Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the Ford Otosan A.Ş. conference call and live webcast to present and discuss the first quarter 2026 earnings results. At this time, I would like to turn the conference over to Mrs. Gül Ertuğ Gerişkovan, CFO, Mrs. Bahar Efeoğlu Ağar, Head of IR, and Mr. Ünal Arslan, Corporate Finance Leader. Mrs. Ertuğ Gerişkovan, you may now proceed.
Thank you. Good afternoon, everyone, and thank you for joining us for our first quarter 2026 results call. Today, I will start with a brief overview of the quarter, highlights essentially from the domestic and export performance. My team will provide further details in their subsequent markets and financial section. We will touch on a key strategic development for our company since we last met, and finally, 2026 guidance before we open it up for the questions. Here now on the first page, I'd like to say that despite a very challenging macro environment and intensified competition, Ford Otosan maintained resilient export volumes and sustained leadership in commercial vehicles in Turkey while profitability was significantly pressured by vehicle mix, including higher EV penetration in exports. That also was a factor for the export part of the business. Sticky inflation and costs associated with that inflation.
Later in the end of February, early March, we had an emerging Middle East conflict, and when all of those things came on top of each other, we witnessed a widening gap between euro/lira appreciation and inflation. Unfortunately, these were challenging for us. In terms of broad physicals, the first quarter was again a period where we were able to fulfill our key product program launches and production-related objectives. Due to the more challenging operating environment, weaker domestic demand, it led to margin compression in the quarter, unfortunately. Overall, I would like to say exports remained resilient, broadly flat year-on-year, supported by the new product ramp-up on the partner new derivatives and Puma Gen-E, with strong positioning within Ford of Europe. Domestic performance was weaker, with 18% decline in unit sales, reflecting softer demand and a very intensified competition.
From a market positioning perspective, we maintained our commercial vehicle leadership while the ranking in the overall market was we came in number five, highlighting the divergence between the passenger car and CV dynamics in Turkey. Given that Ford Focus, our vehicle, our brand nameplate, which used to be a volume seller for us, is going away as earlier announced in Ford's passenger vehicle portfolio. Our preference of profitability over share, we believe it is understandable that we didn't choose to engage in fierce price competition to buy market share. Looking into our balance sheet, our balance sheet remains strong and disciplined. The cash generation, free cash flow was very successful. Later, Ünal will talk more about that one. The net debt over EBITDA is at 1.5x, broadly stable versus year-end.
The EV penetration in our overall production increased to 19.1%, which is strategically a positive, but also it has a near-term margin implication as expected and as we were talking about this with you in our earlier gatherings. Overall, our capacity utilization improved to 73%, Romania weighing in more in this aspect. Overall, we are seeing a mix and macro-driven margin compression. Even though they are mostly external, we are taking tactical and strategic measures against them, which I will mention later in the presentation. For now, let me leave the word to Bahar so that she can give further details on the market developments. Thank you. Bahar, stage is yours.
Thank you, Gül Hanım. Welcome all. Thank you for joining us today. Let me proceed with the key highlights in the domestic market. After hitting an all-time high level of 1.4 million units in 2025, the market contracted by 4% in the first quarter of this year. It was in fact up 2% in the first two months, but demand softened in March as macro expectations and the geopolitical outlook worsened. Also this year, Ramadan falling in February and March had an impact on demand. It is important to mention that availability and competition in the market increased a lot during this period, which made pricing tougher. If we look at the segment breakdown, volumes declined across segments. However, the light commercial vehicle segment outperformed with a 13% year-over-year increase, and its share in total market exceeded 11%, as you can also see this shift on this slide.
This was supported by improved vehicle availability and demand shift from passenger to LCV segment. Because passenger car prices moved above TRY 2 million, and this makes harder to access financing. Market environment, our retail sales declined by 20% and reached to almost 19,000 units level. As a result, our market share was 6.9%, and we ranked number five. This result mainly reflected weaker passenger car sales after discontinuation of our Ford Focus model, as also Gül Hanım mentioned a bit. However, excluding Ford Focus volumes, we see a slight decrease of 3% versus 39%. In the MCV segment, new model introductions, intensified competition, and delays, especially delays in public procurements amid weaker macroeconomic expectations, weighed on both market and our volumes. However, the availability of lower tax 4X2 pickup options supported the demand in this segment.
