Our Esteemed Members, Dear Employees, and Respected Business Partners,
2019 was a year with relatively slow economic growth around the world. Key factors behind this sluggish growth includes ongoing global trade wars, the United Kingdom’s process of exiting from the European Union, and global geopolitical risks. Central banks across the globe reduced interest rates to boost economic activity and support growth. The low interest rate-abundant liquidity environment enabled financial markets’ expectations to remain strong throughout the year. However, the COVID-19 pandemic, which emerged at the end of 2019, dampened expectations and resulted in a negative outlook on economies around the world.
For Turkey’s economy, 2019 saw efforts to correct macroeconomic imbalances. Thanks to a narrowing foreign deficit and growing tourism revenues, the current transactions balance improved. In addition, inflation fell and interest rates declined. After foreign exchange rates stabilized, the Turkish Central Bank had reduced its policy interest rate from a high of 24% to 12% by the end of the year. Annual consumer price inflation decreased to 11.8% at year-end 2019, down from 20.3% a year earlier.
I would like to reiterate that we worked nonstop during this challenging year in line with our sustainable growth strategy. In 2019, we utilized all our resources effectively in order to optimize the value we create and contribute to the Turkish economy.
OYAK: Turkey’s well-established and largest supplementary occupational pension fund
As the country’s well-established and biggest supplementary occupational pension fund, OYAK recorded a solid performance in 2019. Our professional management approach and robust financial structure has made OYAK resilient in the face of economic and market volatility over many years.
In 2019, OYAK increased total consolidated assets by 16.5% to TRY 118.3 billion. Meanwhile, net corporate consolidated assets totaled TRY 47.6 billion and total distributable resources amounted to TRY 8.2 billion. OYAK left behind another challenging year regarding the real sector in Turkey with the strength we have gotten from our deep-rooted history and our confidence in our country. OYAK continued its mission of providing sustainable returns for the savings of its members and delivered 20.5% rate of return for our members. OYAK boosted its consolidated revenue by 3.6% over the prior year to TRY 48.8 billion and recorded operating profit of TRY 8.9 billion.
Operating in seven regions across Turkey and 23 countries around the world with over 32 thousand employees, OYAK is a global brand that embraces innovation, competes effectively and quickly adapts to change. Committed to using the savings of its members in the best possible way by managing its Group Companies with this approach, OYAK creates significant added value for the Turkish economy.
Sustainable development in all sectors of business activity
In line with its objective of sustainable development in all sectors of business activity, OYAK reported exports amounting to USD 4.9 billion in 2019. As a result, OYAK continued to rank among Turkey’s biggest exporters.
Focused on adding value to Turkey’s economy in every area, OYAK paid TRY 9.1 billion in taxes together with its Group Companies in 2019. OYAK maintained its financial profitability and operational productivity during the year. OYAK maintained its financial profitability and operational productivity in 2019. We adopted inclusive, innovative and competitive approaches based on implementation conformity. As a result, we successfully transformed Group synergy and dynamism into profitable operations.
Turkey’s first and largest integrated flat steel manufacturer
OYAK Mining Metallurgy Group – one of the 50 largest steel manufacturers worldwide – recorded total assets of USD 7.9 billion as of year-end 2019. The Group reported sales revenues of about USD 4.8 billion for the same period. With exports accounting for 20.2% of total sales, the Group significantly contributed to the country’s economy with export revenue of approximately USD 1 billion during a year when trade wars and protectionism were rampant around the globe. As the first and largest integrated flat steel manufacturer and a global brand in the steel industry, OYAK Mining Metallurgy Group alone manufactured 26% of Turkey’s total raw steel production in 2019, producing 8,608 thousand tons of raw steel. In 2020, the Group aims to maintain its success domestically as well as globally with its professional business culture, wide range of high added value products, efficiency-based R&D efforts and other competitive advantages.
