82,242 75,000 50,000 25,000 0 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017Q2 2017Q3 2017 Q4 400,000 350,000 300,000 250,000 200,000 150,000 100,000 Tofaş Production Volume - Cumulative units 50,000 0 79,103 181,962 264,840 383,491 93,763 198,683 280,925 384,174 Mar.16 June.16 Sept.16 Dec.16 Mar.17 June.17 Sept.17 Dec. 17 Tofaş YTD December production remained parallel to the previous year at 384k units. Tofaş YTD December production mix is 55% Passenger Cars & 45% Light Commercial Vehicles. Tofas YTD December Capacity Utilization Rate stands over 90% (in 3 shifts) 5
DOMESTIC MARKET SEGMENT EVOLUTION 000 units -2.8% +1,4% +3,2% -4.5% 968.0 983.7 956.2 725.6 756.9 722.8 2.9% 242.4 226.8 233.4 Source: ODD Passenger Cars Light Commercial Vehicles Total 2015 December YTD 2016 December YTD 2017 December YTD 6
TOTAL DOMESTIC MARKET PC & LCV MONTHLY RETAIL SALES 000 units 122 156 142 136 35 3335 55 53 47 92 83 83 85 74 76 94 92 82 85 86 92 84 84 82 83 83 7273 6468 71 64 59 85 101 Source: ODD Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017 Total domestic market retail sales showed a decline of -2.8% Y-o-Y and resulted as 956k units YTD December 2017. 7
TOFAŞ DOMESTIC SALES PC & LCV MONTHLY RETAIL SALES 000 units 22 18.6 17 4 4 4.0 7 6 5.4 10 9 11 10.5 10.9 11.0 9.6 10 9.5 10 10 9 9 9 6 9.8 10.0 8 7 8 7 7 11.3 9 11 14 12.4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017 Tofaş local market retail sales totalized 122.8 k units in FY17. Despite the 2.8% decline in total domestic market, Tofaş retail sales showed a growth of +12.7% YTD December Y-o-Y, thanks to the availability of Egea full product line-up (full year for HB, SW) and Fiorino Gas 1.4. 8
FIAT DOMESTIC MARKET SHARE PASSENGER CARS MARKET SHARES Big jump of Tofaş market share. Including Premium brands YTD December 2017 is 8.9% vs. 7.3% in 2016. 92.3% of Tofaş domestic sales come from locally manufactured vehicles and this is the highest ratio in Turkey. YTD December 2017, Fiat Egea is the best seller among passenger cars with 6.6% market share 15.7% 12.4% 8.5% 6.8% 2017 December YTD 6.2% 5.8% RENAULT VW FIAT HYUNDAI OPEL DACIA Source: ODD 14.1% 13.4% 2016 December YTD 7.3% 6.9% 6.5% 6.2% RENAULT VW OPEL FIAT HYUNDAI TOYOTA 9 Source: ODD
FIAT DOMESTIC MARKET SHARE LIGHT COMMERCIAL VEHICLES MARKET SHARES Fiat confirms its leadership in CDV segment Successful launch of Fiorino 1.4 gasoline 30.5% 25.1% 2017 December YTD 11.9% 7.2% 4.5% 3.9% Source: ODD FORD FIAT VW RENAULT PEUGEOT MERCEDES 30.1% 23.7% 14.5% 2016 December YTD 6.7% 4.5% 3.7% Source: ODD FORD FIAT VW RENAULT PEUGEOT CITROEN 10
FIAT DOMESTIC MARKET SHARE MARKET SHARES PC + LCV COMBINED YTD December 2017, Fiat market share is 12.6% up by 1.8pps YoY, climbing from 2nd position from 4th in the market. 13.6% 12.6% 12.3% 11.6% 2017 December YTD 5.5% 5.1% RENAULT FIAT VW FORD HYUNDAI DACIA Source: ODD 13.7% 12.4% 11.1% 10.8% 2016 December YTD 5.6% 5.4% Source: ODD VW RENAULT FORD FIAT OPEL TOYOTA 11
