Katmerciler Shifts With Turkey From Crowd Control to Trucks

(Bloomberg) -- Turkish vehicle equipment maker Katmerciler, known for its riot-suppression vehicles called TOMAs, is shifting its product line as the government’s security priority moves from crowd control and protests in cities to asymmetric warfare in the nation’s southeast.

Katmerciler will showcase two new armored personnel carriers in Istanbul on Nov. 9, Executive Vice President Furkan Katmerci said in an Oct. 19 interview in Istanbul. The vehicles provide better protection against mine and bomb blasts that have killed hundreds of Turkish security officers since war resumed last year against militants from the Kurdistan Workers’ Party, or PKK, following a failed peace process.

“We have examined many vehicles in this segment and got field feedback from former and serving special forces members,” said Katmerci, whose father Ismail Katmerci is the company’s founder and a former member of parliament for the ruling AK Party. The company will begin selling a 16-ton vehicle it calls “Hizir” with a V-shaped independent, monocoque suspension that spreads blast impact, he said. “Many casualties occur due to blast pressure and not the explosives themselves,” he said.

More than 750 security force members and hundreds of civilians have been killed in clashes with the PKK between July 2015 and Sept. 2016, according to International Crisis Group, which monitors conflicts. Almost half of the security casualties were due to improvised explosive devices, the data show.

Ceramic Armor

A second vehicle, whose name Katmerci didn’t disclose, will be a modified Jeep Wrangler Rubicon with armor made of ceramic plating, he said. The company could start its own ceramic armor production at its Ankara facilities, depending on the vehicle’s success in winning government tenders, Katmerci said.

Under emergency rule imposed in the wake of a July 15 coup attempt, Turkey’s government has exempted security purchases from procurement law, making the process of awarding contracts for such items less transparent. Public spending on goods and services for defense and security in the first nine months of the year totaled 8.4 billion liras ($2.7 billion), up 16 percent over the same period in 2015, according to data from the finance ministry.

Katmerciler’s shift to new product lines for domestic warfare could result in setting up defense subsidiaries and the company may sell stakes to minority shareholders, Katmerci said. The Izmir-based company is also open to selling a minority stake through an allocated rights issue, he said.

The company targets 450 million liras ($145 million) in sales in 2017, while revenue this year may trail 2015’s 311 million liras, Katmerci said. 2016 Ebitda margin is seen at about 11-12 percent, he said, referring to earnings before interest, taxes, depreciation and amortization. It was 15.2 percent last year, according to data compiled by Bloomberg.

Katmerciler shares have declined 6.3 percent in 2016, compared with the Borsa Istanbul 100 index’s 9.9 percent gain. They rose 1 percent to 8.20 liras at 4:57 p.m. in Istanbul.

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