As for Ford Otosan, the absence of the 4X2 variant in our Ford Ranger lineup has constrained our ability to capture this demand. Despite these factors, we continue to lead the total commercial vehicle segment with a 24.4% market share. Now turning to the export performance. In this period, the European Union automotive market showed a mild pickup, with both passenger and commercial vehicle markets recording year-over-year growth, although dynamics varied by country and segment. Passenger car volumes increased by 4% year-over-year, supported by a later quarter acceleration and revised tax incentives across key European markets. However, on the commercial vehicle side, growth of almost 3% was largely driven by a rebound from a weak base, with the heavy commercial vehicle segment expanding by 10%, following a sharp contraction over the past two years.
In contrast, the light segment, our core focus area, saw only a limited increase of around 1%, which was mainly driven by limited fleet renewals and deterioration in expectations of small business owners and e-commerce customers. As a reminder, van market was down by 9% year-over-year in full year 2025. Against this backdrop and fragmented market conditions, Ford maintained its undisputed leadership in the European commercial vehicle market with a 16.2% market share. As for Ford Otosan, we continue to be the main contributor to this performance by producing around 80% of Ford's commercial vehicle sales in Europe. We are also proud to produce 16% of Ford's global vehicle sales during this period. As I mentioned in the previous slide, we see mixed performance across our main export markets, especially in the van segment. The registrations in the U.K., Germany, and Italy declined by 4%, 9%, and 2% respectively.
On this slide, the pie chart shows that these three markets together make up around half of our export units, which constrained our performance. That's all from my side. I will hand it over to Gül Hanım to share recent developments with you. Gül Hanım, you're on mute.
Sorry, I was on mute speaking to myself, I hope you can hear me right now. Getting back to a little bit of strategy. We talked about the challenging environment, and like in March, we announced our intentions for the acquisition of 100% of Koçfinans, subject to approvals through BDDK, the banking authority, and the competition boards. We see this development as a very important strategic asset and a value creation step, because looking into the domestic market, in fact, our competitor set operating in different segments in domestic market had such an arm, such a financing arm that we didn't have. Walking into this structural value creation step, we would like to enable deeper control over the customer value chain. Not just the end customer, but also the dealer body we are serving them through.
Stronger positioning in financing-driven demands, expansion into used vehicle financing, and several other tailored products, and a more integrated ecosystem model. We see this as a very strategic asset, and you should interpret this as a vertical integration that will enhance our existing auto business synergies regarding the margin volume, customer lifetime value leverage, as well as creating inorganic growth and creating additional financial benefit to our company. With that, I will leave it here. Maybe just a word of caution, so that you can model, you can interpret it correctly. The acquisition-related financing doesn't show up in our capital spending, and we are careful on this one. I will just leave it here because although the SPA, the share purchase agreement, is in place, we are very careful with the process. Until the necessary authorization is in place, we will be leaving the information sharing at this level.
We are really looking into this strategic action as a very important enabler while we are operating in this challenging environment. Let me leave the word to Ünal so that we look in further detail for the financials.
Thank Gül Hanım. good afternoon, everyone. This is Ünal Arslan, Corporate Finance Leader. Thank you for joining us today. I'll take you through our first quarter 2026 financial results, which we released yesterday, as all you know, and provide some context on the key drivers and near-term considerations. Starting with the revenue, we delivered TRY 192 billion, a 9% decline versus the index prior year base. Exports accounted for 84% of our revenue, and volumes were broadly stable quarter-on-quarter. The roughly 5% decline in export revenue in TRY terms was driven primarily by the gap between domestic inflation and the euro/lira move, Gül Hanım already mentioned in the beginning. Year-on-year, the lira depreciated by 25% against the euro versus 31% consumer price index.
