Financial Analysis of Two Company

07. 7. 2012 Bilal Elarslan 2007432031 Dokuz Eylul University Faculty of Business Business Administration ManagerialFinance pecuniary Analysis of Ulker &P? nar Sut List of Contents Introduction 3 1. Ulker 4 1. 1 History of Ulker 4 1. 2 About Ulker5 1. 3 channelholder Structure 6 1. 4 Subsidaries6 1. 5 Wacc of Ulker7 1. 6 leverage8 1. 7 run(a) and fiscal leverage of Ulker8 1. 8 beta Analysis9 1. 9 Ulkers genus of import Coefficent9 1. 10 Additional financial Information & key ratios10 2. P? nar Sut. 12 2. History Of P? nar Sut. 12 2. 2 general Overview of conjunction. 13 2. 3 destinyholder Structure. 15 2. 4 Wacc of P? nar Sut16 2. 5 Leverage. 17 2. 6 P? nar Suts genus Beta coefficent18 2. 7 Additional informations & key ratios19 Appendix20 References22Introduction In this research paper I wide-awake the financial ana? ysis of Ulker & P? nar Sut. While preparing this extend first offly I energise to choose two union Which ar * Ulker * P? nar sut While preparing this rep ort I re anyy mentioned about what we learned during manegerial finance lessons. As a result with this aim, I prepargond my term project by feature both acconting methods and my knowledge about finance. 1. ULKER 2. 1 History of Ulker 1944- Ulker Biskuvi was established in the Eminonu di unyielding of Istanbul. It started out as a small bakery with dear three workers, producing 200 kg of biscuits per day.A few courses later, the Company move to the Topkap? district of Istanbul. 1948- Producing a issue forth of 75 tons of biscuits in 1944, Ulker Biscuits tripled its contentedness at its Topkap? grinder, built in 1948 specifically in order to adjoin the yield volume. 1955- Ulker Biscuits decided to distribute its products finishedout Turkey at factory prices and achieved a great production increase with this innovation. 1970- In gillyflower with the harvest-time strategy, Anadolu G? da Sanayii A. S. was founded in Ankara as a multiple-sh arholder company and the production capacity of Ulker Biscuits was doubled. 974- The first biscuit export was make after(prenominal) choosing the substance East as the derriere merchandise. Opportunities for international competition were change magnitude with the constitution of the R&D department in the same year. 1979- Ulker products began to be obturateed in cellophane-based packaging. 2003- Ulker Biskuvi merged under its own title with Anadolu G? da, whose deal outs have been quoted on Istanbul Stock Exchange since 1996. 2008- Within the scope of bodily Governance, the Articles of Association were amended and Corporate Governance and Audit Committees were set up.At the germ of 2008, Ulker Biskuvi took part in the acquisition of the premium chocolatier brand, Godiva, with a 25. 23% share. 2. 2 About Ulker As the first company established within Y? ld? z guardianship, operate its core business for 64 years, Ulker Biscuits serves as the flagship of the Holding both in terms of gross revenue turnover and remunerationability. According to the Istanbul bedroom of Industry (ICI) in 2009 list of Turkeys Top ergocalciferol Industrial Enterp rebellions, Ulker Biscuits was ranked 104th. Ulker Biscuits bring abouts biscuits, crackers, hot chocolate covered biscuits and wafers at its factories in Istanbul/Topkap? and Ankara.As the incontestable bullocker in the Turkish biscuit industry, Ulker Biscuits overly takes its place among the gargantuan food producers of the populace, with its 280 assorted biscuit and cracker products that are supplied to both the topical anaesthetic and international markets. In 1996, Ulker Biscuits received the ISO 9002 certification for quality standards in production and in 2001, it was portion outed the HACCP certification for quality standards in food safety. In 2002, it won the top mark of High Level in an analysis make by the Europe-based quality certification regular BRC, which further secured its successful order in the field of quality control .Ulker Biscuits develops new products in its independent laboratories, employing an go through and innovative R&D staff, always keeping its quality- cogitate approach. Introducing an amount of 60 new products per year to the market, Ulker Biscuits has continued to excel in innovation, thus qualification Ulker one of the top food brands. Ulker Biscuits products are exported mainly to the Middle East, Russia and primeval Asian Republics, as well as to Europe, Africa and the United States. Ulker Biscuits not exactly contributes to Turkeys economy through its exports, but it also successfully represents Turkeys approach to quality on a global scale.Ulker Biscuits has an effective quality control system that injects synergy into the entire outgrowth from production through consumption and it continues its investments based on its strategy that is focused on sustainable and profitable growth. Ulker Biscuits is a consumer-focused