2019 6 Months

Investor Presentation

08.08.2019

3

Ereğli Demir Çelik Fabrikaları T.A.Ş. (Erdemir) may, when necessary, make written or verbal

announcements about forward-looking information, expectations, estimates, targets, assessments and

opinions. Erdemir has made the necessary arrangements about the amounts and results of such

information through its Disclosure Policy and has shared such policy with the public through the Erdemir

website, in accordance with the Capital Markets Board regulations. As stated in related policy, information

contained in forward-looking statements, whether verbal or written, should not include unrealistic

assumptions or forecasts. It should be noted that, actual results could materially differ from estimates

taking into account the fact that they are not based on historical facts but are driven from expectations,

beliefs, plans, targets and other factors which are beyond the control of our Company. As a result, forward-

looking statements should not be fully trusted or taken as granted. Forward-looking statements should be

considered valid only considering the conditions prevailing at the time of the announcement. In cases

where it is understood that forward-looking statements are no longer achievable, such matter will be

announced to the public and the statements will be revised. However, the decision to make a revision is a

result of a subjective evaluation. Therefore, it should be noted that, when a party is coming to a judgement

based on estimates and forward-looking statements, our Company may not have made a revision at that

particular time. Our Company makes no commitment to make regular revisions which would fully cover

changes in every parameter. New factors may arise in the future which may not be possible to foresee at

this moment in time.

Disclaimer

2019 Market Overview

5

Crude Steel ProductionChina Crude Steel Production (% yoy)EU28 Crude Steel Production (% yoy)

CIS Crude Steel Production (% yoy)

-10.0%

10.0%

0.0%

-5.0%

5.0%

Apr-

18

Jan-1

8

Dec-1

7

May-1

9

Jun-1

8

Jul-18

Jun-1

7

Nov-1

8

Mar-

16

Sep-1

7

Jul-17

Aug-1

7

Oct-

17

Nov-1

7

Feb

-18

May-1

8

Aug-1

8

Sep-1

8

Oct-

18

Dec-1

8

Jan-1

9

Feb

-19

Mar-

19

Apr-

19

Jun-1

9

5.0%

10.0%

-10.0%

-5.0%

15.0%

0.0%

May-1

9

Apr-

18

Nov-1

7

Aug-1

7

Jun-1

8

Jan-1

8

Apr-

18

Apr-

19

Dec-1

7

Feb

-18

Jun-1

7

Jul-17

Sep-1

7

Oct-

17

Mar-

18

Jul-18

Aug-1

8

Sep-1

8

Nov-1

8

Oct-

18

Dec-1

8

Jan-1

9

Feb

-19

Mar-

19

Jun-1

9

5.0%

-10.0%

-5.0%

0.0%

10.0%A

ug-1

7

Jun-1

7

Sep-1

7

Jul-17

Oct-

17

May-1

9

Nov-1

7

Dec-1

7

Jan-1

8

Feb-1

8

Mar-

16

Sep-1

8

Apr-

18

May-1

8

Jun-1

8

Apr-

19

Jul-18

Oct-

18

Aug-1

8

Dec-1

8

Nov-1

8

Jan-1

9

Feb-1

9

Mar-

19

Jun-1

9

Source: Worldsteel

6

Coking Coal, Iron Ore & Scrap PricesIron Ore Prices

(IODEX 62% Fe CFR North China Mid)

Coking Coal Prices

(HCC Peak Downs Region FOB Australia)

Scrap Prices

(HMS CFR Turkey Mid)

