Good afternoon, good morning, depending on your time zone. Welcome to Sabancı Holding's year-end results webcast. Before we begin, please refer to our disclaimers within the presentation. We have our CFO Kıvanç, and our CEO Kıvanç and CFO Orhun are joining us today's webcast. Without further ado, let me leave the floor to our CEO. Kıvanç?
Thank you, Kerem. Good morning, good afternoon to everyone, and thanks for joining us. This is going to be my 1st webcast in my new role as the CEO. We are here to discuss our 2025 results. I'm happy to announce a relatively positive picture to all of you. Yes, the year is over, but the world is still shaped by the same volatility. It is obvious that the year 2025 tested the resilience across the board for those who stayed disciplined, translated into strategic strength. In this environment, we stayed focused on 3 things. The 1st one is our execution discipline, 2nd one our financial balance, and 3rd one long-term value creation. 2025 also confirmed that our main platforms are scaling in a structured and disciplined way.
As shown on the left-hand side of the presentation, starting with energy and climate technologies stayed our co-core growth engine. Our global generation capacity exceeded 5 gigawatts in 2025, and this is the operational capacity. In Turkey, Enerjisa Üretim reached 4.5 gigawatts with the YEKA-2 wind projects gradually, which are coming online. We passed 1 gigawatt wind, and we remain on track to exceed our 6-gigawatt target by 2028. Over the last 2.5 years, we secured around $1.5 billion of YEKA-2 financing from leading local and global banks. This covers close to 90% of investment costs and extends to 2034. It shows strong confidence in Turkey's clean energy potential, our delivery capability, and our capital discipline. Internationally, Sabancı Climate Technologies continued to expand its footprint in the United States.
Our U.S. portfolio has reached 790 megawatts, including 2 acquisitions totaling 286 megawatts. Importantly, the projects we started in 2022 began to deliver real results in 2025. The Cutlass II was fully operational, and Oriana has been successfully commissioned. These assets started to contribute meaningfully to our bottom line. Most of the new capacity is also backed by secured power purchase agreements, improving revenue visibility. On the other hand, and again in Turkey, in our electricity distribution business, the new tariff period, so-called 2026-2030 regulatory period, also reinforces cash flows visibility of our energy segment with a secure regulated return, and this has been increased from 12.3% to 13.49%.
When we are moving to the right column, material technologies continue to improve portfolio quality and international exposure. Çimsa, Mannok integration continued to deliver strong results with EUR 68 million EBITDA, above last year and with higher margins. The in-integration process allowed us to extend Çimsa's operational capabilities across markets while strengthening our hard currency revenue base. Çimsa's United States grinding facility is now commissioned. It increases capacity and strengthens our position in one of the world's largest construction markets. Kordsa faced a difficult year, including the flooding in Indonesia. The company took steps to strengthen the balance sheet by refinancing short-term debt into longer-term funding. When we are moving to banking and financial services, Akbank effectively navigated a challenging macro environment in 2025 through disciplined balance sheet management, superior fee momentum, and selective market share gains.
While the bank faced pressures on its net interest margin due to the tighter-than-expected monetary policy, it exceeded its guidance in several key operational areas, including loan growth and fee generation. This trajectory is strategically important for Sabancı Holding, supporting sustainable revenue growth and improved capital efficiency. The strategic leadership shift in our banking and financial services business and the unified group structure across Akbank-AgeSA and Aksigorta started to show positive results through strong bancassurance alignment, shared technical excellence, and integrated product development. In the digital, Bulutistan, our cloud company, has expanded into 3 new countries across Europe and Central Asia, advancing our ambition to build a scalable regional cloud platform.
