Ladies and gentlemen, thank you for standing by and welcome to Doğuş Otomotiv Q4 2024 conference call on the 1st of March 2025. Please note that today's conference call is being recorded. After the call, there will be a chance to ask questions. At this time, I would like to turn the conference call over to this company's CFO, Mr. Kerem Talih. Please go ahead, sir.
Thank you very much for the introduction. Hi, all the participants. I would like to welcome you all to the year-end investor relations presentation of Doğuş Otomotiv. Together with my team, we are more than happy to welcome you all in our online meeting. As we have always been doing, we would like to start with an overall overview, let me say, of the performance of the previous year and also the year to come. As we were always mentioning through the quarterly presentations we have been making, year 2024 was a quite busy year in terms of new launches and model presentations to the Turkish automotive market. We have already launched more than 25 new models or facelifts throughout the year successfully.
The year to come, within which we have already completed two months of it, is already a very busy year, as you can see in the presentation. That in all of our brands, not only in terms of internal combustion engines, but also in terms of new EV models of our brands that we are representing in Turkey in the body of Volkswagen Group. Almost more than 25 new models or facelifts will also be presented throughout the year. So in that respect, in terms of marketing activities and sales campaigns and performances, it is going to be a very tough and busy year, I must say. Before going to the market and financial information, just to note relating to what's new in line with the recent public announcements we have made.
On Friday evening, we have announced that following the dividend advance that we have made last year, amounting to TRY 2.2 billion, an additional TRY 6 million is going to be distributed as dividends out of the profit of the previous year. The timing of this will be announced to public just following our general assembly meeting, which is going to take place at the 27th of March. Following this meeting, within 15 days, we will be disclosing it respectively. The second recent information is the distribution of MATE.Bikes, which is a fancy instrument of the way that we are going through in the name of electrification. Mate is an EV bike that, of course, is not going to comprise a material portion of our operational or financial length. But despite of it, we will be serving to the delight of Turkish customers.
Finally, relating to D-Charge, which is a subsidiary of Doğuş Otomotiv Group. This is the company that we are monitoring the strategy of EV stations for all brands, respectively, under one legal entity. We have increased its capital in line with its OpEx and CapEx requirements to 100 million Turkish lira. Having a view of what has happened throughout the year, I am very happy to be able to see that. Competitively, as compared to the performance of year 2023, there are slight decreases in financial output. As we have always been saying, the performance of year 2023 was totally, how to say, an interesting year in which the sector has broke through all the profitability targets.
Now, considering the performance of our stock exchange, we are happy to see that the performance of year 2024, and especially as compared to the competitors, is really being granted by the Turkish or international investors. Our total sales performance is 8% more than the previous year, which has touched almost to 190,000 units together with our Škoda brand. Within that, from day to day, we are seeing that the portion of electric vehicle sales is increasing. Last year, we have sold almost 3,700 EV cars, and this year we are targeting to increase this figure more than 10,000 units almost. It probably may touch to 15,000 units. As a result of this performance, our total vehicle park has increased to almost 2.5 million without Škoda in Turkey.
I will come to the details of profitability by referencing to the outcomes of inflation, accounting, so on and so forth. We have added almost 50 new customer touch points. In all spreads around Turkey, our customer touch points are increased to 730 units. We are sustaining this with sustainable capital expenditures, which is around TRY 4.5 billion . Two highlights as reference to financial liabilities to equity. We have decreased the ratio 4% to a level of 22%, which is nice for us. Also, we have increased our corporate governance compliance rating score, and Doğuş Otomotiv is ranked as the second highest corporate governance rating score in Turkey, just following Garanti BBVA. To a reference or to a glance to the market performance. As you can see, Turkish automotive market again, has reached to a level of more than 1.2 million units.
Our performance had been even more than the performance of the market, and has reached to a level of 187,000 units. When we consider it in segment basis, the only exemption is the premium segment, relating to our Audi brand that we had some supply challenges. Apart from that, the performance of our brand, the expansion as compared to previous year, as you can see, is definitely much better than the performance of the market itself, as you can see in the presentation. In terms of market share allocation in the passenger car segment. In this graph, we have just made a certain update, considering that the consolidation of Tofaş and Stellantis group has not been approved by the competition board yet. They are separately disclosed in this table.
