Message From CEO

We started 2020 with a positive and optimistic outlook for both the real sector and financial markets. However, the epidemic that started in China and spread throughout the world reversed this trend and brought the economies to a standstill, especially in March-April. Although the contraction slowed down with the normalization steps taken in the summer months, the slow progress of the vaccination process caused the economic recovery to take longer than expected. Global trade volume contracted by 5%, while forecasts for a global contraction of 3% to 4% for 2020 were made. In this process, while many countries tried to reduce the economic impact of the pandemic with financial support packages and expansionary monetary policies, global inflation risk emerged as a side effect.

2020, which was also challenging for our country, was completed with an annual growth rate of 1.8%. Due to the significant impact of global trade, exports declined by 6% compared to the previous year, while imports grew by around 4% as a result of increased domestic consumption. Due to the negative outlook in the tourism and logistics sectors, the foreign trade deficit rose to USD 50 billion. Due to the ongoing pandemic, possible closures in markets such as Germany and England, which are the driving force of our exports, continue to be a risk factor. Inflation continued to be in double digits, as in the last few years, and exchange rates followed a highly volatile course.

Entering 2021, the rising trend in the Turkish Manufacturing PMI data, which is one of the leading economic indicators, and the increase in the country’s growth forecasts to 5% create a more optimistic new year expectation. On the other hand, it is very critical to have a stable macroeconomic outlook and a predictable market structure in order to augment investments that will support growth and especially for foreign investors to expand their activities in our country. We consider the immediate implementation of the reforms that will create this environment to be among the top priority agenda items due to the still fragile markets and risks such as the inflation and the pandemic.

Along with the pandemic, the way of doing business in the world and in our country is going through a radical change. In this process, while new flexible business models that focus on themes such as digital transformation, environmentally sensitive and sustainable production came to the fore, traditional business models needed adaptation. In particular, companies that provide advanced technology and value-added products/services boosted their valuations in this period and received much more investment than traditional companies. On the other hand, the tendency to become widespread in supply sources due to the problems experienced in global supply chains has emerged as a vital opportunity for Turkey. We anticipate that this situation will have a very positive impact on the export volume of our industry. On the other hand, the supply problems in some critical raw materials are bringing commodity prices to abnormal levels and mounting logistics costs are affecting imports and exports, thus negatively impacting the profitability of the companies.

Considering all these processes, we continue our work in areas that create high added value, closely following technological developments and putting global changes at the center. As always, we aim to create value in our three main sectors, chemistry, real estate and energy, with an innovative approach that adheres to the principles of being corporate, transparency and trust.

While our chemical group companies continued their organic/inorganic investments in 2020, they have focused on priority issues such as sustainability and circular economy in their business plans. Aksa Akrilik, the world’s largest acrylic fiber producer, prepared the first Integrated Report covering 2019 activities with its sustainability approach and became one of the leading companies in Turkey to prepare this report. Adopting a business model based on creating long-term shared value with its stakeholders, Aksa has entered 2021 more prepared by identifying its priorities, risks and opportunities in the field of sustainability. DowAksa, a 50%-50% partnership between Aksa Akrilik and Dow Chemical Company, managed to raise its turnover by nearly 60% in 2020, despite the pandemic. The carbon fiber reinforced polyurethane resin plate production technology developed by DowAksa in recent years is in high demand from foreign customers, and investments to expand capacity will continue in 2021 to meet this demand.

Akkim Kimya, one of the largest chemical manufacturers in Turkey, has carried out studies on the acquisitions of leading companies in its sector, which will expand its current business area. These processes are targeted to be completed in 2021. Gizemfrit, a subsidiary of Akkim Kimya and one of the world’s largest enamel and ceramic coating manufacturers, changed its name to “Akcoat” in order to gather its rich product range under a single global brand. Accelerating its R&D activities in 2020, Akcoat has undertaken many R&D projects throughout the year, 6 of which were supported by The Scientific and Technological Research Council of Turkey (TÜBİTAK).

Real estate has been one of the sectors most affected by the coronavirus outbreak. For this reason, Akiş REIT, one of our real estate companies, has created an environment where all stakeholders feel safe by keeping the health and hygiene conditions at the highest level in the shopping malls in its portfolio. At the same time, Akiş REIT, which closely follows digital solutions in the retail sector, has invested in various start-ups and new business models within the scope of the “Innovate 21st Investment and Acceleration Program” for startups. Akmerkez REIT, on the other hand, managed to maintain its dividend performance in 2020 with its strong financial structure. “Agriculture on the Terrace”, a sustainable local agriculture project on the roof of the shopping mall, which was implemented as a pioneer in Turkey, has gained more prominence with the pandemic.

As one of the companies that steer the energy sector with its 1,224 MW installed capacity, Akenerji’s main strategy in 2020 has been to operate the existing power plants optimally at market prices. At the same time, aiming to develop new projects that will create added value for the company, Akenerji expanded its trading activities in foreign electricity markets and reached a record level with a transaction volume of 550 GWh.

Our companies SEDAŞ and Sepaş Enerji, which operate in electricity distribution and retail sales, continued their digitalization efforts with the aim of efficient business models. Sepaş Energy focuses on developing online and reliable solutions that add value to customer experience. In this context, Sepaş Enerji, worked in 2020 on projects such as the creation of new service channels and the implementation of applications that provide ease of payment and has taken customer satisfaction to the next level every day. The investment size of SEDAŞ in the 2021-2025 new tariff period has nearly tripled compared to the previous period and reached a significant amount of TL 2.7 billion. Putting customer satisfaction at the center of its investment plan, SEDAŞ focuses on investments that will raise network quality and digital solutions that will provide efficiency for this purpose.

At Akkök Holding, we raised our combined turnover to TL 17 billion in 2020, in a year which was challenging all over the world, and achieved a combined EBITDA of TL 3.2 billion, with a growth of 40% compared to the previous year. In addition, we reached exports of TL 2.9 billion, and maintained the share of our exports in total turnover. We are constantly trying to develop projects that will contribute to our country and create value. I would like to express my sincere thanks to all our stakeholders, employees, business partners and shareholders who have supported us on this path.

Ahmet C. Dördüncü

CEO