Ladies and gentlemen, thank you for standing by. I'm Paulina, your conference call operator. Welcome, and thank you for joining the Arçelik conference call and live webcast to present and discuss the first quarter 2026 financial results. At this time, I would like to turn the conference over to Mr. Barış Alparslan, Chief Financial Officer, Mrs. Mine Şule Yazgan, Finance and ERM Executive Director, Mr. Sezer Ercan, Investor Relations Senior Lead, and Mr. Seçkin Aymak, IR Capital Market Compliance Lead. Mr. Alparslan, you may now proceed.
Thank you very much. Good morning and good afternoon, ladies and gentlemen. Welcome to our first quarter 2026 financial results webcast. This presentation contains the company's financial information prepared according to TFRS by application of IAS 29 inflation accounting provisions. Here are the highlights of the first quarter 2026. We generated TRY 130.3 billion in revenues, reflecting 8.8% real year-on-year decline. Despite softer top-line performance, we delivered a meaningful improvement in profitability through disciplined execution and proactive procurement actions that protected our raw material cost base, resulting in a 1.1 percentage point year-on-year improvement in gross margin and a 0.8 percentage point improvement versus the previous quarter. Our EBITDA margin improved by 1.1 percentage points year-on-year, with sequential quarter-on-quarter performance even stronger at over 1.2 percentage points.
Post-merger integration across our European operations continued to support operational improvement in the first quarter and helped to partially offset weak demand conditions through ongoing cost actions. Synergy delivery remains on track and in line with our initial targets. Seasonal net working capital investments temporarily weighed on cash generation and leverage, resulting in negative TRY 19.2 billion free cash flow, an increase in our net leverage ratio to 4.16 times at the end of the first quarter. Through continued discipline in capital spending, our CapEx to sales ratio stood at 2.1% in the first quarter, reflecting a significant reduction in capital expenditure versus the same period of last year through tighter investment prioritization. In the first quarter, our consolidated revenues declined by 8.8% year-on-year in real terms, mainly reflecting an unfavorable price and product mix, weak international demand, and with competition remaining intense but broadly stable across global markets.
Our gross profit margin reached 29.8%, representing a 1.1 percentage point year-on-year improvement, supported by lower raw material costs secured through supplier agreements before the conflict and favorable EUR-USD parity, despite continued pricing pressure across key markets. Higher gross profitability and savings from restructuring initiatives supported 1.1 percentage points improvement in adjusted EBITDA margin, while the normalization of trading expenses remained gradual due to wage inflation pressure. Here you can see our revenue bridge for the first quarter on the left-hand side. In EUR terms, revenues declined by 10.9% year-on-year, driven by a slowdown in both international and Türkiye markets, primarily reflecting unfavorable price and mix dynamics, followed by a decline in volumes. International revenues decreased by 9.2% year-on-year, while revenues in Türkiye declined by 13.9% in the quarter. In real Turkish lira terms, international revenues were down 7.1% year-on-year, while sales in Türkiye declined by 12%.
EUR terms figures imply a smaller decline due to FX impact. On the right-hand side, you can see our regional sales breakdown. Türkiye accounted for 33% of total revenues in the first quarter, while Europe's share increased slightly and remained at just below half of consolidated revenues. Western Europe increased its share by 2 percentage points to 35%, while CIS and Eastern Europe remained at 14%. APAC region accounted for 10% of consolidated revenues, while Africa and Middle East represented 8%, both broadly stable versus the previous period. You can see the trend in sales volumes across our main product categories versus market performance on the left-hand side. In Türkiye, demand in the MDA 6 market remained under pressure in the first quarter, with pricing and product mix continuing to be the main headwind. Overall, MDA demand was supported by promotional activity and targeted discounts.
Despite a 14% decline in MDA 6 market volumes, our wholesale data shows a 3% decline, significantly outperforming the market and resulting in record high market share levels. In AC, moderate wholesale volume growth supported the top line despite weaker retail market data. TV sales remained weak during the period, although we again outperformed the market. Overall, given pricing challenges and unfavorable product mix impact, revenues in real Turkish lira terms declined by 12% year-on-year. In Europe, recovery in MDA demand continued with modest volume growth, although no recovery in EUR terms as yet materialized due to ongoing pricing pressure driven by intense competition. Beko maintained its market leadership with broadly stable market share over the last few months. In Western Europe, the recovery trend continued in key markets such as the U.K., Italy, Spain, and the Netherlands, supported by early signs of improvement in France.
