PROFILE2016

ERDEMİR IN BRIEF

The Erdemir Group has been producing steel and contributing to the development and employment of Turkish industry while investing in the future of our country for more than 50 years. Erdemir Group, which has been the leading producer of Turkish steel industry for many years, is increasingly adding value to Turkish economy with its deeply rooted brand, high production capacity, wide product range and strong financial structure. Erdemir Group has been under the OYAK roof since 2006. Erdemir Group, which is among the largest groups in Turkey in terms of total assets and the employment that it provides, operates in the fields of flat and long steel production, steel service center, mining, engineering and project management.

Erdemir Group includes İsdemir, the producer of flat and long steel; Erdemir Maden which has mining fields in Sivas and Malatya; Erdemir Romania which produces silicon flat steel in Romania; Erdemir Mühendislik which provides engineering and project management services to Group companies; the Erdemir Steel Service Center which meets the sector’s need of sized flat steel; and Erdemir Asia Pacific Pte. Ltd. which conducts the Group’s operations in the Asia-Pacific Region.

Erdemir Group supplies raw materials to almost every branch of industry such as automotive, white goods, general machinery, pipe profile, packaging, shipbuilding and construction. It is the sole domestic producer of packaging steel and heavy plate in our country. Erdemir Group attaches great importance to R&D and aims to meet the present and future needs of Turkish industry to the highest level by investing in the production of high value added products.

Erdemir Shares (EREGL) have been traded on Borsa Istanbul since the establishment of the stock exchange in 1986 and are listed in the BIST 30 Index as leader shares. Besides, the shares of İskenderun Demir ve Çelik A.Ş., our Group company, have been publicly traded on the Pre-Market Trading Platform with transaction code “ISDMR” since 28 March 2016.

Ereğli Demir ve Çelik Fabrikaları T.A.Ş. (Erdemir) was established in 1960 pursuant to special legislation in

order to produce flat steel desperately needed by Turkish industry but which the country was unable to manufacture

at the time. The Company commenced operation in Karadeniz Ereğli in 1965 and has created value ever since for both the domestic and global economy by

manufacturing high-quality, Turkish steel.

Erdemir Mühendislik Yönetim ve Danışmanlık Hizmetleri A.Ş. offers Erdemir and it’s subsidaries a wide range of engineering and project management services, from planning to application, in their capital investments

undertaken to attain their profitability, product diversity and high-quality product manufacturing goals.

Erdemir Asia Pacific Private Limited (EAPPL)”, a wholly-owned Erdemir subsidiary, was founded on

4 July 2014 in Singapore with a share capital of USD 250,000 in order to carry out Erdemir Group’s commercial

activities in the Far East.

Erdemir Romania, which was founded in the city of Targoviste in Romania, joined the Erdemir Group in

2002. Erdemir Romania produces electrical steel (silicon flat steel), which is a key input in the electric motors, transformers and generators. Erdemir Romania is in

an important position in Europe in terms of electrical steel production, with 10% of its protection used in the

Romanian domestic market, with the remaining 90% exported to various countries, mainly in Europe.

Established in 1970 in Hatay’s İskenderun district, İskenderun Demir ve Çelik A.Ş. (İsdemir) is an integrated

iron and steel factory with the largest liquid steel production capacity in Turkey. It was transferred to

Erdemir in 2002 on the condition that İsdemir would initiate production of flat products. İsdemir also

began manufacturing flat products in 2008 with the Modernization and Transformation Capital Investments undertaken after İsdemir’s acquisition by Erdemir that

year. This largest single investment in the history of the Republic of Turkey served to mitigate the imbalance

between long and flat steel production in the country.

Commencing ore production in Sivas-Divriği in 1938, the company continued operations under the business name Demir Madenleri İşletmesi from 1940 and joined

Erdemir Group in 2004. The company’s nine iron and one manganese sites undertake 37% of all iron ore production

in Turkey and meet 15% of the country’s iron ore needs.

ERDEMİR GROUP

ERSEMSteel Service Center

100%

ERDEMİR ENGINEERING

100%

ERDEMİR ASIA PASIFIC PTE LTD

Trading100%

ERDEMİR - ROMANIASilicon Flat Steel

100%

İSDEMİRLong & Flat Steel

95.07%

ERDEMİR GROUP COMPANIES

ERDEMİRFlat Steel

100%ERDEMİR MADENIron Ore and Pellet

Engineering and Project Management

90%

Erdemir Çelik Servis Merkezi San. ve Tic. A.Ş. (Ersem), which provides high-standard services for companies

active in many fields of industry such as general machinery and production, heat industry, electrics & electronics, particularly automotive and white goods, was established in 2001. In 2015, in addition to its

existing facilities, Ersem put into service a new steel service center in Manisa with a cold slicing capacity of

150,000 tons per year.

