SABANCI’S PLAN TO RUN
Focusing in certain sectors is the most outstanding trend during the recent years particularly in larger “multi-business” groups. Therefore companies are sold. New partnerships have been being developed, investments being shifted to some sectors... This is, however, not an “abstention from management difficulties” arising as a result of overspreading of the businesses. Simply a strategic decision! Not only the market, population, demand and income projections of Turkey are taken into consideration. But actions are based on global considerations. Future and growth of the groups are secured by focusing on up and coming, promising sectors. Sabancı Holding CEO Ahmet Dördüncü acknowledges this fact by saying, “When it comes to the first 1020 companies in developed countries, most of them are in the sectors of energy, retail and financial services. When Turkey too reaches the level of the developed countries, we will have been positioned our group correctly.” And, “the 5 sector of Sabancı” are finance, retailing, tyre reinforcement and automotive, cement, and energy.
We may acquire a partner in textile
Aside from these, the group sees the tobacco business as a “financial investment.” A
profitable business with a big turnover. Number one of the market. As the group is the minority shareholder, it is not of a character prejudicing its “sectoral focusing.” The packaging business (Olmuksa) on the other hand, is a high-market-share field with a high rate of in-house growth, where the group is acting with a foreign partner. Tourism is of no serious size within the group. Textile is important in group’s business volume. There are plans about this sector. “We have highly neat companies in financial terms. We would like to secure their futures wisely and safely. We may make this by ourselves, or by means of a strategic partner, if we find one,” says Dördüncü. And when it comes to the sectors of focus of the group... Finance constitutes one half of the group’s business volume. Tripling the retailing business within three years is on the agenda. Automotive, tyre reinforcement is willing to growth by creating a global bus brand via Temsa, and entering the heavy-duty truck manufacture. Target for cement is overseas... Overseas investments, and purchases may follow... And the largest investments are into energy... A foreign partner in nuclear power is about to be announced.
- Sabancı Holding is operative in finance, tyre reinforcement, automotive, retailing, cement, energy, commerce, textile, packaging, tourism, tobacco, and IT sectors. What about the shares of such sectors in group’s business volume?
We are talking about 5 strategic businesses. Finance, automotive and tyre reinforcement, cement, retailing, and energy. Moreover, we are conducting business such as textile, packaging, and tobacco. We control the majority in some thereof. And the minority in some. Our financial services occupy approx. 50-55 percent in our business volume. 10 percent consists of retailing. Automotive and tyre reinforcement represents 20 percent, textile currently 6 percent, and cement about 5 percent. Energy is 2-3 percent for the time being, i.e. minor... And the rest are things what we call “others.”
- Holding intends to focus on five sectors. Yet, 12 sectors are noticed in the sector portfolio. Which of them can you leave? You have alienated some interests in telecom and food...
We have completely left telecom. If you will exist in a business you must be very big, or you had better be out. We have opted for the other sectors. It was extremely difficult in today’s market conditions. If we look at textile in general, not as the Sabancı, we see that this is a field of which future we must consider at length. A positioning of the Turkish textile sector against that of more competitive countries reveals the difficulties in terms of cost.
We have highly neat companies in financial terms. We would like to secure their futures wisely and safely. We may make this by ourselves, or by means of a strategic partner, if we find one. We have doubts about the future of textile in Turkey.
We have been working on a retailing expansion of Yünsa. Yünsa acquired the men’s clothing brand name “Uptown.” Currently it has been opening retail stores nationwide in Turkey. The number has reached 25 so far. It is a great company in woollen fabric.
We have acquired a brand name in order to enhance its value. It is difficult to remain in this sector merely by manufacturing and selling fabric. You must be creating more value. We do so either by ourselves or by selling to anyone else, time will show it.
We have a very precious partner (International Paper Company) in packaging, with whom we are very happy. We have been working together for many years. It is not a strategic line of ours, but we are partners with one of the largest companies in the world. They love being a partner of ours. An internally healthy company. We see they have the potential for growth in Turkey.
- Is there a specific agenda in finance?
Akbank is a business on its own. Everybody knows how gigantic, how healthy it is. Everybody knows what it has done in the field of SME and retail banking, we have two insurance companies. We merged one of them with Aviva; Ak Emeklilik became Avivasa. It has a significant share in the market.
