Ladies and gentlemen, thank you for standing by. I am Gayle, your Chorus Call operator. Welcome and thank you for joining the Koç Holding Chorus Call online webcast to present and discuss the first half 2025 financial results. At this time, I would like to turn the conference over to Ms. Cansel Atak, IR Manager at Koç Holding. Ms. Atak, you may now proceed.
Thank you. Welcome and thank you for joining us today for Koç Holding's first half 2025 earnings call. This is Cansel Atak, IR Manager of Koç Holding. I have here with me our CFO, Polat Şen, our IR Coordinator, Helin Avşar, Finance Coordinator, Özge Sözer, and our IR Manager, İsmail Özen, to go over the presentation and answer your questions during the Q&A session. Our presentation on the first half financial results contains the company's reviewed financial information prepared according to Turkish accounting financial reporting standards by application of IAS 29 Inflation Accounting.
I would like to note that our presentation and the Q&A session might contain forward-looking statements and assumptions based on our business environment as we see it today, and they might be subject to change. As a reminder, a replay of this webcast will be available on our website after the call.
Now, I would like to hand over to Polat Şen to start the presentation. At the end of the presentation, we'll have a Q&A session. Polat Şen?
Thank you, Cansel. Welcome, everyone. Let's start with slide three. You will see today's agenda. I would like to start by giving you a brief overview of the macroeconomic dynamics of the period. Global economic activity remained steady in the second quarter, contrary to the expectations. In Türkiye, the policy rate rose and remained elevated. The Turkish lira continued to depreciate gradually against the U.S. dollar, while the Euro/Turkish lira parity rose in parallel with the Euro/Dollar parity. The central bank's measures succeeded in easing the volatility in the domestic financial markets.
Higher interest rates and tight liquidity conditions put pressure on the financial sector. High funding costs and limited demand weighed on industrial production. Meanwhile, domestic demand for autos was strong, and services activities were steady. Inflation continued to decline. Recently, the central bank has begun cutting its policy rates.
Domestic demand is expected to rise, and funding costs will ease as interest rates fall. Within this tough macro backdrop, our diversified portfolio structure, agile execution, and the disciplined risk management have kept us resilient while positioning us to pursue selective growth opportunities. Let's move on to slide five with some key indicators for Koç Holding. On the left, you can see the sectoral breakdown of our portfolio in terms of net asset value at the end of June.
The chart on the right shows the share of international revenues within the combined revenues, which was around 33% in the first half. Our portfolio diversification is not only limited to sectors but also includes international positioning. We are the largest exporting group in Türkiye, and with our exports accounting for around 7% of Turkey's total exports.
Including the FX-linked revenues of Tüpraş, nearly half of our revenue base is hard currency-linked. On slide six, you can see our dividend income and dividend payment in nominal terms. Year to date, our dividend income was solid and amounted to approximately 20.1 billion TRY. The amount does not include potential dividend income that may be received in the remainder of the year. In 2025, we distributed 17.4 billion TRY in dividends, corresponding to 4.5% dividend yield, which is higher than our historical averages, which is the 10-year average is around 2.6%.
As of June 2025, we held a net cash position at the holding level at around $857 million, compared to $911 million at the end of the first quarter.
The net proceeds from dividend contributed to net cash position in Turkish lira terms, while 13% depreciation of TL during this period resulted in a slight decline in dollar terms. On slide seven, you can see that around 69% of our net cash was held in hard currency as of the end of June. At the holding standalone, we remain at a level of liquidity cushion to cushion against the market volatility and to retain flexibility for potential investment opportunities. We currently have no outstanding financial debt at the holding level.
We strictly apply and regularly monitor our prudent risk management policies both at the individual company level and on a combined basis. In terms of liquidity, leverage, and foreign exchange position, we preserved our conservative levels. On a combined basis, our current ratio is around 1.2x , and our financial debt to EBITDA is at 1.6x .
In terms of FX, we remain well within our management rules. With that, I'll hand over to Helin to walk you through the key sectoral developments in the first half of this year.
Thank you, Polat Şen. Let's start with the energy sector on slide nine. The energy segment contribution to Koç Holding's consolidated net income was strong in the first half of the year, mainly supported with improved white product yield and higher capacity utilization, despite the narrower differentials and softer crack margins year on year. In the first five months, the domestic demand for refined products grew nearly by 4%. Demand for gasoline was particularly strong, resulting in a 20% growth year on year. Jet fuel sales increased 9%, while diesel sales growth was around 2% year on year.
In the first half, Tüpraş's domestic sales volume declined by 2%, mainly due to weak diesel demand. With a 14% decline in international sales volume, Tüpraş registered a 5% decline in total sales volume compared to the same period of last year.
Looking at the crack margins, net refining margin of Tüpraş stood at $4.7 per barrel in the first half, on a higher QoQ performance with improved demand. Global inventories remaining below the five-year averages in the second quarter also contributed to the strengthening of product margins. Tüpraş operated at 90% capacity utilization in the first half, following major maintenance activities in 2023 and 2024. Its white product yield reached 82% during this period. On the LPG side, consumption was weak, decreasing 6% year on year in the first five months.
