Ladies and gentlemen, thank you for standing by. I'm Constantinos, your call operator. Welcome, and thank you for joining the Arçelik conference call and webcast to present and discuss the full year 2025 financial results. At this time, I would like to turn the conference over to Mr. Barış Akgun-Ataslan, Chief Financial Officer, Ms. Mine Şule Yazgan, Finance and ERM Executive Director, Mr. Alp Uluer, Capital Markets Compliance Senior Lead, and Mr. Sezer Ercan, Investor Relations Senior Lead. Mr. Akgun-Ataslan, you may now proceed.
Thank you. Good morning and good afternoon, ladies and gentlemen. Welcome to our full year 2025 financial results webcast. This presentation contains the company's financial information prepared according to TFRAS, the application of IAS 29, inflation accounting provisions. Here are the highlights of the year 2025. We generated TRY 523.9 billion in revenues, reflecting a 6.6% real year-on-year decline. Nevertheless, we delivered a significant improvement in profitability through cost execution, resulting in a 1.8 percentage point year-on-year improvement in gross margin and a 2.2 percentage point improvement Q4 compared to the same quarter last year. The EBITDA margin increased by 0.6 percentage points year-on-year, while the improvement exceeded 2.7 percentage points in the last quarter. TRY 5.7 billion of free cash flow was generated on the back of improving operational performance, in line with strict CapEx and working capital management.
This represents a remarkable recovery compared to last year's negative figure of approximately TRY 11.4 billion. We also completed most of the post-merger integrations across our European operations in 2025. We closed Braille and Kuching plants in Łódź and a refrigerator factory in Wrocław, Poland, as well as the Siena refrigeration factory in Italy at year-end, in line with the initial business plan as part of our restructuring initiative. Even in such a transition year, we managed to sustain our leadership in the European MDA market. Despite market stress and cash outflows related to restructuring efforts, major progress was made in balance sheet optimization, and delivered significant deleveraging on the back of strong free cash flow generation. With a year-end MGL adjusted leverage ratio of 3.74 times, we remain in compliance with our covenants.
In 2025, our consolidated revenues declined by 6.8% year-on-year in real terms, mainly driven by unfavorable price and product mix in Turkey, weak international demand, and intensified competition in Europe. Our gross profit margin was 28.8%, reflecting a 1.2 percentage point year-on-year improvement driven by lower raw material costs and favorable euro-dollar parity amid pricing pressures across key markets. Higher gross profitability and savings from restructuring efforts helped achieve a 0.6 percentage point improvement in adjusted EBITDA margin, despite wage inflation pressure, which increased OpEx as a percentage of sales due to lower revenue levels. Here you may see our revenue bridge both for the final quarter and the full year on the left-hand side. In the last quarter, figures in euro terms reflect a 7.5% year-on-year decline. This was driven by a steep decline in international sales, which declined by 14.3% year-on-year, mainly due to volume contraction.
Revenues remained flat in Turkey over the same period. In real Turkish lira terms, international sales declined by 13.5%, while sales in Turkey recorded 0.9% growth. However, the full year comparison indicates better consolidated sales performance, with a 0.4% growth in euro terms, supported by the inorganic contribution of European legacy entities in the first quarter. International sales remained flat in euro terms, while Turkey recorded 1.3% sales growth year-on-year. Pricing remained a headwind across international markets and in Turkey, while volume decline was the main challenge throughout the year in international markets. On the right-hand side, our regional sales breakdown is presented. Turkey's share of total revenues stood at 34% in 2025, unchanged year-on-year. Europe's contribution remains slightly below half of consolidated revenues, in line with last year. Western Europe's share increased by one percentage point to 34%, while the share of CIS and Eastern Europe declined to 18%.
