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ITALY –TURKEY ECONOMIC FORUM

ITALY –TURKEY ECONOMIC FORUM. Hans Hoegstedt, CEO Turk Prysmian Istanbul May 4, 2012 . G LOBAL PARTNER WITH LOCAL PRESENCE SINCE 1879.

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ITALY –TURKEY ECONOMIC FORUM

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  1. ITALY –TURKEY ECONOMIC FORUM Hans Hoegstedt, CEO Turk Prysmian IstanbulMay 4, 2012

  2. GLOBAL PARTNER WITH LOCAL PRESENCE SINCE 1879 No.1 in cable solutions for the energy and telecommunication business, with a strong position in high-technology, innovation-driven market segments. 50 COUNTRIES 98 PLANTS 22,000 PEOPLE > 8 €B SALES 22 R&D CENTRES

  3. FULL range OF CABLE SOLUTIONS FOR YOUR BUSINESS... • World-wide Partner of Choice of major utility companies • Reliable supplier for large and long time projects • Comprehensive range for various technical specs • Strong after sales support

  4. PRYSMIAN IN TURKEY WITH LOCAL PRODUCTION SINCE 1964 2011 “Merger with DRAKA” The company became PRYSMIAN GROUP. 2005 The company became PRYSMIAN. 1999 The company acquired by PIRELLI. 1964 The company established as SIEMENS. LOCATED IN MUDANYA TOTAL AREA 180.000 m² > 400 PEOPLE 687Mil.TL SALES 35% OF SALES ARE EXPORT • Unique Cable Maker listed into Istanbul Stock Exchange as well as Cooperate Management Index (only few selected companies) • The largest R&D facility in the Country • Leading the overall quality (both for product and business ethics) standards in Turkey to higher levels

  5. PARTNER IN TURKEY’S LEADING PROJECTS Zorlu Center, Istanbul Kanyon AVM, Istanbul Mardan Palace Hotel, Antalya Agaoglu My World, Istanbul 380kV TEİAŞ Davutpaşa HV, Istanbul Dubai Metro, Dubai Formula1 Istanbul Park, Istanbul Sukru Saracoglu Stadium, Istanbul

  6. TRENDS: Young Urbanized Population IS driving GROWTH • Booming Economy • GDP ’02-’10: USD 230 billionto USD 736 billion tobecomethe 16th biggest economy inthe world • GDP ’11: +8,5% andexpected CAGR ’12-’14 of 5%where private spendings, construction and mfgare the key driverof the growth • Volatile exchange rates andstrengthening TLR/€ (today 2,33 vs’10 of 1,99) • Young Urbanized Population Changing the Market • 50% of thepopulation < 29.2 yrs (EU 44) • 76.3% of the population is living at city and town centers • 18% of the total population is living in Istanbul • Growing urbanization is “forcing” the construction market to grow above the GDP level and to shiftthe construction market to multi-storage/ mid-rise buildings andgrowing commercial construction but also urgent needs for improved infrastructure (transportation, education, health) • Growing electricity demand forcingincreased investments powergeneration and transmission linesboth land and submarine • More demanding and more affluent population is raising the standards (safety, technology and comfort) • And a very strong hub for the neighbouring countries!!!

  7. SOME LAST ADVISE from our 48 yrs EXPERIENCE IN TURKEY • Strong local partner / relationships are critical for success • Buildrelationshipto a level of strategic partnership (good quality, open minded, long-term) • Be ready to compete: Local competition is fierce • Don’t estimate local competition that are usually very competitive and quick learners. • Keep tight quality control of suppliers • There are still a fair amount of below spec products in the market. Be careful! • Risk management • Customer Credit risk. Many small and medium size businesses do not publish official financial results according to IFRS. Insurance of trade receivables is the key while operating in such uncertainenvironment. • Exchange rate risk. TL is still very volatile compared to major hard currencies of the world. Not only for cash flowbut also to manage profitability daily forex balance and forward operations to ensure the hedgingof the risk is a must. • Inventory cost risk. Varying degrees but depending on the cost components of a product, a lot of materials are tradedin currencies other then TL. If the sales price is not a function of these different currencies and raw material prices, inventory losses may arise, and operating profit may be distorted considerably. • Interest rate risk and working capital management. There are various investment incentive programmes for exporters and/or local manufacturersthat you may find the most suitable one based on your operating structure. These programmes arereally useful to balance the cost of working capital management and also the inherent interest raterisk.

  8. Last words... Why turkey – italian partnership • Strong economic growth in Turkey where the country still lacks sufficient infrastructures • The Turkish government is showing a real committment to improve the infrastructure as a the backbone of the sustainable growth • Now is the right time to invest in Turkey with still limited foreign investments (only 20% of GDP vs China with 50%) • Good fit between Italian – Turkish mindset (entrepreneurial, family spirit, flexible) • Closer to home • Focus on the long run as the key • success is long-term relationships • and market knowledge!

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