Aygaz's domestic sales volume was down 3%. Including the wholesale as well as the contribution from Bangladesh, total sales volume of Aygaz was up by 3% in the first half. In the first five months, Aygaz's market share for cylinder gas and auto gas were 40.8% and 22.8%, respectively.
Aygaz maintained its leadership position in the cylinder gas segment with a total market share of 25.7%. Let's move to slide 10 and discuss the developments in the auto segment. The auto segment was the largest contributor to our consolidated net income in the first half of the year, and yet, on a year-over-year basis, it also recorded the steepest decline despite strong domestic demand in the second quarter, the ramp-up of new models, and the two-month contribution of Stellantis Türkiye under Tofaş.
In the first half of the year, the total automotive market rebounded from a 7% decline in the first quarter to register a 5% year-over-year increase. This recovery was partially driven by pull-forward demand with anticipated increases in the special consumption tax, intense price competition driven by sales active campaigns, as well as the wealth effect in a high real interest rate environment.
While our market share in the domestic market through the first six months stood at 23%, June figure of 32% truly reflects our sale post-Tofaş-Stellantis Türkiye merger. On the export side, while the European passenger car market decreased by 1%, the commercial vehicle market declined by 13% in the first six months. Meanwhile, our group market share in exports increased around 5 percentage points to 42%.
During this period, Ford Otosan's export volume was 18% higher year on year on the back of refreshed product lineup, while Tofaş registered a 33% decrease in its export volume, mainly due to a decline in the PC exports.
To summarize, despite rising volumes, the decline in profitability in our automotive business was mainly due to a competitive pricing environment, a higher share of export revenues within total revenue mix, and an increase in costs, which was mainly due to a higher proportion of EVs in production, a high inflationary environment, and rising imported vehicle costs with FX movements. TürkTraktör reported a 43% year-over-year decline in revenues, primarily driven by a 42% contraction in tractor sales, reflecting weakness in both domestic and international markets.
The domestic tractor market contracted 27% in the first half, impacted by tight monetary policy measures aimed at controlling inflation, which created a more challenging environment for the sector. Otokar, our leading bus and defense company, recorded 13% year-over-year revenue growth in the first half of the year, and the international revenue share corresponded to 61% within total.
Domestic deliveries of trucks and the newly added pickup model to the product family, and the export deliveries of armed vehicles, contributed significantly to the revenue growth. The increase in armed vehicle deliveries compared to the same period last year significantly contributed to its gross profits. Otokar holds a backlog of EUR 880 million in armed vehicle orders, and the majority of this backlog is the project in Romania. Let's look at the consumer durable segment on slide 11.
Consumer durable segment performance was adversely affected by soft demand driven by a challenging market environment. White goods unit sales in Türkiye contracted by 8% year-over-year in the first half, largely attributable to high interest rates, limitations for monthly installments, and diminishing disposable household income. Export sales also softened, decreasing by 5% over the same period, given the intensified competition and pricing challenges.
Looking at our Arçelik figures, Türkiye revenues decreased by 9% year-on-year. Meanwhile, international revenues constituting 66% of the total increased by 1% during the same period. As to the key metrics, Arçelik's working capital to sales ratio was 20.9%, which was similar to the year-end level. Arçelik's leverage was higher due to changes in working capital and financing activities, with a net debt-to-EBITDA ratio rising to 5.86x compared to 3.8x at year-end. Adjusting for the monetary gains, net debt-to-EBITDA ratio would have been 4.5x .
Arçelik remains confident in its ability to improve its leverage level by the year-end on the back of margin and cash flow improvement expectations in the second half. Lastly, I'd like to briefly touch on the finance segment, mainly Yapı Kredi on slide 12.
For our consolidated financials, we take Yapı Kredi's inflation-adjusted financial statements, where the bottom line is impacted by monetary loss, given the net monetary position of the bank. It's also worth mentioning that Yapı Kredi's contribution to our finance segment results may differ from the bank's IFRS results, mainly due to the purchase price allocation adjustments regarding Koç Holding's additional share purchase transaction back in February 2020. In this presentation, when providing the main KPIs of the bank, I'll refer to its BRSA financials as banks remain exempt from inflation accounting.
In the first half of the year, total performing cash loan growth was around 32%, and total customer deposits growth was 29% on a year-on-year basis. The bank's strategy to focus on small tickets in deposits has continued, and the share of demand deposits in total customer deposits became 47%.
Despite the disruption in the rate cut cycle in the second quarter, swap-adjusted net interest margin widened by 116 basis points over the end of 2024, reaching 1.89%, thanks to agile asset liability management. Net fees and commissions registered a solid 45% growth year-on-year, while operating costs increased by 52% year-on-year. As a result, fee coverage of operating costs ratio was registered at a strong 96%. All in all, Yapı Kredi achieved a net income of TRY 22.7 billion and 22.4% return on tangible equity, whereas return on assets stood at 1.6% in the first six months of the year.