150

100

300

200

250

Sep-1

7

Jul-19

Jun-1

9

Aug-1

7

Oct-

17

Nov-1

7

Dec-1

7

Jan-1

8

Feb-1

8

Mar-

18

May-1

8

Apr-

18

Jun-1

8

Jul-18

Aug-1

8

Jan-1

9

Sep-1

8

Oct-

18

Nov-1

8

Dec-1

8

Feb-1

9

Mar-

19

Apr-

19

May-1

9

Aug-1

9

110

80

40

100

60

50

90

70

Mar-

19

Sep-1

8

Oct-

17

Nov-1

7

Nov-1

8

Dec-1

7

Apr-

18

Jan-1

8

Sep-1

7

Mar-

18

Jul-18

May-1

8

Aug-1

9

Jun-1

8

Aug-1

8

Dec-1

8

Jan-1

9

Feb-1

9

Apr-

19

Jun-1

9

Jul-19

Oct-

18

May-1

9

Aug-1

7

Feb-1

8

200

300

400

150

350

250

May-1

9

Mar-

19

Feb-1

9

Dec-1

7

Feb-1

8

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Jan-1

8

Mar-

18

Apr-

18

May-1

8

Jun-1

8

Jul-18

Aug-1

8

Sep-1

8

Oct-

18

Nov-1

8

Dec-1

8

Jan-1

9

Apr-

19

Jun-1

9

Jul-19

Aug-1

9

Source: Platts / IODEX

7

Turkish Steel Production & Consumption

Source: TSPA

Production (mn tons)

Consumption (mn tons)

26.0

10.4

2017

10.4

2015

25.7 26.5

10.9

2014 2016

13.1

25.9

13.4

25.2

2018

36.1 36.9 36.9 39.0 38.6

Flat Long

14.6

16.2 17.6

16.5

30.8

14.8

2014

34.4

17.9

30.6

16.5

35.9

2015 2016

17.8

18.1

2017

15.8

2018

34.1

9.9

6M 2018

7.1

13.4

6.5

6M 2019

20.516.4

-20.0%

8.8

9.3

6M 2018

7.0

5.2

6M 2019

18.1

12.2

-32.6%

8

Turkish Steel Exports & Imports

Exports (mn tons)

Imports (mn tons)

11,0 10,2 10,0 9,3 10,7

2,5 2,6 3,1 4,3

6,1

2015

0,6

14,4

0,3

2014

0,3

2016

0,8

2017

1,0

2018

14,1 13,1 13,4

17,8

Semi-Product (Slab+Billet) Flat Steel Long Steel

6,78,6 8,7 9,0 7,5

4,8

7,9 6,2 4,84,8

2017

1,5

20162014

1,6 1,6

2015

1,5 1,3

2018

13,0

18,116,5

15,313,6

9.2

6M 2018

0.2

6M 2019

2.7

4.9

0.9

3.1

5.2

7.8

17.9%

6M 2019

0.8

3.1

4.3

0.6

6M 2018

3.5

1.4

8.2

5.5

-32.9%

Source: TSPA

2019 6M Results

10

Operational and Financial Highlights

Operational Highlights 2017 2018 6M 2018 6M 2019 Growth (YoY)

Liquid Steel Production (000 tons) 9,392 9,322 4,716 4,516 -4.2%

Flat Steel Production* (000 tons) 7,713 7,743 3,923 3,776 -3.7%

Long Steel Production (000 tons) 1,328 980 452 522 15.5%

Flat Steel Shipments (000 tons) 7,594 7,482 3,777 3,782 0.1%

Long Steel Shipments (000 tons) 1,364 919 422 540 28.0%

Financial Highlights 2017 2018 6M 2018 6M 2019 Growth (YoY)

Net Sales Revenue (USD mn) 5,140 5,598 2,845 2,601 -8.6%

EBITDA (USD mn) 1,496 1,720 919 622 -32.3%

Net Profit** (USD mn) 1,030 1,160 630 411 -34.8%

All figures are on IFRS consolidated basis unless stated otherwise.(*) Total flat steel production of Ereğli and İskenderun Plants.(**) It demonstrates Net Profit of Equity Holders of the Parent.

11

Liquid Steel Production (000 tons)

9,373

2016

9,3229,392

2017 2018

4,716

6M 2018

4,516

6M 2019

2,1472,316

Q2 2018 Q1 2019

2,369

Q2 2019

12

Crude Steel Capacity Utilization Ratio

2013

93%96%

78%76%

2014

100%

70%

2015

97%

69%

2016

97%

72%

2017

97%

2018

94%

6M 2019

Erdemir World*

Source: Worldsteel

As of August 2018, Worldsteel no longer publishes

global capacity utilization ratio for anti-trust reasons.

