Chairman's Message

Our Esteemed Shareholders, Business Partners and Associates,

The measures taken to invigorate the economy in 2017 served, on the one hand, to increase expenditures, while also reducing tax revenues, and this resulted in an increase in the budget deficit. This situation, which has continued into the middle of this year, has led to the period closing with an unexpected rapid growth in the economy in the second half of the year, and a budget deficit that exceeds significantly the targeted figure, even though it showed a positive development. Unfortunately, it does not seem likely that the rapid 7,4 percent growth in the economy attained last year will continue this year. Should the majority of funds in the market being withdrawn by the public, less resources will be left for the private sector, and higher interest payments will emerge as a natural result. It is highly probable that this development will reduce investments and thus cause growth to slow down. According to data announced by the Ministry of Customs and Trade, the regression in foreign trade encountered in recent years has finally come to an end, and 2017 was a year of recovery, although it can be said that the beginning of an increase in the foreign trade deficit and its reflection on the current deficit is not a good sign.

We see that the 2017 inflation target has been exceeded for the first time since 2002, with a high deviation. Consumer inflation, which has followed a rather fluctuating course, started to rise in August and climbed to 13 percent with the hike in exchange rates seen between September and November. As a result of the decline experienced in December upon the reversal of the base effect, 2017 concluded with inflation having reached 11,92 percent, which is more than double the targeted figure.

We do not think it will be easy to achieve the 5 percent target for 2018, and the fact that the Central Bank has speculated a higher rate of 1,32 points in the first month of the year indicates that the medium-term inflation outlook will continue its course in double digits.

Given the state of the global economy, it would seem that the central banks of the developed countries, mainly the FED, as the central bank of the United States, are slowly tightening their monetary policy, and this means that global interest rates will rise again in the upcoming period. This situation, which adversely affects the flow of capital into developing countries, constitutes a risk factor for Turkey. When we look at the international markets, commodity prices, especially those of oil and natural gas, are on the rise, and this again pulls the inflation pointer upwards.

While the United States and the EU appear to be losing ground in the balance of world powers, countries such as China, India, Korea, and Malaysia seem to be keen to fill the global leadership gap in many areas, especially in investment and trade. It is likely that tensions between China and the United States will continue through 2018, which will affect the global economy in a negative way.

The downsizing in international contracting market in recent years has been a result of the economic uncertainty that has surrounded the global liquidity recession and geopolitical problems. At this conjuncture, after seeing a total decline of 14 percent in 2014 and 2016, the performance of Turkish contracting companies abroad in 2017 has improved positively, in terms of both figures and market share, and we hope that this momentum will continue in the coming period. The fact that Turkey can still attract financing and investment from abroad, albeit with high costs, is a good indicator.

Nurettin ÇARMIKLI Chairman of Board

For 2018, in addition to our ongoing projects in the country, our business plan includes also the development of larger projects in high added-value areas. It can be said that Nurol Construction, which has a very large share in our total financial turnover, has been operating both in Turkey and on many different continents abroad, covering a wide geographical area that stretches from the UAE, Saudi Arabia, Libya, Algeria, Morocco and Qatar to Georgia, Russia, Turkmenistan, Uzbekistan, Iraq and Afghanistan. Our analysis of the markets in the Far East and in South America are ongoing, and potential opportunities in the African region, in mainly the Sub-Saharan African countries, are being closely monitored.

As the NUROL GROUP OF COMPANIES, our goal is always to produce the best quality with the greatest efficiency in a sustainable manner, and it is our goal to make our mark not only in Turkey, but also on the global markets, while sustaining our brand awareness. We are aware that we can achieve this together with our shareholders, and, as always, with the efforts and support of our business partners and associates.

NUROL continues to operate with approximately 40 subsidiaries, affiliate companies, branches and project partnerships established both at home and abroad, primarily in the defense and manufacturing sectors, but also in such sectors as technology, real estate investment, energy, tourism, mining, finance, trade and services, and particularly in construction and contracting. As of December 31, 2017, the Group has consolidated assets amounting to TRY 14 billion, and the 2018 year-end target has been set at TRY 15,8 billion. Planning, coordinating and executing its operations in line with the goal of sustainable growth in parallel to the developing markets and economic changes, the NUROL GROUP OF COMPANIES today employs over 10.000 people and has a turnover of TRY 4,56 billion, and by the end of 2018, its budget will be increased to TRY 6,3 billion, representing an increase of 20 percent.

As the NUROL FAMILY, we are aware of our responsibility to carry out our activities in full accordance with our ethical values. While focusing on the commercial successes of our companies, we strive to fulfill our duties of social responsibility with projects that will provide social benefit in many fields, particularly in the areas of education, culture, the arts and sports, thanks to the works of our Foundation. In order to protect our natural and cultural heritage, there are various activities across the country in which we are involved, including the regions in which we have invested.

Our investments have supported national development for more than half century, and we strive to provide better and increased numbers of services through our contributions to the national economy and employment, and through the foreign exchange inflow we achieve. We will continue to be involved in successful projects to live up to the expectations of our country without compromising on universal values, while moving toward our goal of profitable growth abroad.

I offer my thanks to the members of Nurol Family, particularly to our Founding Partners, who have been working together with devotion for many years, for their contributions to our unity and solidarity, and we hope for our nation and the world days full of peace, health and welfare.

Sincerely Yours,

Best Regards
Chairman of Board