Dear Shareholders,
In the aftermath of an almost unprecedented global crisis we passed through in recent years, 2011 was the year when the wheels of economy and industry began to turn once again. While the world economy is still at the stage of recovery and even recession, Turkey performed successfully in 2011 thanks to the measures, works and regulations put into the operation.
Year of Revival in Automotive and Defence Industry
Not only the figures, but also the activation in the commercial vehicle segment which is considered as one of the indicators of revival of economic life, is a proof of this fact. Commercial vehicle business was slow in 2010. However, the demand postponed in 2010 turned into sales in 2011. The bus and semi-trailer markets grew significantly.
While the bus market slowed down a little bit during the first half of the year because of the matter of compliance with the Euro 4 emission levels and European regulations under the program of harmonization with the European Union, especially purchases of public transportation busses by municipalities and private persons revived the sector. The bus market grew by 50 percent. The bus market in Europe, which is the main export market of Turkey, recovered a little bit, but unfortunately the figures in 2008 could not be attained both in the domestic market and the export markets.
In the semi-trailer market, one of the main business segments of Otokar, with the impact of demand postponed for two years on the one hand and the revival of the industry and increased manufacturing on the other, the highest sales in the last decade could be achieved in this segment. The trailer market grew by 80 percent over the previous year.
In the defence industry, the natural demand fluctuations continued in 2011. In the market which was stagnant in general, civil commotions in the Middle Easter and Gulf countries created instant new demands.
Otokar grew by 72 percent, reaching a turnover of TL 890 million, in 2011
As Otokar, we successfully managed the crisis period of 2009-2010 thanks to our customer-focused product and service strategy and engineering, R&D and manufacturing power. By taking correct and proper decisions, we entered 2011 stronger with new products and a more aggressive sales strategy. As a result, we have become the most preferred bus and military vehicle brand of Turkey once again. Our turnover grew by 72 percent, almost four times of the growth rate over the last eight years, reaching TL 890 million. We increased our sales by 58 percent and earned a profit of TL 55 million.
This success is not a coincidence, of course. Otokar used one other advantage of operating in two different segments as commercial and military in the last year. The fact that the commercial and military businesses have balanced each other and we have distributed the risk to two different segments has enabled us to achieve a sustainable growth even under most adverse conditions so far until 2011. 2011, on the other hand, was a special year during which we achieved growth and great successes in both of the segments thanks to the positive effect of the activation in the market.
We have become a brand in the world and doubled the exports
As we point out at every opportunity, one of the most important characteristics of Otokar besides operating in different segments is that it manufactures as an independent manufacturer products of which intellectual rights are owned by it. Owing to this, Otokar is able to offer its own products under the brand name of Otokar to any market of its choice so as to meet the needs of the market. As the leading bus and tactical armoured vehicle brand of Turkey with a proven track record in the domestic market, Otokar has been reinforcing its power with sales figures increasing year by year. Products with Otokar brand are today used not only in the domestic market, but also in more than 60 countries in 5 continents.
These successes are reflected to our financial results. We reached an export figure at the level of USD 96 million with an increase by 110 percent in 2011. The great growth in exports in 2011 stemmed from the defence industry products. Manufacturing the most known vehicles in their class in the world, Otokar added new countries to the users of Turkish armoured vehicles which successfully serve in more than 20 countries and in the peace forces of the United Nations; existing successes became references for new orders. With the impact of this, we achieved a success in the defence industry which is rare in the world. Our new product ARMA received the second order from abroad before it completed the age one.
Toward a turnover of TL 1 billion
Besides achieving a significant growth in 2011, Otokar is a company which has potential to increase this growth more owing to the growth potential of the sectors in which it operates and to its own strengths.
We expect that the bus market will grow both in Turkey and Europe for the benefit of us during the next 5 years. Especially the cost sensitive approaches in Europe with the effect of global crisis offer a significant market opportunity for Turkish bus brands which have lower operating costs and sales prices. For this reason, we believe that our company Otokar Europe we established in 2011 will create new opportunities for us as being nearer to the customer and the market. In the trailer market, we expect that the market for the ADR tanker trailers in the fuel oil transportation will grow in the aftermath of introduction of new regulations in Turkey.
Meanwhile, in the wheeled tactical armoured vehicles segment where we have been operating for 25 years as the largest private capital defence industry company of Turkey, we target to repeat the success of COBRA in our new products in the next years. In the project of ALTAY, whose model in real size we exhibited in 2011, we are working with full force to manufacture the vehicles deserved by our country.
While we are meeting a new year with excitement to reach our goals, I thank our shareholders, customers, business partners, suppliers and employers who have always stood by us and wish to complete the year 2012 with successful results.
Yours sincerely,
Kudret Önen
Chairman of the Board of Directors