This differential is the central factor behind the pressure on our export revenue. I'll talk about this on kind of a lot today. Domestic revenue was down by 22%. About 18% of that decrease was volume related, and the remainder reflects tighter pricing headroom versus inflation due to lower exchange rate pass-through and increased competitive intensity and unfavorable mix unfortunately. Looking at the gross profit, our gross profit was TRY 13.3 billion, down by 27% year-on-year. As highlighted on the slide, the key driver was the relatively limited euro appreciation versus the lira during the quarter this time, which is only 1%, against the 10% inflation in the same period. For context, euro appreciation in the first quarter of last year was 11%, again along with a 10% inflation.
This divergence between FX and inflation continued to weigh on competitiveness in the domestic market, increasing the relative attractiveness of imports and limiting pricing flexibility. Our operating profit declined 51% to TRY 4.9 billion, reflecting the more pronounced impact of the exchange environment. Despite an 8% reduction in operating expenses, our net FX gain from operations, which is primarily linked to the export business, decreased by almost 90%, and that was a meaningful headwind in the quarter one of this year. Our adjusted EBITDA was TRY 11.7 billion. That's also down by 28% versus quarter one of 2025. The decline mirrors the movement in gross profit and is less pronounced than the reduction in operating profit, mainly due to higher depreciation and amortization in 2026. At the bottom line, PBT and PAT declined by 34% and 35% respectively.
The impact was more contained than at operating profit, supported by lower net interest expense and a higher monetary gain versus the third quarter of 2025. IFRS tax expense totaled TRY 2.5 billion, approximately TRY 1 billion lower year-on-year. The deferred tax charge primarily reflects, as I tried to explain in our previous webcast as well, widening temporary differences between local statutory accounts and IFRS, especially following the removal of inflation adjustment from local books. If we look at the margins on the next page, consistent with the profitability trends I just discussed, our margins were down by approximately 1.7 percentage points versus the prior year quarter. The primary drivers were the unfavorable FX inflation dynamics and the weaker profitability in the domestic market.
Also on a per vehicle basis, EBITDA and PBT in euro terms declined in line with the overall profitability performance I tried to explain. On the next page, in fact, we have covered the reconciliation to adjusted EBITDA in our prior webcast, so I will keep this section very brief. The main reconciling items continue to be the embedded lease impact and other operating income and expenses. Next slide summarizes the year-on-year EBITDA bridge. Our EBITDA decreased by, as I mentioned in the first slide, TRY 4.6 billion, and we delivered operating expense savings through the actions we put in place. However, the two dominant headwinds that I mentioned were the FX environment and the contraction in the domestic profitability. If we move to next page, in fact, this slide brings together the macroeconomic variables that have been most influential on our results.
From quarter one of 2025, as we can see here to this quarter, Consumer Price Index increased by 31%, while the euro appreciated by 25% against the Turkish lira. For like-for-like comparison under inflation accounting, we indexed our financials, including revenue and profit of course, by the 31% CPI. Given that more than 80% of our revenue is generated from exports and is effectively euro linked, the FX inflation gap can translate into an underlying 5%-6% pressure on Turkish lira outcomes, all else equal. Within the quarter, the divergence was even more pronounced. The euro appreciated by only 1%, while CPI rose by 10%. CPI was also 10% in the same quarter last year, but the euro appreciated by 11%, a materially more supportive level. Over the long term, though, we would typically expect currency depreciation to broadly track inflation. However, Q1 was meaningfully below that relationship.
As a result, the FX inflation mix remains a critical determinant of export profitability, and we continue to monitor developments closely. Following quarter, the euro appreciated by more than 3% in a single month and by more than 4% to date. That seems favorable to us, but we will look at how sustainable that movement is. Recent geopolitical developments are adding complexity to the outlook for inflation and interest rates. That said, we have been operating in a challenging macro environment for some time, not only this year. We believe our performance and financial discipline demonstrate that we are managing the conditions effectively with disciplined execution, especially tight cost control, active working capital management, and a clear focus on liquidity while staying agile as global and local conditions evolve. Switching to the next slide.
