Momentum and Investments Position Akkök Holding for Growth in Exports and Employment Opportunities
Defence Turkey: Can you briefly tell us about Akkök Holding, one of the most prestigious corporations in Turkey with its 70 years of experience? How many companies and production plants currently operate under Akkök Holding, and in which industries are they active?
Ahmet DÖRDÜNCÜ: Akkök Holding was established in 1952 by the late Raif Dinçkök, one of the most respected entrepreneurs in our country. Operating in the chemistry, energy, and real estate sectors, Akkök Holding has 20 operational trade and industrial companies and 19 production facilities, 4 of which are abroad. Together with all our subsidiaries, where more than 5,700 employees work, we aim to become a globally competitive corporation and reach world standards with a sustainable development approach.
Defence Turkey: Can you evaluate 2021 in terms of financial performance and turnover from the perspective of Akkök Holding, which operates in the fields of chemistry, aviation, defense, real estate, and energy? How has the COVID 19 pandemic impacted the turnover of both the Holding and its subsidiaries?
Ahmet DÖRDÜNCÜ: 2021 was a fulfilling year for Akkök Holding. Following the outbreak of the pandemic in 2020, there were some downsides, such as the disruption of production and consumption chains and the temporary closure of shopping malls. Our factories continued production activities, but the real estate sector was hit by the measures adopted due to the pandemic. In this sense, 2021 was better than 2020 or even 2019. Our annual consolidated turnover reached the level of 4 billion dollars. Moreover, our operating profitability figures, especially in the chemical sector, were at a satisfactory level.
Defence Turkey: Having invested on behalf of Turkey for 70 years, Akkök Holding also made significant investments in 2021. What are some of your 2021 highlights and what new investments and acquisitions are planned both in Turkey and abroad for 2022? Do you plan to make investments in the defense, aviation, and space industries in 2022?
Ahmet DÖRDÜNCÜ: 2021 was a year we accomplished our investment plans and increased the economic support we offered to Turkey. Akkim Kimya, one of our subsidiaries, made a good start in 2021 with its organic growth strategy based on innovation and new products and took an important step in line with our inorganic growth strategy by incorporating USK Kimya one of the world's leading carboxymethyl cellulose producers. With this investment of 63 million dollars, Akkim significantly increased its annual exports and turnover.
Afterward, Akkök Holding and its main partners purchased a 51% share of Epsilon Composite, which produces high value-added composites and exports them to world giants. Epsilon carries out the production and assembly of high-tech composite parts and components for various industries, particularly defense and aerospace. In addition to international business partners such as Airbus, Bell, and KAI, it also provides parts and services to domestic defense companies. Epsilon's composite exports will also reduce Turkey's imports and foreign dependency in this critical field. We believe this partnership will bring us important advantages by expanding cooperation with group companies, especially DowAksa, another subsidiary that provides carbon fiber composite solutions to industrial sectors. With Epsilon, which has global customers, we aim to become a leader in the internationally competitive field of composites. We also made a new strategic investment towards the end of the year following this acquisition. Aksa Akrilik, another subsidiary of ours, made a new investment of 27.5 million dollars with the brand named Aksafil.
Defence Turkey: As Akkök Holding, which capabilities and technologies do you prioritize in the fields of defense, aviation, and space?
Ahmet DÖRDÜNCÜ: Within Akkök Holding, fiber, which is the keystone of composite, and prepreg material as an intermediate product were being produced and sold. Last year, we accomplished composite part production and autoclave molding technology in line with our goal of selling the final product with the materials we produced in the fields of defense, aerospace, and space. Within this framework, we plan to gradually acquire the necessary capabilities and technologies to become a manufacturer at the SMC, EMC, BMC, metal bonding, and component level.
Defence Turkey: DowAksa, established in 2012 as a joint venture of the company Dow Chemical and Aksa Akrilik San A.Ş., a subsidiary of Akkök Holding, with the aim of providing a wide range of products and technical services to the global composite industry, is currently one of the world's leading carbon fiber manufacturers. It is the first and only Turkish carbon fiber manufacturer and provides integrated carbon fiber composite solutions to industrial sectors, particularly the energy, transportation, defense, and infrastructure sectors. What can you tell us about DowAksa’s 2021 performance and 2022 targets? Do you have any plans for new investments, capacity increases, and new production lines in 2022?
Ahmet DÖRDÜNCÜ: As you also mentioned, DowAksa is the first and only carbon fiber manufacturer in Turkey and is one of the world's leading manufacturers. Carbon fiber is four times stronger than steel yet three times lighter. As it is a non-corrosive product, it provides significant added value for the environment as well in the areas where it is used. For instance, in the automotive industry, it helps lower fuel consumption by reducing the weight of vehicles, thus reducing CO2 emissions. Therefore, it is a crucial product for environmentally friendly electric cars planned to be produced in Turkey. Additionally, carbon fiber is also used in the production of turbine blades for renewable wind power plants, which are growing rapidly in our country as well as in the world. Thanks to the strength, lightness, and anti-corrosion feature of the product, 7% energy efficiency can be achieved by reducing the weight while extending the length of the blade.
The carbon fiber produced only by DowAksa in Turkey makes a substantial contribution to our country's economy with its strategic share in exports. DowAksa also continues to grow. As of the end of 2021, the company's turnover increased by 68% and reached TRY 981 million 357 thousand. With the new investment plan on its agenda, we expect its positive momentum will continue increasingly in the coming years.