In that respect, in the passenger car segment, we are the leading brand group with a market share of 16.5%. In light commercial vehicles, we are ranked at the fourth level with a share of 8.7%. In total, in the total of all segments, we are just following Stellantis group with a market share of almost 15%. As you can see, we have increased our market share, 1.2% as compared to the performance of the previous year. Considering that the presentation has been revealed beforehand, I'm just skipping some detailed pages. We can come back to them if you have any question relating to them. When we just consider the performance of brand basis sales allocation.
As you can see, Volkswagen passenger cars with a sales volume of more than 75,000 units, and Škoda with a sales performance of more than 43,000 units, which is more than 25% above the previous year's performances, are the leading ones. At this point, I must also give the required applause to the performance of light commercial vehicles, because in a market that the market is not performing so well, our light commercial vehicle segment has increased its performance more than 25%. We are really very happy out of this performance. In the remaining charts, you can see the performance of other brands. What has happened, at the end of the first month of the year? Of course, we are all together with the other participants in the market. We are expecting a kind of normalization in the market.
The total market has downsized to a level of 15%, and our performance is almost similar. We have sold more than 9,500 vehicles at the end of January. The market share allocation has not changed much as compared to the performance of the year end. Coming to financial performance. As you can see, having to talk about the performance or the comparative performance of year 2023 and 2024 needs some additional explanation. Just to refresh our memories, year 2023, I'm sorry, was the year that the automotive market was kind of recovering himself, in terms of avoidance of supply obstacles, chip shortages, so on and so forth.
In a period of, in such an inflationary environment with the appetite of Turkish customers having utilized buying a car as an investment instrument, has turned out to be a phase that this lack of supply has tried to recover itself, but the demand of the customers was boomed. In that respect, not only the sales performance, but also the performance of the total market was at the highest historical levels. After this explanation, in year 2024, all the players in the market, not only Doğuş Otomotiv, but all the players, we were expecting a normalization, both in terms of sales performance and also in terms of profitability, not only in the sale of new cars, but also in the performance of used cars as well. Our revenue has realized at a level of TRY 188 billion, which is 13% lower than the previous year.
By the effect of increasing the operational expenditures and decreasing gross profitability, I will come to it, our EBITDA is 54% lower than the previous year. With the adverse effects of inflation accounting and other factors that will come in the reconciliation page, our net profit has realized a level of TRY 7.6 billion. Our capital expenditures are moderate to a level of TRY 5.5 billion, which is on average, in line with the yearly performance. The decrease in total assets, and respectively, in working capital, is in line with the decrease in our total sales performance, I must say.
This is a chart, as you may remember, that we have started to add in our presentation in order to be able to clear reconciliation in between the performance of the previous year and this year, just following the inflation accounting has been in practice. On the left side, TRY 19.7 billion is the nominal historical net profit at the consolidated level of Doğuş Otomotiv at the end of last year. At the top of it, 1.44 coefficient has been multiplied to be able to represent it by the purchasing power parity at the end of year 2024. An additional TRY 8.7 billion is added at the top of the historical performance, which brought the last year's performance to a level of TRY 28.5 billion.
Respectively, the normalization in gross profitability and decrease in sales figures has decreased our total gross profit to a level of TRY 16.1 billion. By the way, those figures are the difference between 2023 and 2024. There is a material amount change in the total operational expenditures to a level of TRY 6 billion. Among this, as you can see in the footnote, last year, we have started to donate in the earthquake zone of Turkey, which was an unfortunate event which took place in year 2023. The donations in this region has reached a level of TRY 2.4 billion. I am sorry, just going to wake up the page. I got a phone call. I am sorry just for the 30 seconds break.
Also, among this TRY 6 billion worth of change in operational expenditures, TRY 2.4 billion is coming mainly from the donations, which did not took place last year. Also, almost TRY 2 billion of it is coming from the decrease in the value or decrease in the market value of the financial assets of Doğuş Otomotiv, which is in the body of the dealership, which is rented in Ankara, and also the idle general management building in Kartal region of Istanbul. When we just proceed, the other material deviation is change in contributions by affiliates, which is TRY 6.5 billion, that I will come the detail of it in the P&L section. There is a plus or positive variance, which is around TRY 5.5 billion.
