Esteemed Business Partners, Colleagues and Shareholders,

COVID-19 had an overarching impact on life throughout 2020. Originating in the Chinese state of Hubei, the novel coronavirus quickly spread before being declared a global pandemic. Over 100 million people were infected with the tragic loss of over 2.1 million lives worldwide as of year-end 2020. Restrictions were imposed to slow the global pandemic from the first quarter of the year. Meanwhile, the world’s central banks, including the Fed in particular, expanded efforts to maintain economic stability by adopting expansionary fiscal policies. A once-in-a-century pandemic, the COVID-19 crisis caused multidimensional problems and widespread devastation. However, the pandemic also paved the way for a significant opportunity in unfolding the strengths of humankind. Driven by technological advancements, preventative and responsive measures were taken across the world to safeguard economies and communities while ensuring the stability and continuity of life. Mass vaccination programs launched in late 2020 were embraced as the first step toward a return to normal without having to reach herd immunity.

Turkey's private sector stands out with its competitive edge

Turkey has always achieved great accomplishments in a challenging region. Similarly, the country has implemented a wide range of precautionary and supportive measures to counter the coronavirus pandemic. Under the leadership of the Turkish government, crisis management practices were successfully introduced in a number of key areas, ranging from public health to macroeconomics. To address the domestic market in parallel with the shrinking global economy, Turkey focused on supporting disadvantaged groups through loans and direct assistance. Having made digital investments in a host of areas – from supply processes to payment systems – for many years, Turkey's economy maintained its export potential especially driven by the performance of textiles and semi-finished goods. Borusan owes its very existence to Turkey. We see the country successfully unlocking its strong growth potential in the coming year, despite the necessity to take tangible steps to address food inflation and youth unemployment.

Sustainable success in core industries

At Borusan Holding, we have always differentiated from the competition thanks to our professional governance approach. In 2020, we recorded strong financial and operational results. Borusan Group reported total turnover of over USD 3.7 billion and EBITDA of USD 375 million in 2020. Not confining our efforts to responding to the pandemic, we achieved lasting improvements in our cost structure during the year.

As of year-end 2020, Borçelik, our flat steel company, produced 1,760 thousand tons and recorded total turnover of USD 1.1 billion, accounting for the lion’s share of Borusan Group's turnover. Together with Borusan Mannesmann, our steel business line's total turnover exceeded USD 1.6 billion. Meanwhile, our automotive and machinery and power systems business lines generated turnover of USD 1.7 billion in 2020 – a striking contribution to the Group's total turnover. Aiming to be a strong player in every region where it operates, Borusan Group posted total international sales of USD 1.2 billion through its various companies, making up 31% of our consolidated turnover.

A pioneering brand in its industry, Borçelik took prompt action to address the negative impact of the coronavirus pandemic on the domestic market in particular while expanding its share in overseas markets. Borçelik has delivered a robust performance, improving its EBITDA by 17% compared to 2019.

Borusan Mannesmann's shale gas business in the US was negatively affected by the sharp decline in oil prices combined with the pandemic. However, our company maintained its strong position vis-à-vis the competition owing to its digital transformation investments and diversified product portfolio.

Boasting a strong brand mix, Borusan Otomotiv Group turned rising automobile demand into high profitability in 2020. The Group delivered a strong performance and increased EBITDA by 45% compared to the previous year. Our Automotive Group maintained its track record of sustainable success in all its business areas and continued investments in the digital arena in 2020.

Having concluded 20 years in Kazakhstan operations, Borusan Cat kept its EBITDA at the healthy levels of 2019 thanks to the high performance of our overseas dealerships despite the challenging conditions of the pandemic.

Supsan – the engine valve provider for the world's leading automobile brands and Turkey's largest engine valve manufacturer offering the widest product range – continued to move forward in fiscal year 2020. The company sold 4.27 million valves, 1.9 million of which were exported to mostly European markets. Supsan largely owes this success to the positive impact of R&D and innovation activities conducted internally.

Borusan Lojistik, a leading logistics player in Turkey, continued its technology transformation journey in 2020. Turkey's first digital logistics platform eTA, developed by Borusan Lojistik, has enabled 420 thousand full truck load (FTL) s to be shipped. Annually, 35 thousand individual and corporate shippers execute their shipments via eTA. With these volumes, eTA is the largest digital logistics platform in Turkey and the third biggest in Europe.

Borusan ENBW Enerji closely monitored global developments in energy technologies and maintained its digitalization investments during the year. Thanks to the capacity extension at Kıyıköy WEPP and the start of operations at Saros WEPP, the company reached a total installed capacity of 725 MW. Coming to the fore with its balanced portfolio structure, Borusan ENBW Enerji aims to create further sustainable added value for Borusan Group in the coming year

Creating sustainable value with our agile management style

Borusan Holding has the capacity to inject momentum into Turkey's economic growth in all its business lines – including steel, energy, automotives and heavy machinery distribution, as well as logistics. Serving as a building block in the Turkish real sector, Borusan Holding plans to capitalize on its well-established corporate culture and create further sustainable value for stakeholders in the years to come. Borusan is a global brand with operations in international markets in addition to Turkey. As a result, Borusan Holding will utilize its comprehensive sustainable approach and adapt to the change and transformation facing its core business lines. In addition, Borusan aims to maintain its agile management style in the face of uncertainties – just as it did successfully during the COVID-19 pandemic.

From the beginning, Borusan Group has invested in R&D and innovation for business development purposes. Today, we are pursuing the ambitious goal of creating sustainable value 200 years from now. I have no doubt that we will achieve these forward-looking objectives with the valuable contributions of our shareholders, customers, business partners, and first and foremost, our employees. All the while, we remain committed to our top priority: creating sustainable value. Borusan Family is one big team whose members are all interconnected – moving forward to the future, together.

I would like to thank all our stakeholders for being with us on this long and challenging journey to sustainable success.


Kind regards,

ERKAN KAFADAR
Grup CEO
Borusan Holding