Yapı Kredi's non-performing loan ratio realized at 3.4% on a BRSA bank-only financial basis. Despite continued strong collection performance and comparatively slower increase in non-performing loans versus the sector, Yapı Kredi maintained its prudence in provisioning.
Accordingly, provisions to gross loans ratio realized at 3.7% on BRSA bank-only financial, when net cost of risk materialized at 162 basis points during this period. Yapı Kredi remains comfortable in terms of liquidity. The FX liquidity ratio coverage was 273%, while the total liquidity coverage ratio of the bank was 134% as at the end of June. In terms of capital, Yapı Kredi continued to operate with a 189 basis point buffer on its capital ratios compared to regulatory requirements.
The capital ratios continued to remain comfortably above regulatory levels, and the consolidated CAR and Tier 1 ratio without forbearance were at 13.1% and 10.9%, respectively. I'd like to leave the floor back to Polat Şen for concluding remarks.
Thank you, Helin. On slide 13, I'll walk you through the overall results of the group in the first half of the year, incorporating all the segment trends we just discussed. Please note that all figures in this slide are inflation-adjusted. On a combined basis, Koç Group registered TRY 39.6 billion in profit before tax and TRY 19.8 billion in net income. Koç Holding's consolidated net income amounted to TRY 6.2 billion after non-controlling interest.
Our second quarter, and therefore first half, financials of the last year included a provisional accounting for the recognition of the Whirlpool EMEA and Whirlpool MENA acquisitions of Arçelik in accordance with TFRS 3 business combinations following their closing in April 2024. The actual figure was finalized at the end of the year-end financials.
Same reporting standards require the restatement to our quarter 2, 2024, and first half 2024 financial statements to reflect the actual final figure. The impact of this adjustment is an additional gain of TRY 9.2 billion at the consolidated net income level. We believe excluding this one-off item enables a like-for-like comparison of our underlying performance. Excluding this impact, the consolidated net income growth in the first half of 2025 would have been positive 73% compared to the same period of the previous year. Considering the second quarter only, our income growth in 2025 was tenfold.
In the first half, we continued to record monetary losses in our companies that carry high monetary asset positions, particularly Yapı Kredi.
And yet, due to lower-level inflation and changes in our company's net monetary asset positions, monetary losses significantly improved in favor of monetary gain position compared to the same period of last year. On slide 15, I'd like to briefly talk about some of our unlisted companies. Otokoç clearly makes the largest contribution to our net asset value among our unlisted assets. It is Turkey's leading automotive retailing and car leasing company and number one in second-hand sales among corporate brands, with operations in nine countries abroad.
The company is Avis Budget Group's biggest licensee and its most important investment partner abroad. Opet is a significant player in the fuel distribution sector in Turkey with a total of 1,886 stations. As of the end of June, electric vehicle charging units were available at 12% of Opet stations.
Opet has 18.7% market share in white products, thanks to its well-established dealer network. In line with the Group's strategic transformation plan, Entek aims to expand in the field of renewable energy not only in Turkey but also abroad. Currently, 77% of Entek's 492 MW total installed capacity is zero-carbon electricity. As the first milestone for international growth strategy, Entek successfully concluded the acquisition of Nicolești Solar Power Plant project in Romania in January this year.
This project has a capacity of 214 MW and is ready to build status, and the construction work is scheduled to start late this year. Another unlisted company is Koçfinans. Engaged in the finance sector, Koçfinans is a leading company in its sector, and total assets are worth TRY 33 billion.
The company's loan portfolio increased by 4% to almost TRY 29 billion as compared to 2024 year-end, and its net profit for this period grew by 32% to TRY 0.6 billion. I'd like to say a few words on our marina operations. We recently announced the signing of an SPA to acquire Göcek Village Port Marina and Göcek Exclusive Port Marina through Setur Marinas for a total consideration of $160 million, subject to closing adjustments, of course. The Göcek Marinas, located in one of Turkey's most prestigious yachting destinations, benefit from long-term usage rights.
These premium assets complement Setur Marinas's existing marina portfolio, which is on the mainly western coast of Turkey from north to south. So we would like to solidify our position in Turkey's maritime tourism sector. On Slide 17, you will see the evolution of net asset value discounts.
As Koç Holding, we benefit from our market proxy status, and we observed our net asset value discount narrowing down when supported by sentiment. However, our weekly average NAV discount in the first half of the year was approximately around 32% compared to the long-term average discount of 13%. We believe that this discount is unwarranted and does not reflect the strength of our underlying fundamentals.
In summary, in the first half of this year, with a disciplined focus on balance sheet strength and liquidity, we continued to generate value through a diversified and balanced portfolio designed to withstand market volatility. Thank you for listening, and we can open the floor for the questions. Thank you.
Ladies and gentlemen, there are no questions at this time. I will now turn the conference over to management for any closing comments. Thank you.
Thank you very much. I understand that there are no questions. I assume that we were clear enough, but if you have any questions after going through the numbers, our IR team will be happy to help you. Thank you very much.