Message from the CEO

Çağlar Göğüş

Esteemed Stakeholders,

The Covid-19 pandemic quashed the positive outlook for the global economy in 2021. From the start of the pandemic, central banks around the world have tried to stimulate their national economies by injecting a total of USD 32 trillion into the global economy. According to Bank of America data, this level of support corresponds to an injection of financial assets worth USD 800 million per hour for the past 20 months. The size of global stock markets rose to USD 60 trillion in the same 20-month period. All these massive supportive measures and the subsequent economic recovery fueled inflation throughout the world. There are strong signs that this unprecedented level of support will be reduced in 2022, depending on the extent of the rise in inflation. In the coming year, the global inflationary environment is forecast to persist and central banks of developed countries are expected to adopt contractionary monetary policies. The Fed did not make any changes in parallel with market expectations on its policy rate in its last meeting of the year. However, the Fed accelerated its bond tapering process and signaled three interest hike of 25 base points each in 2022.

The IMF forecasts that global economic growth will decelerate to 4.9% in 2022, down from 5.9% a year earlier. Although post-pandemic growth expectations are high for many countries worldwide, the Russian and Turkish economies are expected to slow in 2022. Despite the impacts of the coronavirus pandemic in first quarter, Turkey displayed one of strongest economic performance as exports and industrial production drove growth. The search for alternatives to global supply chains, which broke down with the effects of the pandemic, attracted more attention to Turkey. As a result, Turkish companies continued their production activities with anti-pandemic precautions, met domestic needs, and gained new markets for exports. Turkey’s economy extended its robust export performance and set new records in exporting. While the depreciation of the TL accelerated in December, various measures were announced to encourage TL time deposits including the rollout of Foreign Currency Protected TL Time Deposit products. At end-2021, the USD/TL exchange rate increased by 79.2% compared to the end of the previous year. Annual consumer price inflation (CPI) climbed to 36.1% in 2021, the highest level in the last 19 years. Higher inflation is expected to continue in the first half of 2022, fueled by rising global commodity and energy prices as well as increasing prices of many other items in the country at the start of the year. In the January 2022 issue of the World Bank's (WB) Global Economic Prospects Report, the growth forecast for the Turkish economy was 9.5% for 2021, 2% for 2022, and 3% for 2023.

We successfully navigated 2021 with an extensive and balanced portfolio.

During the pandemic, we took advantage of our Group's extensive and balanced portfolio. The higher share of foreign revenue with the contribution of our export companies was central for the Group’s healthy growth and profitability. Thanks to our effective crisis management and cost control, we are successfully exiting the pandemic, which I believe is in its final stage. We tried to ensure that Doğan Group companies are not burdened with debt and that companies with no revenue in foreign currency do not incur debts in foreign currency.

This year, we achieved the most growth in fuel oil retailing, industry and trade, and automotive trade and marketing. Our consolidated turnover for 2021 climbed to TL 16,920,914 thousand, up 57% year-on-year. Our EBITDA jumped to TL 1,714,693 thousand, an increase of 90%. Our EBITDA margin increased from 8.4% last year to 10.1% in 2021. The leading segments in boosting our EBITDA margin were fuel oil retailing, electricity generation, industry and trade, automotive trade and marketing. Our net profit for the period was TL 3,062,489 thousand, up 112% from the prior year. We recorded increasingly positive results from the Value Creating Plans and the Doğan Investment Strategy, which we initiated in 2019.

In electricity generation, our Galata Wind company ended 2021 successfully thanks to rising prices on the spot market, the commissioning of Taşpınar WPP with full capacity as of March 25, and growing demand for electricity. We also realized Turkey's first “green” initial public offering with our Galata Wind IPO. The Galata Wind IPO raised TL 1.1 billion in funding. Additionally, Galata Wind Enerji received an A1 (‘Advanced’) rating of 57/100 in the ESG audit by Moody's V.E.

