Ladies and gentlemen, thank you for standing by. I'm Constantinos, your cordial call operator. Welcome, and thank you for joining the Tofaş Türk Otomobil Fabrikası A.Ş conference call and live webcast to present and discuss the first quarter 2026 financial results. All participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Cengiz Eroldu, CEO, Mr. Ahmet Taşangil, CFO, and Mr. Mehmet A. Ağyüz CFA Investor Relations Manager. Mr. Taşangil, you may now proceed.
Thank you, Constantinos. Good afternoon and good morning. Thank you all for joining our call. Mehmet A. Ağyüz , our Head of Investor Relations, will now take you through the details of our results for Q1 2026. But before that, I would like to highlight a few key points. We had a good start to the year in terms of profitability, execution in our local markets, and also in our production. Q1 PBT margins reached 2.5%, despite a seasonally low quarter, marking a significant improvement over the same period of last year. Higher production tempo and consolidation of sales in Türkiye lead to economies of scale and were the main drivers of our year-on-year PBT margin expansion. In Q1, we improved our local light vehicle market share by 130 basis points, reaching approximately 27%.
Our light commercial vehicle market share reached close to 49%, 500 basis points higher versus the same period of last year, while passenger car market share was flattish at 21.4% in the first quarter. On the other hand, capacity utilization of our plant has been improving with 38% year-on-year production growth in the first quarter. Thanks to better performance of K0 model at both export and local markets, we revised up our 2026 production outlook by around 10%. Our export volumes increased by 155% year-on-year in Q1, supported by the introduction of new variants of K0. We now project approximately 20% higher export volumes for 2026 compared to our initial guidance. The ongoing investments for new models are on track. We plan to begin the production of K9 model in September this year. As the only local producer in this segment, K9 is likely to improve our profitability further.
Investment for K0 exports to North America is ongoing, and shipments to this market are also expected to begin late this year. Our feasibility studies to achieve full capacity utilization at our plant have been progressing. We anticipate to share more details about new projects over the next couple of months. Lastly, even just after the TL 10 billion dividend distribution in Q1 and the ongoing CapEx cycle, our balance sheet remains flexible with an industrial net debt-to-EBITDA of 0.4x . I will now give the floor to Mehmet for the rest of the presentation, and then we will be glad to answer your questions. Thank you.
Thank you, Ahmet . Good afternoon and good morning, everybody. We start with the production. In the first quarter, Turkish motor vehicle production declined by around 7%, reaching to slightly above 320,000 units. During this period, Tofaş production expanded by 38% compared to the same period of last year and reached 37,000 units. With this performance, our share in the industry increased to 11.4% compared to slightly below 8% in the first quarter of 2025. In terms of production mix, our LCV share has been increasing and now constitutes about two-thirds of our production volumes. This marks more than doubling of the mix on the LCV side, and this is thanks to the ramp-up of K0 production. Moving on to domestic markets. After three years of record demand in the local markets, in the first quarter, light vehicle demand retreated slightly and down by around 4%, reaching to 265,000 units.
The driver of this decline was the passenger car demand, which was down 6%, whereas LCV demand remained robust and grew by 4%. When we look at the monthly evolution of the domestic retail sales, you could see that after the increasing geopolitical risk, especially in March, the market, which has been growing and slightly stable, started to go down in March, which was down around 12%. Nevertheless, yesterday's data for the April figures suggests that stabilization in the overall light vehicle market remains well above the historical averages. In terms of market share, Tofaş continues to perform quite strongly in this market, and our market share increased by around 130 basis points and reached slightly above 27% in the first quarter.
Fiat brand and the Citroën brand was the main driver of this performance, as well as the Jeep brand also more than doubled its market share, thanks to the introduction of Jeep Compass. On the LCV markets, we now control slightly below half of the market, with a 48.7% market share, which is up 500 basis points compared to the prior years. The main driver of the improvement is the Fiat brand, which increased by around 10 percentage points. This is thanks to the ramp-up of K0, higher availability of the imported LCVs, as well as the low base of last year. On the PC market share front, our market share was relatively stable at 21.4%. Whereas Stellantis and the Opel brands was performing, and as well as Jeep brands, was quite strong, partially offset by the decline in the Fiat brand market share due to the product transition.
