Koç Holding’s profits feel gloom of global economy

ISTANBUL - Hürriyet Daily News

Koç Holding’s Tüpraş oil refiner is located in northewestern Turkey. The company’s second quarter profits were down 47 percent, data say. Hürriyet photo

koç Holding, Turkey’s largest conglomerate, posted a 13 percent drop in quarterly net profits yesterday, as its businesses ranging from oil refining, banking and car manufacturing felt the chill of a cooling global economy, according to Reuters.

Its oil refiner, Tüpraş, also posted a 47 percent drop in its second-quarter net profit on Aug. 28, after a fall in global oil prices hit refining margins. The sharp decline in its net profits was due mostly to falling oil prices, loss of stock, a reduction in product prices and its costly Iran trade, according to daily Hürriyet. However, while Tüpraş’s second quarter profits dropped 47 percent, its sales revenues were up 16 percent.

According to the company press release, Tüpraş’s net refining margins fell from $0.69 per barrel of oil to $3.65 in the second quarter of 2012, compared to the same quarter last year. Tüpraş has also only managed to finance 25 percent of its slated “Fuel Oil Recycling Project,” which it plans to have up and running in 2014 with a $2.4 billion investment.

Ford Otosan, Tofaş, and Yapı Kredi also reported falls in second-quarter net profit earlier this month.
Ford Otosan’s net profit was down 13 percent, while lender Yapı Kredi saw a 20 percent decline. Net profitb of Koç’s other carmaker Tofaş was down 2.8 percent.

“The squeeze in the domestic market impacts all sectors and companies, which is caused by a stagnation in global markets and due to the expectation that interest rates will not be eased in the short term,” said Koc Holding Chief Executive (CEO) Turgay Durak in an e-mailed statement.

“Koç Holding rose 25 spots to reach number 222 on Fortune Magazine’s Global 500 list this year. In 2012 we will continue growing with new investments. Despite all the challenges arising in our biggest export market, Europe, we were able to increase our overseas sales revenues by 11 percent on a dollar basis,” said Durak.

Creating jobs

Durak also said that despite the global uncertainties, Koç Holding had been able to add an additional 2,592 employees to its domestic payroll since January, increasing its total number of employees to 83,579.

Durak said Koç Holding’s domestic performance with its foreign partners was a success story. “Our strong domestic performance is encouraging our partners to look even more to Turkey to develop their production centers. Right now we are embarking on a $1 billion investment with Ford to produce three new light commercial vehicles, and FordOtosan is working very hard to build its third plant for $250 million,” he said.

Koç Holding’s banking arm, Yapı Kredi, has opened ten new branches in the first half of the year, bringing the total number of branches to 918.

“We grew 11 percent in Turkish Lira loans in the first six months of the year, 13 percent in consumer loans, 8 percent in loans to small and medium sized enterprises and 12 percent in medium-sized trade loans,” said Durak.