However, demand remained weak in Germany, Belgium, and Austria. Overall, MDA 6 volume growth in Western Europe market was around 2% in the first two months. In Eastern Europe, demand was relatively weaker across key markets. Volumes declined in Romania, while the contraction in Ukraine was comparatively more moderate. Despite modest volume growth in the overall Eastern Europe MDA market, euro-denominated sales reflected high single-digit decline in selected key markets, driven by pricing pressure and intense competition. As a result, overall growth in EUR terms across the region remained limited. In total, Europe accounted for 49% of consolidated revenues, with revenues declining by 8% in EUR terms. Revenues generated in the Africa and Middle East region constituted 8% of consolidated revenues in the first quarter. Revenues in EUR terms declined by over 10% year-on-year due to ongoing conflicts and continued uncertainty in the Middle East.
Demand in Africa remained relatively resilient. Defy sales volume growth exceeded 7% in Q1, with over 10% growth in EUR terms supported by FX impact. Demand in South Africa remains strong while growth in sub-Saharan markets outpaced the broader region. Defy succeeded in maintaining price positioning and retained clear market leadership through targeted promotions. In the Middle East, we started the year with a very strong momentum. However, the course changed amid ongoing geopolitical instability and highly volatile news flow, leading to a more than 20% decline in Q1 euro sales, primarily due to shipment disruptions linked to the US-Iran conflict. We expect some of the deferred demand to gradually normalize as conditions stabilize.
In Egypt, following the market recovery observed in recent quarters, Beko delivered strong performance, with MDA sales increasing by over 50% in USD terms in the first quarter, supported by more than 60% year-on-year volume growth. This performance was driven by continued market normalization, FX dynamics, and further strengthened by improved competitive positioning and market share gains across key MDA categories. Representing 10% of consolidated revenues, the APAC region was weighed down by consumer demand pressures in the first quarter as disruptions in shipment flows and supply chains, particularly across ASEAN markets, negatively impacted operations. The decline in sales was also impacted by portfolio optimization initiatives, including the closure of the Rayong factory and sales subsidiaries in the region such as Thailand, Malaysia, Indonesia, et cetera. As a result, sales revenue declined by almost 15% year-on-year in euro terms.
Sharp slowdown in China, Japan, and Thailand, combined with subdued demand in key regional markets such as Bangladesh and Taiwan, lead to overall weak regional performance. This was partially offset by strong growth in Pakistan and solid seasonal demand in Vietnam during the festive period. In Pakistan, despite heightened geopolitical tensions, increased regional uncertainty, cross-border frictions, and intense competition, Dawlance delivered robust performance, with MDA sales volumes increasing by over 40% year-on-year in Q1. Revenue growth in euro terms reached nearly 20%, marking another strong quarterly performance. In Bangladesh, amid weak consumer demand driven by economic slowdown, political uncertainty, elevated inflation, and continued pressure on household income, Singer achieved nearly 2% volume growth across major product categories in Q1. However, revenues in euro terms declined by 8% year-on-year.
In Q1, we saw higher metal prices but lower plastics prices in the market year-on-year, while margins were protected thanks to our procurement agreements secured at favorable terms before the conflict. On metals, prices increased in Q1, driven by a stronger commodity environment, geopolitical disruptions, particularly in aluminum supply chains, ongoing anti-dumping investigations in Asia, and elevated energy-related processing costs. Looking ahead, we expect gradual stabilization supported by hedging and targeted pricing actions, especially in aluminum and copper. Importantly, thanks to previously secured contracts at favorable levels, we do not anticipate a significant cost impact in the first half. On plastics, prices increased in Q1 but remained broadly in line with the 2025 average and still below last year's levels. The increase was mainly driven by supply constraints, including force majeure declarations and localized production disruptions linked to geopolitical developments.
Early procurement already covers most of our needs for the first half, limiting near-term exposure, although some pressure may persist in Q2. Overall, plastics prices are expected to increase by around 10% in 2026, with normalization taking time. With that, I leave the floor to Mine for summary financials.
