Vestel Elektronik announced total revenues of US$3,659mn and net profit of US$2.1mn in FY06. While the Company recorded an 11% YoY US$ top-line growth, tough market conditions, especially in the European LCD market, coupled with higher FX losses on the Company's short FX position resulted in deterioration in profitability in FY06.
Click here for FY06 Financials.
ISS, the world's leading provider of corporate governance and proxy voting solutions, assigned a corporate governance rating score of 7.5 (75.91%) to Vestel Elektronik. ISS Corporate Services stated in its report that the rating reflected the good overall performance of the company regarding its current corporate governance structures as measured against the Principles of the Turkish Capital Markets Board (CMB). Accordingly, Vestel became the third ISE listed company that received a corporate governance rating score.
Vestel performed satisfactorily in all of the four main components (Shareholders, Public Disclosure & Transparency, Stakeholders, Board of Directors) of the rating, though showing particular strength in its Shareholders area.
At the beginning of 2005, Vestel Elektronik started the process to implement relevant corporate governance mechanisms. Initially, the Company revised its Articles of Association (AoA) according to the CMB Corporate Governance principles. New rights, such as the right to call upon the Board of Directors to convene and the right to introduce motions concerning general meeting agenda items were granted to minority shareholders. Moreover, Vestel made changes in its Board of Directors structure in line with corporate governance principles to increase its effectiveness. Accordingly, two independent board members were appointed to the Board. Furthermore, an audit committee and a corporate governance committee were established with independent board members serving as the committee heads. An Investor Relations Unit has been set up within the Company for the purpose of managing relations with the investors. The corporate website was revised in line with corporate governance principles.
Vestel Elektronik's goal is to reach the highest level of compliance with these principles with the involvement of all its management and employees.
S&P Revises Outlook on Vestel to "Positive"
Standard & Poor's Ratings Services said on 30 January 2007 that it revised to positive from negative its outlook on Turkey-based Vestel Elektronik Sanayi Ve Ticaret A.S. (Vestel), a cost-efficient consumer electronics manufacturer, reflecting expectations of improving cash flow generation and positive shareholding developments at Vestel. At the same time, the 'B+' long-term corporate credit rating was affirmed.
At Sept. 30, 2006, Vestel had consolidated financial debt of $692 million.
"Vestel's cash flow generation, which is currently modest, is expected to improve in 2007, as revenues and EBITDA from the white-goods division continue to rise, on the back of recently increased production capacity," said Standard & Poor's credit analyst Patrice Cochelin.
Capital expenditures should remain at about $100 million per year. The rating on Vestel remains primarily constrained by the volatile Turkish macroeconomic environment and resulting currency swings; the company's significant debt burden; and the highly competitive nature of the company's end-markets.
Vestel continues to benefit from its favorable cost position, flexible manufacturing capabilities, considerable economies of scale, limited marketing and distribution expenses, service quality, and end-market proximity. Turkey's participation in the European Customs Union gives Vestel a significant competitive advantage, although competitors with equally low costs could present a threat in the future.
With significantly lower capital spending in the coming months, we expect Vestel's free cash flow generation to be positive, and to become a source of liquidity.
"The positive outlook reflects the potential for an upgrade if the company's operating performance and, notably, cash flow generation, continues to improve, enabling some debt reduction," said Mr. Cochelin. "An upgrade would also hinge on our satisfaction with Vestel's majority shareholder's long-term financial and strategic goals, a lower reliance on short-term funding, and better currency matching of currencies and cash flows."
On the other hand, the outlook could return to stable in the case of operating underperformance or liquidity pressure.
Mr. Levent Hatay quitted his duty as a member of the executive committee responsible for marketing-sales & branding at Vestel Group of Companies (Vestel Şirketler Grubu) on the date of September the 29th, 2006.
By the agreement signed on the date of September the 19th, 2006, Vestel Dayanıklı Türketim Malları Pazarlama A.Ş.(Vestel Durable Goods Marketing), a member of Vestel Group of Companies, has received murabaha financing in the amount of 40,000,000 USD for a period of one year and one week under the guarantee of Vestel Elektronik A.Ş.
Through above-mentioned brand acquisitions, the company mainly targets Northern European market considering strong positioning and recognition of these brands in that region. Hence, the Company's current strategy continues with no aim to establish a "Global brand".
Please note that the company has a "strong brand name" at home and aims to expand its business in Russia and ex-CIS countries, Middle East and Sub Continental Asia through "Vestel branded products".
On the date of 23.08.2006, Vestel Elektronik Sanayi ve Ticaret A.Ş., Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş., Vestel Komünikasyon Sanayi ve Ticaret A.Ş., Vestel Dijital A.Ş. and Vestel Holland B.V. under the structure of the Vestel Group of Companies have signed a letter of credit syndicated loan facility at the amount of 125,000,000 USD for a period of 1 year with the participation of local and foreign banks acting under the leadership of Deutsche Bank A.G. and ABN Amro Bank N.V..
At the General Shareholders' Meeting of Vestel Electronics held on the date of 24.05.2006, it was decided that:
Vestel Electronics acquired a 55% stake in Birim Bilgi İşlem Müşavirlik ve Ltd, a healthcare software company at a total value of 1,500,000 USD from BYSE Bilişim Sistemleri A.S. Following this transaction, 55% of Birim Bilgi İşlem is owned by Vestel Electronics Industry and Trading Corp., the remaining 45% share being owned by BYSE Bilişim Sistemleri A.S. The agreement was signed on the date of 02.05.2006.
As agreed upon previously by the board of directors, Vestel Electronics purchased 89,699,993 units of Vestel White Goods shares belonging to Zorlu Holding and Zorlu Family over the public offering price of 3.20 YTL on the date of April the 13th, 2006.