Representing 10% of consolidated revenues, the APAC region share decreased by 1 percentage point, while the Africa and Middle East region continued to increase its contribution to 8% of consolidated revenues. Diversified revenue streams reduce dependence on any single macroeconomic cycle and provide access to high-return pockets such as Africa, MENA, and South Asia, as well as after-sales and consumer durable operations. In addition, we are implementing a segment-driven brand strategy to address the broader market and strengthen our market position through differentiated products, with each brand playing a distinctive role in portfolio growth. You may see the trend in sales volumes across the main product categories compared to market volumes on the left-hand side. In Turkey, demand in the MDA market was under pressure, particularly in the first half of the year, while modest demand was supported by discounts and sales promotions throughout the year.
Despite a 3% decline in sales volume in the MDA market in 2025, we managed to keep our sales volumes flat year-on-year, thereby outperforming the market. Despite strong volume growth in the last quarter, real growth remained limited, reflecting approximately 1% real revenue growth due to unfavorable price and product mix. As a result, full-year figures marked a 6.6% real decline in 2025. Please note that scope of the market data for the AC and TV segments was revised starting in July to include sales from discount retailers and supermarket chains. Following the scope change, our performance in the AC category reflects significant growth. Competition remains intense in the AC segment with 45 brands in Iran, some of which attract price-conscious consumers. We closed the year with record market share in 2025 in Turkey.
With a strong start to 2026, we expect that we'll outperform the market this year as well, especially thanks to dryers, air conditioners and cooling products. In Europe, recovery in MDA demand slowed in 2025, with limited volume increases and no growth in euro terms due to pricing pressures stemming from intense competition. In Western Europe, recovery continued in some key markets such as the U.K., Italy, Spain, Netherlands and Belgium, but there was contraction in demand in France, Germany and Austria. Overall market growth in Western Europe for MDA stacks stood at 1.6% in the first 11 months of 2025. Whirlpool preserved its market leadership and stabilized the loss of market share in the final months of the year. Meanwhile, demand in Eastern European markets remained relatively strong over this time period.
However, growth rates decelerated in some key markets such as Romania and Ukraine, compared to growth of over 10% in 2024. Romania recorded modest volume growth while robust recovery continued in Ukraine. Similarly, growth in euro terms remained limited. Overall, 49% of consolidated revenues were generated in Europe, with sluggish revenues in euro terms, including the inorganic contribution of the Europe transaction. Following the progressing ramp-up of new product launches in Q2 of the second half, market share gains signal a renewed growth path. The increasing share of high gross margin new product launches has been supportive of margin generation and market share gains, particularly in major countries and European categories. We will continue to focus on customized marketing and media investments to drive the success of new products and enhance brand appeal. In particular, Whirlpool and Bauknecht brands will be elevated through newly field initiative investments.
Revenues generated in the Africa and Middle East region constituted 8% of consolidated revenues in 2025. Revenues in euro terms grew by almost 10% year-on-year, driven by robust growth in the African region. Defy sales volume growth exceeded 10% in 2025, with nearly 15% growth in the last quarter. Growth in euro terms remained below 7% year-on-year due to price decreases across major categories. Demand in South Africa was steady in the last quarter, while growth in export markets outpaced local markets. Defy succeeded in maintaining stable pricing and sustained clear market leadership. In the Middle East, Arçelik Hitachi JV delivered 7% growth in dollar terms, amidst the political instability, supported by channel expansion, effective sales promotions. Operating in one of the key markets in the region, Beko Egypt increased sales volumes by over 13% in 2025, resulting in a 9% year-on-year increase in sales revenues in dollar terms.
We achieved multi-brand growth through Whirlpool legacy brands and Hitachi brands supporting market growth in the MENA region. The increasing contribution of the Egypt factory further supported performance in this region. Representing 10% of consolidated revenues, the APAC region continued to face a prolonged economic slowdown driven by rising cost of living and political instability. Sales revenues in the region declined by over 5% year-on-year in euro terms. Substantial growth in Taiwan, Pakistan and Bangladesh limited the decline resulting from the sharp slowdown in China and weak demand in key markets such as Thailand, Japan, Indonesia, Malaysia and Singapore. In Pakistan, Whirlpool's sales volume growth exceeded 10%, resulting in euro-denominated revenue growth of over 8% year-on-year, marking another successful year. In Bangladesh, Singer's net sales increased by over 3% in euro terms, supported by significant volume growth across major product categories, despite the economic slowdown and political challenges.
