With sustainable growth as one of the most crucial components of its competitive power, PETKİM is proud to have had a successful year in line with the vision developed and the synergy created by the SOCAR &  Turcas partnership.

 

Achieving a capacity utilization rate of 99% in 2010, PETKİM broke the previous production, sales and export records of its 45-year long history. In 2010, the Company’s total production rose by 10% and total sales by 40% with respect to the previous year. PETKİM’s turnover reached TL 2,909 billion with a profit of TL 130 billion.

 

As a supplier of raw materials for a number of sectors including electronics, construction and automotive, the Company, thanks to its strong performance during the crisis, played a key role in helping the Turkish economy to recover with relatively limited damage. In the post-crisis growth period as well, PETKİM played a key role by maximizing production in line with its strategy of meeting the demands of its loyal customers and becoming more active in product imports.

 

The world petrochemical sector started the year 2010 with a more consolidated position than the year prior. The first signs of exit from the crisis appeared in the second half of 2009, and resulted in positive growth for emerging economies first, and then for the more developed economies. Economic growth continued into 2010.

 

The newly extended capacity of 4 million tons of ethylene generated an expectation of contraction in the market at first because of the over supply, but then the subsequent demand kept the market buoyant. Global demand for ethylene increased by 4% to 115 million tons in 2010. The industry’s capacity utilization rate, which fell to about 60% during the global downturn, has climbed back to 80% in the following periods.

 

By the end of 2010, oil prices hovered around USD 100 per barrel, and exerted pressure on production costs. Soaring oil prices were directly reflected in naphtha prices, which reached USD 850 per ton towards the end of 2010, and pushed up production costs and lowered profits. In EU countries, reduced spending and new taxes by governments had an adverse impact on customer confidence. Despite the weakening of the Euro creating a competitive advantage for European exporters, their export volumes nevertheless contracted rapidly.

 

In 2010, the Turkish market also witnessed similar developments. Demand remained high throughout the year. In 2010, Turkish demand for thermoplastics increased by 13% from the previous year. The buoyancy of the Turkish market will be an important driving force allowing PETKİM to realize its future projections.

 

In this respect, the Company’s growth strategies focus on vertical integration in Refinery-Petrochemicals-Energy-Logistics and the production of new high value-added goods. PETKİM aims to grow with a cluster model; with the help of domestic and foreign investors, the Company is transforming the PETKİM Peninsula into a Chemical Industry Park. For this purpose, efforts began in 2010 to enable PETKİM to make optimal use of its land and infrastructure, and lay the groundwork for a master plan of the Refinery-Petrochemicals-Energy-Logistics value chain. As part of the project, a consultancy agreement was signed with Jurong International, founder of the chemical industry park in Singapore’s Jurong Island, which currently implements chemical park field plans in over 40 countries. The first phase of the Chemical Industry Park initiative was completed in 2010.

 

The petrochemical refinery investment undertaken by STAR Refineries Inc. on the premises of PETKİM launched in 2010 after obtaining the necessary license; accordingly, PETKİM geared up its investments to boost capacity and expand its product range. High priority work is currently underway to alleviate bottlenecking in the Ethylene, LDPE-T, and PA plants. In parallel with our investment plans, the Company’s primary objective is to boost its competitiveness by upgrading technology and to maintain sustainable growth.

 

In 2010, the Company placed great emphasis on R&D activities, and continued to develop new products and processes by collaborating with universities and industrial corporations.

 

PETKİM makes investments in line with its strategic objectives and pays utmost attention to those investments designated “necessity” and “priority.” With approximately USD 100 million in investments planned for 2011, the Company targets to maximize the capacity of the plants, upgrade technology, diversify energy resources with efficiency boosting investments, and reduce the weight of energy expenses in overall production costs.

 

The Energy Market Regulatory Authority approved PETKİM’s license application for a Wind Power Plant with a 25 MW capacity, to meet the additional energy demand resulting from the capacity increases; the Company received an autoproducer License during the year. PETKİM plans to initiate this investment in 2011.

 

On November 2010, PETLİM Port Operations and Commerce Inc. was established to ensure the development of the Company’s ports, their better management, and the pursuit of income generating activities in a more efficient manner. The Company is currently introducing the PETKİM port to potential investors and exploring possible strategic partnership opportunities.

 

Aiming to become a global player, PETKİM is dedicated to implementing an environmental sustainability approach. This approach gained fresh momentum when the Company decided to join the Carbon Disclosure Project in 2010 on a voluntary basis.

 

Committed to the belief that the success of an organization can only be guaranteed by highly qualified personnel, the Company completed the third session of the PETKİM Employment Guaranteed Workforce Training which was initiated in 2008. With the addition of the successful graduates of this program to PETKİM’s workforce as technicians in 2011, a total number of 650 qualified technical employees commenced their careers at PETKİM in the last three years.

 

The Board of Directors is extremely sensitive towards practices necessitated by Good Governance and makes sure that Corporate Governance Principles are internalized and fully implemented. Making the utmost effort to comply with the Corporate Governance Principles issued by the CMB, PETKİM saw its corporate governance rating assessed by the Kobirate International Credit Rating and Corporate Governance Services Inc. rise to 8.19 in 2010, up from 7.71 in the previous year.

 

In 2011, the objectives of raising productivity and profitability in all our operational processes shall continue to be a top priority. We aim to achieve a level of performance that will meet the expectations of all stakeholders.

 

I would like to express my gratitude to all of our employees, business partners, shareholders and social stakeholders, for their immense contributions to our robust organizational structure.

 

Kind regards,