Thank you, Barış. We recorded TRY 130.3 billion in consolidated revenues, representing approximately 9% real decline year-on-year and an 8% decline quarter-on-quarter. Gross profitability improved by 114 basis points year-on-year and by 79 basis points over the last quarter. Operating profit margin also improved, increasing by 71 basis points year-on-year and 85 basis points sequentially. Other operating expenses had a negative impact on the bottom line, amounting to TRY 0.6 billion in the first quarter. Net financial expenses improved by 12% year-on-year, but were higher than last quarter, mainly reflecting the shift in our net FX position at year end, which reduced hedging requirements following the extension of our hedge policy to include subsidiaries. Overall, we recorded TRY 7.4 billion in net financial expenses in Q1.
The net monetary position increased by 8% year-on-year to TRY 6.2 billion , with a sharper sequential increase driven by higher inflation in the first quarter. As a result, we recorded TRY 0.3 billion profit before tax and TRY 2.2 billion net loss attributable to minority interests, corresponding to a negative 1.7% net margin for the period. Finally, adjusted EBITDA came in at TRY 8.3 billion with a margin of 6.4%, reflecting a continued sequential recovery trend. Please note that one- off expenses are excluded from this calculation, amounting to TRY 555 million in the first quarter. Including inventory-related monetary gains and the net monetary position effect attributable to EBITDA related items, our EBITDA margin would stand at 6.8% in the first quarter. As of March, our adjusted leverage stood at 4.16 times, marking the seasonal net working capital investments in the first quarter.
Note that the first quarter is typically when we build up receivables and inventory for the upcoming high season, including AC, cooling, and freezers for the summer season, as well as the Eid al-Adha holiday. As sales volume and collections accelerate throughout the second half, de-leveraging will root back in. Reducing leverage remains to be our top priority. We continue to utilize receivable factoring and early collection tools within the quarter. The amount of factoring and early collections stood at EUR 578 million and EUR 78 million respectively. Within the first quarter, implying a EUR 154 million decrease in total as compared to the last quarter. As a note, first quarter is not a testing period for our covenants. You may find the details of our debt currency breakdown and the effective interest rates of our loan and bond portfolio on the right-hand side.
Total borrowings amounted to TRY 249.2 billion , with an average maturity of 1.2 years. Our average effective funding rates, including loans and bonds, were 36.8% for Turkish lira, 4.4% for EUR, and 8.3% for US dollars. On the bottom left-hand side, you may see our cash currency breakdown totaling TRY 79.5 billion . With well-diversified cash holdings across currencies, 47% of our total cash is denominated in EUR, 13% in US dollars, and 17% in Turkish lira as of March. Euro-denominated borrowings constitute 56% of our total borrowings, while USD and Turkish lira-denominated borrowings account for 14% and 18%, respectively. In terms of the debt maturity profile, long-term borrowings account for 36% of total borrowings, reflecting the upcoming maturity of EUR 350 million green bond in May and the tactical preference for shorter-term instruments amid expectations of upcoming policy rate cuts.
Excluding the notional cash flow and company credit card balances, the share of short-term borrowings stands at 54%. Following the redemption of the green bond and the utilization of upcoming long-term facilities amounting to EUR 300 million, we expect the maturity profile to normalize to approximately 45%-55% split between short-term and long-term debt by the end of the year. Starting from the top left, you can see our adjusted EBITDA margin bridge. The main driver of the 1.1 percentage point improvement in EBITDA margin was the expansion in gross margin. This was particularly offset by higher operating expenses as a percentage of sales, while one-off adjustments provided a mitigating impact. At the top right, our net working capital to sales ratio stood at 22.1% as of March, broadly in line with both year-end levels in our guided range.
Moving to the bottom left, our CapEx to sales ratio came in 2.1%, reflecting continued strong discipline and prioritization in investment allocation. Please note that this figure also includes capitalized amortization expenses. Finally, at the bottom right, free cash flow was impacted by seasonal working capital build, resulting in an outflow of TRY 19.2 billion at the end of the quarter. With that, I will now hand it over to Barış for the macro outlook and our guidance.
