We expected that 2003 would be a turning-point year for the world and for Turkey.
That expectation turned out to be largely true. The part of the world in which our country is located has embarked upon a process of deep and radical change. The developments that began with the war in Iraq are triggering changes in society that will shape the future while also signaling the possible emergence of new business opportunities as well.
In 2003 our country experienced its first year of relatively low inflation in perhaps a generation. With the birth of a new business environment in which sustainable growth and balance will prevail, all economic actors must put their houses in order and confront the need of having to redefine their business models according to the new realities.
Another important fact to which this financial performance points is that the business model OYAK has developed can also be successful in a low-inflation environment: not only is it sustainable, its ability to generate real returns will get stronger and stronger.
Profitability is an issue of fundamental importance for OYAK. We are responsible for protecting the value of the assets entrusted to us. This responsibility requires us to be mindful of profitability in every corporate decision and action and, in the final analysis, to regard it as having priority over every other commercial concern.
The 2003 rate of return is the highest achieved in the last forty years.
Since its founding, OYAK has put its assets to work by participating in other companies active in different sectors. In that respect therefore, the profitability of the companies that we invest in is very important to us.
The most important issues for us are neither whether these companies are the undisputed leaders of their sectors nor their size. Those qualities are evaluated together with profitability and it is a search for the right mix of size and leadership that is mindful first and foremost of profitability that guides all of our investment decisions.
For this reason, OYAK has never viewed pulling out of a business that proved not to be profitable or whose profitability is declining as a loss but rather as a gain.
Our participations and investments
We strive to carefully protect the risk-return balance of the assets entrusted to us and to ensure that those assets survive into the future. As a part of this ongoing effort, we pursue our investments along two axes: A) equity participations and B) financial investments.
Depending on prevailing market conditions, sometimes the first will be more profitable than the second and at other times exactly the reverse will be true and our investments in money and capital markets will outperform our stakes in companies.
The rate of return, the most important benchmark of our success in our members’ eyes, was 39.2%, a result that outperformed WPI by 182% and CPI by 113% last year.
When choosing between the two and their relative weights, we engage in a great effort to arrive at a precise balance making maximum use of OYAK’s vast business experience, our foresight, and our management abilities. The only focal point and objective of this effort is to ensure that our profitability remains high and that our actuarial balance remains sustainable.
OYAK is a corporate group whose activities are pursued under free market conditions and which is managed with a private-sector approach.
The more OYAK is successful, the more its identity, its members, and its status become a topic and focal point of public attention. Elsewhere in this year’s annual report you will find satisfying information about what OYAK is. What I want to do here is to address the issue of what it is not.
As most of us are aware, OYAK is a mutual assistance organization and a pension fund for Turkish Armed Forces personnel. The most important point here is that our Company is not a part of the Turkish Armed Forces organization: the relationship between OYAK and the Turkish Armed Forces is that it is their members’ pension fund.
There are some who think that OYAK is a company that trades in military material. That is a mistaken idea too. We are not a company engaged in business in military-related matters. It is worth noting that not one of the companies in which we have a stake is directly involved in any defense industry; neither do any of them make or trade in military equipment or supplies. This is an abstention that is an essential part of our ethical values and to which we give the utmost importance.
The bottom line therefore is that OYAK is a corporate group that operates under free market conditions, is managed by professionals, civilians with a private sector approach, and is subject to all the provisions of private law.
2004 and beyond
The days of making easy and big profits are over. Stretching out before us into the future lies a period in which all public and private economic actors are going to have to carefully measure their effectiveness, productivity, profitability, and costs and pay great attention to them all in the conduct of their economic activities. Competition is going to increase and only those who are good and who offer high-quality products and services will win and survive.
OYAK is ready for this race. We are assessing the growth and investment opportunities that our national economy puts in our path in light of the crucial points I have tried to summarize above. We are currently studying the investment opportunities available in different sectors, with special attention being given to energy and financial services. In parallel with this, we are also keeping a close watch on the progress of privatization in our country. We are interested in buying into companies that are profitable, respected, and good at what they do. Our decisions on these matters of course will continue to be made with an eye first and foremost on our profitability, returns, and actuarial balance.
So long as we join hands around our vision, mission, and common values, we shall continue to work in order to provide only the best for the 216,389 members who trust us and who regard us as their lifelong partners.
Şerif Coşkun ULUSOY, Ph.D.
Chief Executive Officer