Due to factors such as weak global demand, slowing growth, and ample capacity, average raw material prices declined significantly year-on-year. On the metal side, market prices were slightly higher in the last quarter. Thanks to contracts with favorable pricing, no major impact is anticipated in the first half from rising metal prices. However, average metal raw material costs are projected to increase slightly year-on-year in 2026. On the plastic side, market prices were substantially lower both year-on-year and quarter-on-quarter. Fixed favorable cost conditions in the first half, however, a slight increase is anticipated in the second half, with prices remaining broadly flat on average in 2026. We are expanding our outsourcing activities to strengthen competitiveness by reducing cost base to the maximum extent. I'll pass on to Mine Hanım to cover the summary financials.
Thank you, Barış Bey. Here is the summary of our 2025 full year financial results as per inflation accounts, including yearly and quarterly comparison. We recorded TRY 523.9 billion consolidated revenues, reflecting an approximately 7% real decline through the full year and a 1% year-on-year decline in the last quarter. Gross profitability improved by 170 basis points year-on-year and by 215 basis points Q4 compared to the same period last year. Operating profit remained flat in real terms in 2025 due to wage inflation pressure. However, Q4 reflects a 32 basis point improvement compared to the same period last year, driven by the lagging impact of cost and position optimization. Further positive impact is expected to become visible in the upcoming quarters.
Other income from operating activities made a positive contribution of over TRY 1 billion to the bottom line, mainly driven by an approximately TRY 3 billion provision reversal following changes to the initial redundancy plan. Net financial expenses improved significantly in the final quarter, resulting in a 27% decline for the full year and a 56% year-on-year decrease in the same quarter. This improvement was driven by a decline in Turkish lira interest rates, higher interest income from increased Turkish lira deposits, change in our net hedging position that reduced hedging needs, and the extension of our hedging policy to include subsidiaries. Overall, we booked net financial expenses of approximately TRY 27.6 billion in 2025. Our net monetary position decreased by 28% year-on-year to TRY 15 billion.
Consequently, we recorded TRY 4.7 billion post-tax and TRY 9.8 billion net loss for minority interest for the full year, corresponding to -1.9% net margin in 2025. Finally, at a margin of 5.9%, we recorded an adjusted EBITDA of TRY 30.7 billion for the year, reflecting a substantial year-on-year improvement. Please note that one-off accounting expenses related to restructuring initiatives are excluded. The EBITDA adjustment amounted to TRY 439 million in 2025 and TRY 126 million in Q4 2024. Including the adjustment for inventory-related monetary gains and net monetary position attributable to income and expense items comprising EBITDA, our EBITDA margin stood at 7.1% in 2025. Also note that following the implementation of TAS, Q4 2024 figures have been restated under IFRS 3 with bargain purchase gain allocated to Q2 2024 and only restructuring costs remaining in Q4 2024.
As of December end, our adjusted leverage stood at 3.74x, marking a substantial improvement compared to the peak level of 4.5x recorded in the first half. Deleveraging accelerated on the back of EBITDA recovery and robust free cash flow generation, while disciplined net debt management reduced net debt to EUR 2.8 billion. As usual, we utilized receivable factoring and early collection tools at year-end. The amount of factoring and early collection stood at EUR 723 million and EUR 87 million respectively in the last quarter, implying a EUR 193 million increase in total as compared to Q3. As consistently communicated, we delivered deleveraging and closed the year cash flow to loan covenant at 3.8x. You may find the details of our debt currency breakdown. The effective interest rates of our loan and bond portfolio are on the right-hand side.