Thank you, Mine Yazgan. We are practically revising our 2026 international sales guidance in light of recent geopolitical risks and continue to closely monitor global uncertainties as the trajectory evolves. We remain attentive to evolving macro and geopolitical conditions, and we will revisit our assumptions once a clear visibility framework is established. We will continue to assess the situation prudently and act swiftly where needed while ensuring disciplined execution across all levels of the business. On the other hand, as the closing date for the sale of our 60% stake in the Arçelik-Hitachi business announced on 21st April remains subject to regulatory approvals from the relevant competition authorities and is expected to be finalized within 12 months, we are not making any additional revision to our year-end expectations related to this transaction at this stage.
Going forward, upcoming actions of the CBRT will be a key determinant of any potential change in our domestic outlook in Türkiye. In particular, any easing steps or greater flexibility around credit card installments and bank lending growth caps could act as a catalyst for demand recovery, potentially supporting a more visible acceleration for the latter part of the year in a gradually normalizing, more consumption-supported environment. In Europe, we continue to see a gradual improvement in macro conditions, although the recovery remained uneven and still weak overall. Consumer confidence is improving slowly, supported by early signs of real wage recovery and relatively stable employment levels. However, it remains below long-term averages, and households continue to be cautious in their spending behavior. While inflation has broadly converged towards target levels, near-term volatility persists due to energy-related shocks and geopolitical developments.
At the same time, the European Central Bank remains in a plateau phase with no expectation of an aggressive easing cycle under the current base case scenario, which limits the pace of demand recovery. On the external environment, ongoing geopolitical conflicts and elevated volatility in oil and energy prices remain key focus areas from a margin perspective. In addition, EUR-USD parity continues to play a critical role for our cost structure, with a stronger U.S. dollar remaining a headwind. As a result, the resolution or de-escalation of ongoing conflicts will be an important positive factor for margin stability and visibility going forward. With that, we remain focused on delivering disciplined execution while navigating an increasingly complex macro and geopolitical environment. With that, we can proceed to the Q&A. Thank you very much.
The first question is from the line of Hanzade Kılıçkıran with JPMorgan. Please go ahead.
Barış, great. Thank you very much for the presentation. I have a follow-up question on the raw material costs. Because as you have not changed your guidance on margins, I wonder how you factor the rising aluminum prices and also increasing transportation costs to your guidance. Could this create any downside risk if it continues to be an issue in the second half of the year? How much have you hedged in aluminum? Do you see any supply issue at the moment, for your future buying in second half of the year? The second one is for the European market, do you see any issue in Chinese manufacturers in terms of supplying to the European market amidst this conflict, or they are still very strong in the European market in terms of availability?
Finally, can you please guide us on the expected restructuring costs for 2026, as it seems to continue this year as well? Thank you.
Thank you, Hanzade. I think the biggest factor as it pertains to supply chain is the Strait of Hormuz. Our direct exposure to the Strait of Hormuz, both in inbound procurement and outbound shipments, is relatively limited. We do not anticipate a material disruption to our supply chain. We already operate through diversified logistics corridors, and within a 30-90 days timeframe, we would be able to further optimize routing and adjust sourcing. We are quite flexible on that front. The main impact in a prolonged disruption scenario would be cost related rather than supply related, pertaining to your question. Higher oil prices, of course, would not only increase logistics costs, but also affects transportation, warehousing, assembly, after sales, installation, et cetera. All of which have, directly or indirectly, have fuel and energy linked cost components.
We are passing this through as much as we can to pricing, especially in the markets where we have pricing power, such as Türkiye. That said, and as I also mentioned during my script, we have secured raw material purchases at favorable prices, especially for the first half of the year. That will provide a partial buffer. In addition, as we always do, the impact on COGS or cost of goods manufactured for that matter, is expected to be mitigated through ongoing material improvement initiatives, which we continuously do. Hence, through these initiatives, we aim to offset part of the cost pressure. As I also mentioned in the past, it is also worth noting at that stage that our EBITDA margin guidance was also already set conservatively. Which I think provides additional buffer in absorbing potential cost headwind.
Just to sum up, on the COGS side, I think we are relatively protected considering the fact that the cost increases are coming with a lag and/or our ability to reflect the material improvement projects to our COGS. On the OpEx side, it is much more visible, but as I said, we have certain buffers. Just a correction on the adjusted EBITDA margin, it is 7.9% when we factor in the inflation related adjustments in the first quarter.
Thank you very much, Barış.