Last but not least, Sabancı Holding continued to receive strong external ESG recognition, maintaining AA ratings from MSCI, achieving an A score from LSEG, and strengthening its presence across global and local sustainability indices, including a record representation on the CDP Global A List. Overall, 2025 showed resilient performance in a volatile year, which is translated into both external recognition and sustained shareholder returns. Our organization strength and talent program were recognized internationally as Sabancı Holding became the highest-ranked Turkish company in the list of TIME's World's Best Eco-Companies and Forbes and Statista's World's Best Employers. With this foundation, our board proposed a dividend of 1.4 TRY per share, marking 24 consecutive years of uninterrupted distributions, and while maintaining financial flexibility to pursue opportunistic value, accretive growth, and enhance portfolio returns.
While these results reflect strong execution across our platforms, they also point to a deeper shift in how Sabancı Holding is governed and managed. That's what I will cover on the next slide. 2025 was not just another year. It marked the start of a structural evolution in how we run Sabancı towards portfolio-level ownership and integrated decision-making. With the leadership transition and my appointment as CEO in June, we entered a new phase grounded in execution discipline, disciplined capital allocation, and collective accountability. We have now formalized this under our new executive board structures. This moves us beyond silo-based management to a truly portfolio-driven approach. Today, capital allocation, strategic priorities, and transformation initiatives are evaluated together through our lens, return discipline, and long-term value creation. This also improves recurring earnings visibility across our portfolio.
Shared accountability strengthens coordination, increases speed, and helps us rebalance resources across platforms when needed. This is not a structural change on paper. It changes how we scale, streamline, and steer our portfolio. This governance upgrade is not structural in name only. It fundamentally improves how we scale, streamline, and steer our portfolio. 1 early example is the binding offer we have received from an unrelated third party for our stake in Akçansa. We are evaluating every strategic option with the same discipline and with a clear focus on long-term value creation. Let's look at how our strategy, operations, and sustainability efforts translated clearly into financial performance in 2025. Operationally, the improvement in non-bank EBITDA margin came from 2 sources: stronger performance focus and tight cost discipline. This was both structural and execution-driven.
The turnaround started to become visible in Q2 and Q3 . The momentum strengthened further in the last quarter. At the bottom line, we moved from a significant loss in 2024 to a clear profit in 2025, with the strongest contribution in the last quarter. Banking supported the recovery. I also want to highlight the resilience of our non-bank businesses. If we exclude the one-off impact related to the suspension of inflation accounting in tax financial, the non-bank contribution to bottom line would have been higher. Margin discipline, portfolio balance, and operational execution across all segments created a durable earning space. As you can see on the right-hand side of the slide, financial discipline remained central to our performance. Prudent balance sheet management and stronger operating cash generation supported both deleveraging and continued investments.
Orhun will cover further details on these metrics. In short, 2025 was a year in which operational execution, cost discipline, and prudent financial management worked together. The result was not only a return to profitability, but also an improvement in earnings quality, balance sheet strength, and portfolio resilience. Before I hand over, a brief word on the geopolitical environment. We are monitoring developments closely. At this stage, we do not see a direct impact on our physical assets or operations, and we continue to manage risks with the same disciplined approach that Sabancı has used in the past volatility. In today's environment, volatility is not the exception, it is the baseline. What matters is whether we have clarity, a plan, and the ability to execute. I want to be very clear, we do. Sabancı has a diversified portfolio, and we run it with dynamic strategy planning.
We are not guessing what to do next. We are not waiting to see how events unfold. We have a clear roadmap, clear priorities, and clear decision rules. Our plans are ready on growth, on efficiency, on capital allocation, and on portfolio optimization. Our focus now is simple: delivery. We know what we will execute, in what sequence, and with what return expectations. That's why I am confident in our direction, and this confidence is not based on words. It is based on the platforms that we have built, the discipline we have strengthened, and the governance model we have put in place. In short, we are prepared, we are focused, and we are executing. By the way, it also happens to be my birthday today, so thank you for spending part of today with me, with us. Now let's go into the results.
I will now hand over to Orhun to walk you through the financial results in more detail. Thank you.