To broaden its global footprint, OYAK partnered with Miilux, a leader in the production of strategically important high-strength steel and armor steel with manufacturing facilities in Finland and Poland. On February 25, 2019, OYAK acquired 70% stake of Miilux, while commencing operations at the company’s Manisa Plant.
Regional power in the cement industry
OYAK Cement Concrete Paper Group – operating in Turkey, Portugal, Cape Verde, Ivory Coast and Romania – continued to boost OYAK’s overall performance in 2019 by maintaining its leading position in its fields of business activity. OYAK Cement Concrete Paper Group differentiates from the competition with its advanced technology production infrastructure and R&D competency. The Group aims to take further steps toward becoming a global player by expanding its regional footprint in 2020. Currently, OYAK Cement Concrete Paper Group boasts annual cement production capacity of 32.6 million tons in Turkey and abroad. Conducting cement, concrete, paper production and sales activities, the Group proved its advanced operational competency once again by starting to generate power from waste heat and solar energy resources in 2019.
During the year, OYAK Cement Concrete Paper Group took a major step forward in line with its vision of becoming a global player. The Group acquired the Portugal and Cape Verde operations of CIMPOR, one of the largest cement brands in Europe, on January 17, 2019. Over the last three years, the Group has expanded its cement capacity by 52%. In 2020, OYAK Cement Concrete Paper Group aims to further consolidate its production strength with the synergy created by this strategic acquisition while moving forward to achieve its cement industry objectives.
Undisputed leader in the Turkish automotive industry
Identified with the Renault brand in the Turkish automotive sector, OYAK Automotive Logistics Group maintained market leadership by having share of 34.9% of total automobile production in Turkey as of year-end 2019. OYAK executes automobile, engine and mechanical parts production in collaboration with Renault; automobile and light commercial vehicle sales and after-sales services in collaboration with MA‹S; automobile financing services in collaboration with ORF‹N; and brokerage services for rental operations of corporate enterprises with ORF. We are proud to have achieved successful financial and operational results in 2019 despite volatility in the markets thanks to the Group’s integrated management approach.
MA‹S ranks second in the Turkish automotive market with total sales of 84,983 vehicles (Renault+Dacia) and a market share of 17.7%. Meanwhile, OYAK Renault ranked first in Turkish automobile exports with 295,275 exported vehicles in 2019. This year, MA‹S maintained sector leadership with sales of 78,201 vehicles. OYAK Renault has remained the most preferred passenger automobile brand in Turkey for 20 consecutive years.
OMSAN is a Group company in the logistics sector with land, maritime, air and railway operations. The company provides a comprehensive range of logistics services to leading domestic and international firms in various industries. OMSAN primarily serves customers in the automotive, iron and steel, cement, construction, fuel oil, textile, retail, food and communication sectors.
We developed international cooperation in the logistics sector to create more opportunities for investment and exportation. OYAK brought new investments to Turkey in the logistics arena via loan agreements with international banks. We plan to complete OYAK Port Project in January 2021. This facility will boast an annual handling capacity of 780 thousand vehicles. The port project serves as a major milestone in our logistics business given OYAK’s joint venture with Japanese NYK Group, which accounts for 16% of global market share in Ro-Ro transportation. Once commissioned, OYAK Port will generate many benefits for our Group as well as Turkey’s economy. The project will be the first Ro-Ro port in Turkey to be built and operated in cooperation with a global port operator.
A trusted address in the financial sector
OYAK Finance Group operates OYAK ANKER Bank in corporate and individual banking; OYAK Investment, OYAK Investment Partnership and OYAK Portfolio in intermediary firms; and OYAK Group Insurance in insurance and reassurance brokerage. Despite volatility in global markets in 2019, OYAK Finance Group recorded a successful year thanks to its wide product range and high quality advanced technology customer service. In addition to third parties and institutions, the Finance Group serves other OYAK Group Companies, thus helping to create synergy across the organization and ensuring financial effectiveness at OYAK.