Yeah. On the restructuring side, the remaining provisions in our balance sheets are around EUR 35 million at this juncture. From a cash standpoint, the total can be expected for the total 2026 at around EUR 50 million, which is considerably below that of last year, which was around EUR 150 million in terms of cash disbursement. So in terms of the provisions that we took back in 2024 year end, we will be mostly done within 2026, unless there are new initiatives which would require additional provisioning.
Okay. Thank you very much. About the Chinese players in Europe, a re they facing any-?
Yeah, the competitive tension coming out of Chinese is the same. Having said that, especially due to supply chain, as you know, the Korean and Chinese players are mainly impacted by Strait of Hormuz. So we expect some price increases from their part just to reflect the increases in transportation on their part. So either they will have to eat up their margins and sacrifice some of their profitability or have to reflect pricing. The jury is out on that one. But in any case, the impact is working towards our advantage, to be honest with you on that one.
Thank you very much. Very clear.
Thank you.
The next question is from the line of Evgeniya Bystrova with Barclays. Please go ahead.
Yes. Hello, good evening. Thank you very much for the presentation and for all the comments. That is very useful. I have one follow-up to the previous question. You mentioned that part of the COGS pressure is expected to be mitigated with some internal initiatives. Could you please clarify what you are exactly referring to in this case? Then I have two more questions. My second question is, how are you planning to address the upcoming maturity of the euro-denominated bond? Do you plan to use maybe bank financing or maybe the proceeds from the asset sale? That actually is my third question is, what is the intended use of proceeds from the recent asset sale? What would be the impact maybe on revenue and EBITDA? Thank you.
Thank you. The material improvement projects are the usual projects that we always conduct in our factories to reduce the production cost that can be related to the design and/or usage of material and change of materials, et cetera. These are structural improvements in the material cost side, which comprises the predominant share in a given product cost. For your second question, we will redeem our EUR bond with our existing cash. We have enough cash at hand that was pre-funded before the year-end, in any case. Any incremental leverage that we are getting at this juncture, as Mine Şule Yazgan alluded to, will be mainly to extend the duration of our existing loan and bond structure. Whatever cash infusion that we will have from asset sales, be it Hitachi, be it remaining ones, I think it will be mainly used for deleveraging purposes.
Thank you very much.
You are welcome.
The next question is from the line of Cemal Demirtaş with Ata Invest. Please go ahead.
Thank you for the presentation. My first question is regarding the effective tax rates. You have high deferred tax expense in first quarter. Could you just further elaborate that? Should we expect the same trend to continue during the following quarters? The second question is about the one-offs related to restructuring. I guess TRY 555 million in first quarter. Should we expect some more in the following quarters? Or we are at the end of those, the major things. The other question is about net debt levels. Will you have more efforts to cut the debt ratio, leverage ratio below 4 times? Coupled with this, I see some increase in the working capital in the first quarter further. Do you have any actions to take in the following quarters regarding this issue? Thank you very much.
Thank you, Cemal. Regarding the tax expense, the increase in tax expense is mainly driven by the interplay between inflation accounting and changes in tax legislation. I've tried to allude to this in the past as well. We expect this trend to continue, because while inflation accounting is applied under IFRS, it is not being applied under Turkish tax procedural law, as you know. Non-monetary assets are carried at higher inflation-adjusted values under IFRS. So we are only able to utilize devaluation, which is very limited under tax procedural law right now as compared to the indexation levels that is being applied under IFRS. This divergence has widened the gap between IFRS and statutory tax basis, and this will obviously translate into higher taxable amounts under tax procedural law going forward. That's one of the reasons.
Another reason is given the tax structure of Beko Europe, we're currently not able to utilize the accumulated losses fully, which is going to change as we progress to Beko tax structure. Lastly, we do not have the same level of investment incentives as we do in the past. We've used up most of them. As you know, our main investments are completed. We can expect the trend to continue. But I must say that, and I'm sure you can track this from the audit report, a majority portion, which is almost TRY 1.9 billion out of TRY 2.6 billion, is related to deferred tax expense, not period tax expense. I'm sure you're seeing observing a similar situation in other publicly listed entities. That's an anomaly, unfortunately, which has got not much to do with the cash tax payments that we're paying throughout the year.