There is the Ak Sigorta. The top insurance companies worldwide have come to Turkey. I do perfectly understand this. A comparison of the insurance sector in Turkey with that in the European countries shows that the market here is in its early stages. There is a huge potential. And we are interested in putting Ak Sigorta in a more powerful position. This is an item of our agenda. Partnerships may follow. A more active role in the consolidation is another option. The path may vary, but our goal is not questionable.
- There are three companies in the tyre reinforcement group: Kordsa, Brisa, and Beksa. What is the agenda in this group?
Kordsa is a company of ours on which the sun never sets. When it becomes evening in Indonesia, dawn breaks in Brasil, on the opposite side. The real global company of Turkey. It has reached a value of 1 billion dollars on its own. Even exceeding. We observe considerable improvements in profitability, as well.
Kordsa has in its agenda the objective of becoming an innovative company, rather than growing. A few week ago Miss Guler Sabancı inaugurated the R&D centre. Sure it will grow, but it will move towards a more innovative, more customer-close structure. It is the world’s leading company in this respect. It must maintain this feature. We see chances for growth in cord fabric in China. Something may be done there over time. Tyre is no sector of growth at double-digit rates. It is likely to continue at 2 to 3. Brisa has one of the largest factories in the region. Should the partners come to an agreement, something may be done in the region.
Lassa is our own brand name. Brisa tries to prioritise Lassa to the highest extent possible. It exports under the Lassa brand name. We are very satisfied with the progress there. We have changed the logo, now it has a younger one, reflecting its modernity.
Perception over the SA logo in Turkey is highly positive; it has important values such as safety, stability, robustness, respect, embracement. This makes us very happy, and we do our best to maintain it this way. We must have other logos and brand names like that.
Late Mr. Sakip Sabancı used to play a considerable role, but everybody had better prove his/her own adequacy in spite of always taking shelter in it. We say to the companies “You do it, too!”
- You operate with Carrefoursa, Diasa, and Teknosa in retailing. Serious plans for growth are known. Why have you terminated the Gima brand name?
We are partners with Carrefour at Carrefoursa and Diasa. Teknosa is wholly owned by Sabancı Holding. We acquired Gima, it was a good brand name, but the investigations made showed that it was a somewhat tired brand name. We worked a lot for Migros, and then saw that it would not be a rational acquisition for us. Carrefoursa plans to focus on the field of hypermarkets. Migros is rather a supermarket name.
We are looking at the growth plans of Carrefoursa. It has a growth target of 20 to 21 percent each year. Within the next 3 years. This is a serious organic growth. Yet this does not rule out the possibility of smaller chain acquisitions. No, this is possible.
We have Teknosa, which we are proud of, we grow. There are 240 shops as of the end of 2007. Number of provinces where they do not exist is less than 10. They have different concepts. There are planets, pockets, and regular stores. We will make Teknosa almost double in size within the next 3 years. A lot of foreign companies come to Turkey. Some try, some leave. I guess that stealing market share can be seen within the next 2 or 3 years, and then consolidation. We are by far ahead; with our company exceeding 1 billion dollars, and profitable as well.
- Where has your share in cement reached? Will new investments follow?
Our market share is 22 percent. We have foreign partners in Akçansa. There is not so much to come considering the position we have reached in terms of growth in Turkey. If you have reached the level of some 20 percent in a market, then you may face certain arrangements.
Our colleagues say they know this business very well. And we say them “Keep on growing, repeat this model abroad. The venue may be Black Sea or Mediterranean Basin. Go, you can establish partnerships, investments from scratch.” They work on this; they have not come up with anything concrete yet, but I know they have been travelling a lot.
Çimsa is the world leader in white cement. They have terminals in Germany. They have been working to build a terminal in Romania. May be in Russia. An investment was made in an additional capacity of 1.5 billion tons at Akçansa. We have made an investment of approx. 600 million dollars during the last 2 or 3 years.
- Your plans in energy are known. Has anything developed after your last press conference? Who is the foreign partner?
We have recorded considerable progress in nuclear, it will come to light within a couple of weeks. Our partnership with Verbund has no nuclear energy aspect. Therefore we have to be in another consortium in nuclear. I think it will become clear within a few weeks.
- You have hotels. What is your intention in tourism, would you sell out the hotels?