Despite the lockdowns in the first half of the year, Aytemiz, our company operating in fuel oil retailing, closed 2021 with net profit of TL 228,127 thousand thanks to its strategic focus on differentiation, productivity, and profitability. Aytemiz focused on successful gas station renovations, electronic sales, a new market concept, improved customer service quality, payment systems, and non-fuel oil revenue in 2021. With the support of successful inventory management and higher fuel oil sales, Aytemiz exited the year in parallel with its targets despite the pandemic.

Doğan Group companies in the industry and trade segments recorded major growth this year by compensating for production breakdowns and postponed orders in 2020. High export rates and foreign currency-based sales also had a positive impact on our industrial companies. We are aiming for SESA, Çelik Halat, and Ditaş to achieve further sustainable growth in the coming years with the forward momentum effect of recent capital investments in this trio of companies.

In 2021, SESA Ambalaj initiated the procedures to acquire and transfer a 70% stake in Maksipak Ambalaj. Closing 2021 with turnover of TL 750,407 thousand, SESA Ambalaj continued its investments in eco-friendly and sustainable barrier food packaging and recorded remarkable sales and export figures. As part of its investment strategy, Ditaş (Doğan Yedek Parça ve İmalat A.Ş.), a class “A” supplier of Turkey’s and the world's biggest vehicle manufacturers, acquired 70% shares of Profil Sanayi ve Ticaret A.Ş. and 3S Kalıp Aparat Makina Sanayi ve Ticaret A.Ş., both operating in the automotive industry for many years. Ditaş kicked off a major expansion drive in the automobile, light commercial vehicle, and swing product groups with this acquisition. Efforts related to technological transformation and value-added product range development moved ahead at full speed at Çelik Halat. As a result, value-added products that can be used in different industries, such as non-rotating ropes and plastic-based ropes, provided a significant revenue boost during the year.

In 2021, electric mobility accounted for a larger share of the portfolio with the addition of new brands and models to the automotive trade and marketing segment. MG group in particular attracted ever-increasing attention in electric vehicles. Besides distributorships, we invested further in for expertise on and second-hand trade of SUVs, a category accounting for the highest and steadily increasing share in automotive sales. In addition, electric scooters, motorbikes, and bicycles accounted for a bigger share of the portfolio and attracted intense attention from consumers in 2021. To better support the mobility model with several brands and lines of business, we both strengthened our distributor structure and started to provide service at our own retail sales points, including in Koşuyolu, İzmir, and Güneşli.

Further enriching its offering with successful local formats, international content, and internet and radio content in 2021, Kanal D Romania brought the year to a successful close with the positive impact of rising cable TV revenue. Kanal D Romania also made dividend payments for the first time and improved its profitability in 2021. Hepsi Emlak executed a relaunch upon completion of its comprehensive overhaul, including a brand refresh and entire platform renewal during the year. With the effect of successful transformation efforts, Hepsi Emlak also boosted its customer satisfaction score (NPS), traffic, real estate agent numbers, and market share in 2021.

In financing and investment, Doğan Yatırım Bankası started its business activities in August. This new investment bank aims to meet the banking and financing needs of companies located in Turkey. Doğan Yatırım Bankası also provides value-added services and consultancy on company acquisitions and mergers, access to international funding sources and security issuance. In addition, Doğan Yatırım Bankası offers a new experience in investment banking as a trusted and reliable representative of the international financial system in Turkey. In a major technology step forward for Turkey this year, Doğan Yatırım Bankası conducted the pilot application stage of an effort to meet SME digital loan needs based on lending decision trees specific to this segment. Digital assessment and allocation efforts moved forward with our factoring company for financing SMEs and suppliers. Continuing its productive and profitable growth, ÖNCÜ VCIT participated in founding Doğan Trend Sigorta, an investment in the emerging field of insurtech, which gained importance especially during the pandemic. Doğan Trend Sigorta plans to commence its business activities in second quarter 2022.