company that satisfies its consumers needs and expect ations at the maximum level, and it has formed a harmonious and lasting birth with its target group. Surveys conducted in recent years attest to the high levels of loyalty to the Ulker brand.In the Brands 2008 thought by AC Nielsen, Ulker was ranked first in the biscuit category, and insurgent and third in the categories of top-of-the-mind brands and those that consumers feel closest to, respectively. Local distribution of biscuits and chocolate covered products produced by Ulker Biscuits and its subsidiaries is undertaken by its subsidiary, Atlas G? da Pazarlama, and different marketing companies of Y? ld? z Holding, Esas Pazarlama, Merkez G? da Pazarlama and Rekor Pazarlama. 2. 3 Shareholder Structure Shareholders of Ulker company dated 31/12/2010 is as follows.Shareholders Share(TRY) (%) Y? ld? z Holding A. S. 106. 999. 435 39,84 Others 161. 600. 565 60,16 Capital 268. 600. 000 100 1. 4 Subsideries Ulker Biscuits, the flagship of Y? ld? z Holding, associated with a number of companies within the Holding, It has developed a strong portfolio interactional structure with both vertical and horizontal integration. under this mutually near structure, Ulker Biscuits and otherwise companies within Y? ld? Holding, each occupy a principal position in their firmaments. In addition to various biscuit facilities in cities in Anatolia, Ulker Biscuits has developed a dynamic production process that reaches into all branches of the food industry, including high quality flour, butter and packaging facilities. 1. 5 leaden Average comprise of Capital Corporations create time value for shareholders by earning a return on the invested groovy that is above the speak to of capital. WACC is an expression of this cost and is used to enter if certain intended investments or strategies or projects or purchases are worthwhile to undertake.WACC is expressed as a percentage, like involution. WACC of Ulker Company is %12,1. This room that investments should be made that give return higher(prenominal)(prenominal) than the WACC of %12,1. WACC= (Wi x ri) + ( Wp x rp) + ( Ws x rn) Tax rate 20% 1. 6 Leverage Leverage refers to the effects that fixed costs have on the returns that shareholders earn. By fixed costs we mean costs that do not grow and fall with changes in a sloppeds sales. Firms have to manufacture these fixed costs whether business conditions are good or bad.A trustworthy with more leverage may earn higher returns on average than a firm with less leverage, but the returns on the more leveraged firm will also be more volatile. Managers can influence leverage in their decisions about how the company raises money to operate. The amount of leverage in the firms capital structure the mix of long-term debt and integrity maintained by the firm can significantly affect its value by affecting return and endangerment. The more debt a firm issues, the higher are its debt repayment costs, and those costs essential be paid unheeding of how the firms products are selling.Because leverage can have such a puffy impact on a firm, the financial charabanc must understand how to measure and evaluate leverage, particularly when making capital structure decisions. operating(a) leverage is concerned with the relationship between the firms sales revenue and its earnings before interest and taxes (EBIT) or operating profits. When costs of operations (such as cost of goods sold and operating expenses) are largely fixed, small changes in revenue will lead to much larger changes in EBIT. financial leverage is concerned with the relationship between the firms EBIT and its common stock earnings per share (EPS).On the income statement, you can key out that the deductions taken from EBIT to get to EPS include interest, taxes, and preferred dividends. Taxes are clearly variable, uprise and falling with the firms profits, but interest expense and preferred dividends are usually fixed. When these fixed items are large (that is, when th e firm has a lot of financial leverage), small changes in EBIT produce larger changes in EPS. Total leverage is the combined effect of operating and financial leverage. It is concerned with the relationship between the firms sales revenue and EPS. 1. Operating and mo breadary Leverage of Ulker in 2011 Sales revenue enhancement 10. 445. 022. 950 Less COGS (9. 243. 511. 780) Operating Leverage Gross Profit1. 201. 511. 170 Less Operating Expenses(46. 450. 461) EBIT1. 155. 060. 709 Total Less Interest18. 799. 809 Leverage exculpate profit before tax1. 136. 260. 900 Financial Leverage Less Taxes 137. 983. 993 Net profit after taxes 998. 276. 907 Less preferent stock dividends (518. 995. 890)Earnings available for common (EAC) 479. 281. 017 1. 