Thank you, Kıvanç. Happy birthday once again. Good morning, good afternoon, everyone. We welcome you in Sabancı Holding's 2025 results webcast again. As always, on page 7, I'd like to give you a little bit on the backdrop of the results and what's happening in the outside world. Obviously, it's fair to say, as we concluded 2025, it was a year where the disinflation program in Turkey continued. Presumably, we have seen the most severe monetary policy execution in 2025. That was obviously reflected onto the relative high real interest rates that we've seen in the market. The global markets in general was a little bit, you know, had different tunes on the geopolitical side.
Obviously, we have seen talks starting between Russia and Ukraine, between, you know, a settlement in Gaza, et cetera, which was relatively better news. Obviously, there were negatives there as well. The in general, oil prices, gas prices, and energy prices remained quite subdued. That was basically a, you know, a snapshot of what 2025 looked like. Last week when our teams were preparing this presentation, obviously, the picture they wanted to show us started with the graph you see on the bottom left side of this page, which shows you the Geopolitical Risk Index at the end of February. This is, you know, relatively calmer. It's not necessarily very low, but however, compared to what we have seen in the course of past few years, we were heading into a, you know, more calmer direction.
On the bottom right-hand corner, as you see the Turkish reference rates, you've seen them, you know, coming down, in general in the course of, you know, past, let's say, 6 months, if you take this as a benchmark. Fast-forward a week, obviously these graphs have changed. Unfortunately, we can't yet update what the Geopolitical Risk Index may look like today. It's, I think, safe to assume that there could be a spike in this graph, when you take March. If you take a look at the Turkish reference rate, there you see, you know, already a spike in the numbers. Obviously, without saying, Kıvanç has alluded to that, you know, what's been happening, significantly elevated, so far the geopolitical risks. Obviously added a lot of uncertainty at the start of 2026.
We will obviously continue monitoring what's happening and obviously make sure that we manage our business to the best of our ability. I think our portfolio allows us to be able to deliver good execution and good results. Now, on the next page, I want to talk about what's what happened in 2025 in a bit more detail. Starting from the last quarter of the year, there you see we've seen a slight revenue contraction of 5%. You know, that's a little bit about the bank, revenue growth in bank is not necessarily something very relevant, we're happy that at least our non-bank businesses posted a slight real growth in the last quarter. The bank's profitability improved quite significantly in the last quarter.
I'm sure you must have followed, if you followed what Akbank has disclosed. The total EBITDA has grown by about 35%. At this time, there was a slight contraction in the non-bank businesses EBITDA, which is usually related to the calendarization of our business execution. Therefore, you see some 50 basis points contraction in EBITDA, which you don't see on the annual basis. As you see, the consolidated bottom line, the consolidated net income, we posted a TRY 4.6, you know, billion of net income compared to TRY 4.8 billion in the same period of last year. That's, you know, in excess of TRY 9 billion of a swing in the last quarter this year, the majority coming from the bank.
As again, Kıvanç was underlining, had there not been a change in the inflation accounting application to the statutory accounts in the last quarter, obviously we would have seen our net income, just about TRY 7.2 billion for the last quarter of the year. What that means for the full year on the next page, that's page 9. You know, we mostly seen flattish revenue, 1% up on bank, 1% down on non-bank, but mostly flattish. We've seen in, you know, earn in profitability growth there you see in EBITDA, you know, 6% in non-bank businesses and some 9% in the bank. Overall 8% that resulted in some 90 basis points of margin contraction.
If you look at the bottom line again, obviously now you see a TRY 24 billion swing between 2 years from -TRY 24.3 billion to +TRY 3.8 billion on a consolidated basis. The bank's contribution was about 17 to that shift, TRY 17 billion, whereas the non-bank businesses has contributed some TRY 7 billion between 2024 and 2025. Again, if we analyze the impact of the elimination of inflation accounting on the statutory accounts, obviously our net income would have been about TRY 2.5 billion higher at TRY 6.3 billion at the end of the year. This, on the next page you see, has resulted in our return on equity coming to the positive territory.