OYAK Finance Group has consistently increased its revenues and expanded its customer base. An industry standout with its highly skilled human resources and strong financial foundations, the Group is also a leader in digital transformation. Thanks to its value adding efforts in this key area, OYAK Finance Group aims to maintain its exceptional service quality and high level of customer satisfaction in the coming year.
Chemical industry experience spanning half a century
Boasting 50 years of experience in the industry, OYAK Chemical Group extended its track record of success in 2019 thanks to its strong global brands, including Almatis, Akdeniz Kimya and Chemson. The Group ranks among the largest manufacturers in the world in the PVC sector, with an annual PVC polymer chemical admixture production capacity of 300 thousand tons. OYAK Chemical Group continues to expand its PVC product range with R&D projects. Leading the sector especially in the development of alumina and alumina-based products, OYAK Chemical Group bolstered its position as the primary global supplier in 2019 with an annual production capacity of over 600 thousand tons.
OYAK ventured into yet another area where Turkey’s economy is completely foreign-dependent by starting to establish a carbon black production plant. The facility will produce carbon black which is used in various sectors, such as rubber manufacturing, particularly tire, the paint industry, and special electronic products. This plant will be able to meet Turkey’s domestic carbon black needs of 220 thousand tons per year.
In addition, MicroMedicine, our start-up company operating in the US, took a major step forward in 2019 in developing the Sorterra blood decomposition product. We completed FDA (USA Food and Drug Administration) Class-I listing and received CE marking certification. In 2020, OYAK Chemical Group aims to further contribute to OYAK’s value chain with its extensive experience and expertise along with its strategic product range.
Agriculture and Animal Husbandry Group supports Turkish farmers with innovative applications
In 2019, OYAK Agriculture and Animal Husbandry Group’s company Hektaﬂ continued to lead the industry with smart and sustainable agriculture applications that respect people and the natural environment. The Group develops environmental friendly solutions in line with the growing importance of this area in recent years. During the reporting year, Hektaﬂ produced 14.4 thousand tons at Gebze Production Facility and 4.5 thousand tons at FNC Agricultural (Ni€de) Production Facility. In 2019, the company boosted its total production to 18.9 thousand tons, up 7% year-on-year. Hektaﬂ recorded organomineral fertilizer production of 31.3 thousand tons, an increase of 297% over the prior year. Committed to supporting farmers across Turkey with Smart Agriculture applications, Hektaﬂ developed strong international collaborations oriented toward innovative products while effectively using its nationwide sales-marketing network in 2019.
The Group conducts R&D efforts in the areas of plant protection, plant nutrition, seed breeding, livestock health and smart agriculture at its center in Gebze Organized Industry Zone. Plans are underway to establish a world-class agricultural center equipped with advanced technologies for Turkey’s agriculture industry. This state-of-the-art project is located in Orhangazi, Bursa.
OYAK Agriculture Animal Husbandry Group aims to further support the development of Turkish agriculture with more than 350 products best suited for the ecological characteristics of the country.
Generating “Power” for Turkey
OYAK Energy Group includes ISKEN Power Plant, one of the largest international investments in Turkey with 1,320 MW installed capacity. OYAK Energy, owner of the supply license, provided 3% of the total power need of Turkey in 2019. The uninterrupted power supply operation for OYAK Group Companies transformed into a competitive advantage which strengthens “OYAK Synergy.”
Real-estate investments that add value to life
In 2019, OYAK ‹nﬂaat, an OYAK Service Group company, continued to develop prestigious real-estate projects that add value to the lives of OYAK members. Some 90% of OYAK Göksupark Housing Project, consisting of 1,876 residences built to meet the housing needs of OYAK’s membership, were completed; required permits were obtained for Seyirce Housing Project consisting of 375 residences in Sincan, Ankara; construction began in April 2019 for our mixed use project consisting of 414 residences, 156 offices and 10 commercial areas at OYAK Dragos Project site. During the year, development plans for 370 thousand m2 of real estate in Bademler, Urla, Izmir were approved by the Ministry of Environment and Urbanization. In addition, real estate assets amounting to 12,160 square meters located in Çorlu, Tekirda€ was acquired from TOK‹ and leased out. OYAK successfully conducted a digital transformation in the real-estate development field as well. About 15 thousand pieces of data and information on 40 million m2 of land owned by OYAK Group companies were entered into the Real Estate Operations Management System.
