Turkey Country of challenge and opportunity

Özgür Durgun - Risk Services 1

October 2017 Monaco

■ Hello!

■ Turkey at a glance

■ Turkish Politics & Economy

■ Major Sectors

■ Foreign Trade

■ Payment Behaviour

■ Doing Business in Turkey and Opportunities

■ Atradius in Turkey

■ Underwriting Strategy & Information

Content

2 Turkey - Risk Services 1

Turkey at a glance

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Population: 80 million Average Age: 31 Growth: 1,4%p.a.

G-20, OECD, WTO, European Council, NATO, IMF, EU Customs Union

Political stability Erdogan’s leadership:

15 years Previous avrg: <2 years

Difficult Region: Neighbours Syria, Iraq, Iran, Georgia, Armenia, Greece,

Bulgaria

Political Situation

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The change to Presidential system has been agreed at the April

referendum by 51,4% and will be effective by 2019

State of Emergency in place since the failed coup attempt and expected to

continue

Ongoing legal process against FETO (Gulen movement) after detention of

thousands of public officials and seized companies

Tayyip Erdogan President

Binali Yildirim Prime Minister

Increasing conflict with Kurdish authority in Northern Iraq after the independence referendum in September

Easing situation in Syria; especially with the weakening IS

Normalizing relations with Russia and Israel while tension with EU during referendum and elections

Economy

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2016 2017E Indicator

Unemployment 10,9% 11,0%

S&P Rating

9,5% 10,5%

Growth 2,9% 5,5%

Public Debt / GDP 29,3% 29,5%

Inflation

BB Negative BB Negative

2018F

11,0%

9,5%

5,0%

30,0%

BB Negative

Current Acc./ GDP -3,8% -4,0% -4,0%

USD / TRY

Major Sectors

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The largest export industry; $24,3bln in 2016 1,5mln units Production and 1,1mln Export Fiat, Renault, Ford, Honda, Toyota, Hyundai, Mercedes, Isuzu

The largest TV manufacturer in Europe; Arcelik, Beko, Grundig, Vestel $14bln Retail Market; Teknosa, Media Markt, Vatan, Bimeks

16th largest market in the world and 6th in Europe; $ 6.5bln Novartis, Pfizer, MSD, AstraZeneca, GSK, Sanofi, Bayer

$195bln Market size; $97bln non-food Migros, BIM, Carrefour, A101, Boyner, LCW

33mln tons Production; $15bln Exports 8th largest producer in the world 2nd fastest growing after India

The biggest textile manufacturer in Europe The 2nd elargest export industry; $16,9 bln in 2016

Textiles

Metals

Retail

Pharmaceuticals

Electronics & Durables

Automotive

Foreign Trade

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2015 2016

Total ($, bln) 143.8 142.5

EU 63.9 68.4

1. Germany 13.4 14.0

2. U.K. 10.6 11.7

3. Iraq 8.5 7.6

4. Italy 6.9 7.6

5. USA 6.4 6.6

Exports 2015 2016

Total 207.2 198.6

EU 78.7 77.5

1. China 24.9 25.4

2. Germany 21.4 21.5

3. Russia 20.4 15.2

4. USA 11.1 10.9

5. Italy 10.6 10.2

23

86

143

44

140

199

050

100150200250

1996 2006 2016

$ bln Export Import

Imports

Payment Behaviour

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Metals Shipbuilding Plastics

Construction

Wholesale

Textiles ICT

Doing business with Turkey

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Crisis experience

Fortune 500 Global (number of companies) France 29 U.K. 26 Turkey 1

Forbes Global (number of billionaires) France 38 U.K. 54 Turkey 29

1994 – Currency Crisis

1998 – Region’s Crisis

2001 – Banking Crisis

2009 – Other’s Crisis

2016-17 – Unnamed

Boss is rich ! Group Structure

■ Integrated to global economy

■ Proximity to Europe, Middle East, Asia and North Africa

■ Crisis experience

Opportunities

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■ Population & demographics

■ Strong industries & skilled workforce

■ Solid banking system

■ Increasing Risk Management and Credit Insurance awareness

■ Experienced and dynamic team

■ Serving over 1.700 policyholders worldwide

■ The fastest growing Credit Insurer in the Turkish market for the last 3 years

■ 1H2017 market share of 29%

Atradius in Turkey

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■ More than 25 years of Underwriting experience on the Turkish market

■ Local presence since 2007

Underwriting Strategy

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Growth Commodity Prices FED China

Global Developments

Buyer Assessment

Sector Facts

Country Economy

Growth Currency Consumer Confidence Interest rates Inflation

Capacity Utilisation Competition Productivity Regulations Payment Behaviour

Financial Position Ownership Indebtedness FX Position Payment Behaviour

Underwriting Strategy - Sectors

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Underwriting Strategy - Areas of Concern

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Negative payment history

Limited or no access to financial statements

Quality of financials

Parental support not given or not visible

FX position gap

Buyers operating in high-risk sectors (e.g. Metals)

Company age < 3 years

High dependency on consumer confidence (e.g.Retail)

High dependency on bank borrowing (e.g. Energy)

Connection to illegal FETO organisation

■ Turkish companies are not obliged to publish or register their financials unless they are quoted

■ Companies are also not willing too much to share information; but it is improving

■ Quarterly financials are ready in the following 3-4 months

■ Information Agencies can provide financial information only for 2/3 of the requests

■ KKB –the credit pool- provides information on financing capabilities & trends as well as payment behaviour

Information

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INFORMATION

Lists, Trade Registry, Publications, Press,...

Customers & Buyers

KKB (credit pool)

Information Agencies

Thank you for your attention!