Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome and thank you for joining the Koç Holding conference call and live webcast to present and discuss the third quarter 2023 financial results. At this time, I would like to turn the conference over to Mrs. Cansevil Akçağlıyan, IR Manager at Koç Holding. Mrs. Akçağlıyan, you may now proceed.
Welcome and thank you for joining us today. This is Cansevil, IR Manager of Koç Holding. I have here with me our CFO, Polat Şen, our IR Coordinator, Nursel, and Finance Coordinator, Özge, and our IR Manager, İsmail, to go over the presentation and answer your questions during the Q&A session. I'd 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. Please remember, you can access the replay of the webcast on our website after the call. Now, I would like to hand over to Polat Bey to start the presentation. At the end of the presentation, we will have a Q&A session. Polat Bey.
Thank you, Cansevil. Welcome, everyone. Good evening. I'm delighted to share with you that this year, with both great enthusiasm and honor, we celebrate the centennial of our republic. As Koç Group, having witnessed the century of the republic, we will continue to be at the forefront, and we consider it our greatest duty to carry our republic ever forward. I would like to move on to slide two. You will see today's agenda. Let's start with slide four, with some key indicators for Koç Holding. I'm proud to share that we had a solid first nine months despite all the challenges that we have been facing. Since our last webcast in early August, we observed escalated geopolitical risks, and these inevitably remain as significant challenges for the global economy. Many countries continue to deal with high inflation as it is above historical levels, and tight monetary policies are sustained.
Global markets face a slowdown in growth, with the euro area remaining the weak link. Still, this soft landing scenario provides some relief, and there is less concern for the global recession scenario. In Turkey, despite the devastating earthquakes in early February, real economic activity remained relatively resilient, primarily due to strong domestic demand. Despite a slight quarterly backdrop, we observe ongoing strength in our economic activity in the third quarter as well. On the other hand, the softness in European markets is reflected in Turkey's exports, as you can see. As Koç Holding, we have a proven track record of successfully managing our volatility. Our resilience, strong financials, and intact fundamentals are the reflection of our diversified portfolio, agile management, and prudent risk policies. On the left, you can see the sectoral breakdown of our diversified business portfolio as of the end of September.
Here, the major change since June is our lower effective ownership in Yapı Kredi without loss of control, following the 6.81% share sale to foreign institutional shareholders via accelerated book building. This explains the lower share in the financial segment. On the right side, you can see the revenue breakdown. Our portfolio diversification is not limited with sectors but also includes international positioning. We are the largest exporting group in Turkey, with our exports accounting for around 7% of Turkey's total exports. In terms of the composition of our revenues on a combined basis, in the first nine months of 2023, 28% is coming from international sales. If we also include Tüpraş, which is an effective commodity business, approximately 50% of our revenues can be considered in hard currency.
Moving on to slide five, you can see the evolution of our net cash in the first nine months of this year. At the end of last year, we had $74 million net cash position at the holding level. In the first nine months of this year, our dividend income was solid and amounted to approximately TRY 16 billion, excluding dividends after the end of September. Considering our dividend income and other items such as management fees, operating and financial expenses, and currency conversion impact, our net cash position at the end of September 2023 reached $632 million, including Yapı Kredi AT1 investment.
Please note that we will receive dividends in the fourth quarter from Ford Otosan to be received at the end of this month and EYAŞ, which has already been received in October, totaling TRY 8.2 billion, which is Koç Holding's share, while there is a cash outflow related to the capital contribution for Marmaris Altın Yunus. Accordingly, our net cash position will increase by TRY 7 billion, excluding other items for the remainder of the year, such as operating expenses. On the slide six, you can see the main pillars of our solid balance sheet. As you all know, prudent management has always been a key focus area. As we have discussed, our net cash position as of end of September stood at $632 million, including Yapı Kredi investment.
Around 94% of our $1.2 billion of gross cash, which is $1.4 billion with Yapı Kredi, is in hard currency. At the holding standalone level, we like to keep some liquidity to serve as a war chest against volatility as well as a firepower in case of investment opportunities. In terms of our funding at Koç Holding level, the only debt we have is the $750 million euro bond outstanding as of end of June. We strictly apply and regularly monitor our prudent risk management policies at each underlying company on a combined basis. In terms of liquidity, leverage, and foreign cash position, we preserved and even improved our conservative levels. On a combined basis, our current ratio is 1.3 times, and our net financial debt to EBITDA is at 0.2 times, which is excluding the finance segment. In terms of effects, we remain well within our risk management rules.
As the largest holding company in Turkey and being active in diversified sectors, we manage our balance sheet to ensure that we remain resilient against the market volatility. So now, I'd like to hand over to Nursel to go through the developments of this quarter.
Thank you, Polat. Welcome, everyone. Let's move on to sectoral developments in the first nine months of the year. We'll start with energy and Tüpraş on slide eight. The energy segment's contribution to Koç Holding's net income is solid in the first nine months, mainly thanks to strong domestic demand, above historic average credit margins, wide differentials, and also easing energy costs despite low capacity utilization in the first half of the year. Looking at the sector data that is available for the first seven months of this year, we observe that the domestic demand for refined products was strong. Jet fuel sales surged 18%, gasoline sales increased 30%, and diesel sales grew 9% year on year. In the first nine months, Tüpraş's domestic sales volume was up 3%, while international sales were down 18%, resulting in a 2% year-on-year lower total sales volume.