ErdemirAsia Pacific PTE LTD

SHAREHOLDER STRUCTURE AND DEVELOPMENTS IN ERDEMİR SHARES

SELECTED FINANCIALS (MILLION USD) *

ABOUT ERDEMİR STOCK “EREGL” (MILLION USD) *

SELECTED FINANCIAL RATIOS (MILLION USD) *

Erdemir shares (EREGL) are listed on the BIST 30 index and the majority of Erdemir’s shares, which is one of the publicly traded companies that has the widest base with a 47.63% free float rate, are held by corporate investors.

Ereğli shares traded at a price of TL 3.04 per share at the opening on the first transaction day of 2016, and ended the year at a price of TL 5.14. BIST 100 index had posted an increase of 9% during the 2016 full year. Meanwhile, Ereğli shares impacted positively by its operational&financial success, and the high dividend payment marked an increase of 69%.

Erdemir achieved a remarkable achievement in 2016, by raising its rank from the 15th most valuable company on the Borsa İstanbul at the end of 2015 with a market value of TL 10,640 million to 9th at the end of 2016 with a market value of TL 17,990 million. Erdemir achieved the highest increase in value of any listed company in 2016. The extent which Erdemir shares outperformed the index resulted in an increase in shareholder satisfaction and commitment.

Ataer Holding%49,29

Held by Public%47,63

Erdemir’s own shares

Ataer Holding Held by public

3.08%

49.29% 47.63%

200

180

160

140

120

100

80

60

169

109100

100

31.1

2.20

15

14.0

1.20

16

28.0

1.20

16

11.0

2.20

16

25.0

2.20

16

10.0

3.20

16

24.0

3.20

16

07.0

4.20

6

21.0

4.20

16

03.0

5.20

16

19.0

5.20

16

02.0

6.20

16

16.0

6.20

16

30.0

6.20

16

14.0

7.20

16

28.0

7.20

16

11.0

8.20

16

15.0

8.20

16

08.0

9.20

16

22.0

9.20

16

06.1

0.20

16

30.1

0.20

16

03.1

1.20

16

17.1

1.20

16

01.1

2.20

16

15.1

2.20

16

30.1

2.20

16

BIST 100 EREGL Stock

ERDEMİR (EREGL) vs. BIST 100 INDEX(31.12.2015=100)

Net Sales Revenue 3,855Net Operating Profit 697EBITDA 895Net Profit 502Total Assets 6,721Equity Attributable to Equity Holders of the Parent 4,321

2016 Market Capitalization (End of Year) 5,1222016 Foreign Transactions 4,668Free Float Rate 47.63%

Profit Margin 13.0%EBITDA Margin 23.2% Return on Assets 6.0%Return on Equity 11.1%

* As of 31 December 2016

DID YOU KNOW?

AWARDSErdemir Group 2016 Annual Report, themed as “Towards Future with Steel”, was ranked 75th in thelist of the world’s top 100 reports at the LACP Vision Awards, which has been held annually since 2001 and is considered the most prestigious award for annual reports. It ranked 26th among the top 50 annual reports in Europe, Middle East and Africa (EMEA) Region and was given Gold Award at the metals category. The report was also ranked as one of the top 20 Turkish annual reports.

Within the scope of the “Projects for Increasing Energy Efficiency in the Industry” (SEVAP) contest organized by the Republic of Turkey Ministry of Energy and Natural Resources for the 17th time in 2016, İsdemir won first prize in the SEVAP-3 category with its project to generate electricity from the Top Pressure Turbine in Blast Furnaces No. 3 and 4.

Erdemir’s score rose from 8.83 (88.3%) to 9.02(90.2%) in the 2016 Corporate Governance Compliance Rating Report.

İsdemir broke a record in both liquid iron and liquid steel production, exceeding 5 million tons of production in both of it.

We have transferred our operations specific to iron and steel to a wider and more integrated scope and are organizing our activities under the roof of the OYAK Mining and Metallurgical Group.