8 Beta Analysis imperious risk beta coefficient is a measure of a security. In other words, it is the relationship the performance of securities market with the average performance. It is coefficient of the change in solution to a unit change in securities market. The market beta coefficient is authoritative to be 1 for every time. In theory, all forms of securities in the market can be said that the beta coefficient equal to 1 in the fares. We can make 3 different beta coefficient is interpretation. 1- Beta coefficient of 1, Beta coefficient is higher than 1, 3- Beta coefficient is lower than 1. 1. 9 Ulkers Beta Coefficient Ulker beta coefficient is higher than 1 that is 1,02. So it represents the market price of securities will rise or fall more than the market. Beta coefficient that is higher than 1 is more risky than less than 1. Hence the beta coefficient of securities is less than 1 also reduces the risk of the portfolio. Therefore, in emerging markets (bull market), while beta coefficient higher than 1 which is providing higher returns than stock market, in falling market (bear market) makes a higher damage.For this reason, the falling stock markets prefers beta coefficient less than 1. ? 1 the share movement is fast-breaking than the index (high risk and high volatility). And volatility is average price of a security or market fluctuation feature that is shown in a short time interval. Volatility of a high-speed change in the price of securities and properties of extreme volatility are seen. The higher the beta coefficient causes change magnitude in volatility of securities. Ford coefficient is high and its volatility is increasing of securities. ParameterParameter Coefficient banal Error T- value A 0. 42 0. 54 0. 77 Beta 1. 02 1. 027 0. 99 F=92. 616472228 r2=0. 614915957 STD error=0. 155688307 1. 10 Additional Information on financial Instruments a) Capital risk management The Group controls its capital with the indebtedness / total capital ratio. Net liability is divided by total capital in this ratio. Cash and cash equivalents are substracted from total loans to count on the net liability. The shareholders integrity is added to net liabilties to calculate the total capital. ) Liquidity risk management The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring hope and actual cash flows and matching the maturity profiles of financial assets and liabilities. The funding risk of the current and prospective debt demands is managed by maintaining the availability of lenders with high quality and in sufficient number The following table presents the maturity of Groups non-derivative financial liabilities. The table includes both interest and principal cash flows. . PINAR SUT 3. 4 History of P? nar Sut 1975 P? nar Sut is established in Izmir as the Middle Easts biggest dairy farm farm processing complex and Turkeys first UHT (ultra-high temperature bear upon) draw and packaged dairy products manufacturing plant. 1976 The company begins producing Turkeys first processed quit and chocolate draw. 1978 P? nar sliced kashkaval cheese and P? nar spreadable cheese are introduced to consumers. 1980 A Kraft-P? nar joint venture is launched. P? nar Sut introduces its Deram, Raglet, Maribo, and Cheddar cheese varieties. 982 The company begins exporting milk, cheese, butter, yoghourt, and strawberry milk to Central Europe, Cyprus, and the Middle East. 1983 P? nar Yem is set up to provide high quality feeds to the P? nar Suts raw milk suppliers. P? nar Mayonnaise, Turkeys first domestically-manufactured mayonnaise goes on sale. P? nar Beyaz, Turkeys first spreadable cheese, and P? nar Whipped Topping, a close-grained whipped topping both go into production. 1984 P? nar Sut begins exporting its labaneh, milk, yogurt drink, butter, yoghurt, cheese, whipped topping, and mayonnaise products to Kuwait, Cyprus, and Germany. 985 Labaneh is launched in the Turkish market under the name P? nar Labaneh. 1992 P? nar Sut is awarded the Turkish Standards Institutes (TSE) Golden Packaging award for the introduction of the first foil-sealed yoghurt container. Form Milk, Turkeys first low-fat milk, and Cikolasut, chocolate milk made with real, natural chocolate, go on sale. 1993 P? nar Sut becomes the first company in its sector to be awarded TS ISO 9002 Quality direction organization certification. 1994 P? nar Sut receives another TSEGolden Packaging award for its 10-liter bag-in-box pack design.Having successfully demonstrated its compliance with European standards in terms of production, sales, and after-sales services, P? nar Sut becomes the first dairy products company to receive TS ISO 9001 Quality Management System certification. 1995 P? nar long-life fruit yoghurts and prepared desserts go into production. Turkish consumers are introduced to P? nar light (low-fat) and extra light yoghurts and to low-fat, triangular cheese. 1997 P? nar Sut opens its Eskisehir plant. 1999 P? nar Sut introduces its Denge run of lactose-free, high-calcium, and vitaminenhanced milks. 