Total borrowings amounted to TRY 235.9 billion, an average maturity of 1.2 years. Our average effective funding rates, including loans and bonds, were 33.8% for Turkish lira, 4.5% for euro, and 8.5% for dollars. On the bottom left-hand side, you may see our cash currency breakdown totaling TRY 97.9 billion. With well-diversified cash holdings across currencies, 41% of our total cash is denominated in euro, 7% in dollars, and 31% in Turkish lira. Euro-denominated borrowings constitute 55% of our total borrowings, while US dollar and Turkish lira-denominated borrowings account for 15% and 20% respectively. In terms of the debt maturity profile, long-term borrowings account for 37% of total borrowings, reflecting the upcoming maturity of our EUR 350 million green bond in May and the typical patterns for shorter-term issuance amid expectations of further post-rate cuts. We have EUR 3 million of long-term facilities coming on stream.
Following the redemption of the green bond and the utilization of additional facilities, we expect the maturity profile to normalize to approximately 55%-45% between short- and long-term debt. Excluding the notional cash pool and company inside balances, the share of long-term borrowings would increase to around 55%. We're actively working on additional long-term facilities to further extend the maturity profile by year-end. At the upper left corner, you may find our adjusted EBITDA margin range. Higher gross margin and increased depreciation impact of the transactions are the main drivers behind 250 percentage points recovery in the margin, whereas higher operating expenses had a negative impact amid inflation pressure. At the upper right corner, you may see our net working capital to sales ratio. As of year-end, the working capital to sales ratio was 21.8%, slightly above the level in 2024.
At the lower left corner, you can see our CapEx to sales ratio at 3.2%, including capitalized amortization expenses, reflecting a significant decrease year-on-year, thanks to the tight focus on capital expenditure. Finally, at the lower right corner, you may see our free cash flow figures. Robust cash generation from operations, dividend spin-offs, and reversal of working capital seasonality, our free cash flow at the year-end was TRY 5.7 billion, outperforming our prior initial cash flow anticipation for the year-end. Here you may see our guidance and actual figures for 2025. Against the backdrop of weak demand in the second quarter, we then lowered guidance while we adjusted the margins to likely meet the low end of the guided range. We met our year-end guidance for a net working capital to sales ratio closing at 21.8%.
OpEx came in at around EUR 205 million, well below the guided level, reflecting strict capital expenditure discipline. I leave the floor to Barış Bey to walk us through our guidance for 2026. Thank you.
Ongoing global economic uncertainty and a weak demand environment continue to weigh on global growth expectations, with projections for 2026 remaining below 2025 levels. That said, macroeconomic expectations revised over the course of the year point to a more moderate and gradual normalization. According to OECD estimates, global growth is expected to reach 3.2% in 2025, ease to 2.9% in 2026, and reaccelerate to 3.1% in 2027, indicating that global growth momentum, while softer, remains intact. In Europe, overall growth expectations remain broadly in line with 2025 levels. However, the outlook for Germany and France, both of which are expected to see only modest GDP growth at best, has turned more constructive. This improvement is attributed to subdued consumption, particularly through the release of pent-up demand in these markets. This backdrop provides supportive conditions for our international revenue outlook.
In addition, a potential Russia-Ukraine ceasefire scenario could represent a significant upside for the European outlook. In Turkey, macroeconomic conditions remain challenging, with consumer demand continuing to face pressure while signs of a meaningful recovery remain gradual. As such, a broadly flat year-over-year performance in Turkey appears to be a reasonable base case assumption. However, if the anticipated policy rate cuts continue throughout the year, a more supportive funding environment could emerge, especially in the second half, presenting potential upside potential. These factors will serve as catalysts for a potential upward revision to expectations over the course of the year. Against this backdrop, for the year ahead, we are guiding for a broadly flat real revenue growth performance in Turkey, reflecting the continuing pressure on consumer demand. For our international operations, we expect low single-digit growth in revenues on a euro basis, supported by the gradual normalization in European markets.
