​​​​​​​


ahmet-dorduncu.png

We witnessed critical economic, social and political developments all around the world in 2016. If we were to summarize the year, we experienced many adverse developments, such as instability in the countries we export to, the devaluation in Egypt and Russia, the uprising against our democracy on July 15, and then credit rating agencies degraded our rating to non-investment level. On the other hand, rising crude oil prices resulting from production cuts in OPEC member countries, the questioning of economic and political unions after Brexit, and the fluctuations in markets with the expectation that the US will follow expansionary fiscal policies after the elections, are other key events that left their mark on 2016.

As a group engaged in the chemical, energy and real estate sectors, we run our long-term strategies by closely following our country’s economy, and by considering the position our companies hold in their respective foreign markets. We base our strategies not only on profitability, but also on achieving value added production through sustainability, providing long-term contributions to our economy, and offering higher employment levels to our fellow countrymen. We continue to evaluate horizontal and vertical organic and inorganic possibilities that may support the growth of our company in the sectors we focus on.

In 2016, we seized upon all growth opportunities, and developed our strategies based on sustainable growth and profitability for our group companies, Aksa Akrilik, Ak-Kim and DowAksa. In order to compensate for the adverse effect of economic and political instabilities and uncertainties in the domestic market, Aksa Akrilik concentrated on export activities, and also focused on new business areas, entering new markets and striving to deepen its penetration in current markets. Already serving more than 300 customers on five continents, it maintained a more efficient policy in export markets and raised the share of exports within total sales to 40%, in order to minimize regional risks. On the other hand, we have started commercial production of continuous filament and nonflammable fiber products (modacrylic), which are the direct results of our R&D works in recent years. Continuous filament offers a great cost advantage as it bypasses thread production from acrylic fiber, and is a value-added product with excellent technological properties. Aksa is the only producer in the world in this product segment. Again, it is one of the few producers in the world of modacrylic, which has very high ignitability temperatures and is fireproof. Offering an extensive product range in acrylic fibers, from carpets to upholstery fabric, and outdoor awnings to automobile and ship awnings, Aksa has focused on branding activities in 2016 to raise awareness about its products, and launched public promotion campaigns designed according to the areas of use of acrylic fiber. Producing its own electricity and steam energy, Aksa’s works on enhancing the efficiency of its plants and ensuring energy safety in production continue in order to complete the new turbine project in 2017.

We have also completed an important year for DowAksa, another of our companies engaged in the chemical sector. We have taken a major step towards a grand cooperation in becoming the supplier of one of the largest wind turbine producers in the world, after passing stringent quality tests. In this respect, we will soon start to produce carbon fiber parts for turbine blades. In addition, we are aiming to support the nationalization of strategic raw materials, and reduce foreign dependency and foreign trade deficit in the national defense industry, with the carbon fibers we have developed along with civil aviation and national security institutions. Works within the scope of the agreement between DowAksa and the automobile giant Ford in 2015 on developing carbon fibers for high-volume automobile sector applications continue.

At Ak-Kim Kimya, we have reviewed our capacity usage rates and implemented renewal works to enhance the capacity of production lines to maximize the productivity of our facilities, and we have passed investment decisions to produce new products downstream. By analyzing global trends, we started production and sales of an ultrafiltration module formed from perforated fibers, which we developed as a long-term technological solution to the lack of clean water resources. In this respect, we are planning on great growth through cooperation with Municipalities, Organized Industrial Zones and private companies. By benefiting from our group’s integrated facilities, we are also initiating new projects to ensure that Ak-Kim covers the chemical raw material needs of our group companies, thus generating synergy. In order to grow in the European market, where our country holds an advantage in terms of production costs and logistics, and to better serve customers already in the region, we are continuing inorganic investments in the first quarter of 2017. R&D activities continue on 80 current projects for greater value added and higher knowhow production.

We have successfully completed the integration of Gizem Frit, the company that produces enamel, ceramic frit and other coating areas, which we subsumed into the structure of Ak-Kim at the beginning of 2015. With this investment, we have entered a market with high growth potential for Ak-Kim. We are evaluating inorganic ink-jet investments, as ceramic frit is a complementary product, and plan to offer packaging services to our customers. We hope to complete our efforts to accomplish this in 2017 through purchasing companies in Europe, which we started in 2016. In addition, we are targeting growing our special application area activities with organic investments.

For a sustainable world in energy production, in parallel with our renewable energy strategy, we have completed the capacity expansion investments at our Ayyıldız Wind Plant, belonging to Akenerji, which we started last year, and boosted our installed capacity from 15 MW to 28 MW. We are continuing our efforts on improving energy efficiency, which is becoming an ever more important issue in the energy market due to the world’s growing needs, and we serve many shopping malls, residences, hospitals and industrial plants with teams we have established in this area.

Our technology and infrastructure works at Akcez, which owns Sakarya Elektrik Dağıtım A.Ş. and Sakarya Elektrik Perakende Satış A.Ş., and engages in its activities with the partnership of CEZ, continues to ensure uninterrupted energy and customer satisfaction.

In the real estate area, Akiş GYO has merged with SAF GYO, one of the leading REITs in Turkey, and of which the Company is a shareholder, thus raising its equity to TL 2.5 billion, and total assets to TL 4 billion. With this merger, Akiş GYO has become one of the largest real estate investment trusts in Turkey. With shopping center investments reaching a certain level of saturation, our investments in high street retail, a new business model, will bear fruit in 2017. Housing development projects are also proceeding.

In IT, our technology company Aktek has carried out a joint project with an international technology consultancy company for Industry 4.0, a crucial new concept today, and for adaptation to digital transformation. Within the scope of this work, the current status of our group companies according to digitalization index, and the production and operational processes that need to be developed, have been closely investigated, and the required actions have been prioritized. It is aimed to complete the digital transformation of our companies by evaluating the production, operation, supply and transportation processes, and to enhance the production efficiency of the industry through products our group will offer in this area. At Akkök Holding, we have completed a challenging year, both for our country and the regions we operate in. With TL 704 million investment in 2016, we aimed to create a more value added economy and grow employment in our country. We believe that such accomplishments will continue to expand in the coming years, and I’d like to sincerely congratulate all our employees, business partners, shareholders and stakeholders, who have made 2016 a successful year with their sterling efforts.

Sincerely,
Ahmet C. DÖRDÜNCÜ
Chief Executive Officer