The material component of it is more than 90% of it is the decrease in our FX loss. Considering that the foreign currency volatility was much higher in 2023 as compared to 2024. In that respect, our foreign currency loss out of foreign currency borrowings is definitely much less than this year. With the influence of monetary loss of almost TRY 1.2 billion, which is mainly stemming from the indexation of capital, and the net tax effect together with the taxes to be paid, and also together with the deferred taxes, we end up with the net profit of TRY 7.6 billion. Coming to margins, as you can see, the normalization in gross profitability is located at a level of 16%. By the way, this is the consolidation of with new vehicle sales, used car sales, and also spare car Spare parts profitability.
But for the moment, not only for the whole evaluation of year 2024, but also for the performance of year 2025, I must say that in the sectors, in line with the competition and with the abundance of supply of vehicles, the gross profitability normalization will continue. When you consider the performance of OpEx over sales, it is 7.4%, which is relatively higher than the previous year. But at this point, this donation to the earthquake zone amounting to TRY 2.4 billion, when we eliminate this figure, it goes down to 6%. The reason in the total increase in the operational expenditures is mainly stemming from marketing expenditures, which is a natural output of more than 25 new models on face lists, respectively. As an output of those variances, our EBIT margin has decreased to almost 10% to 8.6% respectively.
After the financial expenditures and taxation, our net profit margin is located at a level of more than 4%. But when we just consider the historical performances, I must again repeat that the performance of year 2024 is not a benchmark year, even for the sake of gross profitability. Year 2024 was a year that our gross profitability has been realized much more or above what we were expecting, and normalization may take place also in the year as well. Coming to the performance of. In fact, in those slides, I have already explained to you the major components of the income statement. In that respect, I am not going into the details on the P&L one by one. But as I have already said, one important variance is stemming from the income from associates.
As you can see, the performance is decreasing from TRY 5.6 billion, unfortunately, to minus almost TRY 900 million. The major variance here, as you can see, is coming from Doğuş Oto, which is 85% lower than the previous year. This is also a result of gross profit normalization, and also it was a period that they have sold more than 45,000 units. They were also making so many new models and marketing campaigns and launches throughout the year. Also in VDF Servis, the figure has turned to a material degree of negative, mainly stemming from the residual value provision of VDF FİLO out of the remarketing income provision of the operational rental portfolio that they are carrying in their balance sheet. Coming to balance sheet, as you can see, the size of the balance sheet has only decreased 8% to a level of TRY 56 billion.
As you can see, we have decreased our total consolidated financial liabilities, which covers the figures of Doğuş Otomotiv and also the real estate company at the consolidated level. We decreased our total borrowings to a level of TRY 12 billion. In line with the decrease in the profitability of our equity accounted investments, their portion in the total consolidated balance sheet has decreased from TRY 12 billion to TRY 9.4 billion. Coming to financing costs, as I have tried to explain it briefly in the bridging page, there is a considerable amount of decrease, which is mainly stemming from the foreign exchange losses on borrowings. As you can see, our total FX loss out of borrowings has decreased 80%.
With the other figures, also considering the liquidity that we are keeping in banks in terms of foreign currency, has enabled us to acquire interest revenue to a level of TRY 2.2 billion. As a result of it, we have considerably decreased our total financing costs successfully. The working capital net cash position and turnovers, I don't have much to add in that detail because, as you can see, the variances are quite normal in line with the developments, both in terms of financial outcomes. Coming to sustainability, Arda, do we have anything to add here?
Yes, maybe we can add a few points. Thank you, Kerem Talih. Hello, everyone, and greetings from Investor Relations Department of Doğuş Otomotiv. I would like to summarize the facts and recent news about corporate sustainability and corporate governance performance of Doğuş Otomotiv. In the environmental line, reporting in accordance with international financial reporting standards will be crucial in 2025. That's why we will be publishing our integrated sustainable support in the end of August. Additionally, in the economic line, our company was ranked sixth company among more than 300 companies worldwide in the retail sector, based on London Stock Exchange Group and Refinitiv evaluations. Additionally, again, our company was ranked first company in Turkey in the automotive sector based on London Stock Exchange evaluations.