OYAK Group supports UN Sustainable Development Goals (SDG)
OYAK has created a sustainability ecosystem encompassing all Group Companies to ensure a future for members’ savings and leave a more habitable world for future generations. OYAK conducts its own sustainability efforts in line with United Nations Sustainable Development Goals (SDG). We have presented our active support for 14 of the 17 available goals to the attention of OYAK stakeholders. With the active involvement of its employees, OYAK considers sustainability related work one of its main priorities. These efforts range from the fight against global climate change and strategies for efficient use of natural resources, to continuous development opportunities for employees and social development programs.
First organization to obtain Zero Waste Basic Level Certification in its category
At OYAK, we plan for both today and tomorrow. We take great care when making decisions that will shape our future. In addition, we build the future with our sustainable solutions and applications. With the “Zero Waste Project,” we have taken the first step for the OYAK ecosystem. This effort will contribute to all OYAK projects economically and ecologically with an approach that embraces efficient and sustainable management of world resources. The “Zero Waste Project,” implemented with all our Group Companies to contribute to Turkey’s sustainable development goals, was officially registered by the Ministry of Environment and Urbanization. We earned the right to be the first organization to receive Zero Waste Basic Level Certification in our category with this initiative. Our goal is to touch the lives of some 1.5 million people within OYAK’s impact area, together with OYAK employees, our members and their families. We also aim to raise awareness in society for prevention of wastage and resource efficiency with our Zero Waste initiative.
Health and Safety is integrated into all OYAK Group operations
We are committed to creating a healthy and safe environment for all our stakeholders, particularly our employees. OYAK integrates health and safety with all Group operations. We comply with all applicable legal and regulatory requirements and adhere to internationally accepted standards by continuously improving our performance.
OYAK maintained its zero-accident objective in 2019 pursuant to its corporate policies and strategies. The Group is a pioneer in applications oriented toward ensuring health and safety in all sectors where it operates.
“Honor Projects” demonstrate OYAK’s corporate reputation
OYAK boasts one of the most robust corporate cultures in Turkey. In 2019, the Group continued to conduct its “Honor Projects” as a demonstration of its professional management approach.
Employees who added exceptional value to the Group in various fields are recognized with awards as part of our Corporate Loyalty initiative. Meanwhile, we significantly boosted efficiency by digitalizing all our human resources processes with the OYAK Digital HR Project. This effort was developed completely with internal resources and is so advanced that it competes with international HR digitalization systems. OYAK Platform, designed exclusively for OYAK Family, enables easy access to OYAK Health Platform (OSP) Contracted Medical Institutions, OYAK Education Discounts, services and products of OYAK Group Companies – all for the benefit of OYAK members. We plan to take further steps to strengthen our communication with OYAK stakeholders in the future while capitalizing on the opportunities provided by digital transformation.
2019 was exactly the 100th year of Gazi Mustafa Kemal Atatürk’s first steps toward founding the Republic of Turkey. As representatives of a robust corporate culture spanning nearly 60 years ourselves, we aim to maintain our leadership position in domestic and international markets in all our sectors of business activity. OYAK draws strength from its dynamic organizational structure as well as its well-qualified human resources. OYAK is committed to adding value to the savings of its members and supporting the sustainable development of Turkey. Our digital transformation and R&D projects continue apace as required by today’s highly competitive business environment. With wishes of further successes in the future with the support of all our stakeholders, particularly our members and employees,
Süleyman Savaş ERDEM