Moving on to exports. In the first quarter, demand conditions in the European market was benign, and passenger car registrations grew by 4%. This was mainly due to the robust March performance, which was up in double digits. Also after the revised and the new tax incentive schemes introduced across the major European countries, the share of battery electric registrations also increased by more than 400 basis points, and now constitutes slightly less than 20% of the PC registrations in Europe. On the LCV market, it was slightly up by around 1%, and this reflects actually a recovery from relatively a low base of the last year. There were mixed results across the main markets, where France and Spain registered growth and the other markets registered declines in the first quarter. Our export volume performance has diverged from the underlying demand.
As you know, we are in the process of ramping up our production and filling the gap in our product portfolio. Due to the strong performance of the K0, our export volumes recovered by more than 150% in the first quarter, reaching to slightly below 17,000 units. This was mainly driven by the tripling of our LCV volumes, thanks to our K0 model, which we introduced the new version, the combi version, towards the end of last year. You could see the monthly evolution of our export volumes, and you can see the increasing tempo on our production, on our export volumes, which marked around 7,500 units in the March month. We expect the trend to continue for the rest of the year. In terms of regional breakdown of our exports, as you can see, almost 100% of our exports go to Europe.
Within that, one-third of our volumes goes to France, followed by Italy and Germany, with shares of around 15%, and Spain constitutes around 13% of our export volumes. In terms of shipments volume breakdown, this is wholesale figures, and total domestic volumes grew by around 190% and reaching to 77,000 units. This is thanks to the import growth of more than eight times compared to the prior years, thanks to the inclusion of Stellantis Türkiye. Also on the production side, our LCV sales from production grew by 82%, whereas our PC sales from production was down around 36% due to the aging of Egea. As you know that the production phase-out will take place at the end of June this year. On the export front, the main driver is the increase in our LCV shipments, which more than tripled and result in 155% growth.
All in all, we shipped 93,000 units, which is 180% higher compared to the prior year. You could see that our shipment volumes was balanced between LCV and PC, which were roughly 46,000 units each. Moving on to financial performance. In shipments, 183% growth translated into 200% growth, real growth in the revenues. This is mainly due to the differences due to product mix. Whereas this revenue growth translated into the similar EBITDA growth and which reached to TRY 2.6 billion in the first quarter. Whereas our profit before tax surged to TRY 3.3 billion compared to the negative figures in the first quarter of 2025. This is a snapshot of our P&L, and more than a tripling of the revenues has translated into a gross profit margin expansion as well as notable operating margin expansion due to also the economies of scale.
Our main KPI PBT margin improved by 360 basis points, percentage points, to 3.5%, which is at the mid-range of our year-end guidance in a relatively seasonally low season. Our balance sheet remains robust with a net industrial net debt position of around TRY 5 billion after the distribution of TRY 10 billion of dividend, as well as the ongoing CapEx cycle. One of the major increases here you could see in the inventory line, and this is partly due to the phase-out of Egea production as we are building inventory to be able to sell after the phase-out of production, as well as goods in transit. You could see the more balanced increases in the other items with trade receivables and trade payables are broadly offsetting each other, which has not put pressure on the net working capital.
On the investments, we spent EUR 41 million in the first quarter, half of which is constituted of our ongoing K9 investment. The rest of that is mainly K0 investment, the homologation investment for the North American market, while the remainder was structural investments as well as pre-spending for the new project. On our guidance, on the local light vehicle market, we decided to take a more cautious approach given the geopolitical tensions and slightly revised our domestic market assumption by around 100,000 units to 1.2 million-1.3 million units. In parallel to that, we are reducing our local domestic retail sales by around 25,000 units to 320,000 to n350,000 units. Considering this good export shipment tempo, we decided to slightly increase our export guidance by around 8% to 70,000-80,000 units.
In parallel to the increase in our export shipments, we also increased our production volume assumption by the same amount to 145,000-155,000 units. We maintain our CapEx guidance at this stage at EUR 250 million. Our profitability target for this year and for 2028 when we complete our investment cycle remains the same, with 3%-4% PBT margin in 2026 and 5%-7% for 2028. This slide concludes our presentation, and we are happy to take your questions. Operator?
Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star then one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please mute your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from the line of Cemal Demirtaş with Ata Yatırım. Please go ahead.
Thank you for the presentation, and congratulations.
Mr. Cemal, excuse me for the interruption. We cannot hear you.
Do you hear me now?
Yes, now we can. Please proceed. Thank you.
Hear me?
Yes.
Do you hear me now?
Yes, we can, Cemal .
Okay. Thank you. My first question is about the domestic market. We see that you cut around 100,000 units from your previous estimates. I would like to understand the reasoning behind that. Does it include potential risks related to geopolitical issues, or do you have any sense of some slowdown in the market? Because Cengiz Bey, you have always been good in predicting the market direction in these times. I want to understand any specific indication you see in the market or just being cautious because we are also being cautious nowadays. If these tensions continue, then we are likely to see maybe major decline as a risk factor. I would like to understand how much the concern you issued in this area. Do you see any additional downsides if these current conditions or the current worries persist? That is my first question.
The second question is, recently we see April figure for your export figures, and finally, we see some improvements in April. We see that you increased the export, the guidance to some extent. Could you further just elaborate that side from the export side? At some point, do we have a chance of moving to the three shifts? Any change in the production signal? What could be the signal that your capacity utilization is getting higher? When do you think we can get that indication? Of course, assuming that the global conditions or geopolitical conditions will normalize. Thank you very much.
Thank you for the question, Cemal. Cengiz Eroldu speaking. Regarding the domestic market side, as you said in your question, we are a little bit cautious about the geopolitics, I can say, because the April market numbers are almost at the level of last year. There is a very small difference between 2024 and 2025. In Türkiye, there is still a high demand for the cars, both passenger cars and light commercial vehicle side. Because according to us, still for the customer, the car is representing important opportunity to invest in these circumstances, because in the normal conditions, we should not see this kind of high demand, but only explanation is the customer is acting in order to also protect the value that they have in their hand, because they are also seeing the flat exchange rate situation.
They are seeing geopolitical tension, and they are expecting also some cost ups and reflection of those cost up on the sales price in the coming months. For this reason, the demand in the local market is still robust. March was like this, and April is the same. Now, in May, we have a one week of vacation period, so for this reason, maybe not so much indicative, but we will see the June, and how the geopolitical tension will continue. That will be the key for the local market, I think. Regarding the export side, as also Mehmet explained, our export performance is improving. We are forecasting also better year-end numbers compared the latest revision.
But the third shift, I do not think so, because now we need to manage also launch of the K9, the Doblo and the sisters production in the plant in the last quarter of this year, which is a very important car for the company performance. Thank you again.
Thank you, Cengiz.
The next question comes from the line of Murat Yiğitbekçili with HSBC. Please go ahead.
Hello. Thank you for the presentation. My question is similar to Cemal's. Seeing the April run rate of exports, would you say another year-end export guidance upwards is likely in the coming quarter because a monthly run rate of 10K is quite strong? You already have 26K in the first four months. That tells us that this number could easily be attained. Would you agree with that? Also, looking at the Koç Stellantis Finansman, the contribution to profit before tax is over 10% now. It's a significant item in your balance sheet. Would you expect the contribution of that to improve as well in the coming quarters? Thank you.
Okay. Thank you very much for the question. Starting from the first one, you also see the F&O numbers is a pretty much strong number, but we would like to, for the time being, stick with our expectation. Obviously, there is an upside risk on the volumes, but we will wait and see on this one and how it evolves through the time. For the other question about Koç Stellantis Finansman, the net income contribution is getting higher, and that's one of the achievements of the company as well, because now Koç Stellantis Finansman is also o ffering consumer finance business for Peugeot, Citroën, Opel, and their experiences as well. The contribution will continue throughout the months to follow, and it is one of the synergies that we have managed to achieve. Thank you very much.
Thank you. If you were to comment on the first quarter's PBT margin, would you say it's ahead of your forecasts when you provide us the year-end guidance. Is it above your previously enriched run rate. Thank you.
