Looking into 2018 with bated breath


Akkok Holding is gradually implementi­ng a determined strategy to indigenize the production of chemical products in Turkey, a strategy that will markedly reduce the current account deficit. The company, one of the few that produces carbon fibre at their Dow Aksa operation, has now reached the second phase, CEO, Ahmet Dorduncu, stated. In 2018, it plans to acquire companies to help meet demands for carbon fibre, among other investment­s. The outlook is optimistic, but not without risk.

“We won’t be able to breathe a sigh of relief this year,” Dorduncu said. “My worry is political instabilit­y. I hope to have a comfortabl­e year without an election.”

Key to his business is more inte- gration with the world, which operates a little like an insider club. “Turkey should not isolate itself from this. I’m very confident in my company and Turkey. I think our future is very bright with all the young people around.”

►How was 2017?

Despite everything, it was a very good year for us. There were significan­t advancemen­ts in growth, in operating and net profitabil­ity. We had a good year. Net sales increased by 8-10 percent in dollar terms. The figures on operating profitabil­ity have also doubled (by 120 percent) in dollar terms again. Keep in mind that we are also in the energy sector, which has problems at the moment. If we had remained neutral there, we would have had a much better year. We achieved very good results in chemistry and real estate. But everyone borrowed money in foreign currency so their balance sheets suffered with the rapid changes in currencies. We were expecting a 3.5 dollar rate for the end of the year but had to deal with four. These are such massive oscillatio­ns that it affects everything. For this reason, we were not able to breathe a sigh of relief in 2017. I’m afraid 2018 will be the same. We will have to monitor our plans closely, on a monthly basis, but based on those, we are expecting a better year.

►How does the nvestment env ronment look? W ll you cont nue acqu s t ons n 2018?

We bought an important company in chemistry, along with a license which lets us trade in all of Europe. As a result, we are improving our knowledge base in the inter-country management of companies. We will buy two companies for our Ak-kim operation this year, one in Turkey and the other abroad. These purchases will be in the hundreds of millions of dollars. We aim to develop a growing competency around our core business. Ak-kim will reach a size of $300 million in 2018. By 2020, we expect it to exceed $500 million. More broadly, at the Holding level, we are planning to buy companies that will manufactur­e directly for customers. There, the investment amount is low, profitabil­ity is very high. Entry barriers are high because it requires advanced technology. We are planning two purchases in the aviation sector and are interested in companies with advanced technologi­es along with the required certificat­ions. Our chemistry group, Ak-kim, Aksa and Dow Aksa will make a cluster with revenues surpassing $3 billion, up from the current $1.5-2 billion.

►Consol dat on n chem stry s ongo ng. You have pos t oned yourself as a company grow ng w th acqu s t ons.

Yes, we consider the needs of Turkey there. Chemistry takes second place, after energy, in our current account deficit. There’s so much to do, and plenty of opportunit­y. Chemistry is in our company’s DNA. Aksa is one of the oldest chemistry companies in Turkey so growing in this sector is much more comfortabl­e for us. We are gaining momentum with the introducti­on of highly advanced products. Also, the import substituti­on policy of the government is helping. Ak-kim was a $100 million company when I took on the job. Today it is approachin­g $300 million. It acquired Gizemfrit, then Gizemfrit acquired another company in Spain and suddenly it became a company managed in Germany, Spain and hopefully in France very soon. You can grow internatio­nally with operations and maintain a synergy with Turkey.

►You are about to beg n produc ng g ant w nd turb nes w th your competence n carbon f ber n Turkey. How s the process go ng there?

We are the supplier of companies producing large wind turbines. We make skeletons from carbon fiber so that the wings are light and durable. This is a process that requires very advanced technology. We have a 4-year deal with Vestas, worth about $ 300 million. Today’s capacity cannot even meet the demands of that agreement but production and deliveries have begun.

►Is the energy sector on alert r ght now?

It definitely is. The price of natural gas we buy is determined by the value of the dollar in the free market, but in the electricit­y we sell there is a limit, after which Keban Dam kicks in. How do we survive and profit in this environmen­t? The state has done a very smart job and removed the energy requiremen­ts of society from the back of the public sector and put on the private sector. There is plenty of capacity, which keeps increasing through new investment­s. But as investors, we are in a somewhat challengin­g environmen­t. There is an 80 thousand megawatts capacity, but how much of this is in your command? We need to consider this.

►Wh ch f gures w ll be mportant n 2018?

I will have to watch the exchange rate in terms of both our costs and our exports. I read an analysis for the first time saying that it will fall to 3.75 in the first quarter. Everyone has an estimate. Our CFO predicted the end of the year at 3.80 at the beginning of 2017. End year figures proved his estimation. Our estimate for this year is 4.15. Let’s see.

The Turk sh bus ness world has the power, res l ence and courage to transform tself. Be ng a daredev l works but let’s just be a l ttle calmer and lower our vo ces on the pol t cal front. It s not r ght for certa n people to carry the banner. When we are too aggress ve, the bus ness world s negat vely affected. In a stable env ronment, Turkey’s compan es w ll carry the country much further.

Ahmet Dorduncu Akkok Holding CEO

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