Looking at the refining margins, we see Med complex margin reaching $28.7 per barrel in the first nine months of this year. Tüpraş's overall net refining margin amounted to $13.3 per barrel, which is lower than the same period of last year, mainly due to a higher base of cracks last year and weaker utilization in the first half, wide differentials against narrowing on a quarter-on-quarter basis, and also lower energy costs. The capacity utilization was around 84% in the first nine months, mainly due to maintenances in the first half. On the LPG side, again, looking at the sector data available for the first seven months of the year, we observed that consumption was strong, increasing 24%. Aygaz domestic retail sales volume was up 19%, and including wholesale as well as contribution from Bangladesh, total sales volume growth was 29% year-on-year in the first nine months.
Let's move to slide nine and discuss the developments in the auto segment. Our auto companies sustained their stellar performance in the first nine months of the year. The segment contribution to our consolidated net income was 31%. The main drivers of this performance were strong domestic demand, gradual recovery in export markets, solid export contracts, OPEX control, and also pricing discipline. In the first nine months, we witnessed a 63% surge in domestic auto sales. Our market share in the domestic market decreased around 2 percentage points to 26% compared to the same period of the previous year. On the export side, the European passenger car market registered a 17% growth, and our group market share in the exports decreased 8 percentage points to 37%.
In the first nine months, Ford Otosan's export sales volume was 35% higher, primarily supported by the volumes from Craiova Plant, while Tüpraş witnessed a 51% decrease in its export volumes due to the expiry of the Doblo contract at 2022 year-end. Strong domestic sales, pricing discipline, as well as currency payables supported total revenues of both Ford Otosan and Tüpraş. Export revenue growth was strong for Ford Otosan, including contribution from Craiova, while it was down at Tüpraş, mainly due to the discontinuation of Doblo production for export markets. TürkTraktör enjoyed strong domestic sales in the first nine months, mainly due to subsidized agricultural loans at low interest rates, and the company's export sales volume was also strong. Otokar, our leading bus and defense company, realized 152% growth in revenues, and the share of international revenues constituted around 67% of total revenues.
On slide 10, let's look at the consumer durables segment. The segment performance was supported by robust Turkish revenues with currency tailwinds for international revenues as well as raw material costs. However, softness in demand in main international markets and higher financial expenses continue to be reflected on the bottom line. Turkish white goods unit sales increased 18% in the first nine months, while the export sales were weak and decreased 12%. Looking at Arçelik figures in the first nine months, Turkish revenues increased 98% thanks to effective pricing and an increase in unit sales across major product groups. Similarly, international revenues constituting 62% of total increased 34% on the back of FX impact and inorganic growth, despite a 3% decrease in like-for-like sales. Looking at the key metrics, we see that Arçelik managed to attain the target levels, and the company's working capital to sales ratio was 23.4%.
Similarly, leverage stayed at comfortable levels with an EBITDA ratio of 2.4 times. Finally, let me also briefly talk about the finance segment and the developments at Yapı Kredi on slide 11. The finance segment was the largest contributor to consolidated net income with a 41% share in the first nine months of the year. According to BRSA Financials, Yapı Kredi Bank's net income increased 38% to 48.7 billion TRY in the first nine months, while return on tangible equity was realized at 46%. Thanks to the ongoing loan repricing, below sector average pricing for TL deposits, and also strong Turkish lira demand deposit performance supporting cost of funding, Turkish lira loan-to-deposit spread expanded in the third quarter. The bank recorded a substantial improvement in frees . On the operating cost side, the increase includes inflation pass-through impact and also earthquake-related costs.
In the first nine months, total performing cash loan growth was around 31%, and total customer deposit growth was 42%. The bank's strategy to focus on small tickets in deposits continued, and the share of demand deposit in total customer deposits remained at high level with 43%. Net cumulative cost of risk, including currency hedge, was at 31 basis points, mainly due to strong collection performance. Conservative coverage levels were preserved, and the total coverage was 4.8% on a consolidated basis. Yapı Kredi remains comfortable in terms of liquidity, and the liquidity coverage ratio of the bank stood at 197% as of end of September. In terms of capital, the bank continued to operate with around 600 basis points buffers on its capital ratios compared to regulatory requirements supported by the internal capital generation. CAR and Tier 1 ratios stood at 17.8% and 15.8% by September, respectively.
If we move to slide 12, I'll walk you through the overall results of the group in the first nine months of the year, incorporating all of the segment trends that we just discussed. On a combined basis, the Koç Group registered TRY 174 billion in profit before tax and TRY 145 billion in net income. Consolidated net income amounted to TRY 73.7 billion with a 75% year-on-year growth. Moving on to slide 13, you can see our third quarter results with consolidated net income totaling TRY 36.3 billion, implying 83% year-on-year growth. Now, I would like to leave the floor to Polat Bey for concluding remarks.