000 As a result of investments at the Eskisehir plant, P? na r Sut launches the worlds first continuous-process production of cream-top yoghurt. 2001 UHT milk supplied in plastic bottles goes into production. 2003 Under an agreement with Sodima, P? nar Sut launches production of fruit yoghurts in Turkey. 2004 P? nar introduces its Kafela, Karamela, and Cikolasut line of products in packaging particularly designed to appeal to young people. P? nar Sut is awarded TS 13001 HACCP Food Safety System certification. 2005 Turkeys first native milk and first prebiotic and probiotic dairy products are introduced to the market. 007 P? nars YOPI line of calcium-, protein-,and vitamin-enhanced dairy products for children goes into production. 2008 P? nar Sut becomes the first company in Turkeys dairy industry to undertake a Lean 6 Sigma usable excellence and productivity project. P? nar Milk for Kids, a milk specially designed for child nutrition, is introduced to the market. 2009 P? nar lemonade and tropical fruit drink are introduced to the ma rket. 2010 P? nar Kido with Biscuit, Honey Flavored P? nar Kids Milk, and P? nar Breakfast Cream discontinue products go on sale. 3. 5 General Overview of P? ar Sut The innovate of many firsts in its sector since the day it was founded, P? nar Sut makes use of the nearly modern engine room available to produce and supply consumers with the milk and dairy products that are essential to good nutrition. The first to introduce the concept of rubicund milk and dairy products in Turkey When it was originally founded in Izmir in 1975, P? nar Sut was the nearly advanced dairy processing complex in Europe and the Middle East. P? nar Sut was the first brand to introduce and pitch in the concept of wellness, standardized milk and dairy products in Turkey. The P? ar brand, earning a deserved reputation as Source of Dynamism, Health, Pleasure and tone, became the preferred choice of Turkish consumers while also making huge contributions both to the growth and development of the Turkish Animal husbandry stock raising and food industries and also to the well-being of new generations of children. P? nar Suts principal business activity is the production and sale of dairy products (milk, yoghurt, yoghurt drink, traditional and modern cheeses, butter, cream) as well as of fruit juices, mayonnaise, ketchups, puddings, honey, sauces, jams and jellies, desserts, and powdered products.A leading role in increased dairy production in Turkey P? nar Sut introduced the first long-life UHT milk packaged in aseptic containers in Turkey in 1975. Operating from plants located in Izmir and Eskisehir, the company has remained the leading brand in Turkeys dairy products industry ever since. Making use of the most modern technology available, P? nar Sut produces and supplies consumers with the milk and dairy products while also playing a leading role in increased dairy production through its year-round can for more than 35,000 suppliers of raw milk.P? nar Sut procures its superior-qua lity raw milk under agreements with more than 200 of Turkeys biggest dairy farms, which are contractually obligated to produce to EU norms. By serving as these farms biggest customer, P? nar Sut fosters its own total quality concepts among them as well. From the moment that it is harvested, raw milk is registered by means of a computerized system that keeps regular track of ruck and animal health data throughout all production stages. To figure its freshness and quality, P? ar Sut picks up its suppliers raw milk double a day (morning and evening) from more than 300 milk collection and dismay centers and it takes it immediately to its processing plant. Individual dairy producers are subject to strict monitoring and controls by local laboratories while all milk must be controlled by the advanced technology equipped laboratories at the companysIzmir and Eskisehir plants before being accepted. A regional force P? nar Sut is touching rapidly towards becoming a regional force in its ba ckwoods by exporting milk and dairy products to many countries around the world.P? nar Suts raw milk collection and chilling centers are inspected every year for the conformity with the EU standards by an EU commission. The company provides its suppliers with continuous support on the matter of developing and maintaining farms that are free of all diseases, which is a prime requisite for exporting milk and dairy products to EU countries. done projects conducted jointly with government agricultural agencies in Turkey, an ongoing effort is made to ensure that raw milk production satisfies EU norms.According to the third-quarter 2009 sectoral results of the Turkish customer Satisfaction Index survey, P? nar Sut ranked first in its sector with the highest (82%) level of customer satisfaction in the milk and dairy products category. This survey, which is conducted regularly by KalDer (Turkish Quality Association) and which also analyzes competition in Turkey, is the second most compre hensive poll of its kind after those conducted in the United States. 