Borusan Faaliyet Raporu 2010

Chairman's Message

Valued shareholders,
We started off 2011 with great joy over our impressive performance the previous year and much optimism concerning our expectations about the possibility of sustaining such high levels this coming year. As we overcame the effects of the economic crisis, we renewed the vision of Borusan by determining new strategies and targets.

During 2010 Borusan achieved the greatest business growth in its history. Our combined turnover reached $3.5 billion, an astonishing 45% growth over 2009 figures. There are both internal and external factors behind our high level of performance. The most important external reason is the high rate of economic growth our country has been, and still is, experiencing. This favorable atmosphere, which dominates all markets we are presently active in, has had a very positive impact on our business results.

Our business culture is creating a difference...
Meantime, the most important internal factor concerning our Group's success is the high efficiency we enjoy and our ability to react quickly to developments. The 6 Sigma methodology, which we have adopted as a Company culture, has formed a foundation that enables Borusan to significantly outperform its competitors concerning the attainment of successful business results, precisely under these kinds of settings.

The fact that we utilize a five-year, long term strategic growth plan to chart our course is yet another important characteristic of our Company. After we put its implementation on hold over the past two years due to the global crisis we returned to this planned management technique once again beginning in 2011. Last year we developed a new growth plan which encompasses the 2011 to 2015 period.

Risks and new trends of today...
Prior to preparing this plan for 2011 and beyond we assessed the basic trends, as well as the dynamics, pertaining to the world, our country and the sectors in which we are presently active. I can summarize the key issues in this analysis as follows:

Today we are experiencing two global risks. The first is the stagnation of the European economy. Moreover, the ongoing state of regional crises in Greece, Portugal, Ireland, Spain and some of the Eastern European countries can still be described as grave.

Secondly, there is as serious political transformation process that is being experienced in North Africa and the Middle East which is not expected to be resolved in the short term. Even though it should not directly affect Borusan there is a possibility that this change could have adverse effects on some of the important economic and trade players in our country. In addition, we have been observing two import trends in the sectors in which we are actively involved; namely, that trade is moving from the West to the East and competition is increasing in both the domestic and international arenas.

Turkey, meanwhile, is moving forward while displaying a relatively consistent and high economic performance in the midst of all these risks.

As everyone can agree, our top priority must be the sustainment of the rapid growth atmosphere which we are experiencing. However, we must not forget that our current account deficit always continues to pose a threat.

A new term, new strategies...At various stages in the history of mankind a significant transformation has occurred in the basic variables of the world system. This change, which deeply affects all results, marks the arrival of a new era that calls for the implementation of different methods. Philosophers refer to it as the "detachment from the old order" or a "paradigm shift".

The need for a radical reevaluation becomes quite evident when the following issues are examined collectively: the problems pertaining especially to energy and sustainable resources, the effects that the deep economic crisis has had on global financial systems, geopolitical changes in neighboring countries and the new developments pertaining to our own country.

When we evaluated the changes, risks and trends related to 2011 and beyond, we came to the realization that our five-year strategic plan had to be prepared with a different perspective. We summarize this new point of view, which is actually a paradigm shift, under four main headings.

First of all, what we had initially labeled as "unconditional growth" has now been termed as "growth for profit". In other words, growth has no meaning if it does not generate profitability.

Secondly, we are changing our portfolio in order to make it more resilient towards fluctuations. As a matter of fact, we made a strategic decision to withdraw from the telecommunications business and enter the energy production sector for this very reason.

Third, and perhaps the most important aspect for our Company, is related to our understanding of globalization. In our international business activities we are slowly transitioning from the role of "an exporter" towards becoming "a regional player". Trade is steadily moving to the East and we are giving priority to investments in Kazakhstan, Azerbaijan, Georgia, Iraq and Iran. With this in mind, we have begun to meticulously appraise regional investments including takeover opportunities, especially for our steel and logistics businesses.

A new term, a new way of doing business...

Finally, we have defined the fourth change in our perspective as the new way in which we do business.

We have chosen the expression of "simple, fast and creative" to describe the characteristics of Borusan over the course of the next five years. The most important success criteria in all the business ventures we conduct will be "innovativeness". We are going to develop new products, find new markets and increase efficiency in all areas. Furthermore, we decided to form a new division known as "The Innovation Faculty" as a part of Borusan Academy which, incidentally, had its first graduating class this year.

While implementing our new strategy, we are also taking into consideration global warming and environmental issues. As we establish our sustainability strategy we began an initiative in all related business areas to determine targets pertaining to these issues. As a part of this effort we aim to achieve improvements in the areas of energy efficiency, greenhouse gas emissions, waste management and water consumption.

The 5 year target of Borusan: A turnover of $6 billion!
Our five-year strategic growth plan, prepared from this perspective of transformation, aims to attain a $6 billion turnover by the end of 2015. Our investment plans, service and production capacities are all in alignment with this target.

I am confident that we will be able to surprise everyone and surpass our five-year strategic targets as long as unanticipated problems do not arise in the global economies. The ones who are going to make this happen are our qualified employees, every one of whom is among the best in their respective sectors. On behalf of my family, our shareholders and business partners and country. I want to thank all members of Borusan for the high level of performance they displayed during 2010. These members of the Borusan family constitute the most valuable competitive leverage we have for reaching the ambitious 2015 targets.

When evaluated broadly, such surprising performances by other companies similar to Borusan will push Turkey higher in terms of living standards, economic size and development rankings.

With warmest regards,

A. Ahmet Kocabıyık
Chairman of the Board
Borusan Holding

A. Ahmet Kocabıyık
Chairman of the Board
Borusan Holding

Trade is moving from the West to the East and competition is increasing in both the domestic and international arenas.

The most important success criteria in all the business ventures we conduct will be "innovativeness". We are going to develop new products, find new markets and increase efficiency in all areas.

I am confident that we will be able to surprise everyone and surpass our fiveyear strategic targets as long as unanticipated problems do not arise in the global economies.

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