The European Bank for Reconstruction and Development (EBRD) provided EUR 75 million in loans to Erdemir and İsdemir. This loan, which financed a comprehensive investment program that will assist in the efficient use of resources in the production processes of Erdemir and İsdemir, was used to invest in the Top Pressure Recovery Turbines in blast furnaces.

At the 2016 “Stars of Steel Exports Awards” ceremony, a total of 48 awards were handed out to 39 companies that had achieved the highest exports in all products in 16 different product categories. A total of 154 certificates were awarded to the top 10 companies in each category. The Erdemir Steel Service Center was awarded third prize in the category of “cold/coated flat exports” and İsdemir was awarded second prize in the “hot flat exports” category.

“Golden Gloves” award for Erdemir The Turkish Metal Industries Union (MESS) organized the “Golden Gloves and Gold Proposal OHS Competition” for the second time in 2016 with the aim of spreading the culture of occupational safety. The good practice carried out by the employees of Erdemir Assistant Operators Directorate received a prize in the MESS Gold Proposal contest.

İsdemir agreed with Linde Gas Turkey, which is Turkey affiliate of Linde AG, to establish a partnership that would contribute towards achieving İsdemir’s objective of meeting the additional industrial gas needs and reduce the costs of the existing industrial gas system. This state-of-the-art plant, whose design and construction work will be carried out by the Linde Engineering unit, will enter operation in 2017. The plant will increase İsdemir’s oxygen production capacity by 14% and its nitrogen production capacity by 45%.

In the survey of Turkey’s Top 500 Industrial Establishments conducted by the Istanbul Chamber of Industry (ISO) ever year, İsdemir was ranked 10th, Erdemir was ranked 11th, Ersem was ranked 86th, and Erdemir Maden was ranked 320th based on 2016 figures.

WHAT ANALYSTS SAY ABOUT ERDEMİR?

Halk Invest: Erdemir is Turkey’s first and the only integrated flat steel manufacturer, which gives the company a strong pricing advantage particularly in value added product lines. Turkey still has significant excess demand for flat steel products where Erdemir generates larger portion of its margins.

Ata Invest: One of the strongest balance sheets not only in Turkish industrial universe but also in global steel industry. Thanks to its strong balance sheet and strong cash flow, we expect Erdemir to remain a high cash-dividend payer next year while ramping up its investments in 2017E.

Şeker Invest: Triumphant operating profitability leading to a much better than expected bottom line performance in 1Q17. We continue to appreciate Erdemir’s strong balance sheet and, on balance, healthy profitability prospect for FY2017E, despite the current downward leaning trend in steel prices.

eker Yat Şeker

SUSTAINABILITYAs a result of the Group’s successful performance in management of sustainability, Erdemir was one of only a few companies to be included in the Borsa İstanbul Sustainability Index in 2016, as it was in 2015.

Adopting the OYAK Group’s sustainability approach, Erdemir Group adopts as a principle itself on end-to-end sustainability in its operations. It carries out activities to create and spread an awareness of sustainability in the community and employees.

The Erdemir Group continues to create “more value with less resources” to protect the environment in order to leave a habitable world for present and future generations, and to make a contribution to social development.

In our world where the need for steel steadily increases, Erdemir Group determined its vision on the basis that environmental, social and financial capital work within the framework of a sustainable business model, the expectations of community are met at the highest level and the culture of innovation.

1995Establishment of

ErdemirSuggestion System

(ERÖS)