In fact, we have already discussed volumes, Bahar already mentioned. This slide summarizes the key movements. Domestic sales were down 18%, primarily reflecting the withdrawal of Ford Focus from our passenger car portfolio. Export volumes were flat, supported by the strong performance of Puma. Overall, exports represented 87% of total volume, up from 85% in quarter one of last year. In the next slide, we have covered the key income statement drivers. I'll now turn to the balance sheet and cash flow, where our financial discipline is most visible. In this slide, in the balance sheet slide, we see that we maintained a resilient balance sheet and strong liquidity. Financial debt is lower year-on-year, even after a meaningful dividend payment in the first quarter this time. For context, last year, the first dividend we paid was in the second quarter and at a lower level.
The next page is new for this webcast and reflects our commitment to transparency with additional detail on performance drivers. Leverage remains stable at 1.55x net debt to adjusted EBITDA. Despite the pressure on profitability, as I mentioned, the adverse macro and geopolitical backdrop and the relatively high dividend outflow, we kept leverage at a prudent level. Working capital discipline is an area where we have made tangible progress. We are sustaining that approach, as we can see in first quarter financials. Inventories are somewhat elevated, partly due to seasonality and certain one-off effects we are managing closely. Even so, working capital requirement as a percentage of sales remains around 5.5%. On cash flow, on the next page, we see that our operating cash generation was lower year-on-year. We completed the dividend payment.
Nonetheless, we ended the quarter with a solid cash position and a healthy net debt profile, as I mentioned. Looking at the financial indicators, our return on equity and return on invested capital are modestly lower, reflecting the profitability dynamics we discussed. Importantly, our working capital management remains disciplined. We delivered a further one-day improvement in the cash conversion cycle, as you can see here. We also continue to manage our net FX position tightly in line with our targeted risk appetite. With that, I will hand the call back to Mrs. Gül Ertuğ to walk you through our 2026 guidance. Thank you for your time. Gül, you're on mute.
Gül Ertuğ.
Sorry, second time I was on mute, so I hope you can hear me this time. Ünal, thanks very much for the comprehensive analysis. Like you explained, especially the updated macro assumptions, particularly the inflation dynamics and the FX behavior, and later towards the end of the quarter, what we saw in the oil price impacts, we looked into our guidance and we wanted to touch on a single area to revise our outlook. Currently, even if the Middle East conflict is continuing, currently in the order banks, we do not see a very pronounced change yet. We are looking into our analysis and sensitivity analysis. Due to mostly the euro behavior, FX behavior, and the cost behavior, in fact, we have now updated our revenue growth to be flat versus the previous high single-digit guidance.
Having said this though, because of the discipline we continue to deploy and the projections we foresee for the rest of the year, the EBITDA margin guidance, it still remains at 7%-8%, indicating gradual normalization throughout the year. For the rest of the line item elements, the retail sales in Türkiye, the export wholesales, the export production, and overall our investment levels are pretty much intact. As I explained just a few minutes ago, that we will be having the acquisition of the Koçfinans, but the action, the payment regarding that one is not appearing as a capital investment. I believe that concludes our overall view for the year. Having said this, I think now it is a good time to get into the question and answer session. Thank you very much.
The first question is from the line of Hanzade Kılıçkıran with JP Morgan. Please go ahead.
Hi, Gül Hanım, Ünal Bey, thank you for the presentation. I have two questions related to your margin performance. You have kept your margin guidance unchanged despite Q1 is tracking below your guidance, you seem to be more concerned about the General outlook in the sector. What will be the main driver of the expansion in the remains of the year versus Q1 so that you can meet your guidance? Second, I would like to gather your opinion on aluminum challenges, where European peers have started to feel the impact. Where do you secure your aluminum? Do you expect any disruption in supply? Could this lead to lower EV production, because I think EV cars have higher aluminum content compared to ICE. Thank you.
