Sabanci Holding

Fourth quarter 2021 financial results

Publication of results

February 24, 2022

Record revenue growth and exceptional financial performance

Sabancı Group left behind a very successful year with record growth in revenue, EBITDA and net income. The Group also achieved excellent results in terms of strategic initiatives and improving its ESG scores. This solid performance in 2021 is in line with the Group’s medium-term objectives.

Financial performance accelerated in the last quarter thanks to the strong contribution of banking and non-banking activities despite increased market volatility and input cost pressures.

The strong improvement in banking and non-banking ROE brings consolidated ROE to a record level of 23%. Despite the fact that the proceeds from the sale of the tobacco business were received in early 2022, net cash holdings more than doubled, reaching TL 2.5 billion by the end of 2021.

Comment from Sabancı Holding CEO Cenk Alper: “Despite all the challenging business environment caused by the pandemic, we were able to maintain our strong and steadily improving financial performance in 2021. We increased our cash position with improved earnings quality and return on equity, while reducing the net debt to EBITDA ratio to 1.2 times. All this clearly proves the financial excellence of Sabanci Holding and its group companies in balance sheet management. This approach, in the midst of all kinds of external events adverse and extraordinary market conditions, allows us to consider future opportunities while protecting our strong portfolio. I would like to thank all our employees for allowing us to achieve these good results and our shareholders for their support.”

FINANCIAL HIGHLIGHTS

• Combined revenue growth accelerated to 77% year-on-year in the fourth quarter. Non-banking growth drivers were energy, industrials and construction materials. Combined revenue in 2021 exceeded TL 150 billion, a 45% year-on-year increase.
• Comparable combined EBITDA increased by 128% year-over-year in the fourth quarter thanks to strong performances in banks, energy and industrials. In 2021, the combined EBITDA reached TL 33 billion, up 61% from a year ago.

Note: Combined income excludes dividend income held. Combined EBITDA and consolidated net income exclude non-operating and non-recurring exceptional items and IFRS16 impact in retail. Operating cash flow and net debt figures exclude banking, financial services and other segments. Consolidated ROE excludes one-time non-operating and non-recurring items.

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• Consolidated comparable net income more than quadrupled in the fourth quarter to over TL 4 billion, driven by phenomenal growth in both banking and non-bank segments. Net income growth reached 95% in 2021, totaling TL 10 billion.
• Consolidated ROE further improved to 23% in 2021 with solid improvement across the board.
• Combined non-bank operating cash flow exceeds TL 12 billion, up 15% year-on-year. Our net cash-only position more than doubled in 2021, reaching TL 2.5 billion.
• Deleveraging continued as Net debt/non-banking EBITDA fell to 1.2x at the end of 2021 compared to 1.5x at the end of 2020.

STRATEGIC STRENGTHS

• Exit from the tobacco industry completed. All shares of Sabancı Holding in PHILSA and PMSA, the former subsidiaries of Sabancı Holding with respectively 25% and 24.75% of the capital, were acquired by Philip Morris in consideration of 2,747,308,823 TL on January 5, 2022 after pre-determined adjustments at closing. The acquisition price, which will be further adjusted based on the audited financial results of PHILSA and PMSA for 2021, was collected by Sabancı Holding at closing.
  On the other hand, in accordance with cash management principles, a variety of derivative instruments are effectively used by Sabancı Holding against exchange rate fluctuations and other market risks, and transaction-specific hedging operations have incurred in connection with the sale of PHILSA and PMSA Shares to offset the risks associated with exchange rates. For this purpose, 88% of the total acquisition price of PHILSA and PMSA shares has been hedged at the weighted average exchange rate of 9.3249 TRY/USD using forward contracts with various maturities.
• For the purposes of supporting the price performance of the SAHOL share on the equity market, and therefore of reducing the net asset value discount by bringing the SAHOL share closer to its fair value, and of offering shareholders a more attractive offer long-term investment opportunity, a share buyback program was launched on November 9, 2021. As a result, up to 10,200,000,000 shares with a par value of TL 102,000,000 representing approximately 5% of the issued share capital of Sabancı Holding are being considered for repurchase, and the total maximum funds allocated to share repurchase transactions have been determined at 1,750,000,000 TL. As of December 31, 2021, the total nominal value of shares repurchased as a result of the transactions reached TL 8,000,000, representing 0.3921% of the share capital.
• In line with the Group’s objectives to grow with pioneering services beyond tires and to pioneer mobility in Turkey, the process of acquiring Arvento shares representing 88.89% of the total share capital by Brisa for a amount of 291,469,028 TL started. The necessary permits for the contemplated transaction were granted on January 20, 2022 by the Competition Council, and the transaction is expected to close by mid-2022 at the latest.

Note: Combined income excludes dividend income held. Combined EBITDA and consolidated net income exclude non-operating and non-recurring exceptional items and IFRS16 impact in retail. Operating cash flow and net debt figures exclude banking, financial services and other segments. Consolidated ROE excludes one-time non-operating and non-recurring items.

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• Enerjisa Müşteri Çözümleri, of which Enerjisa Enerji is a 100% shareholder, acquired a 14% minority stake in Eşarj, Turkey’s first and fastest network of electric vehicle charging stations, operating with 320 charging outlets in 186 locations public at the end of 2020. After the transaction, Enerjisa Müşteri Çözümleri’s share in Eşarj increased from 80% to 94%. The 14% stake is acquired for an amount of TL 42.4 million. Following this acquisition, the Group aims to strengthen the innovative and pioneering position of Enerjisa Enerji in the field of e-mobility and propose solutions that will contribute to the decarbonisation of transport.
• Following MSCI’s two-notch increase following successful execution in all aspects of E, S and G, Sabancı Holding improved its CDP Climate Change score to B (management level) and took its place in the category management level maintaining the CDP Water Program B score. Additionally, Sabancı Holding has been included in the Bloomberg Gender Equality Index (GEI) 2022 which recognizes the performance of companies committed to gender equality across five pillars: female leadership and talent pipeline, equal pay and gender pay equity, inclusive culture, anti-sexual harassment policies and pro-women branding. Thus, Sabancı Holding has become the first and only conglomerate in Turkey to be included in the Bloomberg Gender Equality Index 2022.
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  STRENGTHS OF THE SECTORS
• Energy segment: Strong profitability despite the deterioration of liberalized margins and hydrology.
• Industry segment: Strong improvement in earnings quality and deleveraging.
• Building Materials segment: The quarter was marked by escalating cost pressures.
• Retail Segment: Growth in e-commerce continued.
• Financial Services segment: Robust growth in premiums and profitability.
• Bank: Well positioned to remain healthy and profitable.

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COMBINED RESULTS OF THE SABANCI HOLDING SEGMENT

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SABANCI HOLDING CONSOLIDATED SEGMENT RESULTS

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