TOFAŞ EXPORTS
TOFAŞ EXPORTS SEGMENT EVOLUTION -3.1% 000 units +3,2% +1,4% 279.4 270.8-7.8% 1.6% 173.7 139.6 141.8 139.9 128.7 142.1 31.9 Passenger Cars Light Commercial Vehicles Total 2015 December YTD 2016 December YTD 2017 December YTD 13
TOFAŞ EXPORTS Tofaş Monthly Export Volumes 000 units 19.8 29.8 29.0 23.8 22.7 21.0 14.7 13.8 14.7 14.8 14.9 23.8 25.1 11.2 27.1 18.3 27.2 24.1 24.4 16.4 21,3 5.5 16.8 14.3 9.2 25.8 19.7 28.8 28.4 22.4 22.3 17.2 14.9 15.2 26.7 19.2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017 YTD December 2017 Tofaş exports declined 3% Y-o-Y totalizing 271k units Volume growth during H1 is mainly driven by the new Fiat Egea/Tipo (Dodge Neon) family vehicles. In H2, FCA focus on inventory management and a lower-than-expected penetration in the fleet channel in Europe, affected export volumes. 14
EUROPEAN MARKETS Total European PC Market units Total European LCV Market units 4,500,000 5.7% 600,000 5.2 % 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 2.7% -5.7% 4.7% 7.9% 7.7% 500,000 400,000 300,000 200,000 7.1% -3.6% 4.9% -3.4% 15.5% 1,000,000 500,000 100,000 0 Source: ACEA 240 235 230 225 220 215 210 205 200 Rest of Europe GERMANY UK FRANCE ITALY SPAIN Jan-Dec 16 Jan-Dec 17 Tofaş Export to Europe 235k Jan-Dec'16 235k Jan-Dec'17 0 Source: ACEA Rest of Europe FRANCE UK GERMANY ITALY SPAIN Jan-Dec 16 Jan-Dec 17 Growth seen in major European markets except UK, badly affected by Brexit, continued in 2017. Market with the strongest growth rates are the ones where FCA has a higher share 15
EXPORT MARKETS SALES BREAKDOWN 2016 FY (Total Units:280k) 2017 FY (Total Units:271k) USA & Canada; Mexico; 1.8% Other; 2.2% 6.5% MENA; 5.4% Rest of Europe; 12.0% Italy; 37.8% USA & Canada; 4.7% Rest of Europe; 9.0% MENA; 4.0% Mexico; 1.7% Other; 3.5% Italy; 37.6% Poland; 5.1% Belgium; 3.7% Belgium; 4.5% Spain; 8.4% France; 7.9% Spain; 8.1% France; 9.5% UK; 5.8% Germany; 8.3% UK; 5.3% Germany; 6.9% 16
TOFAŞ SHIPMENTS PC&LCV QUARTERLY BREAKDOWN 000 units 392 393 123.5 78.6 58.3 106.2 76.0 83.7 61.3 83.9 97.0 78.6 106.5 75.0 84.4 53.3 105.6 64.0 20.3 30.2 22.4 39.6 18.5 31.5 31.1 41.6 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 Export Domestic Tofaş 2017 shipments remained flat Y-o-Y, at 393k units. Q4 2017 shipments remained below Q4 2016, with 105.6k units due to lower exports.. 17
SHIPMENTS BY BUSINESS 2017 YTD December Domestic Exports LCV 59.2 48% PC 63.5 52% LCV 118.7 44% PC 152.1 56% Total PC LCV PC LCV LCV 177.9 45% PC 215.6 55% PC LCV 18
SHIPMENTS BY MODEL 2017 YTD December units 2017 YTD 2016 YTD Δ 2017 YTD 2016 YTD Δ Exports Domestic Market Linea 0 355-355 Linea 8,436 7,298 1,138 Tipo Sedan 30,473 45,998-15,525 Egea Sedan 42,873 34,796 8,077 Tipo HB & SW 98,191 65,108 33,083 Egea HB & SW 4,361 4,153 208 Doblo 0 5,236-5,236 New Doblo 27,970 28,604-634 New Doblo 58,289 63,631-5,342 Fiorino 27,656 22,971 4,685 GM (Opel, Vauxhaul) 19,346 25,556-6,210 MCV PSA 0 3,062-3,062 Ram Promaster City 12,651 18,173-5,522 Imported Vehicles 11,411 11,606-195 MCV Fiat 37,351 40,842-3,491 Domestic Total 122,707 112,490 13,364 MCV PSA 14,395 14,544-149 Others 64 94-30 Total Shipments 393,467 392,027 1,526 Exports Total 270,760 279,537-8,777 19