Our flag waves. Tourism is not a business we approach strategically. We have been exploiting our real estate. Whatever sector you take in Turkey, it has a potential for growth.
- You have a share of 25 percent in Philsa and marketing company in cigarette. This sector is not among your priorities, but its market share and turnover are very high. A turnover of YTL 6.1 billion for 40 percent. Do you have any intention of quitting?
Look at it as a financial investment. Selling shares, quitting the sector are out of question; both partners are satisfied with each other. Market share is high. Therefore it has not interested in purchasing Tekel. Sabancı will be a multi-business company within the next 5 to 10 years as well. Multi-business does of course not mean 12, but five. If you look at the top 10 or 20 companies in developed countries, you see that most of them exist in energy, retailing, and financial services. When Turkey too reaches the level of the developed countries, we will have been correctly positioned our group.
- You closed last year with YTL 193 billion (representing an increase by 20 percent) in terms of consolidated net sales. The first quarter of the year has ended. And we are by the end of the second. What is the situation?
In my opinion, we have been experiencing a phenomenon. It is told about generally unfavourable situation of the market, sales going bad. But, on the other hand, this must be shown with figures, with data. As for the performance of our group, I see figures exceeding the budgets as of the end of May.
We have announced the results of the quarter, which ended up favourably. I suppose that the second quarter’s results will be similar. Yet, a certain anxiety is to be seen when it is told around. We are anxious, as well. We revise the year-end result projections every quarter. Now I see no deviation in our targets. There is no serious shrinkage reflected in our figures so far.
- You are on the marketing side of Toyotasa in automotive, but you have become a major bus manufacturer with Temsa. Temsa invested in Egypt. To what extent the conditions in this sector grant to such independent manufacturer the chance of becoming a global brand? Where will be the new investment of Temsa?
Bus manufacture occupies a distinct position in automotive. Bus sector involves a more labour-intensive industry. A sector where design and labour stand out. A mode of industry where robotics is less applicable. Hence, the developing countries such as Turkey have higher chances in the manufacture of busses and trucks. Manufacturers such as Mercedes and MAN have been producing in Turkey. And we, as Temsa, are experienced in manufacture of busses. Our colleagues have developed this, and seen that they have this capability. The vehicles manufactured under the brand name “Mitsubishi” have turned into that of “Temsa” over time.
It has strengthened itself considerably in Europe. We are proud of the fact that some of the busses take you to the city centres in Paris and Frankfurt are Temsa. It has recorded significant progress in design. Opened a factory in Egypt. Segmented its products. Busses intended for Europe will be manufactured in Adana. Lower-price models in Egypt.
There are also customs advantages thanks to the contracts made between Egypt and neighbouring countries. Production will be cheaper. And no sophistication and luxury are required that much.
We manufacture Mitsubishi Canter. We have been thinking if we can extend this to cover heavy-duty trucks. If our colleagues develop, and the management decides so, then the manufacture will take place at Adapazari.
We founded a design company at TUBITAK Techno Park. More than 60 engineers are working for Temsa. Our colleagues also dwell upon some issues about countries such as China and India. Maybe a vehicle can be developed with India. Temsa has the target of becoming a regional power initially, and a global one afterwards. Temsa has recorded a highly important progress within the last 3 to 4 years. Its sales has exceeded 1 billion dollars. Our Komatsu and Mitsubishi business have been going well, too.
Agenda of Sabancı
- Foreign partner or alienation of companies may be seen in textile.
- Number of Yünsa stores will increase rapidly
- Aksigorta wants to achieve a more strong position. Partnership or acquisition of a company may follow.
- Kordsa looks at the Chinese market in polyester cord fabric.
- A serious plan for growth is in place at Lassa.
- Temsa targets at becoming a global bus manufacturing company.
- Manufacture of heavy-duty trucks is in the agenda
- Countries such as China and India are considered in automotive. A vehicle may be developed with India.
- Carrefoursa will grow by 20 to 21 percent each year, and prove itself.
- Carrefoursa may acquire companies.
- Teknosa too is to grow to approximately double its current size within the next 3 years.
- Neighbouring countries have been considering in cement. Investments and partnerships may follow.
- There is an enormous investment plan in energy.
- Foreign partnership negotiations for nuclear energy are in the final phase.