On a consolidated basis, we are seeing about 1% of return on equity. Now, great to, you know, be on the positive territory. Nothing necessarily to boast about. I think 1 thing that's important for us, again here, is about 620 basis points improvement year-over-year on our ROE. Obviously, we would be keen to continue growing as we move forward. Our operational cash flow, the non-bank operational cash flow that you see on the left-hand side of this page, has grown some 16% to TRY 89.3 billion. That's a growth of that's coming on top of a 17% growth between 2024 to 2023.
Therefore continue to deliver strong cash flow generation, which is becoming important because you see on the next page, even though we still, you know, invest on our non-bank businesses with a run rate of 12.3% of our non-bank revenue, our indebtedness stays at 1.6 times as measured on the basis of net debt to EBITDA. Strong cash flow generation, and even though our CapEx levels are not low, we still can maintain a very healthy balance sheet. Depending on how you approach, it's very useful either to mitigate any potential risks going forward or useful to capitalize on any opportunities as we move into 2026. The cash that we hold, free cash that we hold is TRY 8.5 billion at the end of 2025.
The level could have been quite similar had we not realized our capital contributions to various of our, you know, subsidiaries amounting to TRY 3.8 billion within 2025. You know, substantial cash holdings as well. The next page you see the breakdown of our NAV which was at $11 billion. 44% was contributed by banking and financial services, some 34% by energy and climate technologies businesses, and material technologies contributed under 14%. Of course, still there is a very attractive discount of about 56%. That's in the, at the end of February. With that, I'll ask Kerem to join us to walk you through the details of our business segments. Kerem?
Thank you, Orhun. Let me begin with the bank. Just to remind, the banking numbers presented on this page are based on BRSA financials as the banks are exempt from inflation accounting. Akbank's agile balance sheet management and strong adaptability to challenging regulatory landscape coupled with net interest income momentum and resilient fee performance remain the key contributors to profitability. At the same time, Akbank's strong capital position enables growth, providing flexibility to manage the balance sheet with agility and dynamically allocating assets and liabilities across cycles. This disciplined approach is supported by prudent pro-provisioning and solid coverage ratios. While continuing to grow, effective risk management has kept Stage 2 and 3 loans limited below 11% of total loans, and the Stage 2 and 3 coverage ratio robust at above 20%.
Operational discipline is reflected in Akbank's leading 106% fee-to-OpEx performance. Supported by continued focus on customer acquisition and deepening relationships, the bank has sustained strong momentum in fee income market share, reaching 17.8% by the end of 2025. OpEx growth already stabilized at inflation levels amid disciplined cost management. All these positions help bank to further scale a resilient earnings platform and unlock sustained long-term growth potential in the period ahead. As for the core metrics of the bank, swap-adjusted net interest margin started to recover during the Q3 , thanks to improved funding dynamics. This trend was sustained during the Q4 , backed by disciplined balance sheet management. Renewed net interest income support and strong fee income reinforced core revenues.
Looking ahead, focused growth and funding adaptability will remain key drivers, supporting the anticipated gradual net interest margin expansion throughout the year. Additionally, with a total capital adequacy ratio of 16.8% and a Tier 1 ratio of 13.6%, Akbank continues to maintain solid capital strength, anchoring resilience and long-term profitable growth. On financial services segments in the life business, growth continued to be driven mainly by credit-linked life products and expanding contribution from Medisa, while pension business maintained strong momentum and leadership among private players. In non-life, the company continued to prioritize technical profitability and capital efficiency over the volume growth. This selective underwriting approach supported stronger technical results and led to an improvement in the capital adequacy ratio of 166%.
Segment's inflation-adjusted top line declined year-on-year, reflecting the deliberate shift toward profitability in the non-life business, resulting in moderation in premium product-production. This was partly offset by the continued strength of the life and pension business. EBITDA performance for the year was mainly driven by the life segment, supported by strong product-production in credit-linked life products and the increasing contribution from Medisa. Year-on-year comparison was also affected by a high base in the Q4 of 2024, when reclassification of deferred income, which created a one-off positive impact under inflation accounting. In the non-life business, lower reinsurance increased the monetary position on the balance sheet, leading to higher monetary losses. In life, higher financial income supported profitability, but this effect was largely offset by higher monetary losses and tax expenses. Let me now turn to our largest non-bank segment, energy.