FINANCIAL PERFORMANCE 20
2017 DEC. YTD FINANCIAL HIGHLIGHTS SHIPMENTS ( 000 units) REVENUES (MTL) 2017 YTD 271 123 Total: 393k 2017 YTD 11,888 5,580 Total: 17,468 2016 YTD 280 112 %0 Total: 392k 2016 YTD 9,839 4,397 %23 Total: 14,236 0 100 200 300 400 500 Export Domestic 0 5,000 10,000 15,000 20,000 Export Domestic EBITDA (MTL) PBT (MTL) 2017 YTD 2,002 2017 YTD 1,229 2016 YTD 1,366 %47 %54 2016 YTD 798 0 500 1,000 1,500 2,000 2,500 0 200 400 600 800 1,000 1,200 1,400 21
TOFAŞ REVENUES M TL 14,236 17,468 6,000 5,000 4,000 3,000 2,000 1,000 0 3,652 3.112 2,716 3,197 2,519 3,228 2,218 1,905 5,067 4,756 4,499 4,098 3,804 3,131 3,128 2,401 1,559 1,936 810 1,133 1,371 1,403 894 870 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 Local Export YTD December 2017 total revenues grew by +23% Y-o-Y, reaching TL 17.5B. Favorable FX rates (i.e.: strong vs. TL) were the main driver of this growth. 22
GROSS PROFIT M TL 1,448 2,026 700 600 500 400 300 200 100 0 13.8% 11.1% 11.6% 10.2% 10.3% 10.4% 9.8% 9.8% 699 486 467 440 302 357 304 420 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Gross Profit Gross Profit % YTD December 2017 Gross Profit grew by +40% Y-o-Y reaching TL 2B. 2017 YTD December Gross Margin is 11,6% 23
OPERATING PROFIT M TL 500 450 400 350 300 250 200 150 100 50 0 1,305 844 8.9% 7.5% 6.1% 6.1% 5.9% 6.7% 6.5% 5.7% 453 280 276 285 221 166 176 292 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Operating Profit Operating Margin YTD December 2017 Operating Profit climbed to TL 1.3B showing a growth of 54.1% Y-o-Y The full year Operating Margin increased by 1.5pps to 7.5%. * Calculated by keeping the non financial exchange rate gain & losses out of operating profit in line with previous years. 24
EBITDA M TL 700 600 500 400 300 200 100 0 10.2% 276 1,366 9.6% 9.9% 351 307 9.1% 433 435 10.6% 10.2% YTD December 2017 EBITDA climbed to TL 2.0B with an increase of +46% Y-o-Y. FY17 EBITDA margin increased to 11,5% with 1.9pps annual improvement, reaching a peak of 12.8% in Q4, thanks to FX impact and Cost Reduction measures. * Calculated by keeping the non financial exchange rate gain & losses out of operating profit in line with the previous years. 25 460 12.0% 458 12.8% 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 EBITDA EBITDA % 2,002 649 12.0% 8.0% 4.0% 0.0%
PROFIT BEFORE TAX M TL 798 1,229 450 400 350 300 250 200 150 100 50 0 8.6% 7.2% 6.4% 6.4% 5.4% 5.3% 5.5% 5.6% 438 260 173 198 231 272 166 289 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 8.0% 4.0% 0.0% PBT PBT Margin Profit Before Tax surged by +54.1% Y-o-Y in FY17, amounting to TL 1.2B. 2017 Q4 PBT margin was up by 3.1pps to 8.6%. 26