Thank you, Nursel. On slide 15, you will see the evolution of the net asset value discounts. Our year-to-date weekly average NAV discounts is just under 30% compared to the long-term average discount of 11%-12%. At Koç Holding, we benefit from our market proxy status, and we observed our NAV discount narrowing down sharply in May this year, supported by the sentiment and the return of the foreign investors. Unfortunately, considering approximately 90% of our NAV is composed of our listed assets, the share price performance of the majority of our listed companies recently is not reflected in Koç Holding's share price. Besides, the intrinsic value of our unlisted companies is much higher compared to their book values, which is obvious in an inflationary environment. As discussed previously, Koç Holding's current discount level does not really reflect the solid fundamentals, and we observe a deeply disconnected valuation.
We hope to converge back to our historical NAV discount levels with enhanced liquidity, better sentiment, as reflected by the decrease in Turkey's five-year CDS levels and higher share of foreign real investors in pre-float. In summary, our balance sheet is strong with a solid cash position and potential cash inflow in the fourth quarter, and our portfolio structure and diversification ensure resilience against volatility. As the leading investment company in Turkey, we are focusing on managing our portfolio dynamically. We will continue to create value with our leading practices in the fields of environmental, social, and governance. Value creation, extending our global footprint, and diversifying our business further are always the key priorities for us. We have the potential to further diversify our positioning both domestically and internationally through our investments while sustaining an efficient level of liquidity.
I would like to thank you for listening, and we can open the floor for the questions.
The first question is from Hanzade Kılıçkıran with J.P. Morgan. Please go ahead.
Thank you very much for the presentation. I don't have a very sophisticated question, but I really wonder about the impact of the inflation accounting on the Koç Holding ROE. I presume that you have been already doing some accounting work to understand the real ROE on the holding level. Is it possible to share it with us?
We do not disclose right now because it's not audited, etc. We are doing some for our internal purposes. We are running some analysis on that. But as you may expect, from our monetary assets like bank or finance companies, consumer finance companies, we expect a negative impact. But on the other assets, our industrial assets, we expect higher profitability due to inflation accounting like Tüpraş, Arçelik, and Ford Otosan. So that's what I can say. But I'm sure that you have seen the most important negative effect is coming from Yapı Kredi and their guidances around mid to low teens in terms of ROE. So that is what I can say. So you can make some calculation around it, I guess.
Okay. Thank you very much.
Thank you, Hanzade.
There are no further audio questions at this time. We have a question from a webcast participant from Samarth Agrawal with Citi. Thanks for the presentation. Four questions, if I may. Could you elaborate more on cash buffer at the holding company level? What levels of buffer are you comfortable with for volatility and external headwinds? And any qualitative guidance around how much of the net cash levels are earmarked for new acquisitions would be very helpful. Second question, how does your investment pipeline look like currently? What levels of EV and ticket size are you looking in terms of future deployment? Third question, on slide four, I believe that the NAV share of automotive has decreased versus first half 2023, while refining has increased.
While this is mainly share price driven, wanted to get your thoughts if this is also partly reflecting expectations of softer demand outlook following a period of strong growth. And lastly, wanted to understand the components within "other" line item on slide 5. I sense that this line item has increased materially in third quarter 2023.
All right. Thank you. I'll start with the first question. We do not have a specific number of how much cash buffer should we keep in Koç Holding for volatility, but I can say that when you look at the last five to 10 years' average, you can see that it is around $500 million. So basically, there's no specific amount, but it seems like that is how we are practicing it right now. For new acquisitions, etc., this is also the second question as well, a little bit. For the new acquisitions, we do not have a specific number again. Of course, we are looking at opportunities. If there would be an opportunity with a bigger ticket size, we should be able to do it as long as it is not creating an unhealthy situation in the balance sheet.
So I can tell that the opportunities really change or differ from each other. So we should really first see the opportunity and then talk about. But obviously, I can tell that we cannot really go for very, very, very high numbers. That's what I can say. And very high numbers for me is more than maybe 2-3 billion should be hard to swallow without disposing of any asset. So other than that, for EV or, let's say, investment pipeline, we are looking at a lot of stuff. We are looking at too many industries, the adjacent ones, what we are doing today. And on top of that, we are interested in renewable technologies and also healthcare. Or also, we are looking at opportunities in other sectors as well, let me say, the ones that we have some more experience on.
On the NAV share of automotive, yes, you're right. It's mainly share price driven. But if you're asking me if this is reflecting the softer demand outlook for automotive, I do not really know. I think the positivity around refinery business or fossil fuel is more effective rather than automotive business demand outlook. So that is the situation. On the other item, I'm going to be asking Nursel, or maybe we can get back to you about this question later on because I do not have the numbers in front of me right now. But our IR team is going to get back to you with an email.
Thank you. Ladies and gentlemen, there are no further questions at this time. I'll now turn the conference back over to management for any closing comments. Thank you.
I would like to thank everyone who has joined the call and listened to us. Thank you very much. Have a nice evening.