Esteemed Partners,

After a COVID-stricken 2020, 2021 was a year of recovery as the vaccines started to roll out, and we saw a global resumption of economic activity despite the disruptions in the supply chain. The overall recovery observed in economies after the initial shock led to discussions of “back to normal” scenarios. However, this optimistic outlook was soon shattered by the uncertainty and concerns surrounding the rapid spread of the Omicron variant at the end of the year. Falling behind in global vaccinations and the challenges in ensuring vaccine access to low-income communities reintroduced the “global risk” status of the virus as declared by the World Health Organization. This situation caused a loss of momentum in the global economy. It also led to a spike in uncertainty about the end of the pandemic and whether we can return to pre-pandemic monetary and fiscal policies.

Meanwhile, rising energy and commodity prices and disruptions in the production chain have led to much higher inflation rates than expected around the globe. As inflationary pressure challenged all economies, inflation figures in the US and the Eurozone reached record levels in the last period of the year. While central banks originally claimed that price increases would be temporary, they have started to move away from this point of view, noting their concerns that inflation might be here to stay. Having injected $32 trillion into markets from the beginning of the pandemic to the end of 2021, central banks are expected to tighten their monetary policies in the coming period.

Accordingly, as global interest rates rise, debt-ridden emerging economies face increased risks for their capital flows, currencies, and financial positions. Global geopolitical tensions and the possibility of major disasters induced by climate change heightens these risks. Moreover, the possibility that coronavirus might be here for the long haul forces fiscal policies, which are now more limited than before the pandemic, to prioritize health and social expenditures. This necessitates international collaboration for ensuring access to liquidity and debt restructuring when necessary. At the same time, it is still a priority to allocate resources to combating the increasingly-intensive climate change.

These global developments proved to be decisive factors for Turkey’s 2021 agenda as well. Achieving record growth in the first three quarters of the year, Turkey distinguished itself from many developing countries. However, the volatility in exchange rates and climbing inflation in the last period of the year fueled economic uncertainties. In addition to the impact of the pandemic on the world of work, rising raw material and energy prices, supply difficulties, and market fluctuations have particularly hit the manufacturing industry. On the other hand, the industrial sector has continued to contribute to growth, but the agriculture and construction industries and overall investments contracted in the last quarter. Private consumption and exports were the determining factors in the growth performance.

Esteemed Partners,

In 2021, a year marked by decreased investments, we at Tekfen Holding aimed to respond to the rapidly changing global and local environment by focusing on our current areas of activity. With the change in Holding management in the first quarter of the year, we initiated a renewal process to review our Group structure in today’s ever-changing environment and transform it into a more agile, durable, and sustainable organization. An experienced CEO from outside the company, Mr. Ali Pandır, was appointed as the President of Tekfen Group Companies, marking a first in Tekfen’s 65-year history. This development demonstrates the Group’s desire for change like no other. Tekfen was built on a set of values indispensable for the modern business world, and now, the integration of these values into a more agile organization in today’s fast-moving environment is essential to establish a dynamic and competitive corporate structure that looks to the future with more confidence and creates value for all its stakeholders.

Sustainability issues remained high on our Group’s agenda in 2021. We believe that no company will exist in the future unless they are sensitive toward issues that pose a grave risk to the future of our planet, especially the climate crisis, and develop their business models to find solutions to these problems. At Tekfen Group, we consider sustainability vital not only for our Group but also for the future of our planet.

Our sustainability activities are an extension of the world views of our three founders, Necati Akçağlılar, Feyyaz Berker, and Ali Nihat Gökyiğit. Throughout the years, these hard-working and visionary individuals have been role models for us all with their love of Turkey and their approach to social and environmental responsibilities. Our sustainability policies are now increasingly shaped by the environmental, social, and governance (ESG) approach across our Group Companies. Our companies progressively focus on sustainability by integrating digitalization, innovation, environment, efficiency, and inclusiveness into their business processes.

The climate emergency and water crisis are among the most critical risks facing the world today. In another encouraging development in 2021, we once again received an “A” score in both the Climate Change and Water Security Programs of the CDP thanks to our relevant measures in these areas. Following the medium and long-term emission reduction targets we set in 2020, we initiated the “Tekfen Net Zero Roadmap” to shape our plan for transitioning to net-zero emissions.

Today’s fast-paced world poses threats to institutions that cannot keep up with change while creating unique opportunities for companies that have internalized change management and created the appropriate structures and decision mechanisms. At Tekfen, it will be our top priority in the coming period to make the best use of these areas with the right structure and well-configured business processes and turn them into opportunities to achieve more breakthroughs.

I express my sincere gratitude to all our employees and investors who share our goals on this path.

Sincerely,

Zekeriya Yıldırım