In real estate investments, Trump AVM, severely affected by restrictions and lockdowns during the pandemic, entered into a quick recovery with the easing of restrictive measures and the transition to a more normalized social life.

Milta Bodrum Marina was positively impacted by rising interest in sailing holidays due to the pandemic, recording an occupancy rate close to 100% as in the previous year.

Doğan Holding decided to pursue growth in publishing on its own and acquired the remaining 50% stake of its partner, Egmont. On February 16, 2021, Doğan Holding signed a share transfer agreement to be the sole shareholder.

We aim to create further value in 2022.

At Doğan Group, we have a positive outlook toward 2022. We are also encouraged by our favorable outcomes, our value-creating plans, and our investment strategy. The Ukraine-Russia war, a conflict likely to have global effects, has significantly increased uncertainty and risks for the year. We foresee a high inflation environment with high volatility in the first nine months of 2022, with greater stabilization starting in fourth quarter. We see energy and commodity prices as well as recession risk reaching undeniable levels due to extraordinary spikes. Despite all these uncertainties, we aim to create further value for our shareholders, investors, and all our stakeholders ¬– starting with our employees.

Doğan Group plans to focus on investments in major areas of the sustainable economy, and especially technology-oriented, value-added, and innovative business models. We aim to further invest in the energy sector with Galata Wind, and the industrial sector with SESA, Ditaş, and Çelik Halat. We plan to quickly enter the market with Doğan Yatırım Bankası upon completion of our conventional investment banking and fintech investments in 2022. In addition, we are targeting investments abroad to expand our current lines of business.

Doğan Trend Sigorta is expected to start up its activities in the second quarter of 2022, upon completion of required legal procedures. Besides pursuing healthy organic growth, Doğan Group is actively exploring new investment areas as well as complementary investments to its current business lines.

We focused on employment in 2021, and we plan to do the same in 2022. Our “Doğanda” employer brand, launched last year, is moving forward at a fast pace in the fields of career, talent, development, life, and innovation. With this program built upon Doğan Group's values, we stand by all employees and support their development in the ever-changing and transforming business environment.

Sustainability is another issue that Doğan Group’s strategy is centered around. We are reaching out to the future with strong support to our national and international stakeholders. Doğan Group blends the perspective of the UN Sustainable Development Goals into its the Doğan Impact Plan, which covers its accumulation of knowledge and the corporate values it has embraced over the past 62 years. With this vision, we are transforming our investments in the different industries in which we operate. We are investing in efforts to make a difference in the future as a value-driven, sustainable, and pioneering investment holding. Doğan Group is strengthening its portfolio with industries that have high cash-generating capacity, export potential, and alignment with the green economy.

As part of the Doğan Impact Plan that we developed with the motto “Better is Possible,” our Executive Board set clear objectives for our society and our future. We integrate these objectives with our company's plans. To summarize the international support we give with the Doğan Impact Plan:

By 2025, we aim to boost the ratio of Environmental, Social, and Governance funds in our investor share to at least 10%, and our score for these funds to AA, the “Leadership” level. By 2030, we target becoming a carbon-neutral organization. To achieve this objective, we are considering a wide range of solutions, from energy efficiency applications to renewable energy installation and green energy supply. We are also taking into account all Group companies and the actual situation of their industries. We aim to recycle 100% of our water usage by 2030. For this purpose, we are planning transformation efforts and investments to minimize our environmental impact in our buildings and office areas while reaching the level of global best examples for water reclamation in water-intensive industries. To establish a more egalitarian business environment by 2030, we initially aim to boost the ratio of female Board Members and female executives to at least 40% across the Group. We aim to eliminate any possible negative environmental/social impacts with our growth story and further bolster our claim of becoming an organization that creates value for the world.

I would like to extend my gratitude to all our stakeholders who supported Doğan Holding’s operations in 2021.

Best regards,
Çağlar GÖĞÜŞ
Chief Executive Officer