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Chairman's Message
Chairman's Message




The Borusan Group
Steel
Distributorship
Logistics
Telecommunications
Energy

Valued stockholders, investors and colleagues,

I would like to briefly summarize the developments and expectations with regards to our companies and country for the 2007-2008 fiscal year. Following Borusan’s agenda, I will draw attention to striking developments both locally and globally and present my personal views on these matters.

The Agenda of Borusan Holding and Our Companies
From the outset, we targeted a 21% growth rate for 2007. According to year end calculations, our consolidated turnover reached $ 2.958 billion. Consequently, it became apparent that our growth actually rose by 29%. Pretax profits also increased by 28%, climbing from $ 133 million to $ 170 million. Once again, we were extremely happy to have surpassed our targets.

Also, in line with our comprehensive growth plans for the years ahead, we increased the pace of our investments. Our combined new investments, which were limited to $ 91 million at the end of 2006, increased to $ 159 million in 2007. Since a significant portion of these investments were made in order to increase production capacity their effects should become evident by the end of 2008, but mainly in 2009.

We internalized the Lean Six Sigma culture along with our own style of doing business, which we call “The Borusan Way”, and used successful portfolio management as well as efficiency in production and investments to help us attain these targets.

We obtained successful business results in 2007
From our perspective, in addition to the positive financial report, the most important aspect of 2007 was the fact that we took significant steps in line with our strategic targets, and concentrated on our primary areas of business activity and sectors.

In steel, our primary area of business, we were involved in three developments that are worthy of distinction for our country:
We decided to form a joint venture with our business partner, ArcelorMittal, to build a
  $ 500 million hot-rolled steel production plant in Gemlik.
We single-handedly won the El Paso Natural Gas distribution tender for the production
  of the 100,000 tons of pipeline that will be exported to USA.
As a result of a successful privatization attempt, we have completed final preparations
  for the takeover of a fairly large spiral pipe production plant in Algeria..

We took another important strategic step in 2007 by making an entry into the energy sector. As mentioned in our strategic plans, we decided to swiftly acquire a license portfolio totaling a minimum of 800 MW from wind, hydro, and coal-based electricity production. We expect to reach a portfolio of 1000MW by the end of the year.

We plan to vigorously execute these investments one after another in the following years.

I am confident that these powerful steps will help us quickly realize the $ 5 billion consolidated turnover target we have set for 2010. The Borusan Way shall lead us to this success.

The Agenda of Turkey

It appears that, as Turkey becomes more powerful, the chronic problem areas are repeatedly brought up for discussion. There are many unresolved arguments about our country including its economy, international political standing and local administrative issues. With respect to the economy, the ongoing struggle against unregistered economy, social security reform and the subsistence of the economic stability continues to dominate the public agenda. On the other hand, strategic political issues regarding relations with the European Union, the PKK and Kurdish problem, the Armenian question and the Cyprus situation are also being much debated.

I would like to touch upon the issues that I feel are the most pertinent at this point.

With relation to the economy, our country has maintained an economic growth of over 5% per annum during the past six years and there has been significant and successful progress in the macroeconomic indicators. There has been successful privatizations. There has also been a noteworthy increase in the infusion of foreign investment capital. The finance sector has gained strength. As a result of these developments, Turkey is continuing on its path to becoming an important part of the global economy. Even though there might be a slow down in the speed of economic growth it will, nonetheless, continue into 2008.

There are two areas that I feel we could be doing more about:
The measures that have been taken by the government to combat unregistered economy have not yielded the predicted results. I do not believe that the administration is aware of the magnitude of the significance of this issue. It represents a primitive problem for the country. It would be unimaginable for a country which is making an effort to gain entry into the European Union to not be able to find a solution to this archaic problem.

Regardless of the marked improvement in exports, the current account deficit of the country continues to grow yearly, leaving the local economy defenseless against the effects of any external financial turbulence that might take place. In order to maintain our present success, our country needs to bring to life long term measures to reduce the current account deficit level.

The political issues which demand attention can be summarized as follows:
The Kurdish problem and the PKK
The PKK is seen a threat of foreign origin. There is consensus in the country that it can only be solved through brute force. However, the Kurdish issue encompasses different solutions. Greater freedom within democracy and the economic development of the region could bring an end to the Kurdish problem.

The Armenian dilemma
In order for us to accept that the so-called “Genocide” never actually took place we need the confirmation of historians. It is crucial that we not allow the politicians to make decisions on behalf of the historians. I believe it is up to Turkish diplomacy to ensure that this happens in the right way.

Cyprus
The accession of the Greek portion of Cyprus into the European Union has reduced the probability of reaching an amiable solution. Despite the developments which took place during the last elections in the Greek portion of the island, I think it is going to be difficult to unite both sides under one roof until Turkey is admitted into the European Union.

Relations with the European Union
The negative stance of such EU member countries as France and Austria has slowed our country’s integration process into the Union and virtually brought meetings to an impasse. Parallel to this development, the ongoing reform process of Turkey has clearly started to decelerate. The vision of Europe is one target that Turkey can not afford to abandon. I hope that, in time, both France and Austria change their position regarding this matter. It is unacceptable, in the 21st century, for one nation to block the path to the prosperity of another.

I am confident that all the issues mentioned above will be resolved in a manner that benefits Turkey. As Turkey is moving towards its destiny and vision, Borusan is also formulating its own vision.

By following through with investments in Kazakhstan, Iran and Algeria, Borusan will become a powerful global player in the region during the course of 2008.

With best wishes,
A. Ahmet Kocabıyık
Chairman of the Board of Directors
 
 
Contribution to Community
The Borusan Center for Culture and Arts
The Asım Kocabıyık Foundation for Culture & Education
 
 

 
Annual Report 2007
Click here to download
for PDF file
Consolidated Financial Statement
Click here to download
for PDF file
 
 


"We took powerful
strategic steps
forward in 2007"



"Turkey must formulate effective solutions to the
areas of unregistered
economy and the
current account deficit "



"Maintaining problem-free relations with neighboring
countries is an
acceptable policy;
however, we are nowhere near that at this point "
 
Borusan Holding - ANNUAL REPORT 2007  
 
     
A. Ahmetr Kocabıyık 
Chairman of the Board, Borusan Holding