Cengiz Eroldu
Board Member & CEO

OUR SUCCESSFUL RESULTS IN 2018, A YEAR IN WHICH WE MARKED TOFAŞ’S 50TH ANNIVERSARY, MAKE THIS CELEBRATION EVEN MORE MEANINGFUL.

Valued stakeholders:

A SUCCESSFUL YEAR FOR TOFAŞ

Our business results in 2018, the year in which we marked Tofaş’s 50th anniversary, make this celebration even more meaningful. In 2018 Tofaş produced a total of 302 thousand units, thereby singlehandedly accounting for 19% of the Turkish automotives industry’s total output and 18% of its exports.

With the Fiat, Fiat Professional, Alfa Romeo, Jeep, Ferrari, and Maserati brands that it represents, Tofaş controlled an aggregate 11.7% share of Turkey’s automobile and light commercial vehicle markets in 2018. In the domestic market, the company ranked third with a 9.1% of passenger car sales and second with a 21.1% share of light commercial vehicle sales. The Fiat brand defended its second-position ranking in total passenger and light commercial vehicle sales with 70 thousand units sold and an 11.3% market share.

The successful sales performance of the Egea Sedan made 2018 the third year in a row in which the car has been Turkey’s most popular vehicle. Last year the Egea Sedan reached a market share of 7%. Total sales of all the members of the Fiat Egea family reached 36,649 units last year. Total sales of these vehicles in Turkey since they made their first appearance on the roads have topped 128 thousand units.

In 2018 Tofaş ranked third in Turkey with 244 thousand units exported and export earnings worth USD 3.1 billion. As a result of its efforts, Tofaş generated a foreign trade surplus amounting to USD 1.3 billion.

Looking now at our 2018 financial performance we see that our company’s TL 18.6 million turnover corresponded to a year-on rise of 6.5%. Net profit was up by 3.7% year-to-year and stood at TL 1,330 million. Tofaş’s 2018 EBITDA margin was 1.9 percentage points higher as compared with that of 2017 and amounted to 13.44% while its EBITDA increased by 24.4% and reached TL 2.5 million.

INVESTMENTS IN TECHNOLOGY AND HUMAN RESOURCES

With 700 employees and by virtue of the investments that it carries out, Tofaş R&D Center is one of Fiat Chrysler Automobiles’ biggest R&D centers in Europe.

Having contributed to the development of the New Doblò’s Opel, Vauxhall, and Dodge Ram models thereby making it possible for Tofaş to manufacture four different brands, Tofaş R&D Center has been playing an important role in boosting our company’s exports. The center also conducted the product development projects for the Egea’s sedan, hatchback, and station wagon models. Having been developed under the responsibility of the Tofaş R&D Center, the Egea family was updated in 2018 with the addition of new versions and new technology. The level of our R&D capabilities was raised another notch with the inclusion of “Fiat Connect” connectivity technology in our Egea, Doblò, and Fiorino models.

We regard Tofaş Academy, which was founded in 2010, as Tofaş’s “information factory”. The academy’s comprehensive content infrastructure makes it an important asset and development platform on the path to our company’s future.

Having already received Stevie and Brandon Hall awards, Tofaş Academy was voted the best among 45 corporate academies and received the 1st prize by Association for Talent Development Best (ATD Best), whose award is regarded as the world’s most respected in the field of human resources training and development. Tofaş Academy’s successes were further crowned by numerous other awards and recognitions that it received in 2018.

OUR AIM IS TO PERPETUATE THE SUSTAINABLE SUCCESS THAT WE ACHIEVED IN OUR FIRST FIFTY YEARS.

In the course of half a century, Tofaş has registered countless successes as it evolved from a plant assembling cars for sale to the home market into a company that develops products for world markets and exports the products all over the world. The confluence of our standing as a production base and R&D center for global markets with the successes of the Doblò, Fiorino, and Egea projects that we carried out in recent years is what has enabled us to achieve the highest production and export performance in Turkey. What we take the greatest pride in however is the knowledge that our products and services are part of the lives of millions of people in Turkey and around the world.

While leading the way in the development of the Turkish automotives industry, we are also striving to improve our performance when dealing with environment and sustainability issues. Central to the focus of our environmental sustainability efforts are the matters of electrification, vehicle weight reduction, and vehicle energy consumption reduction. Tofaş’s commitment to environmental sustainability has earned its shares a place in Borsa İstanbul’s BIST Sustainability Index and has also led to significant gains in reducing environmental impact and in improving energy efficiency and workplace health and safety. As a result of projects carried out in accordance with WCM Energy Management Methodology, as of end-2018 79,935 GJ of energy had been conserved resulting in a 5,383 ton reduction in CO2 emissions, per-vehicle energy consumption had been lowered, and 64 million m3 of water had been recovered.

Gains such as these help explain why Tofaş placed first in the “Environment and Sustainability Management” category of the İstanbul Chamber of Industry’s 2018 Environmental Awards. As a result of our World Class Manufacturing workplace safety program, there has been a 95% improvement in our Lost Workdays performance since 2006. Tofaş has been the recipient of the Turkish Employers’ Association of Metal Industries’ OHS “Golden Gloves” award for two years in a row and in 2018 our company also received an award in the “Golden Suggestion” category.

At the same time, we have also been investing in the future for many years through an extensive array of social responsibility projects ranging from sport to culture & art and education while everything that we learn in the course of our production efforts is made available for the benefit of society.

Standing on the threshold of our second half-century, we can see that the dimensions of the changes awaiting us will be even greater than what we have experienced so far. Issues such as technological progress, digitalization, and climate change are altering not just how business is done but also how people live their lives and, consequently, what our customers expect of us. Our aim henceforth will be to perpetuate the sustainable success that we achieved in our first fifty years and to remain a “global company” which creates value for its customers and of which its employees and business partners can be proud to be a part.

In closing I therefore extend my deepest appreciation to our shareholders, customers, employees, dealers, suppliers, and other stakeholders for their support and contributions to our success.

Very truly yours,

Cengiz Eroldu
Board Member & CEO