Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your Koç Holding call operator. Welcome, and thank you for joining the Koç Holding conference call and live webcast to present and discuss the first quarter 2022 financial results. At this time, I would like to turn the conference over to Ms. Sinem Baykalöz, IR Manager at Koç Holding. Ms. Baykalöz, you may now proceed.
Thank you. Welcome, and thank you for joining us today. This is Sinem, IR Manager of Koç Holding. I have here with me our CFO, Mr. Polat Şen, our IR Coordinator, Nursel İlgen, and our Finance Coordinator, Fatih Sertdemir, to go over the presentation and answer your questions during the Q&A session. 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. 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 Şen to start the presentation. At the end of the presentation, we will have a Q&A session. Polat Şen?
Thank you, Sinem. Welcome, everyone. I'm honored to be here with you here today as Koç Holding CFO this time for more than five weeks into the role. Before that, I was at Arçelik, most of you may know, for almost 17 years as the CFO for the last seven years, and I also performed in different departments. As you know, I'm not entwirely new to the Koç Group. I started my career in Koç Holding as well. So I'm pleased to be with all of you today here on this call. Before we begin, I'd like to share that we feel deeply sorry about the war in Ukraine. Let's hope that this suffering ends soon with a sustainable peace established afterwards. Let's look at the highlights of the first quarter of the year. On slide three, you will see today's agenda.
So let's start on slide four with some key indicators for Koç Holding. 2022 started off with many uncertainties, including macroeconomic challenges, geopolitical developments, and the continued impact of the pandemic. Yet, we were able to manage volatility and proved our resilience one more time thanks to our diversified portfolio structure, agile management, strong financials, and our prudent risk policies. On the left, you can see the sectoral breakdown of our diversified business portfolio at the end of March. Business models of all companies were tested in a year when a new set of risks have arisen, having different impacts on each business. Even under the challenging conditions, our portfolio proved its resilience as we have been favoring diversification. Also, we have leading positions in the sectors where we operate, which is also giving us a great power to handle the challenges.
On the right, you can see the revenue breakdown. Diversification is not limited with sectors but also includes international positioning as well. We are the largest exporting group in Turkey, with our exports accounting for around seven% of Turkey's total exports. In terms of composition of our own revenues on a combined basis, 32% is coming from the international sales. If we also include Tüpraş, which is an FX-linked commodity business, approximately 57% of our revenues can be considered in hard currency. On slide five, you can see our dividend income and payments. So far this year, our dividend income was solid and amounted to approximately TRY 5.2 billion, excluding potential dividends for the remainder of the year from some of our companies as our past year practices.
Our dividend income reached an all-time high figure and showed a major recovery compared to last year's dividend income of TRY 3.5 billion for the whole year. This was a good testament to a diverse portfolio, enabling a sustainable dividend flow. Note that the majority of our dividend income is derived from the companies with FX effects or FX-linked revenues. In 2022, our AGM resolved the distribution of TRY 2.3 billion of dividend payments, corresponding to a 15% payout ratio. Moving to slide six, you can see the evolution of our net cash in the first quarter of this year. At the end of last year, we had $275 million of net cash position at the holding level.
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 March 2022 has reached $510 million, including Yapı Kredi 81 investment. Meanwhile, incorporating the purchase of additional 18% Yapı Kredi shares, as well as our dividend payments and dividend inflows from Aygaz and Yapı Kredi Koç Financial Services in April, our net cash position becomes $136 million. On slide seven, you can see the main pillars of our solid balance sheet. As you all know, prudent management has always been a key focus area for us. As we have just discussed, our adjusted net cash position stood at $136 million, including Yapı Kredi 81 investment, around 90% of our $1.6 billion of gross cash in hard currency.
Keeping an efficient level of liquidity has always been our approach, and it allows us to maintain our resilience. With our agile management, we sustained our healthy balance sheet despite the headwinds of the pandemic and the market volatility. In terms of our funding at Koç Holding level, the only debt we have is the two Eurobonds outstanding as of the end of March. 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 exchange position, we preserved and even improved our conservative levels. On a combined basis, our current ratio is 1.2x , and our net financial debt to EBITDA is at 1.3x . In terms of FX, we have the policy of keeping a neutral position, and we remain well within our risk management rules.
As the largest investment holding company in Turkey and being active in diversified sectors, we manage our balance sheet to ensure that we always remain resilient against market volatility. Going forward, we will continue to prioritize maintaining the solidity of our balance sheet no matter how challenging the market conditions are. Now, I would like to hand over to Nursel to go over the other slides. Thank you.