ISO 9002 QualityManagement System

Accreditation

Commissioning theCalibration Laboratory

1996 19981999

2003

2004

1997

Conferences on “What the 3rdMillenium will

Bring”,Corporate

Membership to EFQM,

Business Excellence Trainings,First Self

Assessment

Erdemir Performance Management System,Process Management

Model,Process Improvement

Methodolgy,Erdemir Strategic

Management Model,Erdemir Improvement

Teams,Starting the

Environmental Management System

Studies

Establishment of Total Quality

Executive Committe,

Redesigning of Process

Management Model

EFQM Europen Quality AwardRecognition for

Excellence,National Quality Award,

large Scale Company Achievement

Prize,Commisioning of

e-isoft Quality ManagementSoftware,

TS EN ISO 14001 Environmental

Management System Accreditation,

TS 18001Occupational Health and

Safety,Management System

Accreditation

National quality award finalist

2001

2005-2006

2007

2009

2011

2014

2015

2016

ISO TS 16949 Quality Management System

for Automotive Industry Accreditation

Transition to TS EN 50001 Energy

Management SystemStatistical

Data Analyses TrainingsAlınması

İsdemir wins 1st

prize in 9th Energy Efficiency in the Industry Project

Competition

2010İsdemir wins 1st

prize in 10th Energy Efficiency in the Industry Project

Competition

ISO/TS 16949 SurveillanceExamination Sustainability

Report

ErdemirSustainability Steel

ReportImproving the

efficiency of Erdemir Suggestion System,

Deployment of Erdemir

improvement Teams,Erdemir wins 1st prize in EU Environmenttal

Awards

2008Environmental

Perforamance indexstarted to be calculated

TS EN 16001 Energy

Management System

Accreditation

2012RIO +20 Sustainable

Development in Turkey and the Best Application

in the field of Green Economy

The R&D Centre was established

Design of Experiment Project First Wave

Knowledge Management System Project

Design of Experiment Project Second

Wave Commissoning of New ERÖS Software

Document integration ProjectErdemir Biodiversity Policy

Employees started to be givenEthical Rules training

Life CycleAssessment

Water footprint studies initiatedİsdemir wins 1st

prize in 16th EnergyEfficiency in the industry Project

Competition

TURKISH STEEL SECTOR IN BRIEF

DEVELOPMENTS IN GLOBAL STEEL SECTOR Turkey’s finished steel product imports amounted to

approximately 15 million tons, similar to their 2015 level. Imports of slab, which increased in 2015, stood at 1.6 million tons, a decrease of 46% due to the increase in production from arc furnace plants in 2016.

The year 2016, was a strong year for Turkey’s steel exports. Flat steel exports increased by 21% YoY to 3.1 million tons. Despite the decline in demand in our country and in the world, Turkey’s long steel product exports maintained their 2015 level to exceed 10 million tons.

Turkey’s crude steel production stood at 33 million tons in 2016, marking an increase of 5.3% YoY. This increase in crude steel production brought Turkey back to 8th place in the world rankings.

The Turkish steel industry, which reached a record-high 36.9 million tons of finished steel production in 2015, maintained this level in 2016 as well.

After growing by 12% in 2015, Turkey’s steel consumption increased by 6% in the first half of 2016. Turkey’s steel consumption, which has a strong connection with the manufacturing and construction industries in particular, declined due to a weakening of economic indicators in the second half of the year. By the end of the year, Turkey’s steel consumption had declined by 1% YoY to 34 million tons in total, including 17.5 million tons of long steel and 16.5 million tons of flat steel.

Global crude steel production stood at 1.63 billion tons in 2016, marking an increase of 0.8% YoY. Despite a slight increase in the global capacity utilization rate when compared to the previous year to 69%, it remained well below the sustainable level of 75%. Also, worldsteel expects that the global steel demand to increase in 2017 and 2018 by 1.3% and 0.9% respectively.

İZDEMİRSource: Public Disclosure Platform Source: worldsteel

KARDEMİR İSDEMİR ERDEMİR

7,000Million USD

6,000

5,000

4,000

3,000

2,000

1,000

0

PUBLICLY TRADED STEEL MANUFACTURERS BY ASSET SIZE (AS OF 31 DECEMBER 2016)

Steel Demand Expectations (Finished Steel)Mt: Million Ton %: Yearly growth

EU-28

2017158.2 Mt

+0.5%160.4 Mt

2018

+1.4%

OTHER EUROPE

201741.7 Mt+2.6%

43.2 Mt2018

+3.5%

CIS

201750.2Mt+3.2%

51.9 Mt2018

+3.4%

ASIA & OCENIA

20171,016.0 Mt

+1.0%1,015.0 Mt

2018

-0.1%

MIDDLE EAST

201754.8Mt+3.1%

56.8 Mt2018

+3.7%

WORLD

1,535.2 Mt 1,548.5 Mt+1.3%

2017 2018

+0.9%

AFRICA

201738.4 Mt+1.5%

40 Mt2018

+4.1%

CENTRAL & SOUTHAMERICA

201740.8 Mt+3.5%

42.7 Mt2018

+4.7%

NAFTA

2017135.2 MT 138.5 MT

2018

+2.2% +2.4%

Despite efforts to restrict capacity in China, where production was not expected to increase at the beginning of the year, there was a 1.2% increase in production in China to 808 million tons. The measures taken related to capacity management in China, which realized its target closing down 45 million tons of capacity, only adversely affected small producers, while production increases of large producers led to total steel production to rise above the previous year. With the impact of the performance in the second half of 2016, consumption of steel in China reached 670 million tons, also similar to its 2015 level, with exports of 109 million tons. With the impact of increased protectionism in the world and strong domestic demand, China’s steel exports fell by 3%.