Secondly, the one-off expenses is related to reorganization, restructuring, consulting, litigation, provisioning, et cetera. You might see amounts here and there. I cannot comment on the magnitude, but we will have one-off expenses given we are in the midst of a transformation in any case. But we will be publicly announcing whatever the number is going forward as we always do. On net debt and leverage, yes, we expect the leverage multiple to decline on the back of increasing EBITDA in particular. Related to your last question, I can comment that, as you know, a given year is a tale of two events for Arçelik. There's a high seasonality in the business. We start the year with increasing inventories, receivables given the cooling and/or production and/or air conditioning season, especially Türkiye is impacting the receivable balances as we progress through the first half.
Then the collection period starts, and as you have observed in the last year, on the back of high season of Europe between September and November, we are able to increase our receivables, which can be converted either via early discount and/or factoring as payment schemes as we end the year. So we have to again end the full year to see the full utilization of factoring and early discount on the receivable side. We are pretty much cognizant of the inventory levels, including slow-paced and/or the finished goods. Starting from the second half, it is usually a collection and inventory, destocking period. Given, as I also mentioned, that we do not have the same magnitude of restructuring, cash restructuring expenses as compared to the last year and on the back of increasing EBITDA, declining funding costs, et cetera.
I think we are in a much better position as compared to last year for deleveraging purposes. I think we demonstrated that the leverage net debt, be it on nominal terms and/or leverage multiple metrics, is pretty much in control. It is under check, and I think this will be progressing in an elevated fashion, and we will be in a much better position as we finish the year in 2026. We do not have a major CapEx program. Right now, I think up until the first half, we will be mainly done with our financing program, be it redemption, be it redeeming or refinancing of the existing funding. So that is pretty much it. I do not think I missed anything, but please let me know in case you have any other questions.
Thank you. One additional question about the EUR-USD sensitivity. In the past, you were more sensitive to EUR-USD parity. How sensitive are you now? Currently, the way the Turkish lira is undervalued, overvalued is always an issue. But I would like to understand how does it work on your side? We see that demand side is the key thing. Raw material side is not bad. But how do you see that trend increasing EUR-USD or depreciation in Turkish lira? Could it have any positive impact or negative impact on your outlook concerning not only your balances but also the overall operating performance? Thank you.
Thank you. The level of sensitivity, the degree of sensitivity against EUR-USD parity hasn't changed. In one of the calls I mentioned that 0.01 change in parity impacts around EUR 12 million to EUR 13 million on the cost of goods or gross profit in absolute terms. But it is just, of course, everything else being held constant. So there are many changes. There is an interplay between pricing and product cost in any case. But of course, higher EUR-USD parity is extremely conducive to our business. It is the problem of every exporter in Türkiye at this juncture. So depreciation lower than inflation is hurting us because we are always playing a catch up between wage price inflation, wage inflation, and being able to reflect pricing into our Turkish lira reported financials. As you know, under inflation accounting, everything is being indexed as per the CPI.
But in case your pricing does not go hand in hand with this, you are being hurt in terms of margins. Having said that, as the inflation is lowered and it goes down, any inventory related monetary gain amount that is being fed into gross margins. So our overall P&L is being actually normalized. The first couple of months of this year, actually, we saw higher inflation levels. But one, I think good observation on our side is that although we have seen such inflation levels, we have been able to pass through to pricing. And the gross margin, as you can see in our presentation, I think one of the best performance that we have managed to pull through was on the gross margin side. And of course, the war is going to have some impacts.
But as I said, we aim to be able to compensate this impact at the COGS and gross profit margin level. But the jury is out. If there is a prolonged and heightened disruption, of course, we will revise our guidance accordingly. But I think we are pretty much in line considering what is happening around the conflict.
Thank you, Barış .
Thank you.
The next question is from the line of Maxim Nekrasov with Citi. Please go ahead.
Yes, good afternoon. Thank you so much for the presentation. I have a question regarding the guidance. You continue to guide basically for flattish growth in Türkiye, now flattish growth internationally, even though we saw pretty material declines in the first quarter. I am just trying to understand what underpins that guidance, which implies improvement in the subsequent quarters and just mathematically implies positive recovery. Maybe if you can talk about that on both markets and whether if the current situation continues, you think there could be further downside to this flattish outlook. Thank you.