Thank you, Polat Şen. Let's move on to sectoral developments in the first quarter of this year. We'll start with energy and Tüpraş on slide nine. The energy segment's contribution to Koç Holding's consolidated net income is positive in the first quarter thanks to the growth in domestic demand, rebound in credit margins, inventory gains, and higher capacity utilization rates despite sharp hikes in energy costs. The domestic demand for refined products maintained its growth momentum in the first two months of the year. Jet fuel sales surged 58%, gasoline sales increased 43%, and diesel sales grew 2% year-on-year. In the first quarter of 2022, Tüpraş's domestic and international sales volume were up 18% and 108%, respectively, resulting in 29% higher total sales volume.
Looking at the refining margins, we see a $9.7 per barrel increase in the Med complex margin to $9.5 per barrel in the first quarter thanks to historically high crack margins. Ongoing post-pandemic demand recovery and supply issues stemming from the Russia and Ukraine war resulted in record-high mixed distillate cracks. Diesel crack margin improved strongly and increased to above its last five years' first quarter average due to post-pandemic demand recovery and also decreasing Russian exports to Europe that resulted in supply shortage. Similarly, jet fuel cracks increased to above its last five years' first quarter average, supported by capped distillate supply as well as ongoing recovery in the number of global flights. Gasoline cracks were strong with the opening and driving season and increasing gasoline blending costs.
Meanwhile, Tüpraş's net refining margin was $4.3 per barrel lower than Med Complex Margin, mainly due to Urals being the only crude oil in the slate of Med. In the first quarter of 2022, Tüpraş's overall net refining margin amounted to $5.2 per barrel versus $1.5 per barrel during the same period of last year, mainly due to better cracks, inventory gains, and higher capacity utilization rates despite hikes in natural gas prices. Tüpraş's capacity utilization rate reached 85% in the first quarter. In light of the ongoing strength of cracks, Tüpraş revised its 2022 net refining margin guidance to $8-$9 per barrel from $4-$5 per barrel before. The company will not provide guidance regarding Med Complex Margin until market conditions normalize due to high volatility observed in the oil market.
Tüpraş noted that Med margin is a theoretical calculation and has lost its indicative quality, with Urals being the only crude oil in the slate of Med. On the LPG side, consumption decreased slightly in the first two months. Aygaz, the leading player in the LPG sector, focused on profitability, and its sales volume was down 21% in the first quarter. Let's move to slide 10 and discuss the developments in the auto segment. Our company sustained a strong performance in the first quarter of the year. Auto segment's contribution to consolidated net income was TRY 2.2 billion. The main drivers of this robust performance were favorable product mix, solid export contracts, as well as OpEx control and pricing discipline despite weakness in both domestic and export markets.
In the first quarter, we saw a softness in demand on a year-on-year basis, mainly due to high base year effect as well as accessibility issues due to semiconductor availability. We witnessed a 23% year-on-year decrease in domestic auto sales in the first quarter. While passenger car sales were down 25%, commercial vehicle sales decreased 14% year-on-year. Our market share in the domestic market was flattish at 25% compared to the same period of the previous year. On the export side, we saw a 12% decrease in passenger car and light commercial vehicle sales in the European markets. In the first quarter of the year, European auto sales had a weak start to the year, mainly due to disruption in supply chain as well as ongoing challenges due to semiconductor availability and economic headwinds.
The European passenger car market registered an 11% decrease, while the light commercial vehicle market realized a 22% year-on-year decline. Our group market share in exports increased 1 percentage point to 46%. In the first quarter, Ford Otosan's export sales volume was 11% lower, while Tofaş witnessed a 16% decrease in its export volumes. Favorable product sales mix, pricing discipline, as well as currency turbulence supported total revenues of both Ford Otosan and Tofaş, and they increased 72% and 65%, respectively. Export revenue growth was strong for both companies. Ford Otosan registered 79% growth in export revenues, while it was 68% at Tofaş. International revenues were supported by Euro-based cost-plus contracts and, in the case of Tofaş, also by take-or-pay. TürkTraktör, our tractor company, enjoyed strong export sales in the first quarter with 26% higher export volume. On the other hand, the company's domestic sales volume decreased 30% year-on-year.
