Ladies and gentlemen, thank you for standing by. I am M ina, your host and operator. Welcome, and thank you for joining the TOFAŞ Türk Otomobil Fabrikası AŞ conference call and live webcast to discuss the first quarter 2025 financial results. All participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. Anyone needing assistance during the conference call, you may signal an operator by pressing star followed by one on your telephone. With this said, I would like to turn the conference over to Mr. Cengiz Eroldu, CEO; Mr. Ahmet Taşangil, CFO; and Mehmet Ağyüz, CFA, Investor Relations Manager. Mr. Taşangil, you may now proceed.
Thank you for joining our call. In a moment, Mehmet Ağyüz, our Head of Investor Relations, will take you through the details of our results for the first quarter of 2025. Before that, I would like to provide some highlights for the results. Q1 financials were negatively impacted by several factors, namely high competition in local markets without any local producer advantage under current tax brackets, limited availability on some imported light commercial vehicles, our transition from phase-in, phase-out of some production models, and lastly, implementation of hyperinflation accounting. On the other hand, our company generated cash with an operating cash flow of approximately TRY 5 billion in the first quarter of this year. Our export volumes in Q1 compared to the same period of the last year were affected by the phase-out of Fiorino production and by import restrictions in Algerian markets.
However, ramp-up of our new model, K0, is ongoing, and we will be launching new variants of K0 soon. As a result, we expect multiple acceleration in our export volumes for the rest of the year. More importantly, we are very excited about the road ahead for TOFAŞ after the regulatory approval of our Stellantis Türkiye acquisition. This acquisition marks the beginning of a new era for TOFAŞ. It potentially transforming the company to the next level. We expect the closure of the deal very soon. The acquisition will solidify our local market leadership with a total market share of almost 26% in the first quarter of 2025. As a result, scale economies will enable us to reap benefits of cost synergies as well as to penetrate into new business areas.
In addition, we are also focused on the situation of our plants and recently announced a EUR 256 million investment for the production of a new light vehicle. This model is expected to have an annual production capacity of 150,000 units, including completely knocked-down units. We plan to start production of the new model in the third quarter of 2026 and expect to share more details when we finalize the contract with Stellantis soon. This investment mandate is the second step of our industrial cooperation with Stellantis after the [inaudible] allocation, and our plant is well positioned to secure additional production mandate in the near future. I will now give the floor to Mehmet for the rest of the presentation, and then we would be glad to answer your questions. Thank you.
Hi. Good afternoon and good morning, everybody. I will walk through our first quarter performance for the rest of the presentation. In the first quarter, Turkish automotive production declined by 9%, reaching 244,000 units. Our production levels were around 27,000 units, which were around 50% less than the prior year, and we constituted around 8% of the industry in the first quarter of the year. In terms of production mix, it was stable compared to the prior year, and passenger car production constituted 69%, whereas the remainder was composed of LCV production. In the first quarter, we shipped 30,000 units, which was 44% less than the prior year and better than our production. On the domestic front, our shipments were 37% lower, whereas our export shipments were 61% less compared to the prior year.
We are in the ramp-up stage, and we expect export volumes to recover significantly in the remainder of the year. In terms of shipment volumes by business, the most significant change was observed in our export business, where LCV shipment composition increased by more than 100% and reached 86% of our export business. Moving on to domestic markets. In the first quarter, domestic market declined by 7%, reaching 276,000 units. Passenger car demand fared better than the LCV and contracted by 4% at 224,000 units, whereas LCV demand contraction was higher at 16%, reaching slightly above 52,000 units. You see the monthly evolution of the retail sales in Turkey. After two consecutive years of record demand in local markets, in the first two months of the year, demand retreated slightly.
However, in March, LV demand recorded a historic high figure for that month, and this was due to demand brought forward due to macro volatility with consumers anticipating price increases for the rest of the year due to the macro volatility observed in March. Our shipment volumes in the local market stood at slightly above 23,000 units, which was around 44% lower compared to the prior year. Our PC shipments stood at close to 17,000 units, which was 35% less. Whereas our LCV shipments were around 10,000 units less at close to 7,000 units. The decline in the LCV side was mainly due to discontinuation of the Fiorino production at the end of first half of last year. In terms of market share, Fiat brand stood in the third position with a market share of 8% in the first quarter.