We are guiding for an adjusted EBITDA margin in the range of 6.5%-6.5% underlying tight discipline cost management and operational efficiency initiatives. We expect the net working capital to sales ratio to be maintained around 20%, reflecting continued focus on working capital discipline. Capital expenditures are guided at approximately EUR 250 million, in line with our prudent capital allocation framework. With that, we can proceed to the Q&A session.
The first question comes from the line of Cemal Demirtaş with Ata Invest. Please go ahead.
Thank you for the presentation. My first question is about the revenue drivers. I see that in the fourth quarter you had volume growth, but you didn't have much real growth. Could you elaborate on the dynamics on that front? You just try to keep the volume up, and take advantage of some quality? Should we read it that way? For this year, when you expect flattish, you mean in real terms. Do you expect a volume increase or price increase in 2026? Indications in early January, at least in the first month of the year. Regarding the international side, again, when do you think we will see some recovery considering the seasonality in your international operations? The fourth quarter was weak and that was possibly the reason behind the deviation.
What should be the catalyst ahead for you to become more optimistic or between 3%-5% growth, as you mentioned, single digits growth? Is it the indications or is that a reasonable growth for you to cut your leverage going forward? That's my question. Thank you.
Thank you. Starting with the first one. As you know, Q4, especially in Europe, is usually characterized in competitive period such as Black Friday, et cetera. There is a pressure on the pricing. It was mainly characterized by volume growth. This is mainly the characteristics of third quarter as well. We didn't do anything special. As you know, this is the period where you're cleaning up your inventories and you prepare for the next season. The strongest season is usually the transition between Q3 and Q4, which we enjoyed increase both in volume and pricing. Especially in Europe, the last quarter and in all of the last couple of months of the year, we observed a flattening of the pressure that is coming from Chinese and us gaining significant market share in some key markets.
The market share loss that was experienced during the year, especially in the first half, was reversed to some extent over the last couple of months of 2025, which is encouraging. As you know, I'm usually alluding to these new product introductions, et cetera, which is actually the essence and the main source of our synergies in Europe due to the plant relocations et cetera. The new products have arrived to the market, and we are benefiting one by one, so gradually from this initiative. To the second question, in 2026, in Turkey, yes, we provided real growth as guidance, relatively flat. The price growth in line with inflation. Having said that, we are extremely, especially optimistic on the second half of the year. As you know, the interest rate decline trajectory has continued in Turkey.
In 2025, there was one incident, technical incident, back in March, which delayed the process a little bit. Barring such an incident in 2026, we expect at least a better season over the second half. In Europe, again, there is a carryover that is coming from new product introductions especially, that would boost the volume. We also expect uplift in pricing. As you know, with the brand segmentation that we do, especially on the Whirlpool side and all the marketing investments, we aim to enhance and increase the marketing spend and potential sales in Europe for this year to boost the sales in the newly introduced products. It's driven by both volume and pricing in Europe. For the remaining markets, as you know, there are some plants which are in ramp-up period, such as Egypt and Bangladesh.
We are quite profitable in all these markets, including Pakistan, Bangladesh, Africa, et cetera. Their high growth and profitability emanating from our market-leading positions are expected to continue in these markets. January is a relatively weak month seasonally. Having said that, we started in line with our budgets, especially in key categories, both in Turkey and in Europe. It provides us with a clear silver lining for the rest of the year. It's too early to make a call given the quasi holiday period, especially at the beginning of January in Europe, as you well know. The last question. The growth rates that we provided is more on the conservative side for Turkey, whereas it's more of the case in Europe. This is single digit growth.
We definitely expect a recovery in consumer sentiment, because it has been almost three years now since the consumer discretionary industry demand in Europe has slowed. We see early signs, especially in some key markets, and in continental Europe as well. Some markets like Northern Europe and Iberia, they will recover furthermore, but especially in U.K. and France, Nordics, and Eastern Europe, we see encouraging signs, including us starting to gain market share.
