Page 102 - TURKRptJun19

Two listed automakers, Tofas and Ford Otosan, owned by Turkey’s largest industrial conglomerate Koc Holding, managed to post profits in the first quarter of 2019 despite the economic turmoil that has engulfed the country. Tofas, a joint venture between Fiat and Koc, reported that its net income remained almost flat at TRY325mn in the first quarter compared to a year ago. The automaker’s revenues declined 10% y/y to TRY3.98bn. Its Ebitda, however, rose some 13% y/y to TRY590mn in Q1. “Thanks to favourable FX rates [i.e., a strong euro vs the Turkish lira), the 32% contraction in volumes does not fully reflect on revenues,” the company said. In the first quarter the company produced a total of 56,299 vehicles versus 84,400 units a year ago. “The decline in the domestic market and faltering PC demand from the European markets were the underlying reasons,” it explained. Tofas’s passenger car exports fell 43% y/y to 23,900 units while light commercial vehicle shipments declined by 27% y/y to 20,500 units.
Ford Otosan, in which Koc and Ford Motor Company have equal shares, appeared to better position itself on the export markets to compensate for losses on the domestic market. The company’s profit increased 11% y/y to TRY478mn in the first quarter while its revenues soared some 27% y/y to TRY9.28bn, driven by exports. “Export revenues rose 42% y/y to TRY8.1bn with market growth, ongoing strong demand for our products and currency impact. Export volumes grew 7% y/y to 89,193 units. Share of exports in total revenues rose to 88% from 79% a year ago,” Ford Otosan said in an earnings presentation. “Profitability was strong despite considerable cost pressure [resulting from weaker €/TRY and high inflation] and contracting domestic volumes. Drivers were: rising export demand, cost reduction actions as well as sales mix and pricing discipline,” the carmaker said. Ford Otosan predicted that 380,000-430,000 cars would be sold on the domestic market this year while it expected to sell some 50,000 vehicles domestically in 2019. Its production target for this year is between 375,000 and 385,000 units.
Turkish buses and light trucks maker Temsa has been sold to Swiss firm True Value Capital Partners, according to a May 30 report on Bloomberg HT. Temsa has reportedly been let go by one of Turkey’s largest conglomerates, Sabanci Holding, with the sale made based on a value of Turkish lira (TRY) 375mn ($63.8mn) after adjusting for debt and cash holdings, and including the 49% stake owned by Sabanci and the other 51% owned by shareholders that includes the holding company owner, namely the Sabanci family. The nominal value of Temsa, based in the southern Turkish city of Adana, was given as TRY825mn. Turkish manufacturers are mired in a currency crisis-hit and recession-dogged economy, facing steep rises in costs driven by the dizzying decline of the lira since the start of 2018. Bloomberg HT quoted Sabanci Holding CEO Mehmet Gocmen as saying the sale was decided as part of a technological and strategic shift. The conglomerate, he said, has decided to increase its focus on energy production, including wind power.
102 TURKEY Country Report June 2019 www.intellinews.com