Hi, Hanzade Hanım. Thanks very much for your two questions. Let me start with the first one. You were questioning if the current Q1 level of margin is like adjusted EBITDA is 6.9%, how do you make up for it, and later in the year, how do you expect it to improve? For that one, in fact, in the presentation, I mentioned the strategic part of our combating strategies, but there is also tactical part of our combating strategies, especially with regards to the cost management. The financial management, balance sheet management, the income statement management we try to accomplish prudently. That also is together with Ford Motor Company's involvement also. We are working on a full-blown and very comprehensive cost attack study, affecting, in fact, you could say all parts of the income statement.
We have important high confidence-weighted roadmap that we expect to materialize during the rest of the year. In general, as a cyclical comment, we can say that in the auto business, the fourth quarter is from a volumetric perspective, it's the strongest quarter, and usually the first quarter starts with a slow action. As Bahar explained also this year, there was the Ramadan effect, several other one-time actions falling into this quarter. We believe we have plans in place to make it much better normalized over the course of the year. We do not just base this from the macro, I should highlight that one, because so far what we have seen, especially from the economics management, we are seeing in the first three months, unfortunately, the inflation realization was much larger than what we were forecasting while we were doing the budgets.
We were expecting a little bit more normalization between the gap of euro appreciation and inflation movements. This didn't realize, but we are hearing the plans from Mehmet Şimşek, the explanations from Central Bank, and we understand that with a moderate scenario of Middle East impact everybody hoping for, we think the Central Bank reserves, FX reserves will be enough to maintain the current operation that they are pursuing. Which means for an exporter, this unfavorable area will continue a little bit more. As the prudent company, we are putting in more cost reduction measures. Some of them come in place as resourcing actions, which were initiated in the earlier year, and some of them come in as further automation where it makes more sense. We are approaching this in a holistic manner.
Later in the year, there will be from our Türkiye-related business areas, the national sales business area for Türkiye and for trucks operations, they have their plans to have a better mix management. Currently, of course, I cannot give a certain date for the closing of the Koçfinans acquisition, but at least internally, we are working our plans towards a 1st of July closing. For the second half, if that materializes, if we can make it happen, also the synergies, the synergy effect, increased synergy effect coming from Koçfinans will support us, boost us. With the combined effect of all of these actions, we target, we think we will be keeping our EBITDA margin at its original intended target levels. I hope this explains your first question.
Thank you.
Your second question was about aluminum, right?
Yes.
In fact, I believe this aluminum issue was a little bit more heightened for the North America case. There were two important suppliers where they suffered from a significant fire issue. Thanks to our supply chain, thanks to our structure, we weren't affected by this. Through our strong supply chain management, also in conjunction with Ford, we are keeping a very careful eye on our supply base. Currently, what is being signaled to us is there is no direct commodity-related problem, no aluminum, no nothing else. You might recall on an earlier call, we were talking about Nexperia chip crisis, but it is taken under control.
From a material availability perspective, we do not see an issue. However, because of this Hormuz conflict, the oil price is going up and several other price-related actions coming into the picture, we are more cautious around the cost side of the supply chain. As we stand today in our supply chain forums and in our risk forums, there is not an identified aluminum or steel-related risk, which is in our consideration right now.
Gül, you don't supply or your suppliers doesn't supply aluminum from the MENA region, right?
As far as I know, no. I wouldn't know the entire region, the supplier location, supplier by supplier. As a holistic plan, and we are very careful on the risk analysis, especially after this Middle East conflict came up, we do not have a commodity-related risk which considers us currently. In fact, that is another reason why you see that the volumetric guidance we provided in our guidance is just staying where it is.
Okay. Aluminum prices have been already inflated significantly with the reduction of over 2 million supply. I think BMW has already seen some issue in Europe. That's the reason I really wonder if this is going to have a general impact in production for the overall auto sector, because I think that's a key element in production, right? You sound confident.
I can give you some overall commodity basket-related information, because in the auto business, many of those things are like you explained, they are very important. The aluminum, the helium that goes into the production of the chips, there are certain commodities that are now under radar, very carefully tracked. There are also some other commodities which may be unintuitively in this period, which came in with better price levels. When you manage it as a combined basket, we had some headwinds on some, but they were partially offset with some others. That's why I'm saying from a material, like commodity material availability perspective, currently we don't see an issue.