Accordingly, TürkTraktör's total revenues surged 49%, and the company's net income grew 32% to TRY 477 million . Otokar, our leading bus and defense company with superior R&D capabilities and prosperous products, also had a very strong start to the year. Otokar's domestic revenues increased 22%, and international revenues grew 67% year-on-year, while the share of international revenues contributed around 64% of the total revenues. Overall, total revenues increased 48%, while the net income increase was much higher at 87% to more than TRY 200 million . On slide 11, let's look at the consumer durables segment. Consumer durables segment contribution to consolidated net income was up 24% to TRY 568 million . This performance was driven by strong international and domestic revenues, contribution of newly acquired operations, as well as currency turbulence despite high raw material prices.
Turkish white goods sales decreased 9% year-on-year in the first quarter, while the export sales increased 6%. In the domestic market, despite wholesale units, retail was quite strong in the same period, mainly due to customers' expectation of further hikes in product prices. Looking at our consolidated figures in the first quarter, domestic revenues increased 79% year-on-year thanks to effective pricing despite a 10% decrease in unit sales. Similarly, international revenues constituting 7% of total increased by 138% on the back of FX impact and organic growth. Looking at the key risk metrics, our debt managed to attain healthy levels. The company's working capital sales ratio became 27.7%, and leverage stayed at comfortable levels despite dividend payment, share buyback, and FX volatility, with a net debt/EBITDA ratio of 2.8 times.
Regarding 2022 expectations, consolidated revenue growth expectation is revised upwards for Arçelik from more than 60% to more than 80% on solid positioning in the domestic market and strong performance in international markets. Finally, let me also briefly talk about the finance segment and the developments at Yapı Kredi on slide 12. The finance segment was the largest contributor to consolidated net income, and the share in consolidated net income was realized at TRY 3.25 billion. Yapı Kredi recorded a robust profitability with fully deployed fundamentals. According to BRSA Financials, the bank's net income more than doubled quarter-on-quarter to TRY 7.3 billion in the first quarter, while at the same time, return on tangible equity was realized at 42.3%. Net fees and commissions registered a significant 54% growth, supported by the increasing number of transactions year-on-year.
Core revenue growth was much stronger, driven by the higher net interest income. Cost growth was below inflation at 50% year-on-year. Turkish lending growth continued in both loans and deposits. In the first quarter, total loan growth was 14% quarter-on-quarter, and total customer deposit growth was 14% quarter-on-quarter. The bank's strategy to focus on value-added segments such as Turkish lira small ticket lending and sticky individual demand deposits continued. During the first quarter, Yapı Kredi successfully acquired more than 400,000 new customers. The share of retail loans increased to 55% in total effects adjusted cash loans, while the share of demand deposits in total customer deposits reached 42%. Net cumulative cost of risk, including currency hedge, was at 39 basis points, mainly due to limited inflows and strengthened collections as well as front-loaded provisions.
Conservative coverage levels were preserved across all stages, and the total coverage was 6.3% on a consolidated basis. Yapı Kredi remains comfortable in terms of liquidity. Total liquidity coverage ratio of the bank stands at 201% as of the end of March. In terms of capital, Yapı Kredi continues to operate with more than 350 basis points buffer on its capital ratios compared to regulatory requirements, with close to 150 basis points contribution from internal capital generation. CAR and Tier 1 ratios stood at 15.5% and 13.3% by March end, respectively. If we move to slide 13, I will walk you through the overall result of the group, incorporating all of the segment trends we just discussed. On a combined basis, Koç Group registered TRY 233 billion in revenue, TRY 18.2 billion in profit before tax, and TRY 15.4 billion in net income.
Consolidated net income amounted to TRY 6.7 billion , with a 218% year-on-year growth. Now, I would like to leave the floor to Polat Şen for a summary of our ESG Initiatives and concluding remarks. Polat Şen?
Thank you, Nursel. I would like to take this opportunity to give you an update on our recent developments in the ESG area on slide 15. As the Koç Group, being aware of our significant role in the transition of the sectors we are operating in, we declared our target to be carbon neutral by 2050. In line with our 2050 carbon neutrality target, Koç Holding commits to reduce Scope 1 and Scope 2 GHG emissions by 27% in 2030 and by 49% in 2040, compared to the 2017 baseline year, which is 8.4 million tons of carbon emissions. Scope 1 and Scope 2 GHG emissions totaled 6.9 million carbon emissions in 2021.
