To many outsiders, Aselsan is the Turkish response to arms embargoes imposed on the country by its NATO allies in the aftermath of an armed conflict in Cyprus in 1974. The company, however, grew exponentially — especially in the past decade thanks to its central role in most of Turkey's ambitious programs to design, develop and produce indigenous systems.
With its strong backlog, rising sales and soaring earnings, the company seeks bigger business in foreign markets. Already listed as Turkey's largest defense company and steadily rising on Defense News' Top 100 list of the world's leading defense companies, Aselsan CEO Faik Eken hopes to see the company in the top 50. Eken offered his take on corporate plans and some of Turkey's most critical indigenous programs in an interview with Defense News Turkey correspondent Burak Ege Bekdil.
What was the driving force behind Aselsan's solid earnings performance in 2016? What is the profit estimate for 2017? Where do you expect to see Aselsan on this year's Top 100 list? And the same by 2023?
Our strong backlog, continuously diversifying product/system portfolio and capital management policies were the main growth drivers in 2016. We do not see any downside risks to that going forward. We expect at least 25 percent revenue growth (on Turkish lira [currency] basis) in 2017 with a sustainable EBITDA [earnings before interest, taxes, depreciation and amortization] margin of 18-20 percent. With this perspective we hope to climb a few steps up this year and we hope to catch the defense revenue, which is sufficient to make us one of the first 50 companies, by 2023.
How international does Aselsan plan to go in the next five years? Any further plans for partnerships/subsidiaries or acquisitions abroad?
In the next five years we are eager to expand our global reputation and market share especially in Middle East, Far East Asia and Latin America. Aselsan forms partnerships both for market-scale expansion and creating productive synergies. Aselsan has established four joint ventures: Kazakhstan Aselsan Engineering in Astana; Aselsan Middle East in Amman, [Jordan]; IGG Aselsan Integrated Systems in Abu Dhabi, [United Arab Emirates]; and Saudi Arabian Defense and Electronics Company in Riyadh. We are in the process of forming Aselsan Malaysia, and we are evaluating opportunities in Qatar as well. In addition, Aselsan aims at acquisitions in order to gain acceleration in terms of adapting critical technologies in its field of activities.
What precise role will Aselsan take up in the Altay indigenous Turkish tank program?
Aselsan is the main supplier for the mission-critical subsystems including fire control system, electrical gun and turret drives, battlefield management system (including tactical radios and intercom), remote weapon station, laser warning receiver system, battlefield target identification device, driver's sight system, and active protection system in the Altay program. Aselsan is not only located at the heart of the Altay program but also is an active player in [the] world's main battle tank modernization market.
What is the scope of Aselsan 's work with Sikorsky in the Turkish utility helicopter program?
In [the] Turkish utility helicopter program, Aselsan is developing a new flight and mission management system called Integrated Modular Avionics System, [or IMAS], with indigenously developed hardware and software. This architecture that is the product of a creative and innovative design approach will not only be used on T70 helicopters but also be flying on S-70i International Black Hawk helicopters that will be marketed around the world.
Sikorsky will procure 164 sets of IMAS in addition to Turkish utility helicopter program. In this regard, Sikorsky and Aselsan's mutual target is to utilize this hardware and software in global helicopter modernization programs.
In what ways does Aselsan plan to work with U.S. companies in its radar programs?
As you may know, in recent years Aselsan has been tasked to develop indigenous, new-generation [active electronically scanned array] radar systems including the ÇAFRAD phased array, non-rotating, multi-function naval radar suite and [the] EIRS long-range S-band radar product family for Turkish Armed Forces. We are very keen to collaborate with foreign companies, especially to expand our export market for the radars. We believe that Aselsan can provide [International Traffic in Arms Regulations]-free, cost-effective, tailored radar and microwave solutions to U.S. companies for their sales to the third countries.
Any major civilian programs based on Aselsan 's experience in defense and other electronics?
Aselsan activities besides defense technologies are mainly in transportation, security, energy control, traffic management and medical electronics areas. One of our key projects in the security field is the KGYS (Safe City Management System), which is a large, Turkish grid in 80 cities and 900 districts encompassing extensive video analytics capabilities.
Aselsan has a leading role in Turkey in toll systems spanning from conventional, plaza-based systems to multi-lane, free-flow electronic tolling. Additionally, traction systems for electrical and railway vehicles, vehicle management systems, and alike are other prominent projects where Aselsan is cooperating with accepted and existing platform suppliers.
Which countries would likely be Aselsan 's top export markets in the next five to 10 years?
Middle East is the main export market for Aselsan today and will most probably be the premier export market over the next 10 years. However, all the global market is under the focus of our company.
What is the current stage in Aselsan 's work to develop long-range air and anti-missile defense systems? What role(s) could Aselsan take up if Turkey decides to buy the system from foreign suppliers?
In addition to the ongoing air defense projects such as KORKUT, HİSAR, ÇAFRAD, EWRS and HERİKKS, Aselsan has been working on various research and development activities for further studies on ballistic missile defense with [state-controlled missile maker] Roketsan's cooperation, ready to develop an indigenous long-range air and missile defense system.
What role does Aselsan see for itself in Turkey's space efforts?
Aselsan is one of the main actors in space-related activities in Turkey. While taking advantage of our existing capabilities, we intend to invest more in designing and developing new indigenous and competitive satellite communication and observation payloads. Aselsan sees space technologies as an important pillar for our nation's scientific and technological development. Our pioneering development on space technologies will provide extra benefit to other industry partners, universities, government organizations and also our citizens.
What are Aselsan 's "priority" programs with a prospective view?
Aselsan's "priority" programs to be started in the near future are air defense system modernization program, standoff jammer, long-range air defense missile system, MILGEM I-class corvette, Turkish Fighter Aircraft Development (TF-X) and Altay tank serial production.