Overall, the cost of it, the overall world-related, the Middle East-related crisis, of course, it's going to affect everybody. The cost we are careful of. From availability and from production continuity perspective, we do not have a big red flag to call out.
All right. That's very clear. Thank you very much, Gül.
You're welcome.
The next question is from the line of Cemal Demirtaş with Ata Invest. Please go ahead.
Thank you for the presentation. My question is related to the current legislation in the parliament regarding the cuts in corporate taxes. We know that you have some investment incentives, could you make some comment on that issue from your perspective? When I look at it from the historical perspective, Gül, your strength is in the commercial side, and maybe strategically you are away from the passenger car side. Is it part of your strategy to be smaller and smaller in the passenger car side, or is it related to some other factors? I just want to understand that from maybe longer-term perspective. We know that your direction on that side, but at least you had a bigger, higher market share in the past.
Now you're importing. Always it was the case. Should we expect this to continue for the future to stay not very big expectation from the passenger car side? Thank you very much.
Okay. Thanks very much. You have two questions. One of them, the first one is regarding the latest legislation that has been issued. To be perfectly honest with you, in fact, we are reading it, trying to make sense out of it and understand how it will affect us fully. I believe currently, I will give the word to Ünal if he wants to say something else. I would say currently we are in the phase to understand what it will mean to us. It might have an implication, but so far, since it is not very solidly on the table, ready to be declared, I would prefer not to answer the question at this point in time.
It is out there, and we are looking into it with our own tax teams, also getting some support from Koç Holding, also our audit and consultancy companies. Out of that one, as we understand what the impact will be, of course, we will be calling that one out. Ünal, would you like to say anything else for this one?
Very briefly. You explained very well. Cemal, what I can say is you already mentioned that we have incentives, and our incentives vary, of course, but mostly the incentives that we already have on hand are mostly related to the corporate tax reduction. Our Effective tax rate is very, very low in the local books. It's even close to 1%. You can see it from published tax financials as well. What we can say is the current legislation change will not have a significant impact on our corporate tax payment. What we are trying to assess is, as Gül Hanım mentioned, this might have some impact on the deferred tax asset calculation. For IFRS books only, of course, which is a non-cash adjustment.
We are trying to assess that one, for now it's not clear, since the legislation has not been passed yet, and the details are not there.
Thank you, Ünal. Thanks very much. For the second part of the question, it was about our vehicle mix, the passenger vehicle versus commercial vehicle. You are right, Cemal Bey. Our key strength and the undisputed leadership is in the commercial vehicle area. In Türkiye, in the local market where our distributor rights exist and where we operate in an entrepreneurial manner, especially for the dealer body having traffic into their facilities, especially in a market where the majority of the market consists of passenger vehicles, this is also important. We always try to strike a balance between, yes, we want to exist there, we want to support our overall volumes, we want to support the dealer body and also the spare parts and services revenue. As the connectivity of the vehicle and the value-added services increase, more and more recurring revenues coming out of that.
We want to exist in that segment. While doing so, we also want to remain profitable. That's why while there was very intensified competition in this period, we didn't want to engage it any further because that would hurt our margins. Looking into Ford Motor Company's product portfolio, because you know our vehicles and services, everything is Ford-branded. Looking into the passenger vehicle portfolio of Ford in the cycle plan, with their earlier announcements, Ford announced a partnership with Renault which is going to come into the market, which is going to introduce two new passenger vehicles, mostly EV, these are expected to be EV, electric vehicles, into the market. As we understand, this relationship, this partnership is in fact targeting to have affordability and competitiveness at the same time.
Once they do this, once this plan comes into fruition, in Turkey market, we will also have the chance to introduce these vehicles. What we are trying to do is our key strength and key power resides in commercial vehicles, but we also see within the market there is significant passenger vehicles. To the extent possible, as our vehicle product portfolio supports, of course, we would like to benefit from that. But if it doesn't, then overall, in striking the balance into the overall portfolio, we would favor commercial vehicles, and especially in the Ford Pro business, the upfitting, bodybuilder services, value-added services coming together with it to support the overall business. I hope this sheds some light to your thinking. I hope I was able to answer your question.