We aim to manage the climate-related risks, seize potential opportunities, and regularly disclose our performance to our stakeholders in line with the Task Force on Climate-related Financial Disclosures recommendations. Considering our portfolio, almost all of our companies, all of our leading companies like Arçelik, Ford Otosan, Yapı Kredi have committed to Science Based Targets initiative in different levels. Koç Holding has joined the supporters of CEO Water Mandate initiative, which was created by the UN Global Compact and aims to mobilize business leaders on water management. In line with Koç Holding's global leadership and commitments on the UN Women Generation Equality Forum, we pioneered the commitments of Aygaz, Arçelik, Ford Otosan, Koç finans, Tofaş, Tüpraş, TürkTraktör, and Yapı Kredi to ensure equal opportunities for women and girls in technology and innovation for five years.
Finally, on slide 17, you will see the evolution of our net asset value discounts, which we believe to be unwarranted given our strong fundamentals that we have just discussed. Although we maintained our strong financial profile and prudent approach with a track record of sound liquidity, our NAV discount widens significantly. Unfortunately, Koç Holding's current NAV discount and the discount to its listed assets do not reflect the strength of our fundamentals. As discussed previously, we are not happy with this deeply disconnected valuation. Therefore, last year in July, we initiated a share buyback program to take a more proactive stance. While doing so, we wanted to make sure a meaningful free float in order to maintain Koç Holding's place in various indices. Yet, you must have noticed an accelerated news flow from Koç Holding on high impact and very value-accretive projects in our various sectors.
We closely follow the megatrends in the world, such as climate change, tax acceleration, consumer transformation, and changing demographics. We shape our strategy accordingly as the pioneering group of Turkey. Our investment for the additional 18% stake at Yapı Kredi Bank has already generated more than 100% return in less than six months. We do believe that all our large-scale strategic initiatives and investments, in line with our global growth vision, will further reinforce our position and be reflected to our share performance once the external factors related headwinds will settle down. Thank you for listening, and now we can start the Q&A session if everyone is ready.
The first question is from the line of Kılıçkıran, Hanzade with JP Morgan. Please go ahead.
Thank you, Polat Şen. Congratulations for the new role. I have a question regarding your project on the battery production in Ankara. What is the, I mean, I know this is still an ongoing project, but is there any strategy on the capital allocation? How much do you think you may allocate for this project? And the second question is about your dividend income. Do you have any, I mean, a full year expectation on the dividend income? I mean, it's progressing, but it's still slower than our expectations, actually. I just wonder which company is left to distribute other than Ford Otosan. Thank you.
Okay. I'll answer the battery project one, and Nursel is going to answer the dividend income. For the battery project, as you know, Hanzade, it's very, very early stage. We just have signed the MOU, so the project is still going on, and there's a lot of loose ends to be tied up. Whenever we are available to be able to answer this question in a concrete manner, we are going to be guiding the market with the numbers. But right now, it's really too much moving parts along the way, so let us give some more time for this. It's also nice to see you here with the Koç Holding, Hanzade. Thank you, and I'm moving to Nursel.
Yeah. Thank you, Polat Şen. Hi, Hanzade. As you know, we usually collect dividends from our underlying companies in March and April, and there are some companies that pay dividends twice a year, as you mentioned, like Ford Otosan. So for this year, we have the number that we received from our underlying companies. So far, it is included in our presentation, so we received about TRY 5.2 billion of dividends from our companies. And that doesn't include the potential second dividend for the remainder of the year, so we cannot give guidance regarding how much we are expecting for the remainder of the year. But I would say that you may expect a higher figure than this TRY 5.2 billion that we received so far.
Thank you.
There are no audio questions at this time. We will now move to our webcast questions. The first webcast question is from Recep DEMİR with Garanti Securities, and I quote, "Thank you for the presentation. Can you give a guideline on the share buyback program that you announced in last year? Do you consider to start buying from the market?" The second question is, "Can you give guidance on the battery investment that you announced recently? How much the size, and what is your plan on financing this investment considering your recent cost position?"
Thank you. For the battery, it's almost the same question that I've just answered, so I'm not going to repeat myself. I think it has already been answered. For the share buyback program, as you all know, we have an active share buyback program last in early July last year that we have launched. And so far, we haven't really bought a big amount of shares, very small. According to, we can buy 5% of our free float, which is around 1.4% of our capital. We would like to sustain a healthy dividend payout as well as to ensure a meaningful free float in order to maintain Koç Holding in the radar of passive investors as a constituent in investable equity market indices. Currently, we are not happy with our NAV discount.
That is hovering at levels far away from the historical averages. We are monitoring the markets closely and considering our liquidity as well as the active share buyback program. We may buy back our shares, but I can tell that since July last year, the Koç Holding shares have appreciated much more over the average of the market. So without the buyback program, we have been able to provide a good yield for the investors. So if we think that there is a need to use this share buyback program, we are going to be using it. But right now, until now, we haven't had the need to do it. Thank you.
