Dear Aksa Family,
In the year that we left behind, we had many developments in which we rejoiced and saddened together. However, none of these developments has shaken us as much as the loss of the Chairman of Akkök Holding, Mr. Ali Raif Dinçkök. He was a great leader, an impeccable person. His deep love for his country, his in-depth research into the subjects he was interested in, and his desire to achieve firsts were his most influential characteristics. He also placed great emphasis on the carbon fiber production carried out by DowAksa and often expressed that we needed to achieve this for Turkey. Mr. Diçkök contributed greatly to Aksa Acrylic’s achievement of the highest grades in corporate governance rankings in Turkey. It is important to remember that a company can only be institutionalized by virtue of the opportunity its leader provides. With Mr. Dinçkök’s trust in us, we did our best and we have succeeded in printing Aksa’s name on the top of the corporate governance rankings consecutively for the last 3 years. We will work harder than ever to carry our company, which he has entrusted upon us, to better places and we will always remember him with love, respect and gratitude.
From an economic point of view, we had a difficult year filled with economic uncertainty both in the world and in Turkey. While Turkey was trying to deal with the economic problems that were even more pronounced after the June 24th elections, the US President Donald Trump’s trade showdown with China and the sanctions imposed on Iran were high on the world’s agenda. The uncertainty of economic policies between the US and Turkey, as well as the relations with the Middle East and the embargos have affected the course of the economy throughout the year.
In our sector, the shortage of cash in the market and the excessive rise in raw material prices have affected all of us. We achieved a high sales volume in the first half of 2018 in the domestic market. However, the excessive rise in raw material prices and the shortage of cash in the markets since August have unfortunately led to a drop of demand on all supply chains. As a company with a capacity utilization rate of approximately 98.6 percent in the last five operating years, we too have had to take some measures and reduce our capacity first by 20 percent and then by a further 20% percent. At the beginning of 2019, the outlook started to change slowly and in parallel with the positive developments in acrylic fiber demand, we raised our capacity rate to sector averages.
On the raw material side, although Acrylic Fiber factories performed production cuts, high capacity utilization rates and demand in the two other ACN users, ABS and Acrylamid, contributed to higher prices. However, towards the end of the year, the trade wars in the world and the downward trend in oil prices affected other sectors as well and caused a decline in raw material prices.
In 2018, the demand for acrylic fiber remained limited in the Far East, especially in the Chinese market and remained standard in the US and the European markets. Conditions were uncertain throughout the year in Iran, the world’s third largest Acrylic Fiber market, as the US revamped embargoes and took tougher measures than before. Securing the right to continue oil trade with Iran for another six months period as of November 2018, gave the opportunity to Turkey together with some other countries, to continue to export to Iran. Despite all the economic difficulties in Turkey and in the world markets, we at Aksa, closed the year 2018 with a successful export rate of 46%.
One of the developments in which we took pride in 2018 as Aksa Acrylic was that we were included in the BIST Sustainability Index together with 50 other companies. As a company that builds its medium and long-term strategy within the framework of the world’s trends and sustainable growth principles, we will also register our practices regarding sustainability from global warming to health, employment and water resources through this index. In this year’s “Industry 4.0” Platinum Global 100 Awards, we were proud in emerging the first in the ‘Chemistry’ sector. While the concept of Industry 4.0 provides quality, sustainability and efficiency, we also see it as a tool to better serve our country.
Last year, we signed an significant loan agreement that encouraged us to invest in new investments. In order to finance investment and modernization projects, our company signed an important USD 95 million syndicated loan agreement under the leadership of the European Bank for Reconstruction and Development (EBRD). This loan agreement was the only syndicated loan provided in Turkey by the EBRD in 2018.
I would like to thank all of our employees, customers and business partners that contributed to the success of our Company which was founded in Yalova 50 years ago and has today reached an assets size of TL 4.2 billion.
I sincerely believe that our successes will expand exponentially in 2019, and we will continue to be a company that retains the memory of Mr. Ali Raif Dinçkök alive by continuing to contribute to its country on the path he opened for us.