On the generation side, production volumes increased mainly due to additional 750 MW wind capacity commissioned this year, benefiting from a relatively low maintenance base. This has more than offset weaker output from other technologies, particularly hydrology. From a pricing perspective, strong spot electricity prices in dollar terms continued to trend lower compared to last year, with higher natural gas prices, with the latest hike back in April. Coupled with the unchanged regulated price cap, the pressure on spreads prevails. Together with lower committed trading contribution, Enerjisa Enerji closed the year with $375 million of EBITDA, reflecting the market dynamics that I mentioned. Looking ahead, early indications suggests rainfall regime at the start of 2026 may become more supportive for hydrology compared to last year. Capacity expansion remained a key focus for our generation operations.
As Kıvanç mentioned earlier, Enerjisa surpassed 1 gigawatt of installed wind capacity, supported by continued access to favorable financing, including the recent EUR 200 million EBRD loan. As expected, these investments led to a higher leverage profile. In climate technologies, EBITDA contribution became increasingly visible, supported by the full operational impact of Cutlass II and the commissioning of the Oriana Project by the beginning of Q4. Turning to our distribution business, Enerjisa Enerji, the company delivered solid operational performance in the Q4. Distribution remained the main contributor to operational earnings, while retail continued to operate in a softer environment. Efficiency and quality gains, together with the higher financial income, supported the core earnings performance. Finally, under the new 5th regulatory framework, the after-tax WACC increased from 12.3% to 13.49%, reinforcing the investment case for grid stability and growth.
Looking at the overall performance of the energy segment, EBITDA margin was mainly supported by the distribution of climate technologies. On the back of strong EBITDA, bottom line was further supported by monetary gains in generation, positive tax impacts, including the suspension of inflation accounting in tax financials for the distribution business, and step-up gain recording, recorded in climate technologies. The suspension of inflation accounting had a negative impact on the generation business at the net income level. The nominal contribution of bus operations remained relatively limited within the segment, operational improvement in the business supported both EBITDA and the bottom line. Material Technology segment, in building materials, cement volumes increased year-on-year, mainly driven by international operations. Çimsa expanding global footprints, together with the successful integration of Mannok, supported both revenue growth and profitability.
Higher alternative fuel usage, plant level efficiencies, and disciplined cost management also contributed positively to Çimsa's results. Meanwhile, our transit operations showed gradual improvement in Q4 despite mixed domestic demand conditions. In tire and tire centric solutions, the premium-focused product mix and strict cost discipline help mitigating margin pressure in a softer domestic demand environment. While the consumer segment remained weak, Bridgestone continued to strengthen its position in premium segments. Additionally, company observed demand recovery in the commercial segments, particularly in Q4. Tire reinforcement to composites contribution and cost control supported performance. However, subdued global demand intensified Asian competition, and the flood-related impacts in Indonesia weigh on tire reinforcement. Overall, the stronger performance of international cement operations and composites more than offset the softer environment in tire-related businesses.
On the financial performance of the segment, building materials account for a larger share compared to tire operations, and most of the EBITDA performance relative to last year was driven by this business. Bottom line results were broadly supported by strong EBITDA contribution from the building materials, despite several one-off items weigh on the year-on-year improvements. In tire reinforcement, one-off impacts such as business interruption following the flood disaster and workforce optimization initiatives affected results. Brisa also recorded a TRY 392 million provision in 2025 related to an ongoing competition authority investigation. Excluding this provision, the company's bottom lines turned positive territory in the H2 . The suspension of inflation accounting in statutory accounts, together with the related asset revelation impact, put additional pressure on the bottom line. Let me continue with digital and other segments.