The next question is from our audio participant, Adil Rizvi with Jefferies. Please go ahead.
How are you? Thank you very much. This is Adil Rizvi from Jefferies in New York. Can you shed some color on the plan requiring exporters to convert 40% of their hard currency revenue to Turkish lira?
Thank you. I can. As you know, we are the biggest exporter in Turkey, and with the recent change, the increased number is from 25%- 40%. But to be honest with you, this is very, at the end of the day, we are buying Turkish lira, and then if we need the FX, we are buying back again. So there is a spread which is really affecting us, but this spread is very, very negligible in terms of our overall business cost, let me say. So right now, this is not really hurting our business at all, and we are not really having a huge impact on our P&L because of this regulation. I can tell that it is very, very negligible in the overall Koç Group balance sheet. Thank you.
Thank you.
The next question is from our webcast participant, Umut Öztürk with OYAK Securities. And I quote, "Thank you for the presentation. What were the drivers for the decline in the solo net cash position in first quarter 2022, and how should we expect it for the remainder of the year?" Thank you.
Hi, Umut, this is Nursel speaking. Let me walk you through the net cash bridge that we provided in our earnings presentation. As you know, we end up the year at TRY 3.6 billion of net cash equivalent to $275 million.
If I continue with the Turkish lira equivalents, you can see that we received TRY 5.2 billion of dividend income incorporating the dividend payments and also this additional 18% stake purchase of Yapı Kredi Bank shares. At the beginning of April, which amounted to TRY 3.5 billion, we come up with an adjusted net cash figure of close to TRY 2 billion, which is equivalent to $136 million, so I think this net cash bridge answers your question. The dividend income was TRY 5.2 billion. The dividend payment and the payment for Yapı Kredi Bank resulted in the cash outflow. Still, we have this net cash position as of April.
The next question is from our webcast participant, Samar th Agarwal with Citi. And I quote, "First question is, how do you see the domestic demand trends for the remainder of 2022? Do you see growth rate normalizing? Second question is, can you also let us know how supply chain constraints are impacting the margins of portfolio companies?"
Okay. I'll start maybe with the consumer demand and the trends. As we just discussed, in the first quarter of this year, we had the high base year impact, and that's why we saw some decreases in our domestic sales volumes in autos, in consumer durables with different magnitudes. And there was also the ongoing trend which started last year. We saw the inflation impact that impacted the household's purchasing power combined with this normalization and the pent-up demand for some products. So that trend was visible since the second half of the year. And this is also reflected in the consumer confidence indices.
The indices were at low levels in the first quarter this year. Looking at the guidance of our underlying companies, you can see that they announced flattish or a slight increase in the domestic markets. I'm talking about autos and also consumer durables. So for the domestic market, our expectation is for this year, we expect a flattish market both in terms of autos and also consumer durable sales. And we will be following developments closely, and our companies are announcing their guidances as you follow. On the supply chain, I'm going to give the word to Polat Şen.
On the supply chain side, I mean, I'm sure that you have already listened to our other subsidiaries' earnings calls as well. It's different from sector to sector, and there is still some constraints, especially on the automotive side, and that's affecting to fulfill the demand.
So there is still accumulated demand in the automotive industry due to supply chain constraints. But other than that, the situation is easing for the other part of the world, or let's say for the other parts like consumer durables and some others. But the problem is, of course, the costs are rising on the supply chain side, especially the logistics costs. And that is really also one of the factors which is affecting the inflation all over the world. Because of that, all the producers or retailers are trying to push that increase in the cost to the prices, and we are doing the same as well. And it seems like the supply chain constraints or the supply chain cost is not going to really change until the end of this year. We don't really foresee a big change until the end of the year.
We are closely following up the situation, but I can tell that with the slowdown in China, especially, we see some positive developments on the metals like copper, aluminum. All of you must have seen that the prices are falling down a little bit. We expect the other sectors will continue following that in the upcoming quarters, a little bit later maybe, but we are expecting some normalization throughout the end of the year and maybe in 2023, especially on the materials side. Thank you.
Ladies and gentlemen, there are no further audio or webcast questions at this time. I will now turn the conference over to management for any closing comments. Thank you.
Thank you very much. We would like to thank everyone who has participated in the call at that hour. Hope to see you next time with even better results. Thank you very much.