Q1 is a seasonally low quarter, and it's good to have 3.5% margin on PBT terms, so it's a good start. We expect to continue. For this whole year, we still stick with our guidance on that one. One worthy note, especially in this quarter, as you know, the inflation rate is also 10%, which we also expect to slow down, not maybe in this month, but in the coming months as well. So we may see also an upside there as well. For the time being, we also would like to stick with our guidance.
Thank you very much.
The next question comes from the line of Hanzade Kilickiran with JP Morgan. Please go ahead.
Hi. Ahmet Bey, thank you very much for the presentation, and congratulations on your strong results. I have a question about your CapEx first. I know you discussed this many times in the previous calls, but it will be helpful if you can repeat again. Is it possible to clarify whether new project investments are included into 2026 guidance? Or your CapEx guidance may be revised up in case you reach an agreement to proceed on these new investments. In case you fill the rest of the capacity with new models, how much CapEx will be required in 2027? I know you can't comment much on new projects, but a rough guidance of potential CapEx will be very helpful to understand the upside from here. My second question, I have asked this to Ford as well, but to be fair, I'm going to ask you as well.
Do you expect any production ramp-up issue in case of aluminum shortage globally? Where do you supply your aluminum? Thank you.
Okay. Thank you very much for the question, Hanzade. Starting from the last one, especially during the war times, the supply chain issue is really important, and it's a bumpy road. We are closely monitoring that one as well. It has two aspects from our point of view. One is like the metals that you mentioned. There can be a shortage on that one. But for the time being, we have no immediate problem on that one. The only problem that we face is the prolonged transit times, especially from the Far East part of the world, but it is still on the manageable side, so no issue at all for the time being on the supply chain part. On the capacity part, the CapEx figure that we presented to you doesn't include any investment related to new projects.
There are some pre-spendings, obviously, but they are not really material enough to mention. Going forward on the new projects, it's hard to come up with an exact number, and I need to be cautious on that one as well because it really depends on the models and can vary. But as you know, if you take a look at the previous models that we invested at Tofaş, the number is around EUR 300 million, EUR 360 million range. Can be along those lines, but depends also on the model as well. Hopefully, we are in talks with Stellantis. As you remember, we mentioned that one before in our previous calls as well. Hope to come up with some tangible announcement on that one in the coming months as well. Thank you very much.
Thank you, Ahmet Bey.
As a reminder, if you would like to ask a question, please press star and one on your telephone. Ladies and gentlemen, there are no further audio questions at this time. We will now move on to our webcast questions. The first webcast question comes from Emin Hasemoğlu with QNB Invest, and I quote, Thank you for your presentation. My question is whether there is any near-term locally produced PC platform project planned to replace the Egea, or whether the PC side will be carried forward entirely through the F2U and F2X programs, which produced in Morocco. Thank you.
Thank you very much for the question. As I mentioned to you, we are working on the new projects. If you take a look at the last decade, the top three selling cars are always local produced cars in Türkiye, and as the different market leader in Türkiye, it is actually inevitable for us as well to produce a PC car in Türkiye as well. We are working on that one. No problem at all. But we will announce it when we will finalize it.
The next webcast question comes from Murat Bulut with Azimut Asset Management, and I quote: Hi, and thanks for the presentation. There were some concerns regarding domestic pricing environment. Yet you achieved a real increase in revenue per vehicle in domestic side in the first quarter. Do you have any worries about this topic for the upcoming quarters? Thank you.
Actually, in terms of pricing, it is a complex answer to that one because we are taking into account all sorts of competitive pressures in the market and the inventory on hand as well. We are trying to get the optimal result on that one. Maybe one answer to the question is that there is also an effect of the mix change as well in terms of pricing, so it also affects our results. As I mentioned you, as the market leader in Türkiye, we are trying to get the most optimal solution on pricing front. Thank you very much.
Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Taşangil for any closing comments. Thank you.
Okay. Thank you. Thank you very much indeed for being with us today and for your continued interest in Tofaş. We appreciate your time and wish you a great day.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling. Have a good afternoon.