Message from the Chairman

Esteemed Shareholders,

I would like to start my speech wishing that we have a successful and productive Annual General Assembly Meeting. 

Despite positive indicators in developing countries, we have left behind a year in which long-term growth in Asia, which is proven very crucial in supporting global growth, has slowed down, while indicators in developed countries have been towards the pullback of fiscal expansionary policies, diminished risk appetite for developing countries and a more apparent divergence between countries. While economic activity remained buoyant in advanced economies, especially in the USA, with the support of expansionary fiscal policies, the risks inherent in a number of other countries, along with geopolitical developments, mounting indebtedness and a tightening in global liquidity conditions have precipitated significant devaluations in developing countries, including Turkey, setting the stage for a slowdown in growth. 

The world economy is estimated to have grown by 3.7% during 2018, while the rate of growth in the European Union – our biggest economic partner – estimated to have slowed by 0.6% compared to 2017 and resulted as 1.8%, with a further slowdown in 2019, to 1.6%. 

Growth in the US economy was estimated to have been 2.9% in 2018, with record low levels of unemployment and continued strong growth, and this growth is set to continue in 2019. However, the course of trade wars that punctuated the last quarter of 2018 will surely determine the global economic outlook in 2019. According to the IMF’s latest forecasts, the slowdown started in the second half of 2018 will also affect 2019, in which global growth expected to slow to 3.5%.

In our country’s economy, growth is expected to have fallen below last year’s performance to 2% due to the loss of momentum and the contraction in the second half of 2018, but there are promising signs that growth will rebound to 2.3% again in 2019, thanks to the measures taken in line with the new economic program. 

The price of crude oil, one of the key parameters for our sector, sought direction following a number of factors such as compliance level of OPEC countries and Russia with the production cut agreement, geopolitical developments and crude inventory levels throughout the year. Crude oil prices, which followed a fluctuating course during 2018, started the year at USD 66.60/barrel and rose to USD 86.20/barrel due to the continuing positive trend in global crude oil demand, the compliance of OPEC countries to production cuts and the sanctions imposed against Iran. However, oil prices then entered a downward trend due to the trade wars which had a marked impact on the economy in the last quarter, concerns over global economic growth and the announcement of exemptions from Iranian sanctions, and closed the year at USD 50.20/barrel. 


Tüpraş has continued to perform its operations in line with all global and local developments that affect our sector. Backed by its capability to process heavy and high-sulfur crude oil and the ever-expanding crude oil supply pool, 20 different varieties of crude oil were purchased from 12 countries to achieve the most optimal charge composition. Tüpraş realized 25.7 million tons of production in 2018 with a 95.9% capacity utilization rate, despite the modernization work being carried out in İzmir Refinery crude oil unit and the important planned maintenance stoppages in İzmit and Kırıkkale refineries. 

Tüpraş recorded domestic sales of 25.6 million tons and total sales of 29.8 million tons, with total turnover reaching TL 88.6 billion particularly as a result of strong demand and the record sales volumes achieved in diesel and jet fuel products. 

Despite being a period marked by significant operational and financial risks, Tüpraş successfully managed its operations within the framework of strong risk policies in 2018 and maintained its working capital and strong balance sheet, recording a net profit of TL 3.8 billion. 

Tüpraş continued to invest in sustainability in 2018, with its total investments in refining exceeding USD 6 billion over the last 13 years. Tüpraş opened a London Trading Office in 2018 to strengthen its operational effectiveness through international integration.

In line with the work on the digital transformation initiated last year, Tüpraş started to implement Industry 4.0 projects that significantly improved the refinery processes. Our Data Analytics Centers, opened in 2018 at the METU and ITU Technocities, have started to provide analytical services to other companies with the experience and knowledge gained in this context.

In 2018, Tüpraş continued to create economic value added through its production, while at the same time continuing to carry out social projects in the fields of culture, the arts and education to meet the needs of our country. Tüpraş, a supporter of the HeforShe movement under the leadership of our Group, conducts training and sponsorship activities in order to raise awareness of women’s empowerment both in the workplace and in society.

The main priority in all of the operational and financial achievements we have reached, and one on which we shall never compromise, is occupational safety and technical safety, as guided by the wise words of the late Vehbi Koç, the founder of the Koç Group, who stated “Our most important capital is our human resources”. By reviewing all of our processes through this awareness, our highest responsibility is to ensure that our work processes become ever safer with each passing day.

Our Valued Stakeholders,

Despite the difficulties experienced, we completed 2018 with a successful set of business results. In the view of the decline in global trade, the difficulties posed by the financial conditions around the world and the mounting uncertainties in the commodity markets, it is clear that 2019 will be a challenging year, especially for developing countries. Thanks to our operational efficiency and strong financial structure, I have the utmost confidence that Tüpraş will achieve successful business results next year as well. 

We would like to thank all of our stakeholders – especially our employees, suppliers and business partners – for their valuable contributions to our success, as well as the confidence and loyalty they have placed in Tüpraş.


Ömer M. Koç


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