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Continuing To Grow While Focusing On Core Business

Tekfen Holding is one of the largest groups in Turkey. It has major investments in construction and agriculture. Recently it has begun to expand in the finance and real estate development fields. T...

Son Güncelleme: 01.08.2004

Tekfen Holding is one of the largest groups in Turkey. It has major investments in construction and agriculture. Recently it has begun to expand in the finance and real estate development fields. The head of the holding Erhan Öner says that in the future they will concentrate on their core business areas while also expanding their ‘satellite’ businesses. He notes that in terms of new fields they are thinking of energy and distribution.  
Erhan Öner, who has worked in various positions in the holding for 35 years, is currently Tekfen Holding Group Companies President. Öner, who spoke with Capital for the first time, says that the holding will expand modestly in every field in which it is active and stresses that the company will take calculated risks. He notes that the construction and agriculture groups will be the holding’s locomotives. Answering our questions about the construction sector, he says that there are a lot of experienced and inexperienced contractors in Turkey. He stresses that in agriculture Turkey needs to concentrate on exports. Öner says that they produce vegetables using the latest technology at European standards and that they can do the same with fruit. He continues as follows: “Of course, the second phase of this is that there is a long-term gap in processed foodstuffs. There are opportunities in quality agriculture and quality foodstuffs. In agriculture it is exports which will really lead the way for Turkey.”  
Tekfen Holding Group Companies President Erhan Öner explained the latest situation of the holding to Capital and its new investment plans:  
Could you evaluate the holding’s performance last year and its performance this year?  
Last year we didn’t do much better in terms of turnover than the year before but our profitability was much higher. But we didn’t achieve this profitability just by working hard and being successful. We achieved these results a little because of the cost-cutting measures we had taken and also because of the overall state of the economy.  
We had undergone a restructuring process which began in 1998 and finished in 2000. As a result of this process we withdrew from areas which we thought were outside our fields of interest. Today our two locomotive businesses are our construction company and our fertiliser company. The others are satellites.  
What are your targets for turnover in construction and agriculture in 2004?  
From the perspective of turnover, contracting accounts for 47.2 percent of our total turnover and fertiliser 35 percent. When you add the two together you get 80 percent. Banking accounts for 13.2 percent and the others for 3.8 percent. As a result, we can say that 50 percent of our turnover comes from contracting and 35 percent from agribusiness. The others are much smaller. Last year the group had a turnover of US$ 732 million. I don’t think it will be any less this year.  
What are your growth plans for Tekfenbank and the finance group?  
We are planning modest growth in that area. Because banking is a very sensitive, competitive and difficult business. As a result, we are not thinking of suddenly expanding and becoming one of the leaders. We want to conduct banking according to ethical rules, grow modestly and of course one day form a merger with a foreigner. Because we think that the right way to take this business on to the next level is through a merger with a foreigner. But there is nothing happening in that direction at the moment. We are not large enough to be attractive to anyone.  
Are there any plans to enter new sectors or make investments in new sectors?  
In terms of new sectors we are looking favourably on becoming involved in water, electricity and gas distribution and providing customers with services there. In fact, we have already established a gas company. According to the new energy market laws we have to establish a company with a specific amount of capital. First of all we made a bid for the tenders for gas distribution in Kayseri and Konya but unfortunately our price was not considered appropriate. We weren’t even ranked among the front-runners in the 25-30 companies. We still believe that those tenders went for the wrong prices. We shall try our luck. We are planning to get involved in this business. We believe that the state will privatise some of the municipal services. Apart from these, we are making investments to develop our existing businesses. In contracting investment means machinery. It used to be that when you went into a company it had a very small machine park. But now there are nearly 40 winches on a worksite. We follow the technological developments in the machinery plant that we use in the production facilities that I am talking about here.  
Yes, there are at the moment. We have ongoing investments in both seeds and seedlings. We are expanding our existing investments. We are adding another 20,000 square metres of greenhouses in order to conduct research on the seeds that we are importing. We are planning a new 10-15,000 dönüm investment for seedlings.  
REGIONALIZED PRODUCTS At the moment we are mostly concentrated in Antalya. We are trying to expand to the Aegean, Adana and the Black Sea. Because every region has different needs. There are different seeds which are suitable for the different climatic conditions in each region. It is important to produce products in different climatic regions. For example, the people in Tokat consume tomatoes. We want to produce tomatoes that are appropriate to that region not in Antalya but in Tokat. This means building greenhouses there.  
WE ARE PRODUCING GRAFTED SEEDLINGS We account for nearly 50 percent of the grafted seedlings produced in Turkey. The branches of tomato plants are very fragile but those of eggplants are very strong. In grafted seedlings the stem becomes eggplant. While the main stem of the eggplant is still a seedling you graft on the tomatoes. We are not doing anything artificial, just providing the farmer with the chance to produce products better.  
WORKING ON POTATOES In potatoes we are trying to start with the right, disease-free genes and produce potatoes clean of disease. At the moment there are 4-50 different types of potato seed being used in Turkey. If you can cleanse them of disease then you can produce without any problems in a minimum of 3-5 years. As a result there are a lot of things to do in agriculture.