Defence Turkey: As you mentioned previously, one of the achievements you made in 2021 is acquiring a 51% share in Epsilon Composite, which is the composite mold and composite part supplier of global companies such as Airbus, Bell, and KAI abroad, and TUSAŞ, ASELSAN, STM and BAYKAR in Turkey. What can you tell us about Epsilon Composite's performance in 2021 and targets for 2022?
Ahmet DÖRDÜNCÜ: We have been keeping a close watch on Epsilon Composite for a long time due to its leading position in the private sector and its ability to do business directly with foreign aerospace and defense industry companies, and its capacity to serve as a subcontractor to global companies. Its customer portfolio, investments, qualification, process approval processes as well as its composite manufacturing technologies to render faster growth with Epsilon were effectual in our decision.
Expanding the customer portfolio or adding new projects without compromising quality and efficiency is the primary goal we set in this field. Regarding component level part production, which will be our next goal, we have decided to increase the number of our qualified, well-trained workforce to determine the necessary infrastructure requirements and to fulfill the preparatory work.
Defence Turkey: Can you evaluate the importance of the acquisition of 51% shares of Epsilon Composite for Akkök Holding and our country? What are the strategy and goals you have set for Epsilon Composite regarding the international market in the field of composites?
Ahmet DÖRDÜNCÜ: Akkök Holding was previously performing fiber and prepreg material production. Transforming the prepreg material into a product, again within the Holding, not only creates added value but also leads Akkök Holding to a structure that produces turnkey products from design to manufacturing. With the synergy to be created with Epsilon, the adaptation to the requirements of the aviation sector will be ensured, and with the additional investments to be made, sole source manufacturing will be planned in order to produce the products required by the market.
Being the sole manufacturer of composite, sheet metal, harnesses, and machining parts in the sector, unfortunately, cannot create satisfactory efficiency and competitive prices. The global expectation is to meet the required integration, design, manufacture, and to manage all the specified processes. Within this framework, we aim to participate in the international market by adding technologies other than composite capabilities to Epsilon, giving it the ability to manufacture components.
Defence Turkey: What is Akkök Holding’s vision. With significant investments in composite, which is regarded as the technology of the future, DowAksa with the acquisition of Epsilon Composite is in a position to reduce Turkey's imports and foreign dependency in this critical field. Can you please discuss some of your future plans and expectations in the fields of defense, aviation and space?
Ahmet DÖRDÜNCÜ: As you also mentioned, developments in materials and chemistry technology lead to new material technologies for new types of structures or hybrid structures. It also leads to various materials and forms of production in the interior, exterior, load-bearing, or structural parts of a structure. Epsilon is the means for transition to a product. By making several technology investments with Epsilon, SMC, EMC, BMC, machining, and sheet metal parts manufacturing, chemical processing, assembly, and other capabilities will be added to the production of composite and metal bond parts by pultrusion and the autoclave molding method.
The combination of such capabilities leads to component level supply capacity when working, for example, with Boeing, and to a final product manufacturer capacity for domestic and national products. A final product that we design and produce with the use of our own prepregs will always be the key objective. Briefly, the use of composite materials and the direction to where the industry evolves will be our particular areas of interest.
Defence Turkey: What can you tell our readers about Akkök Holding's export performance in defense, aviation, and space and its impact on the Holding's annual turnover? What are your global target markets?
Ahmet DÖRDÜNCÜ: If we evaluate only in terms of prepreg production, as I mentioned before, by converting a material that costs 50 dollars per square meter into a product, it will be possible to reach a sales price tens of times higher with its added value. Civil aviation, maritime shipbuilding, and energy-wind turbines are the international markets that can be promptly accessed.
Defence Turkey: Do you plan a public offering as Akkök Holding?
Ahmet DÖRDÜNCÜ: We, as Akkök Holding, are familiar with the stock market. We currently have four publicly traded affiliates. Timing is certainly quite an important aspect when it comes to the stock market. We don't have an active plan for the time being, but we may consider making a new move when the right time and conditions arise.
Defence Turkey: What would you like to say about the sales targets for the next decade in domestic and international markets, your expectations and goals in terms of technology acquisition, investments, and the added value you aim to create in Turkey?
Ahmet DÖRDÜNCÜ: In the upcoming period, including 2022, we will always be open to seizing opportunities by maintaining our cautious approach. With our focus on investments, we will take new steps for organic and inorganic growth. In 2022, we foresee a growth of 6-7% in dollar terms and 60% in TRY terms, led by our investments in the chemical and energy sectors. While the overseas income was 19% in 2021, we aim to increase this figure to 22% in 2022. We will increase our export sales in markets such as the US, Europe, the Middle East, and South Africa.
As per our future goals, we focus on long-term investments that will contribute to our sustainable growth. We will keep on making acquisition investments in the future. DowAksa, one of the world's leading carbon fiber manufacturers, will increase its production capacity by the end of the year and is getting ready to commission new production lines with an investment value of 125 million dollars. Again, a new acquisition by Akkim in Europe may take place this year. To sum up, we, as a group, have planned investments totalling nearly US$300 million until the end of the year. We will continue to contribute to Turkey in areas such as exports and by providing employment opportunities, with investments that are compatible and complementary to our strategy
