The wounds of the global crisis that emerged in late 2008 and were widely felt throughout 2009 began to heal in 2010.

The most serious crisis-related problem we still face is the failure as yet to implement an exit strategy from the monetary expansion policy central banks in developed countries, particularly the US and EU, had applied to alleviate the impact of the crisis and to support the banking sector.

The delay in implementing this exit strategy not only carries inflationary risks but also creates long-term fluctuations in international capital movements and exchange rates. On the other hand, putting this exit strategy into effect too soon carries the risk of obstructing economic recovery and, associated with this, a return of the problems that existed in the middle of the crisis, chiefly in the banking sector. Therefore, a crucial challenge facing economic managers around the world is the execution of a well-managed exit strategy.

The Turkish economy weathered the crisis well. The structural transformation policies implemented after the crisis Turkey faced at the start of the millennium stood the economy in good stead.

Turkey was, therefore, in a relatively advantageous position vis-à-vis other countries to rebound from the crisis. Buoyed by a gradual recovery evident at the end of 2009, Turkey was able to take great strides towards overcoming the crisis in 2010.

Furthermore, Turkey’s credit rating rose during this period even as that of many European countries fell.

GDP at fixed prices, having declined by 4.8% in 2009, climbed by 8.9% in 2010. In the same period, construction grew 17.1%, manufacturing 13.6%, and wholesale-retail commercial sectors 13.3%.

2011 started with events that could have considerable impact on the stability of the world economy. The civil unrest which started in Tunisia spread to other North African counties such as Egypt and Libya and has the potential to spread to other Arab countries as well. Political turmoil in the region has been reflected in rising oil prices. The situation in Libya, as a result of the resolutions taken by the United Nations and the inclusion of NATO into the conflict, has gained international dimensions. In Japan, the twin disasters of a huge earthquake and giant tsunami severely damaged a nuclear power plant, creating immense human suffering and, because of Japan’s role in the global economy, leading to serious economic imbalances.

Tekfen Group Companies’ financial results reflect the relative recovery of the global and Turkish economies in 2010. The Group companies, which maintained their commercial activities in Turkey and abroad, had a very successful 2010, especially in terms of profit generation.

In 2010 Tekfen Group posted consolidated revenues of TRY 2,262 million. Profit before interest, depreciation and taxes amounted to TRY 299 million with net income of TRY 178 million. The Group’s total assets increased by 11% to TRY 3,066 million and total shareholders’ equity grew by 17% to reach TRY 1,683 million.

The Tekfen Contracting Group largely overcame the effects of the crisis in 2010 to attain revenues of TRY 1,111 million and expand its business portfolio through new contracts. Working on major construction projects in 10 countries on three continents, the Group had its greatest growth in Morocco, which has the largest phosphate mines in the world, and Azerbaijan, Tekfen’s main base in the Caspian Region. Our Contracting Group raised the value of its active backlog from $1.3 billion in 2009 to $1.8 billion in 2010 by adding projects to its business portfolio.

The Tekfen Agri-Industry Group, the Group’s second largest operating area, performed successfully in 2010. The Group grew its largest area of business, fertilizer sales, in tonnage and revenue terms, and increased its market share from 30% to 34.6%, despite a general contraction in the fertilizer market in 2010. Fertilizer aside, the Group successfully improved on its agricultural activities in 2010, including techno-farming, nurseries and seed production, which it conducts under the Toros Tarım umbrella. Port activities, which had declined during the crisis, revived and capacity at our Ceyhan Terminal increased, contributing greatly to overall improvements in 2010.

The Tekfen Real Estate Development Group continued to develop projects targeted at upper income groups in 2010. Reinvigorated within a year after the crisis, the real estate market lifted the Real Estate Development Group’s sales of completed projects and those under construction. Thanks to its long-term investment strategy, the Group could take advantage of its sound financial structure to continue its development projects in a real estate market suffering from a loss of investment due to liquidity problems.

In 2011, Tekfen Group will continue to create value for all its stakeholders and will further strengthen its position through a dynamic management style that adapts to rapid changes in the operating environment. In this endeavor, we are fortified by our most important assets -a strong financial structure, nearly 55 years of experience, expertise, a highly respected brand, and top-notch human resources - and guided by our founding partners’ leadership and ethical values.

I would like to express my sincere gratitude to our employees, subsidiaries, investors, customers and founding partners, all of whom played a major role in our success in 2010.

Erhan Öner
Tekfen Group of Companies - President & CEO