According to decarbonization strategy of Doğuş Otomotiv, decarbonization strategy has mainly four core parts as carbon footprint, efficiency, global standards, and leadership. Regarding the carbon footprint, we aim to contribute to environmental sustainability by reducing the carbon footprint from operations. On efficiency, we aim to reduce our operational costs, such as transportation costs, by ensuring energy efficiency. On global standards, we aim to comply with international regulations and standards related to carbon emission reduction. Last of all, about leadership, we aim to be a role model company in the automotive industry, gain the trust of our stakeholders, and enhance our reputation. Since the details of decarbonization strategy was published within the scope of our presentation, I'm not going into the details. As Kerem Bey has emphasized, we have increased our corporate governance principles compliance rating score to level of almost 9.80.
We have done some developments on categories such as public disclosures and transparency, stakeholders, and board of directors. Keeping this success in 2025 will be main priority of Doğuş Otomotiv and its strategy. Last of all, since 2020, we have been increasing our corporate sustainability rating score. We have completed the year 2024 as 86.4 points, and keeping this success will be very significant for Doğuş Otomotiv as well. For the guidance of 2025, I will give the word to Talih again. Thank you for listening me.
Thank you, Arda. As an expectations to the current year, I can say that the performance of first two months, in terms of our sales performance, was quite beyond what we have expected, frankly speaking. At the end of February, we have almost, I can say, reached the performance of first quarter of the year in terms of sales. Also, in terms of growth profitability, the outcome is luckily beyond what we have budgeted so far. Throughout the year, we are expecting that the total market size will not be less than 1 million units. Out of which, we are going to sell, without Škoda, 115,000 units. Together with Škoda, it is supposed to reach the level of almost 160,000 or 165,000 units.
We will be, as we have always been doing, we will be continuing our investment expenditures, both in terms of maintenance of the current assets and also digitalization in some sustainability, and EV station charges, I can say. This is the end of the presentation. We are more than too happy if you have any questions. Thank you.
Thank you very much for the presentation. Now we will be moving to the Q&A part of the call. If you have any questions and you are dialed in via the telephone, please press star two. That is star two on your keypad. If you are dialed in via the web, you may also ask a voice or a text question. We will give a moment or so for the questions to come in.
I think there is a question from Marmara Capital, Mr. Haydar Acun.
Hello, can you hear me?
Yes. Yes, we can hear you. Please go ahead.
Yes.
Yes. Could you please talk about Chinese competition? I am very interested to hear your comments about BYD's investments and how other Chinese producers also can create competitive threat to Doğuş over the next three to five years. Thank you.
Okay. It may be a bit early to be able to put some interpretation relating to the forecast of three to five years, because it's quite new. As you would appreciate that the sale of EVs has, let's say, to a material amount, which is less than 5% of the total market last year. This year, it's expected that the market share of EVs will be 10%. Of course, the competition which has been brought by Chinese brands, all of them are almost new for Turkish market, has definitely refreshed the market, I can say. But as a representative of Volkswagen Group in Turkey, we have already launched the EV models of all of our brands. For the moment, just to note, Doğuş Otomotiv is the first company who has imported the first official EV car to Turkey, which was a Porsche Taycan model more than five years ago.
Which has been followed by the e-tron series of Audi. Recently, at the end of last year, and mainly in this year, we have started to sell all EV models of our volume brand, namely Volkswagen passenger cars, in the name of ID.3, ID.4, and respectively, the new ID.7 model. For the moment, I can say the major reason why Turkish customers are appetizing, I can say, to buy an EV car is irrespective of from which country they had been manufactured or imported. Because their Special Consumption Tax, as compared to internal combustion engines, is more than 50% lower. Which has definitely created enormous price advantage. But we are also taking our parts, and we are also placing our pricing strategy in line with the conditions of this related competition.
But in the mid and long run, not only the price level but also the reliability of the safe services, the infrastructural investments of those brands, of the new entrants will be more important in the demand of Turkish customers, I must say. But definitely, it is very obvious that their price, just because of the lower taxation policy, is definitely lower, and we will be taking advantage out of it as Chinese brands are doing so.
Thank you. Last question. I think losing the TÜVTÜRK tender is not going to make much impact on your financials as far as I can see. Is that right?
