Ford Otomotiv Sanayi : 2019 6M Earnings Announcement

Highlights

Financial Results

Revenues

Operating Profit

EBITDA

Profit Before Tax

Net Income

Volumes

Total Wholesale Volume

Million TL	YoY Change
18.409	19%
Export Revenues	16.056	33%
Domestic Revenues	2.353	-30%
1.215	7%
1.576	12%
878	-7%
888	-3%
Units	YoY Change
188.451	-9%
Export Volume	168.148	2%
Domestic Wholesale Volume	20.303	-51%
Domestic Retail Volume	20.485	-50%
Market Share	10,3%	-1.0 pps
Production	186.667	-6%
Capacity Utilization Rate	82%	-8.0 pps due to Transit facelift transition

1H19 financial results published in this earnings announcement have been prepared according to the International Financial Reporting Standards (IFRS).

Summary Income Statement, Million TL	30.06.2019	30.06.2018	% Change
Revenues Export Domestic Gross Profit Operating Profit	18.409 16.056 2.353 1.915 1.215	15.472 12.099 3.374 1.679 1.139	19% 33% -30% 14% 7%
Financial Income/(Expense) Profit Before Tax Net Income	-336 878 888	-196 940 919	71% -7% -3%
Other Financial Data Depreciation and Amortization EBITDA Capital Expenditures	361 1.576 -549	270 1.408 -424	34% 12% 29%

Revenues

Turkish auto industry contracted 45% YoY in 1H19 to 198,883 units. Sales declined across all segments YoY: PC -43%, LCV -50%, MCV -50% and Heavy Trucks -59%. PC industry share was 78.6%, up from 76.1% a year ago. LCV industry share was 9.8%, down from 10.7%. Ford Otosan was #3 in the total industry with 10.3% market share and 20,485 unit retail sales, reinforcing its CV leadership with 36% share.

Ford Otosan's domestic revenues came in at TL 2,353 million. The YoY decline in domestic revenues was limited to 30%,despite 51% domestic volume decline, with focus on high margin products and pricing discipline.

Export revenues rose 33% YoY to TL 16,056 million with market growth, ongoing strong demand for our products and currency impact. Export volumes grew 2% YoY to 168,148 units. Share of exports in total revenues rose to 87% from 78% a year ago. Ford Transit was facelifted in Q2 and the transition slowed down export volumes in May and June. The export volumes will be normalized in the remainder of the year with no downside risk to our export guidance.

Total revenues were up 19% YoY to TL 18,409 million, driven by the robust export business.

Profitability

Profitability was solid in 1H despite considerable cost pressure [resulting from weaker €/TL (+28% YoY) and high inflation], contracting domestic volumes and lower profitability in the domestic market. Drivers were:

• + Rising export demand

• + Cost reduction actions and strong OpEx control

• + Sales mix and pricing discipline

Revenues (TL 18,409 million), cost of sales (TL 16,494 million) and gross profit (TL 1,915 million) were up 19%, 20% and 14%, YoY respectively. Net other income declined 85% YoY due to 261% increase in net financial expenses from operating activities. As a result, operating profit reached TL 1,215 million, up by a mere 7% YoY. OpEx/Sales was flat YoY at 3.8%. EBITDA grew 12% YoY to TL 1,576 million. Net financial expenses were 71% more YoY driven by 73% rise in net fx losses, mainly explained by prior period fx losses from cash flow hedge reserve. As a result, profit before tax declined 7% YoY to TL 878 million. Net income was down 3% to TL 888 million.

Margins: Gross 10.4% (-45 bps YoY); EBITDA 8.6% (-54 bps YoY); EBITDA excluding other income 8.5% (-24 bps YoY); Operating 6.6% (-76 bps YoY); and Net 4.8% (-111 bps YoY).

Sales Volume by Model, units Domestic Sales

Passenger Car

30.06.2019 20.303 4.599

30.06.2018 41.196 11.565

% Change -51% -60%

Transit Courier

Transit Connect

Light Commercial Vehicle

6.841

6.978

137

13.389

13.901

512

-49% -73% -50%

Transit

Transit Custom Ranger

Medium Commercial Vehicle

5.505

1.833

7.613

275

13.359

9.484

3.204

671

-42% -43% -59% -43%

Truck

Total Domestic

Export Sales

Transit Custom

Transit

Transit Courier

Truck

Total Exports

Other

Total Wholesale Volume

1.113 10.441

2.371 19.162

-53% -46%

168.148

165.166

2%

86.096

84.097

2%

59.619

61.176

-3%

21.259

18.999

12%

1.152

776

48%

22 89.193

118 83.068

-81% 7%

188.451

206.362

-9%

Total Domestic Automotive Industry Ford Otosan Retail Sales Ford Otosan Market Share

198.883 20.485 10,3%

362.406 40.942 11,3%

-45% -50% -1.0 pps

Summary Balance Sheet, Million TL	30.06.2019	31.12.2018	% Change
Current Assets Current Liabilities Property, Plant and Equipment - Net Total Assets Total Liabilities Shareholders' Equity	9.122 8.812 4.180 15.240 11.287 3.953	7.395 7.220 3.923 13.184 9.291 3.893	23% 22% 7% 16% 21% 2%

Financial Ratios	30.06.2019	31.12.2018
Current Ratio (Current Ass./Current Liab) Liquidity Ratio ((Cur. Ass. - Stock)/Cur. Liab.) Net Debt / Tangible Equity Net Debt / EBITDA Current Assets / Total Assets Current Liabilities / Total Liabilities Total Liabilities / Total Liabilities and Equity Return on Equity (Net Profit/Av. Shareh. Equity)	1,04 0,67 1,27 1,32 0,60 0,78 0,74 44,9%	1,02 0,64 1,01 1,08 0,56 0,78 0,70 43,2%
30.06.2019	30.06.2018
Gross Margin EBITDA Margin EBITDA Margin excluding other income/expense Operating Margin Net Income Margin	10,4% 8,6% 8,5% 6,6% 4,8%	10,8% 9,1% 8,8% 7,4% 5,9%

Summary Cash Flow Statement, Million TL	30.06.2019	30.06.2018	% Change
Beginning Balance of Cash & Equivalents Net Cash Generated from Operating Activities Net Cash Used in Investing Activities Net Cash Used in Financing Activities End of Period Balance of Cash & Equivalents	1.391 991 -548 82 1.916	1.803 832 -392 -958 1.285	-23% 19% 40% -109% 49%

2019 Guidance	Contacts
Oğuz Toprakoğlu
	Total Industry Volume	380 K - 430 K
Chief Financial Officer
Ford Otosan:	Tel: [phone]
Retail Sales Volume	40 K - 50 K	[e-mail]
Export Volume	340 K - 350 K
Aslı Selçuk
	Wholesale Volume	380 K - 400 K
Production Volume	375 K - 385 K	Investor Relations Manager
Capex (fixed assets)	€160 -180 million	Tel: [phone]
[e-mail]