Thank you. Thank you very much, Gül Hanım. The last question. I know that giving a guidance on EBITDA has been always difficult, but nowadays it's unbelievably difficult. I totally understand you. In that sense, when we look at the quarterly movements, for instance, in first quarter, we had 10% QoQ increase inflation, and your monetary gain increases. In reality, it has some impact on your margins. It's getting from monetary gain side, but you are giving up from the margins, in terms of TFRS or inflation accounting standards.
I would like to ask if you give any sense that when we compare with historical values, the numbers, where do we stand? Does the inflation accounting have some additional pressure on the margins in the quarterly sense? I don't know if I'm clear. In one sentence, one question, what was the effect of inflation accounting on your margins? If you are making some, the guy giving some guidance, for each quarter, you are assuming some inflation. Now maybe it's over your numbers. If it was realized as you expected, what could have been the margin, at least in terms of basis points? Any color on that? Thank you.
I think I understood your question, but I'm not sure if we have a readily available answer to that. If I understood you correctly, you are asking like this. When you start the year, you had a month-by-month inflation assumption for the 12 months. You had also.
Yes
a euro walk, euro lira walk, also. Three months, now in fact, first four months, I would say, because April inflation also got announced, it's 4.18%. If those values were just the same when we were targeting, when we were putting the target for the year, if they were the same, what would the results look like? I think you are asking this.
Yes, definitely this. I know it's difficult.
At least I'm happy I understood the question. Yes, thank you. I don't think we have the ready answers to that. Any appropriation, if you can make a comment, please do so.
Sure. Cemal Bey, in fact, that's what we consider as well, of course, during our analysis. You are asking kind of a scenario analysis. Definitely, as you mentioned, the inflation accounting impact on monetary gain, of course, from our assets, and not only assets, from our inventories. The cost of goods sold is being inflated because of the indexation. That's what you mean. Definitely that has a big impact on our margins, starting from gross profit margin, EBITDA margin, operating margin. It's offset in the PBT level. It's hard to assess or give a basis point equivalent of the impact versus our base scenario, because this is not the only change in the first quarter of the year, as we all know. There are lots of other changes that we witnessed, we encountered. It's hard to look at this one ceteris paribus.
I would say that just to give a flavor, I think if all as constant and just the inflation expectations was in line, I think our margins would be maybe one percentage points higher. I think the impact would be around there. That's what I can say right now, a very high level flavor. Okay. Thank you. Helpful. The only thing I would also add here, maybe you already know that, our EBITDA margin does not include the monetary gain impact there. Coming from even the cost of goods sold amount. I know that some companies are adding this back in the EBITDA calculation as well. We don't. Our EBITDA is under pressure with that calculation. The monetary gain increased, EBITDA decreased due to higher inflation.
Just a note, previously, before inflation accounting, EBITDA was a metric to kind of assess the cash generation level along with the cash flow. After inflation accounting, this is not the case. That monetary gain is there, but the cost of goods sold, the inflated cost of goods sold, the inflation accounting impact is a non-cash impact. We should note that as well.
Yes. Thank you. Thank you, Ünal Bey.
We have a follow-up question from Hanzade Kılıçkıran with JP Morgan. Please go ahead.
Ünal Bey, maybe it could be easy for us to see the impact. Is it possible to share the pre-inflation EBITDA margin and how it was progress on a year-on-year basis?
Unfortunately, no, Hanzade. That's not pre-inflation you are asking without inflation.
No, without, yeah.
Unfortunately, that's not possible. As you know, this is regulatory and we don't even calculate any without inflation financials, and it's not by regulation right to calculate and share anything about that one. Sorry for that.
All right. Okay. Thank you.
Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mrs. Ertuğ Gerişkovan for any closing comments. Thank you.
Thank you very much. Thanks very much for your attention. I believe now this concludes our call. Until next time, please take good care of yourselves and hopefully next time when we come together, we will be in pure peace mode. Take care. Bye-bye.