Alarko Holding CFO

Ömer Çelik 

“Our financial standing will become even stronger” 

Saying Alarko is a group that enjoys surplus cash, Ömer Çelik adds that their financial standing will become even stronger in the current period because of foreign assets and contract revenues. 

 In this period of global turmoil what kind of financial strategy will Alarko follow? 

Alarko progresses with a quite conservative financial strategy not only in periods of such financial turmoil but also in normal periods, paying attention to sitting on cash and taking low financial risk. Alarko will cling to this strategy more strongly in the present period. 

There are comments claiming that Turkish companies experience financial squeeze and that this situation will be felt more severely in the coming period. Could you evaluate this comment from Alarko’s perspective? Are you having a similar problem? 

In terms of overall markets, this comment may contain truth when thought against the foreign debt of the private sector which has recently increased and against the knowledge that negative developments in foreign credit markets are expected both to render it difficult to find this type of finance and to increase costs. However, Alarko Holding’s total cash reserves are way above its total financial debts. It has a net positive cash position. We think that this liquidity advantage will become an important strength for Alarko Holding in the coming period and possible future problems in markets will have minimal effect on our group. In addition to having significant foreign-denominated cash reserves, also foreign-denominated contracts comprise a considerable part of our business. Under this situation we can safely assert that our financial standing will become even stronger thanks to significant foreign-denominated assets and contract revenues. 

It is said that “Out of chaotic periods opportunities arise.” Does Alarko think of taking an initiative to turn the crisis into an opportunity? 

Alarko is a group with surplus cash. We will make use of good purchase opportunities with appropriate prices likely to arise particularly in real estate sector based both on land and project. Our group company Alarko GYO, which is engaged in land development, has significant cash reserves as of 09/30/2008 by virtue of its portfolio having no loan debt. Alarko Deyaar, which is also engaged in the same sector, has surplus cash, too. Both companies will benefit from possible opportunities in this period. 

Recently, Alarko has won the Meram Electricity Grid Tender. What are Alarko’s targets for the coming periods in the energy sector?

 Engaged in energy sector, Altek Alarko generates energy with 3 Hydroelectrical Power Plants and 1 Combined Cycle Natural Gas Power Plant, having a combined capacity of 114 MWe. Profitability in the energy sector has risen with the transition to the so-called ‘DUY’ system (Turkish acronym for “balancing and settlement' system). Since the demand for electricity quickly increases in our country while supply is limited, it seems that profitability in this sector will continue in the coming period. Altek Alarko plans to increase its installed capacity to 283 MWe by two investments: one Combined Cycle Natural Gas Power Plant and one Hydroelectrical Power Plant. Additionally, our newly established energy company Alarko Enerji Üretim A.Ş. also prepares for building various imported hard coal thermal power plants and natural gas power plants. If the recent global financial crisis goes on, there may be shifts in the schedule of the above mentioned power plant investments. Meram Electricity Distribution Region is an ideal region. When we compare this region with the rest of Turkey, we see that there is a very low theft/loss rate. This is a positive feature. Due to the current conjuncture, there may be some concerns in the market regarding project finance. But I would like to express one thing: Many strong groups contact us in order to take part in this project. 

Do you think the real estate sector sound the “alarm”? Or can Turkish real-estate sector emerge from the crisis unscathed? 

After the quick growth phase in the first half of 2000s, real estate sector has recently entered a relative slowdown. The slowdown will continue perhaps for a time yet due to the effects of the crisis; but the sector will enjoy a trend of healthy growth again in 2-3 years. 

Do you plan to make a new real estate investment? 

Alarko GYO and Alarko Deyaar watch for purchase opportunities in real estate. Alarko GYO has nearly completed the 3^rd phase of the ongoing Alkent Istanbul 2000 Lake Mansions Project. Alarko GYO plans to realize, in the medium-long term, a hotel-residence-shopping center complex project on the lands it owns. 

What are Alarko’s financial targets for 2009? 

Soon after the effects of the global financial crisis are left behind and markets are restored to normalcy, Alarko plans to continue energy investments and to get a share in privatization tenders like new electricity distribution regions and Turkish National Lottery Administration tenders, with strong domestic-foreign partners. As usual, when doing all these we will maintain our policy of taking only calculable risks and of not upsetting our robust financial structure.