Barış Bey, regarding your leverage, we see a slight decline in this quarter, that third quarter from 5.70 to 4.50, based on your calculation before the NMP adjustment. Did you see any impact of this share sale to Koç Holding? The Arçelik sale. Did we reflect that in this quarter? I don't remember for now, but did it have any impact on the. Maybe you mentioned during the presentation. Maybe if you further give some, the color of that side. What was the reason for this decline? Did the share sales have some effect in this quarter? What should be the target for the following years based on the assumptions you have, your guidance for the capex guidance, for the capital guidance, and revenue guidance? Where should be the going forward?
Sure. Starting with the reasoning or rationale behind the decline, as I explained in our webcast about the entire year, actually the last quarter of the year is where our collections and factoring opportunities on the back of increased receivables over Turkey and export increases. It has happened exactly as we predicted. There is a massive inventory cleanup and inventory reduction, especially on the stock-based inventory side, in line with our target throughout the year. We started the year with a high demand expectation. As you know, the first half of the year is usually the preparation period for cooling and air conditioning et cetera, where historically and seasonally, our leverage increases. The second half, especially in Turkey and in Europe as well, we usually experience all the sales and collections towards the end of the year.
As you know, we have increased our factoring opportunities as well towards the year end, which is quite a credit to our financials. On the payables side, we have started with various initiatives such as expanding further to China and utilizing the financial instrument, the low-cost financing instrument that was granted out of China to extend our payable days. That has significantly enhanced our trade payable days in that respect. On the inventory side, just to quote a few numbers, the levels at the outset of the year were around EUR 1.2 billion, which declined to around EUR 1.8 billion towards the year-end. So on net working capital, we have really succeeded in line with our targets. Of course, EBITDA, as you well know, is coming on a trailing basis.
On the back of high profitability months, which is September, November, et cetera, the trailing EBITDA, 12-month EBITDA has also increased gradually. We finished the full year as we anticipated. As we said, we managed to remain in line with our covenants towards the year-end. As far as the relationship or discussion with the financial institutions are concerned, therefore we've managed to be in line with our covenants and will get relevant waivers, et cetera. There is no issue on the leverage side whatsoever as we finish the year. Coming back to your question, yes, we concluded this transaction just before the year-end, which is around TRY 5 billion and EUR 100 million. It also contributed to the decrease in leverage with that amount.
Thank you very much.
Thank you.
The next question comes from the line of Hanzade Kilickiran with JPMorgan. Please go ahead.
Thank you very much, Burci. I just wanted to ask about China procurement. What is the current share of China in your total procurement, and what is your target here to increase business and import procurement from China? Do you expect to be more competitive against Chinese players in Europe or a bit more secured market share in Europe? The second question is about your margin expansion for 2026. We have heard that Otlu are looking for a rise in raw material costs in the second half of the year, and currently, they are observing some increase in the precious metal prices like silver, aluminum. How do you plan or you can expect expansion on 2026?
Thank you. On the China procurement, it's as you know, there are, in general, including everything, around 25%-30%, whereas we aim towards 35% in the coming year. Having said that, we always source from China, but the way we utilize this financing instrument, the low-cost financing instrument, has expanded significantly. We rerouted some of the key outsourcing and/or raw material procurement activities towards this financing instrument, which provides around, let's say, 10-12 days increase for a full year in trade payable days. Of course, there are some other compensating impacts, but we see visible improvement in trade payable days coming out of this China procurement initiatives. On the European side, yes, we have started to see stable stability in growth, especially in some key areas, but more importantly, as I also alluded to in our face-to-face discussions, we saw encouraging signs in market share gain.
As you know, the whole year was characterized by market share loss for the main market for us, which we started to win back in key categories towards the year-end. We see that this trend is continued as we enter new year, and the whole aim is that it will pick up fine momentum as we progress throughout the year. Drivers on the margins and inflation of commodity in sight for the first quarter and the second quarter, so almost the first half, we expect to benefit from the locked-in prices over last year. As you know, we have around 6-month duration or 6- to 12-month duration for metal and plastics procurement, in particular. However, as we see in the first quarters of the year, we see some increases in the commodity prices in certain categories like copper or aluminum.