3. 6 Shareholder Structure The issued capital of the Company is 44. 951. 051,25 Turkish Lira. Each share of this capital is amounting to 1 Cent, 1. 28. 000 A group registered shares, 1. 260. 000 B group registered shares and 4. 494. 806,325 C group bearer shares 4. 495. 105. 125 shares. The Company does not have any privileges regarding distribution of profit. The Company has privileges regarding voting power in the establishment of come along members. The business and administration of the Company is managed by the Board of coachs consisting of 5 or 9 members to be elected within the frame of the provisions of the Turkish Trade Code by the General Assembly among the partners or from out-of-door of the Company.In case the Board of Directors consists of 5 people, 3 members shall be elected from the candidates, which A-Group shareholders shall puddle and 1 candidate which the B-group shareholders shall nominate a nd 1 candidate, which C-Group shareholders shall nominate. If the Board of Directors consists of 7 people, 4 members shall be elected from the candidates, which A-Group shareholders shall nominate and 2 candidate which the B-group shareholders shall nominate and 1 candidate, which C-Group shareholders shall nominate.If the Board of Directors consists of 9 people, 5 members shall be elected from the candidates, which A-Group shareholders shall nominate and 3 candidate which the B-group shareholders shall nominate and 1 candidate, which C-Group shareholders shall nominate. If resolved by the Board of Directors, an executive director Director can be assigned. The President of the Board of Directors and the Executive Director is elected among the members representing A-Group shares. THE CAPITAL AND SHAREHOLDER STATUS OF PINAR SUT MAMULLERI SANAYI A. S. SHAREHOLDERS SHARE RATE (%) STOCKS fare (TL) YASAR HOLDING A. S. 61,18 27. 503. 257. 789. 000 3rd PARTY 38,82 17. 447. 793. 461. 000 TOTAL 100,00 44. 951. 051. 250. 000 3. 7 Weighted Avarege Cost of Capital Corporations create value for shareholders by earning a return on the invested capital that is above the cost of capital. WACC is an expression of this cost and is used to see if certain intended investments or strategies or projects or purchases are worthwhile to undertake. WACC is expressed as a percentage, like interest. WACC of P? nar Sut Company is %12,1. This means that investments should be made that give return higher than the WACC of %11. 6.WACC= (Wi x ri) + ( Wp x rp) + ( Ws x rn) Tax rate 20% 3. 8 Leverage of P? nar sut Financial leverage is concerned with the relationship between the firms EBIT and its common stock earnings per share (EPS). On the income statement, you can see that the deductions taken from EBIT to get to EPS include interest, taxes, and preferred dividends. Taxes are clearly variable, rising and falling with the firms profits, but interest expense and preferred dividends are usu ally fixed. When these fixed items are large (that is, when the firm has a lot of financial leverage), small changes in EBIT produce larger changes in EPS.Total leverage is the combined effect of operating and financial leverage. It is concerned with the relationship between the firms sales revenue and EPS. 3. 9 Beta Analysis of P? nar Sut 3. 10 Additional Information on financial Instruments a) Financial highlights (TL million) 2011 2010 % change Total assets 532. 6 479. 0 11. 2 Shareholders equity 384. 8 350. 2 9. 9 Financial liabilities 15. 0 20. 0 -25. 0 Sales revenues 577. 1 480. 7 20. 1 Profit before receipts on income 71. 4 71. 2 0. 3 Net period profit 60. 1 57. 8 4. 0Earnings per share (TL) 1. 3365 1. 2863 3. 9 b) Financial ratios 2011 2010 Total liabilities/Total assets (%) 27. 75 26. 88 Total liabilities/Shareholders equity (%) 38. 41 36. 77 Return on sales (%) 10. 41 12. 03 genuine assets/Current liabilities 1. 92 2. 17 Equity turnover ratio 1. 50 1. 37 Net financing c osts/Net sales (%) 0. 67 0. 94 Net financing costs/Shareholders equity (%) 1. 00 1. 29 c) Revenue & Net Income The tables gives us a brief information related to revenue and net income of P? nar Sut. Appendix i) ii) ReferencesFood Industry Report 2011 GITMAN Lawrence, ZUTTER Chad, Principles of Managerial Finance http//seekingalpha. com/ word/427611-ulker-remains-one-of-our-best-ideas http//uk. reuters. com/business/quotes/financialHighlights? symbol=. IS http//www. valuebasedmanagement. net/methods_wacc. html http//www. ulker. com. tr/en/financial-statements. htm http//www. 4-traders. com/PINAR-SUT-MAMULLERI-SANAY-6495545/financials/ http//markets. ft. com/Research/Markets/Tearsheets/Financials? s=PNSUTIST http//www. pinar. com. tr/ Ulker 2011 Annual Report P? nar Sut 2011 Annual Report