Yeah, that is right. At the end of the tender phase, which was made by the Privatization Administration, the Turk company group, let me say, has bet the highest price for the forthcoming 20 years. But of course, this function in the body of Doğuş Otomotiv in terms of operationally and also financially is important. But which was not material, both in terms of its share in the balance sheet and also in terms of profitability. Also, I must note that the current company, TÜVTÜRK, the 33% of it belongs to Doğuş Otomotiv, will continue their operations till August 27th.
Okay. Just one more thing. I saw that VDF Servis losses were around TRY 2 billion .
Was there a one-off thing in that one?
Yeah. But this is a provision that they have booked for their operational leasing portfolio, so there is the used car prices has also started. They have already been normalized, and I can say that there is a slight phase of recovery in the used car prices in the market. So it is a one-off effect. Since it has the total portfolio's risk out of this remarketing income has already been booked the year 2024, it will not continue in the years to come. But at the end, the overall secondhand market will determine whether there will be a need of additional provision or not. We will see in the forthcoming days. But we are not expecting so far, for the moment, I must say.
Okay. Thank you very much.
Okay. Thank you.
You are welcome.
Thank you very much. We have a next question from Oğuzhan Kaymak, from Tacirler Investment. Please go ahead. Your line is open now.
I am Oğuzhan. Do you hear me? Hello?
Yes. Yes, we can hear you.
Yes, I can hear you. Go ahead.
Hello .
Hello again. Thank you for the presentation. I would like to learn more detail about your outlook for 2025, if possible, of course. Could you share your estimated revenue in EUR for the year? Do you anticipate an improvement in operational profit margins in 2025? Thank you.
Oğuzhan I cannot speak out a precise figure in terms of our profitability targets for year 2025. But in terms of gross profitability, the performance of first two months of the year definitely was better off than what we have budgeted. Our sales performance, let me say like this, in the first two months, we have sold the performance of first quarter as well. If things go like this in the remaining part of the year, there is not any, let's say, change in some policies like Special Consumption Taxes are the same, there is not an hike in the currency level, so on so forth. Ceteris paribus basis, we can say that again, year 2025 will be a successful year that we would easily be able to compare with the performance of 2024. That is all I can say at this stage.
Thank you. Thank you for the answer. Thank you.
You are welcome.
Okay. Thank you. Thank you very much. Just a reminder for anyone that has a question, if you are dialed in via the telephone, you may ask a voice question by pressing star two on your keypad. That is star two. If you are connected via the web, you may also ask a voice question or send us your question via text. Okay, we have a question from Cemal Demirtaş from Ata Yatırım. Please go ahead, sir. Your line is open now.
Yeah. Thank you for the presentation and congratulations for good results. My question is related to the real estate investment trust part. You just consolidated now into your financial. How was the picture when the sum separate with the real estate side and the automotive side? In the automotive side, could you give some indications or cover on the spare parts side? Did it support the margins in the auto side? That's my question. You acquired the company, I don't remember the exact time. Now, could you remind us the value you put on that with the acquisition? What's the impact on your net income? Because the calculation or estimating the related investment trust is much difficult in terms of earnings, but how does it impact to your bottom line? The last question is about the inflation accounting side.
According to our calculation from your net monetary position, if you didn't apply inflation accounting, your net income would have been TRY 1.7 billion higher instead fair statement. Thank you. At least, possibly you will not say the exact number, but I would say that your number would have been TRY 1.7 billion higher if you didn't apply. Thank you.
Thank you, Cemal Bey, for your question. Starting from the last point, yes, you are right. If inflation accounting would not have been implemented, our total profitability would be TRY 1.7 billion, more than that. We have acquired the real estate company at March 2023, with a value of TRY 5.1 billion. The strategy behind this was not only the expectation to have revenue stream from this company, either in the form of full consolidation or potential dividend income that may arise from them, but which was mainly based on two main points. One is an accounting policy consolidation, let me say, to be able to represent the fair value of all the assets that both real estate company and also Doğuş Otomotiv respectively.