Global crude steel production,capacity, and overcapacity 2000-2016

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Mil

lion

Ton

s

Nominal Capacity

Production

Overcapacity

2,500

2,000

1,500

1,000

500

0

Source: Production- worldsteel, Capacity- OECD

The world’s capacity surplus of 700 million tons is expected to continue, as steps to reduce capacity were not taken to an adequate extent in 2016. This surplus of capacity led to a glut of low priced exports, led by countries which are in a situation of having to export to sustain their production. These low priced exports fundamentally threatened the steel industries of some countries, which are now taking steps to restrict imports altogether, instead of merely preventing unfair competition.

Countries such as China, Russia, Brazil and South Korea have been shut out from many markets due to increasing protectionist measures. The protectionist measures implemented by the EU and USA, in particular, have given rise to a new structure for the steel industry formed by regional market and price dynamics.

Global Crude Steel Production 1,629(*) 1,615 Turkey’s Crude Steel Production 33 32

Sector Figures (Million Mt) 31.12.2016 31.12.2015

Source: worldsteel(*) Temporary

EXPECTATIONS FOR 2017

World economy recovering

Protection in the steel industry

Turkish economy improving

Signs of a global economic recovery have started to emerge in 2016,

accompanied by positive changes in indicators in advanced economies. This recovery is expected to continue into 2017, supported by appropriate fiscal

policies and stimulus measures.

Various countries tend to take protective measures in response to low-price sales

by certain other countries that have to export their output in

order continue production. This trend is expected to continue

into 2017.

The Turkish economy, which was to a certain extent affected by the adverse

developments of 2016, exhibited a rapid recovery in the last quarter, closing the year at a growth rate of

2.9%. This growth rate is expected to increase in response to fiscal reforms,

growing domestic demand, and investments in infrastructure.

Global steel consumption is expected to grow to 1.6 billion tons in 2017.

Signs of economic recovery are expected to form the backdrop of a rebound in steel demand. Industry backed policies implemented in the USA positively are supporting commodity prices and a revival in domestic demand is strengthening economic confidence and activity throughout the world. The expected growth in the construction sector in 2017, after a sluggish year in 2016 and the expectation of higher automotive production will support steel consumption. A robust performance from Russia, which broke out of economic stagnation due to the rise in prices of Brent petrol and other commodities and from Brazil, also shaped the revival in steel demand. Since the second half of the year in particular, recovering industrial production in the USA, EU and China have all been offering positive signals regarding global steel demand.

Similarly, thanks to the supportive monetary policies in China, the end of the decline in producer prices due to the revival in the construction industry and manufacturing industry should pave the way for a more positive outlook in 2017 positive. In addition to these, new promises given about revitalizing infrastructure spending are raising hopes for the future.

It is anticipated that the demand for commodities will remain robust until 2020, given the fixed asset investments in the construction, real estate and public-private sector joint projects in China.

There are still elements of uncertainty that could put pressure on global steel demand in 2017, such as low fixed capital investment spending, weak global economic growth and trade growth, slowing growth in emerging economies, especially China, geopolitical risks, the Brexit process and elections in Europe, which could all be seen as risks.

The trend towards protectionism, which has reached unseen levels, together with the global supply surplus that has affected the sector in the last 2 years, will continue this year.

As we enter 2017, steel consumption is expected to increase, even if only moderately in Turkey, hand-in-hand with the growth in manufacturing industry which is expected on the back of the measures taken to revive the economy. Furthermore, steel exports are expected to increase due to the recovery in global markets.

Disclaimer: 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 conditionsprevailing 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.

For further information please contact Erdemir Investor Relations.

Address : Barbaros Mahallesi Ardıç Sok. No: 6 Ataşehir / İstanbul / TurkeyTel : +90 (216) 578 80 61 Fax : +90 (216) 469 48 06

Company Website : www.erdemir.com.trGroup Website : www.erdemirgrubu.com.tre-mail : investorrelations@erdemir.com.tr