Thank you. Starting with Türkiye. Türkiye started the year at an abnormally low footing, which we started to compensate immediately starting from February. Currently, April is also performing pretty strong. As you know, Türkiye is an extremely dynamic market, and it really responds very swiftly and is highly sensitive to the levels of interest rates, the consumer conducive macro policies, et cetera. I think in Türkiye, we have always been able to manage flattish growth in EUR or real terms, depending on the trajectory of Turkish depreciation versus inflation. In Türkiye, we are relatively more optimistic. On the international side, of course, Europe comprises a large chunk of the international venue. We are more on a wait-and-see mode because it is extremely seasonal, as I mentioned. The crossover between Q3 and Q4 is very important.
As I mentioned in the past, our new product introduction projects are still ongoing, so I think we can give Europe a further chance. On the international side, as I mentioned on the Middle East, we started the year very strongly, actually. Unfortunately, the demand stopped immediately on the back of the regional war. This is just a delayed demand from our standpoint. If that comes back, that can compensate some of the, let's say, decline in Europe. Hence, I think the jury is out, and if we see any visible trend in the international arena, we will not refrain from changing our guidance.
Mm-hmm. Understood. Thank you so much.
Welcome.
We have a follow-up question from Evgeniya Bystrova with Barclays. Please go ahead.
Yes, sorry. Just one quick follow-up regarding your potential asset monetization. Sorry. Do you maybe foresee any other assets in your portfolio that you can monetize? Are there any particular plans? Just any color on that would be very helpful. Thank you.
Sure. We are always reviewing our asset portfolio dynamically, and of course, these are confidential projects. If there is something that can be shared with the public, we will share accordingly.
Thank you.
Welcome.
We have a follow-up question from Hanzade Kılıçkıran with JPMorgan. Please go ahead.
Barış , I just want to make a follow-up on your Asia disposal. Basically, you get out of Thailand and also Türkiye, and now I think you still keep the JV in India. Is there any plan on India and how India is performing at the moment?
As we announced, I am sure you tracked our public announcements. We remain confident in the region's growth potential. We will, of course, continue to invest in key markets, including India, Pakistan, and Bangladesh. Pakistan in particular is going extremely well at this juncture. As I mentioned, you can really see from the growth numbers. Of course, we do not share subsidiary level or JV level information, as you know. But we remain committed to such high-growth regions, and India is definitely one of them.
Thank you.
Thank you.
Ladies and gentlemen, there are no further audio questions at this time. We will now continue with written questions from our webcast participants. The first question is from Masud Mohammed with Arçelik Hitachi Home Appliances, and I quote, "We improved profitability, but lost revenue. Should our priority now be growth or margin?
Arçelik is a consumer business. Of course, growth is all that matters. We are always trying to pick our battles in the underlying regions in terms of pricing versus volume. I think for such a business, growth is always the main pillar of the strategy. But given the pressures, especially on the pricing side, and the changes in the business model overall, be it AI, be it the disruption of the supply chain, be it the disruption in the global trade, et cetera, as all of our contenders, we are trying to change our business model to keep the margins in check. The margins have eroded across globe, as you see in this particular industry. Hence we will continuously improve our cost structure, reduce overhead, et cetera.
I think at this point, these are not conflicting priorities in my view, and we will continue to deliver on both.
The next question is from the line of Onur Yalçınkaya with Perform Portfolio. I quote: Thanks for the presentation. On the international side, we had a view that the Chinese price advantage in Europe, which we'd put at around 10%, could start to compress as freight costs rise alongside oil prices. On top of that, with Chinese capacity being redirected away from the U.S. and the Middle East markets into Europe, the competitive pressure could actually be moving into the opposite direction. Are you starting to see any of this play out in the results? When you combine that with that made in Europe angle, is there any way to quantify the market share impact, either through volumes or unit trends?
Thank you. I actually tried to touch upon that trend when I was discussing the impact of the war. We expect this to work to our advantage, especially in Europe, because there was a precipitous fall in the prices over the last couple of years. To be honest, over the last couple of months, since the end of last year, we've started to see stabilization in the pricing. Although it's too early to call for a sustainable trend, we really see that our average sales price is remaining relatively stable in Europe at this point. That can be mixed impacts, of course, partially. We concur with the view that there will be some compensating impact to keep the pricing in check. It's of course not possible to quantify precisely but from a directional standpoint, we believe that it will be conducive to overall pricing levels.
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 call and for all the questions, and hope to see you in our following conference calls in the future. Thank you