High competition in the local market with our lessened competitive advantage as a local producer due to any lack of revision in the tax bracket, continued to impact our market share as well as phase-in phase-out of our production portfolio has continued to have a temporary negative impact on our market share. Including premium brands, TOFAŞ market share stood at 8.4%. Also, more importantly, LV market share of Stellantis brand stood at 25.8% in the first quarter. In fact, the brands we purchased, they improved their market share year-over-year, which shows the resilience and the competitive position of our brand portfolios going forward. In LCV markets, Fiat brand maintains the second position, albeit with a lower market share of 12.6% in the first quarter.
Availability of the imported LCVs and the phase out of Fiorino are the main contributors. Whereas, LCV market share of Stellantis brand stood at close to 44%. In fact, the other brands improved their market shares significantly in the first quarter. In passenger cars, Fiat brand moves down to third position with a market share of slightly below 7%. In addition to high competition, also, you would be aware of the tax-exempt sales to the disabled citizens, which tends to be quite heavy in the first quarter of the year after the announcement of the purchase limits by the government at the end of the year. Competition was quite aggressive in this market, and that also had an impact on our passenger car market share.
For the brands under Stellantis umbrella, the market share stood at 21%, which was 508 basis points lower compared to the prior year. Moving on to export business. In the first quarter, although now due to the transition, our export volumes are quite low. We shipped around 10,000 units less at 6,500 units in total. Our LCV shipments were slightly lower compared to the prior year due to the continuous ramp-up of our K0. Whereas our passenger car shipments were down around 9,000 units due to the import restrictions in one of our key markets in the MENA region, which these restrictions started actually in the second quarter of last year. You can see the monthly evolution of our export volumes on this slide, and you can see a gradual ramp up.
In the coming months, we are foreseeing a notable acceleration in our monthly figures for this year. This is the regional breakdown of our exports and may not be very representative for going forward as our export volumes are relatively low at 6,500 units. Nevertheless, in the first quarter, France became our biggest export destination with 38% of our export volumes, followed by Italy by 1/4 of our export shipments, and Spain with 16% of our export shipments in the first quarter of the year. Moving on to shipments by export and domestic markets by our models. You can see we shipped 6,500 units of exports, which is 10,000 units less, and this was mainly driven by lower passenger car shipments as K0 shipments mostly compensated for the discontinuation of Fiorino.
On the right-hand side, our domestic shipments, we shipped 26,500 units in the first quarter, which is around 16,000 units less compared to prior year. Most of that decline stems from the discontinuation of Fiorino. As a result, in total, we shipped 33,000 units, which is around 26,000 less compared to the prior year. Going on to financial performance. 44% decline in our shipments translates into 48% decline in our consolidated revenue. Whereas we generated almost TRY 700 million EBITDA, which is around 90% less. However, showing a slight recovery compared to the fourth quarter of last year. Due to our high net monetary position, we recorded net monetary losses, which translates into a negative profit before tax of TRY 188 million in the first quarter. You see the snapshot of our income statement here.
Although we have taken tough measures in the quarter, the 48% decline in the revenues translates into higher declines on our operating line due to the fixed cost structure as well as the negative effects of the hyperinflation accounting below the operating line. On our balance sheet, we continued to generate cash in the first quarter. As you can see, our cash and cash equivalent increased by almost TRY 5 billion , standing at TRY 26.6 billion . We have shown an improvement in our net working capital, mainly driven by the receivables and payables accounts, and we paid down around TRY 1 billion of debt with our long-term financial liabilities standing close to around TRY 30 billion . Moving on to investments.
In the first quarter, we spent EUR 38 million of CapEx, which is on track with our plan, and bulk of which, around EUR 35 million , constituted from our K0 investment as we are in the stage of introducing new variants to the market. Moving on to outlook. As a standalone, this year, we decided to maintain our guidance of our light vehicle market output of 0.9 million- 1.1 million units, and our domestic retail sales of 110,000 - 130,000 units, and export shipments of 70,000- 90,000 units. This translates into a production volume of 150,000- 170,000 units with a CapEx of EUR 150 million . I should note that, as you are aware that we are in the process of closing the acquisition of Stellantis Türkiye, which will change this picture notably, and we will provide more details after the closure of this acquisition.
This marks the end of our presentation. We will be happy to take your questions. Mina?
Thank you, sir. Ladies and gentlemen, at this time, we will begin the question- and- answer session. Anyone who wishes to ask a question, press star followed by one on their telephone. If you wish to remove yourself from the question queue, you may press star and two. Please use 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 is from Hanzade Kılıçkıran with JP Morgan. Please go ahead.
