Message From CEO

We began the year 2019 under difficult conditions but have completed it in a more positive environment than expected both globally and in Turkey. The expansionary monetary policies of the central banks have contributed significantly to this outlook. With the impact of the global wind and a series of measures taken, our country has started to gradually exit the stagnation that it entered in the second half of 2018. While relative stabilization has been reached in basic indicators such as interest rates, CDS risk premiums and exchange rates, there have been improvements in our locomotive sectors such as construction and automotive as well.

On the other hand, it is a fact that the world is changing much faster and the fragility is rising. For example, the economic slowdown in China or the threat of global epidemics cause the risk of recession all over the world. The insufficiency of traditional monetary policies causes frequent voicing of radical methods such as providing minimum income to individuals, in addition to expansionary fiscal policies. In addition to the conventional economic models, the thrones of the established business models are also shaky, because disruptive technologies are affecting our lives more and more every day. Time magazine’s selection of Swedish young climate activist Greta Thunberg as “Person of the Year” in 2019 shows how environmental issues have entered the center of life. Topics such as circular economy, digital transformation and artificial intelligence are no longer utopia, but are fast becoming our “must have”s. Therefore, we continue our efforts by taking this high-speed global change into consideration and we try to raise the bar above international standards in our activities.

At Akkök Holding, we continue to focus on chemicals, real estate and energy, our three main sectors. In all our fields of activity, without compromising the principles of institutionalism, transparency and integrity, we aim to create value for our country and our stakeholders in a sustainable manner with an innovative, pioneering approach. In 2019, we have carried out notable works that support our vision and will continue to do so.

While our chemical Group companies continued to focus on their organic / inorganic investments in 2019, as in previous years, they also lent priority to sustainability in their business plans. Aksa Acrylic, the world’s largest acrylic fiber producer, was included in the BIST Sustainability Index in 2019. On the one hand, while strengthening its growth plans with new product investments and strategic partnerships, on the other hand, it launched the start-up support project called “Value for Entrepreneurship” with the cooperation of İTÜ Çekirdek and made its first investment in the Porima initiative. The aim is to develop domestic and high-quality filament production with Porima. DowAksa, a high-tech carbon fiber producer, where Aksa is a 50% partner, achieved savings of up to 40% in cost reduction projects, which is one of its primary goals. In addition, with the facility investments to be carried out until 2023, it plans to expand the existing production capacity and reach new customers.

Akkim, one of the largest chemical manufacturers in Turkey, with an export network of 70 countries in 6 continents, recorded significant progress related to capacity purchase deals to buy companies that will further expand its existing business areas in 2019 while it continued its organic investments. Gizemfrit, a subsidiary of Akkim, is the world’s second largest manufacturer of enamel and Turkey’s largest manufacturer of ceramic frits. It opened its US office in 2019 and has accelerated its R&D activities. Gizemfrit, which has one of the largest R&D centers in its field, has become much more competitive in new product groups such as functional coating and pigment. It continues its development efforts to minimize production waste and make combustion systems more efficient for operational efficiency.

Akiş REIT, one of our real estate Group companies, focused on using its existing assets in the most efficient way in 2019. Aiming to expand resource diversity and strengthen its financial structure by making use of capital market instruments, the company successfully completed its first bond issuance. At the same time, Akiş REIT expanded its efforts in the field of sustainability, and became a participant of the UN Global Compact, the world’s largest corporate sustainability initiative in 2019. The Akmerkez REIT, implemented as a first in Turkey, a sustainable local agriculture project on the roof of a shopping center, called “Agriculture on the Terrace”, and expanded it with the cooperation of the Department of Gastronomy of the Özyeğin University.

With 30 years of experience and 1,224 MW of installed power and being one of the companies shaping the energy sector in Turkey, Akenerji’s basic strategy in 2019 was optimum operation of existing power plants and development of new projects that will create value for the Company. Thus, creating the highest EBITDA in its history this year, Akenerji refinanced its USD 859 million loan debt in line with its cash-generating capacity in order to strengthen its financial structure and carry out market activities more firmly. Sedaş and Sepaş Energy, our companies that carry out electricity distribution and retail sales of our key industrial cities, Sakarya, Kocaeli, Bolu and Düzce, continued their work in the field of customer satisfaction and digitalization. Continuing to support the call center with special applications, Sedaş took its place among the leading companies in the sector with the WhatsApp notification line and the company-specific mobile application. Sepaş Energy, on the other hand, started to serve its customers through new channels such as e-government, where they are able to perform their transactions online, saving time and workload.

At Akkök Holding, we continue to create value for our country with a combined turnover reaching TL 15 billion, a combined EBITDA of TL 2.3 billion, 19 production facilities and more than 5,000 employees. I sincerely extend my gratitude to all our employees, business partners, shareholders and stakeholders for their valuable contribution and support.

Sincerely,

Ahmet C. Dördüncü

CEO