2014 ANNUAL REPORT

014 was a very hectic year for both the world

economy and Turkey. In October, the United States,

having distinguished itself from other countries by

its performance, suspended the bond purchasing

program it had enacted after the crisis broke in 2008,

and expectations of interest rate rises emerged.

Moreover, while the pressure on developing countries’

economies are increasing, in Europe, low growth and low

inflation ratios continued in 2014. Driven by a decelerating global

economy and expanding oil supply, the decline of oil prices

to their lowest level since the 2008 crisis was one of the most

important developments in 2014. While, in the short term, this

drop in oil prices would benefit the trade balances of highly

energy-dependent countries like Turkey, overall it created global

economic uncertainty.

The 2014 conflicts between Russia and Ukraine and in Syria

and Iraq brought to the fore problems inherent in Turkey’s

geopolitical position and negatively affected the economy, which

grew by only 2.9%. Despite enormous fluctuations in Turkish

Lira rates and the increase in geopolitical and macroeconomic

risks in 2014, Borusan Group’s consolidated revenues grew by

9% to US$4.5 billion. With the strategic target of becoming a

strong regional player, Borusan Group has obtained 25% of our

consolidated revenues from international sales. Despite negative

developments in our markets of operation, we succeeded not

only in maintaining our gross profitability at 2013, but also in

making crucial strategic investments as one of Turkey’s leading

companies. We had an operating profit of US$328 million in

2014.

The Turkish steel sector performed lower than expected in 2014.

Turkey’s total crude steel production fell in 2014 by 1.8% as

a result of general stagnation in world markets, the increasing

Chinese activity, and the drop in iron ore prices. However,

Borusan Group’s steel companies, with the help of the increase

in export sales, grew by 5% and accounted for 42% of the

Group’s consolidated revenues and 39% of its operating profit.

ur flat steel

companies,

Borçelik

and

Kerim Çelik

maintained

their 2013

performance against a 4%

decrease in steel prices in

2014 and closed the year with

revenues of US$1.1 billion.

Borçelik, which has Turkey’s

largest galvanized flat steel

production capacity, retained

its market leadership in 2014.

Borusan Mannesmann

has continually consolidated

its presence in export

markets by investing in high

value-added products and

undertaking international

projects. As a result, its export

sales reached 65% of total

prime quality sales. The shale

gas drilling pipe plant, the

foundations of which were laid

in 2013 in Texas (USA), began

operations April 2014, thus

making the company a US

domestic producer. Constantly

expanding its activities in

the US, our Company won

a US$130 million public

tender for a 449-km liquefied

natural gas (NGL) pipeline to

be built in Texas, the delivery

will be completed in 2015.

The Company reinforced its

leadership position in the

Turkish market by winning

important contracts.

Dear Investors,

Shareholders and

Employees,

Borusan 2014

Review of Operations