After the acquisition of their shares in March 2023, at the end of year 2023, we have started to present our tangible assets in the form of land and buildings, not in terms of book value, but also in terms of their market value. This increment to the balance sheet in the form of their values and also its P&L reflection, I'm just trying to recall the figures of the previous year, but more than 50% of the purchase price has already been gained. Even this year, in line with the appreciation in real estate market, we are not only the real estate company, but Doğuş Otomotiv assets expertise values are also generating positive values which is around Damla.
Which is around more than TRY 500 million. The appreciation just stemming from this figure. This is number one. The second strategy behind this was, from time to time, of course, these are strategic and material amount of investments, but in line with the expansion policy of our dealer network or the potential additional investments which is to be made in the body of the importer company, namely Doğuş Otomotiv or Doğuş Oto Pazarlama. Doğuş Oto Pazarlama, as you know, is also fully consolidated.
We may take place those additional infrastructural investments in the body of this real estate company. Just to give a reminder that the largest dealer structure, which is in Maslak in Istanbul, is located in the territories of Doğuş Gayrimenkul Yatırım Ortaklığı, and our subsidiary, Doğuş Oto Pazarlama, has rented those services and after-sales workshops from a real estate company. This is also creating a synergy out of itself.
Thank you. Kerem Bey, related to vehicle inspection stations.
Yes.
By 2027, it's got to end. You will make investments in that. When you, I do not know the details, the agreements, but when you leave it, finish it. If somebody gets it, did they get it all the way because you made some investments? Did we get anything when it's completed by 2028? You had some depreciation on everything, on that. You will have any benefit after 2027 when you just leave the stations to the other party when things just are completed. Will we have any one-off gain or are you going to just leave it all the way?
No, we are not, of course, going to just leave it all the way. As you would appreciate, it may be a quite early phase to judge on it because it's only a week that last Monday the tender was finished. Let me try to put it this way, which is a public information that everybody if they just go into the details through the web, they can see. Out of the tender, for the moment in Turkey, there is 216 vehicle inspection stations.
The requirement of the tender was to increase them to a level of 250. I am just leaving it to your appreciation in a way that the new player is going to structure or invest in totally a new 250 working stations, which seems it can be discussed. In that respect, knowing that we have still plenty of time till August 2027. We will see what will happen in time. We cannot say that what we have in our books, we are just leaving it away. No, we will see how strategic decisions will shape our financials.
Thank you. You know, and we see that January was strong, at least stronger than our expectations. February looks also strong, considering the diagnosis of the auto companies so far, as far as I see, I don't know if it's like 80,000, 85,000 units is possible. That's the indication I see from the market. When do you think will be the critical for testing of the resilience? Because so far it looks very resilient, but we have maybe March or April when you make the estimates for the future. Which month do you think is critical? Of course, about the normalization of profitability, are we there yet? Thank you.
Yeah. In terms of profitability, yes, the normalization has already taken place, and there may be a still certain way to go for it. But if you can just compare the financial outputs of the publicly quoted companies, we are quite performing well on that. In May and June, we may speak more precisely on our perception of the performance of this year, I can say.
Okay. Thank you. Thank you, Kerem Bey.
You're welcome.
Okay. Thank you. Thank you very much. Just a quick reminder, star two on your keypad for a voice question if you are connected via the phone, or you can ask a voice or send a text question if you are connected via the web browser. Our next question comes from Hasan Özkan from A1 Capital Portföy. Please go ahead, your line is open now.
Hello, everyone. Can you hear me?
Yes.
Yes, I can hear you.
Thank you for your valuable presentation, first of all. I want to ask you that, have you determined any timetable or plan for the separation of TÜVTÜRK from the consolidated balance sheet?
No.
That is all about it.
As I have said, it is quite an early phase, but we have more than two years, two and a half years that the current operations will continue. In that respect,
2027?
August 2027, yes.
Okay. All right. Thank you.
You are welcome.
Okay. Thank you. Thank you very much. We are seeing no further questions. I will pass the line back to Mr. Kerem Talih for the concluding remarks.
Thank you very much. It is very nice to see that we have the number of participants was one of the highest at all levels, like almost we have almost 50 participants. We are also happy to see the interest of our investors to Doğuş Otomotiv. Thank you very much, in the name of my team and in the name of Doğuş Otomotiv for granting your time to our presentation. Wish you a very nice day. Thank you.
Thank you very much. This concludes today's call. We will be now closing all the lines.