In retail electronics, revenues declined on persistent macroeconomic pressure and intensified competition, with an additional impact from store network optimization. Although margins remained pressured in Q4 due to seasonal promotional intensity, the full-year performance reflect structural improvement in profitability supported by disciplined pricing, effective inventory management, and a stronger focus on higher margin categories. Continued cost discipline and operational efficiency initiatives also supported margin performance on a full-year basis. In the food retail segment, even though revenue generation was affected by the continued pressure on consumer purchasing power, growing contribution of alternative channels and franchise operations helped offset top line pressure during the quarter. The increase in online services stores and prevailing shift toward asset-light channels supported the strengths. Ongoing network optimization efforts temporarily weigh on reported revenues and profitability, while further strengthening the efficiency and sustainability of the operating model.
In the digital segment, revenues remained broadly stable in the quarter, while full-year performance benefited from the contribution from Bulutistan. EBITDA improved meaningfully reflecting operational efficiency and strong execution across segments. At the bottom line, net loss narrowed on a year-on-year basis, reflecting these improvements and the low base effect created by the impairment recorded at the end of 2024. In the other segments, revenues contracted on weak consumer demand and ongoing optimization efforts across both retail operations. EBITDA declined on year-on-year as profitability remained under pressure in both retail electronics and food retail during the quarter. At the bottom line, higher financing costs and lower monetary gains across both retail operations weigh on the profitability, resulting in a wider net loss. With this, we conclude our presentation. We now would like to open the floor for Q&A.
Please type your question on the Q&A section of the Zoom, so we'll get your questions answered. Thank you. We have a question from Matias. In an event of successful sale of CFO holdings such as Akçansa, would the resulting substantial cash inflow be partially used for SAHOL share repurchases? Your shares discount in EV and the potential described by you stand in the sharp contrast, creating a very strong rationale for buybacks and subsequent cancellations. What is holding you back? Thank you, Matias.
Hi, and thank you, Matias, for the question. Obviously, let me start from, there is a discount to NAV, obviously. And as we've discussed earlier, 1 part that we expect that discount to narrow is how the portfolio works. As Kıvanç was alluding, as there are some, let's say, like the one that you have seen and commenting on, developments that may further streamline the portfolio, we would expect a positive impact on the discount. A share buyback program is something we have done in the past, actually twice. And it's part of our, you know, capital allocation framework in general. And it depends on obviously, how the board views vis-a-vis other, you know, capital allocation alternatives.
Again, it's part of our playbook, and going forward, maybe, you know, that could be something that we may do again, depending on weighing with the other alternatives in place. We'll see. I'm coming to your 1st question one. We'll see if any transaction occurs or consummated, then we'll be happy to talk about how we're going to deploy the cash. It's a great problem to have. Thank you very much.
Once again, if you have any questions, please type it to the Q&A section of the Zoom. Thank you. If you have any questions, please type your question to the Q&A section of the Zoom. Another question from Özgür. Can you give an update on Kordsa after the rejection of capital increase plan?
Many thanks, Özgür . Again, as you've seen in Kordsa, you know, last year, the company has, you know, started restructuring its balance sheet. Company has successfully refinanced some of the short-term indebtedness, and then obviously converted into, you know, long-term indebtedness in its balance sheet. The capital increase was part of that restructuring program. We and our teams will look into, you know, what the CMB is saying. Obviously, we're quite keen to continue, you know, with that restructuring effort. Thank you.
Thank you, Özgür, once again. If you have any questions, please type your question to the Q&A section of the Zoom. Thank you. For a final call, if you have any question, please type your question to the Q&A section of the Zoom. Okay, it seems there are no further questions. I now would like to leave the floor to Kıvanç, our CEO, for closing remarks. Thank you.
Thank you, Kerem. Thank you everyone for joining us this evening, today. As we have turned to profitability by the end of 2025, we will continue this performance, with improved earnings quality, balance sheet strength, and with the resilience of our portfolio. We have the clarity, we have our plan, and we have the ability to execute. Once again, thank you very much.