In that respect, the jury is out whether they will be persistent or not. Honestly speaking, it is also the flip side of the coin where it also applies to competition in the sense that it will probably have an increasing impact on the pricing as well. If commodity prices continue to remain high, the first half is largely protected due to already locked in contracts. The second half, we have to see how much pricing pressure we'll get or how much of this increase will be reflected in our pricing. As you know, pricing power is not the only source of us negating the negative impacts of commodity price increases. We have our material improvement projects, where we are always working towards engineering and design studies to lower our production costs in that respect.
As you know, we always target somewhere around 7%-12% improvement in material costs. Throughout the given year, irrespective of the level of commodity prices and magnitude of commodity price increases.
Okay. Thank you very much.
Just to add before I forget, of course, the synergies will continue in 2026, maybe not at the same level of 2025, but there is the carryover that will come out of 2025, as well as new initiatives that are coming out of the recent closure of Siena and the optimization initiatives in additional Italian plants such as Comunanza and Cassinetta. As you know, Siena was closed at the year-end, and the benefits will accrue, and that includes the white-collar workers that is related to the social planning agreement that we did with the government. Given they were concluded at the very end of the year, the benefits will accrue to 2026, especially in the first quarter. These are mainly the drivers of the margins in 2026.
All right. Thank you very much. Very clear. On the China procurement, I think that is very interesting. Will you increase the share of China because they want to finance extend the payable date for positive impact. In the meantime, I think it's also possibly driving your gross margin, right?
Absolutely. It will both lower the unit procurement costs as well as lower financing costs or increase the cash flow via extending the payable base.
Okay. Double impact on the trade front.
Absolutely.
In terms of the growth of our China procurement, or to what extent maximize it all?
No, I think it all depends on, of course, there are some, let's say, constraints around your insurance limits or your banking lines, et cetera. It's of course not the only source that we will do, but we will try to extend it as much as possible to the extent we're able to extend the payable base, and benefit from the local funding alternative. These are the main drivers of the China procurement initiative.
All right. Okay, thank you. Very clear.
Next question comes from the line of Evgenia Bystrova with Barclays. Please go ahead.
Hi, yes. Good evening. Thank you for the presentation. I have just a few questions. On my first one, I think during the presentation you mentioned 7.1% EBITDA margin. I didn't hear properly. Was it the margin excluding IAS 29 impact altogether, or is it adjusted for inventories and the method that you use for leverage calculation? My second question is about labor costs. Obviously, we have seen about potential strikes and negotiations on that front. It would be great if you could provide more color on the workforce side. What are you expecting this year in that space? Thank you.
Thank you. Yes, metric is adjusted for inventories, and in line with inflation accounting. The leverage metric is adjusted as well, which is aligned with the financial institutions in terms of calculation and calculation methodology. On the labor cost side, we do not expect something that is much higher than 2025. As you know, we have an active labor agreement. In our budgets and/or guidance numbers, these are all built-in into our expectations, including the pricing expectations that we provide. We do not expect something on the outlier side with the labor costs, but they remain relatively elevated in euro terms as compared to historical numbers of Turkey. It's also, as you know, related to the depreciation of Turkish lira. Any depreciation that is slightly above inflation will bring them down, enhancing the competitiveness of Turkish manufacturing companies.
Thank you. Maybe one last follow-up. In terms of seasonality of your margins, I can see that 2025 Q3 was the strongest in terms of margins, whereas there was a decline in Q4. Should we expect a similar dynamic throughout 2026 in terms of quarterly volatility?
Yes. It will be similar given there is no change in the underlying seasonality dynamics of the region mix and product mix that we have.
Thank you.
Welcome.
Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Alparslan for any closing comments. Thank you.
Thank you very much for attending our conference. We hope to see you in the following conferences. Have a great year ahead.