Thank you very much for the presentation. I would like to know about all the potential projects. I can understand that you do not want to disclose too much, but is it possible to comment what type of model, what country? Is this reasonable to assume that this may be a commercial vehicle that you had previously produced in Turkey, such as Doblò, as opposed to it going to be sold in [audio distortion] rather than Europe? The other question is for Egea. If the new model is going to be launched in the second half of 2026, could there be an extension on future contracts so that you may not face an avoidance of production during this transition period? Thank you.
Thank you, Hanzade, for the question. Starting from the first one. From a commercial standpoint, we will just defer the full details of the project until we sign the agreement. For the time being, we will keep only the volume that we mentioned in our public disclosures. For the agreement, we are still discussing with Stellantis, and we hope to sign it soon. On the Egea one—
I am sorry to interrupt. This is a deal that you have done recently, and it is for 2026. There is no project within the Stellantis for 2026. Could this be an old model? [audio distortion]
We will disclose all the details once we sign the agreement. [audio distortion] To not waste you too long on this one, we will try to aim a s soon as possible on this one. Going back to the Egea question, as we talked about it the last time, it is a topic just on the table. We are discussing it, and it is on our agenda, and we will also announce it when there is a decision taken on that one.
Thanks very much.
Thank you.
As a reminder, to register for a question, please press star one on your telephone. Once again, to register for a question, please press star one on your telephone. The next question is from the line of Murat İğnebekçili with HSBC. Please go ahead.
Hello. Thank you for the presentation. After Egea model ends, should we necessarily expect a PC model, or given the dominance of the new aggressiveness of the Chinese electric vehicle competitors, could we just discard the short-term phase to commercial vehicles and we change the plan? Thank you.
Thank you for the question. Both of the options can be doable. As I mentioned, we are discussing and contemplating on this one. The pipeline is not clear yet. Two options can be also possible and are on the agenda.
Mr. İğnebekçili , are you done with your question?
Yes, thank you. Just another question that comes to my mind is, can you compare the profitability of export project and a domestic project after the change of the economic climate in the last two years, given the rate and value of Turkish lira? Can you comment on that, please?
For sure, if you produce in Turkey and sell in Turkey, that is much profitable from our side as well. It was the case in the previous years and will be the case in the coming years as well.
What I am trying to say is domestic focus is not very easy to discard, right? You obviously want to have that domestic exposure.
Sure, definitely. We have a significant market share, and to defend that market share, we also need a production that also appeals to the domestic market as well.
Thank you.
As a final reminder, to register for a question, please press star one on your telephone. Ladies and gentlemen, there are no further audio questions at this time. We will now move on to written questions from our webcast participants. Our first question from the webcast participants is from [Diego Zhan] with HSBC, and I quote, nearly 1/3 of K0 sales went on the domestic market in Q1. Should we expect a change in this ratio for the full year? Thank you.
Thank you for the question. We expect a significant change on that one as the ramp-up stage is ongoing for the time being. As we mentioned in our guidance, the export volume is around 70,000-90,000 units. So we expect a significant change in favor of export volumes for K0. Thank you.
For our webcast participants, to register for a question, please type your question on the function bar on the webcast. Once again, for our webcast participants, please register your question via dialing in the question on the [inaudible] . Our next registered question is from [Rakuten Shinsman], and I quote, can you give us more color on opportunities? What should we expect in terms of margins and new business potential?
Thank you for the question. Both on cost and revenue sides, there will be synergies. On cost side, such synergies will be in areas like logistics, purchasing, and many areas in sales and marketing expenses. On the revenue side, there will be also many areas as well, like insurance sales and new business areas such as used car business and independent aftermarket for spare parts as well. Thank you.
Last reminder for webcast questions, please type your question into [inaudible] . Our final webcast question is from [audio distortion] , and I quote, to which level do you think your total production volume will climb considering all the agreements and terminations with Stellantis? Will you be able to achieve a CUR rate above 80%? Thank you.
Thank you for the question. For the time being, the capacity utilization rate is very low, and with this new vehicle, we will be having at least 70% capacity utilization rate as well. For 2027, actually, that was the target year for us, and we would like to achieve a full capacity utilization rate by that date. With hopefully, a new project that we will also announce in the meantime. 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.
Thank you, Mina. We certainly appreciate your time today and your interest in TOFAŞ. I wish you a good day.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephones. Thank you for calling.