NET PROFIT M TL 970 1,283 450 400 350 300 250 200 150 100 50 0 8.9% 8.4% 7.5% 6.6% 6.7% 6.4% 6.9% 5.9% 424 240 239 281 312 262 284 210 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 8.0% 4.0% 0.0% Net Profit Net Profit margin 2017 YTD Net Profit grew by +32.2% Y-o-Y, reaching 1,283 MTL. Average Net Margin in the full year is 7.3%. 27
2017 YTD INCOME STATEMENT TL Million 31.12.2017 31.12.2016 Δ % Net Sales 17,468 14,236 22.7% Gross Profit 2,026 1,448 40.0% Operating Profit 1,305 844 54.8% Profit Before Tax 1,229 798 54.1% Net Profit 1,283 970 32.2% EBITDA 2,002 1,366 46.5% Gross Margin % 11.6% 10.2% 1.4pp Operating Margin % 7.5% 5.9% 1.5pp Profit Before Tax Margin % 7.0% 5.6% 1.4pp Net Margin % 7.3% 6.8% 0.5pp EBITDA % 11.5% 9.6% 1.9pp 28
RETURN ON EQUITY 39.2% 34.4% 35.0% 27.7% FY14 FY15 FY16 FY17 RoE improvement continues in FY17, reaching a solid 39.2% 29
BALANCE SHEET ASSETS (million TL) Current Assets 31.12.2017 31.12.2016 Δ Cash and Cash Equivalents 3,239 2,383 856 Inventory 1,056 920 135 Trade Receivables 1,765 1,363 402 S.T. Consumer Financing Loans 1,339 1,382-42 Other Current Assets 327 208 119 Non-current Assets 31.12.2017 31.12.2016 Δ Fixed Assets 2,350 2,321 29 Intangible Assets 1,704 1,770-66 L.T. Consumer Financing Loans 1,197 847 349 Other Non-current Assets 899 654 245 Total Assets 13,875 11,848 2,027 30
BALANCE SHEET LIABILITIES (million TL) Current Liabilities 31.12.2017 31.12.2016 Δ Short-term Financial Liabilities 680 408 272 S.T. Portion Of L.T. Financial Liabilities 1,900 1,629 271 Trade Payables 3,866 3,366 499 Other Current Liabilities 399 307 92 Non-current Liabilities And Equity 31.12.2017 31.12.2016 Δ Long-term Financial Liabilities 3,231 2,979 252 Other Long-term Liabilities 216 201 15 Equity 3,583 2,957 626 Equity & Liabilities 13,875 11,848 2,027 31
FINANCIAL POSITION EUR million 31.12.2017 30.09.2017 30.06.2017 31.03.2017 31.12.2016 30.09.2016 Financial Assets 717 744 539 714 642 506 KFK - Consumer Loans Granted 562 540 541 553 601 634 KFK Financial Liabilities 557 511 505 530 597 607 Tofaş Financial Liabilities 730 869 701 740 755 853 Net Financial Position -8-95 -126-3 -109-320 Factoring 153 166 152 222 225 141 At December 31, Liabilities decreased following the Project related payments of 62mn bank loans, while the strong cash generation in the period softened the impact on the Net Financial Position. 32
WORKING CAPITAL EUR million 31.12.2017 30.09.2017 30.06.2017 31.03.2017 31.12.2016 30.09.2016 Trade Receivables 391 343 479 334 367 390 Inventory 234 257 273 249 248 324 Other Receivables 72 27 44 58 56 43 Trade Payables 856 721 935 913 907 731 Other Liabilities 58 116 109 177 58 92 Net Working Capital -218-209 -248-449 -294-66 of which: Factoring 153 166 152 222 225 141 As of December 31, Net Working Capital remained stable both on a quarterly and yearly basis. 33
INVESTMENTS EUR million 2017 2016 2015 2014 Structural 31 55 32 19 Linea 0 - - 2 Minicargo 13 15 15 24 Doblo & RAM ProMaster City 24 30 56 169 Egea/Tipo Sedan, HB & SW 89 252 275 116 Total 157 352 377 330 Over 1.2B investments in the last four years Egea/Tipo Project investments were completed in 2017 34