13

Production (000 tons)

Slab production for 3rd parties was included in

HRC production.

980

8,7239,041

5,891

1,701

2016

1,822

1,572

5,291

1,781

2017

1,328

6,042

2018

8,644

866 781

452 522

3,057

6M 2018

2,995

6M 2019

4,2984,375

435 403 378315

1,572

Q2 2018

201

1,528

2,157

1,423

207

Q1 2019 Q2 2019

2,164 2,141

Hot LongCold

14

Sales Volume (000 tons)

Slab sales for 3rd parties were included in HRC sales.

9191,587

1,908

1,364

1,860

2017

5,303

2016

5,686

8,401

1,750

5,732

2018

8,750 8,958

888 853

422 540

6M 2018 6M 2019

4,199

2,889 2,929

4,322

+2.9%

430 451 402

336

1,4351,410

Q2 2018 Q1 2019 Q2 2019

1,494

2042,013

2,222 2,100

173

+4.3%

Hot Cold Long

Total sales increased by 4.3% YoY in Q2 2019.

15

Net Sales Revenue (USD mn)

517

733

4,407

1,163

3,338

5,140

3,855

2016

4,435

2017 2018

5,598

486620

1,9812,359

6M 2018 6M 2019

2,8452,601

981

281352 268

Q2 2019Q2 2018

1,142

Q1 2019

1,000

1,423 1,333 1,268

Export Domestic

16

Flat & Long Steel Domestic Sales Breakdown

57%(1,652)

12%(352)

18%(526)

13%(386)

Pipe&Profile and Rolling

Distribution Chains

Automotive

General Manufacturing Industry

Flat Steel Domestic Sales

Long Steel Domestic Sales

2,916K ton6M 2019

43%(170)

20%(80)

37%(144) Rebar and Profile Producers

General Manufacturing Industry

High Carbon and Special Qualities

394K ton6M 2019

13%(409)

52%(1,632)

16%(508)

19%(602) 3,151K ton

6M 2018

42%(166)

27%(107)

31%(126)

399K ton6M 2018

17

Export Volume (000 tons)

1,0861,199

2016 20182017

1,631

358

567

445

Q2 2018 Q1 2019 Q2 2019

Total export volume increased by 55.9% YoY in 6M 2019.

19.4%

13.4%12.4%

Export Share in Total Sales

649

6M 2018 6M 2019

1,012

+55.9%

17.8%

21.2%25.5%

23.4%

15.4%

18

EBITDA & Net Profit

895

2016

1,496

2017

1,720

2018

EBITDA (USD mn)

481323 299

Q2 2018 Q1 2019 Q2 2019

502

2016

1,030

2017

1,160

2018

Net Profit* (USD mn)

351186 225

Q2 2018 Q1 2019 Q2 2019

+20,8%

23.2%29.1% 30.7%

EBITDA Margin (%)

23.6%24.3%33.8%

20.7%20.0%13.0%

Net Profit Margin (%)

24.7%14.0% 17.7%

(*) It demonstrates Net Profit of Equity Holders of the Parent.

919622

6M 2018 6M 2019

630411

6M 20196M 2018

32.3%23.9%

22.2%15.8%

19

EBITDA Net Profit

622

519

411

107

EBITDA

6M 2019

(1)

(102)

Investing

Activities

Inc./(Exp.)

Depreciation Interest

Inc./(Exp.)

on Other

Operating

Inc./(Exp.)

Operating

Income

1

Finance

Inc./(Exp.)

(197)

Tax Inc./(Exp.)

(19)

Non-

Controlling

Interests

Net Profit

6M 2019

20

EBITDA Net Cash

622

519

(384)

201

(70)

Changes

in Working

Capital

Taxes PaidEBITDA

6M 2019

Interest

Inc./(Exp.)