EXPECTATIONS 2018 FY expectations are as follows: Domestic light vehicle market (PC+LCV): 930k 950k units Tofaş domestic retail sales: 110k 120k units Export shipments: 270k 290k units Expected production volume: 370k 390k units Investments: 150 170M 35
APPENDICES 36
SPECIAL CONSUMPTION TAX CHANGE PASSENGER CARS Engine displacement (cm 3 ) Pre-tax Price Range SCT Total Tax (SCT+VAT 18%) < TL 46,000 45% 71% <1600 TL46,000 80,000 50% 77% > TL80,000 60% 89% 1600-1999 < TL114,000 100% 136% > TL114,000 110% 148% >2000 regardless of price 160% 207% Pre-tax prices were adjusted at the beginning of 2018: For passenger cars <1,600cc, the TL40k limit is raised to TL46k and TL70k limit is raised to TL80k For passenger cars between 1,600cc and 2,000cc, the limit is raised from TL100k to TL114k 37
FIAT DOMESTIC MARKET SHARE MONTHLY PC MARKET SHARES 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 17.0 11.9 8.7 6.3 6.1 15.7 14.1 8.2 7.1 4.8 15.9 14.9 12.1 11.5 8.3 8.4 7.7 7.4 7.2 6.6 16.8 16.3 15.7 15.5 14.7 12.4 9.9 10.9 9.9 12.7 11.2 9.1 9.2 9.0 7.0 6.8 6.6 6.8 7.2 6.5 6.1 5.4 5.6 5.6 16.3 15.8 14.1 13.5 13.0 11.3 7.8 8.0 7.1 8.4 6.3 6.2 6.5 6.4 4.6 2.0 0.0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Fiat Renault VW Hyundai Opel 38
FIAT DOMESTIC MARKET SHARE MONTHLY LCV MARKET SHARE 40.0 35.0 30.0 25.0 20.0 23.3 30.9 29.0 28.4 28.9 26.2 24.2 22.5 32.1 19.3 30.0 30.9 23.7 25.6 26.1 25.9 28.9 27.3 29.3 33.2 26.0 26.9 33.7 26.9 15.0 10.0 5.0 0.0 13.1 12.7 13.6 11.7 12.9 11.9 13.4 13.0 11.9 13.0 7.5 7.8 10.9 9.0 5.4 5.8 7.3 6.9 6.5 6.3 7.0 8.0 8.1 7.7 5.4 4.1 4.4 4.6 6.0 4.9 4.5 3.1 4.1 3.6 4.9 1.7 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Fiat Ford VW Renault Peugeot 39
FIAT DOMESTIC MARKET SHARE MONTHLY PC + LCV COMBINED 14.0 12.0 10.0 13.8 12.8 12.2 10.9 11.1 13.8 13.1 10.9 13.8 12.7 12.0 11.1 13.0 12.2 12.1 11.9 13.6 12.7 12.5 12.1 14.6 14.1 12.8 13.1 11.8 11.3 11.4 11.0 13.7 13.3 12.9 10.5 14.3 13.6 12.8 12.7 12.0 11.4 10.5 10.4 13.9 14.0 12.0 13.4 12.8 12.6 12.4 12.0 8.0 6.0 4.0 6.2 6.7 6.4 5.5 5.5 5.8 6.1 5.7 4.4 5.1 5.2 4.9 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Fiat Ford VW Renault Hyundai 40
CONTACTS INSTITUTIONAL INVESTOR RELATIONS Erman Tütüncüoğlu Financial Risk & Investor Relations Manager T: +90 212 275 3390 / 2751 F: +90 212 216 4028 : erman.tutuncuoglu@tofas.com.tr : Büyükdere Caddesi, No:145, Tofaş Han, 34394, Zincirlikuyu / ISTANBUL TURKEY
DISCLAIMER This presentation contains forward-looking statements that reflect the Company management s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by a variety of variables and changes in underlying assumptions that could cause actual results to differ materially. Neither Tofaş nor any of its directors, managers or employees nor any other person shall have any liability whatsoever for any loss arising from use of this presentation. 42