Net

22

(189)

(89)

Net Cash

used in

Investing

Activities

(48)

Cash Flow

from

Financial

Investments

Free Cash

Flow

(794)

Dividend

Paid

Credit Usage/

(Payment)

Net

Other Change

in Cash

6M 2019

(39)

21

EBITDA per Ton* (USD/ton)

*One-off income/expense items are excluded.

10596

5143

85

138

119

174

141 143

179197

223 219

172

139 145

Q3

2016

Q4

2015

Q2

2015

Q3

2015

Q1

2016

Q2

2016

Q4

2016

Q1

2017

Q2

2018

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Main Product

22

Financial Figures

Consolidated Net Assets (USD mn) 31.12.2018 30.06.2019 Growth (YoY)

Cash and Cash Equivalents 1,646 1,269 -23%

Working Capital 2,219 2,018 -9%

Tangible and Intangible Assets 3,533 3,512 -1%

Financial Liabilities (1,163) (1,147) -1%

Provisions and Other (674) (569) -16%

Net Assets 5,561 5,083 -9%

Working Capital (USD mn) 31.12.2018 30.06.2019 Growth (YoY)

Trade Receivables 837 675 -19%

Inventories 1,690 1,723 2%

Trade Payables (368) (465) 26%

Other 60 85 42%

Working Capital 2,219 2,018 -9%

23

Financial Borrowings (USD mn)

581 655460 362 266 353

891368 654 829 897 755

(190)

(675)(482)

(161)

2016 2018

529

6M 2019*

14

2014 2015 2017

Net Debt Short-Term Debt Long-Term Debt

*TFRS 16 Leases are excluded.

24

Net Debt (USD mn)

482

161

519

(46)

Net Cash

June 2019

Net Cash

Dec. 2018

Free Cash Flow

(794)

Dividend Paid Other

25

Borrowings Maturity Profile (USD mn)

127 174 145 89

342170

184

1 1

43

2020June 2019

Cash

22

Jul.-Dec.

2019

2021

25

1,269

2022

93

24

2023

8

2024

491

387

163

9

Principal Revolving Trade Financing Loans Interest

26

Cost of Sales Breakdown* (%)

64 73 76 75

1411 9

2017

757

2016

785

6 555 5

2018

76

6M 2019

Personnel Expenses

Raw Materials

Purchased Energy Expenses

Other

Depreciation and Amortization Exp.

36 33 31 34

27 35 35 36

13 12 12 1124 20 22 19

20182016 2017 6M 2019

Other

Scrap

Iron Ore&Pellet

Coal

Raw Materials Breakdown (%)

* Excluding inventory writedowns and provision released.

27

Capital Expenditures (USD mn)

17

5793 83

5580 88

52 43

84

140

143

171159

10782

113

110165

132

71

216

20112009 2010 2012 2013 2014 20172015 2016 2018 6M 2019

158

200

264

242

162 162

201

162

208

83

12

Capital Expenditures Fixed Assets Acquisition

28

Number of Employees

2016 201820152014

12,872

2017

11,975

June 2019

12,659 12,27711,607 11,530

29

Appendix – EBITDA Detail

Note01.01.2019-

30.06.2019(Thousand USD)

01.01.2019-

30.06.2019(Thousand TRY)

Presentation Currency Translation 2.1 5.6118

Operating Profit 519,178 2,913,520

Depreciation and Amortisation Expenses 102,012 572,476

Cost of Sales 14 92,927 521,487

Marketing Expenses 15 3,701 20,772

General Administrative Expenses 15 4,078 22,883

Research and Development Expenses 6 648 3,639

Other Operating Expenses 15 658 3,695

POA Classification 840 4,713

Interest Income for Overdue Receivables 15 (842) (4,725)

Rediscount Expenses 15 (22) (123)

Interest Expense for Purchase Contracts with Maturities 15 1,704 9,561

622,030 3,490,709

30

Erdemir Investor Relationsinvestorrelations@erdemir.com.tr https://www.erdemir.com.tr/investor-relations/ +90 216 578 80 61