Ladies and gentlemen, thank you for standing by. I am Konstantinos, your conference 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 12-month 2024 financial results. All participants will be listed only. 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 Ağyüz, CFA, Investor Relations Manager. Mr. Taşangil, you may now proceed.
Thank you, Konstantinos. Good afternoon and good morning. Thank you all for joining our call. In a moment, Mehmet Ağyüz, our Head of Investor Relations, will take you through the details of our results for 2024. Before that, I would like to provide some highlights for the results. 2024 marked the sixth year that Fiat brand sustained its domestic market leadership with a market share of 11.2%. Since its launch, Egea has remained the best-selling vehicle in the local market for nine years in a row. We were able to achieve this despite several headwinds throughout the year. First of all, high competition in the local market with no revision in the special consumption tax brackets limited our local producer advantage. Secondly, we experienced a low capacity utilization rate, mainly due to phase in and phase out of some production models.
These factors, coupled with the implementation of IAS 29, put pressure on our financials in 2025. Our export business was also affected from the transition, and 2024 marks the bottom for our export volumes. We expect significant recovery in our export volumes in 2025 with the contribution of our new commercial vehicle, K0. We started the production of this model in the fourth quarter of the last year and expect a significant ramp-up with the introduction of new variants this year. K0 is the first step of our industrial cooperation with Stellantis, and our plan is well-positioned to secure additional projects in the near future. Regarding the consolidation of our commercial activities of Stellantis in Turkey, I could say that there is a constructive dialogue with the competition authority, and the process reached to its final stage. I will now give the floor to Mehmet for the presentation.
We will be glad to answer your questions. Thank you.
Hi. Good afternoon and good morning, everybody. In 2024, Turkish vehicle production declined by around 7%, reaching to slightly below 1.4 million units. At Tofaş, our production reached 140,000 units, which suggests around 41% contraction over the prior year. Our production constituted around 10% of the industry production in 2024. In terms of production mix, passenger car production has increased slightly to 75% of our production, whereas the remainder was constituted of LCVs. Our total shipments in 2024 reached 174,000 units, which is around 33% less compared to the prior year. The main driver of this decline is our export shipments which declined by 45% due to the product transition. However, you could observe that there is a sequential recovery in our export volumes in the fourth quarter with the initial production start of our new commercial vehicle, K0.
In terms of shipment volumes by business, in 2024, there wasn't a major material change, which in the total business LCV share increased slightly by around 160 basis points and constituted around 35% of our total business. Moving on to domestic markets. 2024 marks the second year in a row that light vehicle demand remained above 1 million units and reached 1.24 million units with a 1% increase over the prior year. This was higher than our initial expectations, and the main driver of the strength is the passenger car segment. There was a 1% increase on the passenger car demand, reaching to slightly below 1 million units, whereas LCV demand declined slightly by 3% to 260,000 units. As you can see in the fourth quarter, there is an acceleration in the light vehicle demands.
Fourth quarter demand was up 4% compared to the prior year, mainly driven by a notable increase on the LCV demands, increasing 12% compared to the prior year. In this slide, you can see the monthly evolution of the light vehicle retail sales. As you can see throughout the year, light vehicle demand remains resilient. Starting the year, especially in the first quarter, quite strong, driven by the tax exempt sales to the disabled citizens. Throughout the year, with the GSR2 regulation change, with the deadline of July 2024, there were multiple sales campaigns which supported sales for the auto players to deplete their inventory. Also, pent-up demand from the fleet customers throughout the year continues to support demand in 2024. As Tofaş, we shipped in local markets 144,000 units, which is around 28% less compared to the prior year.
Our shipments decline was pretty much similar, with 30% decline on the passenger car and 24% decline on the LCV. Mainly on the LCV side, the product transition with the phase-out of MCV production in the middle of the year played a major role for this decline. 2024 marks the sixth year in a row that Fiat's brand sustained its light vehicle market leadership with an 11.2% market share. There was a slight retreat compared to the prior year due to a high level of competition in the local market, with new entrants from the Chinese players, and also which suggested around more than 600 basis point increase on the import share in the overall market. Also considering the central bank policy of strengthening of Turkish lira, that also improved the competitive position of importers.
There hasn't been any revision in the special consumption tax brackets for two years now, which also limited our local production advantage. Lastly, phase-out of our LCV production portfolio, although we started K0 towards the end of the year with very limited numbers, also had an impact on our market share in 2024. When we look at Tofaş including the premium brands, our market share stood at 11.6%, which showed a similar decline compared to the prior year. All the brands under Stellantis umbrella light vehicle market share stood at 27% in 2024. In light commercial vehicle markets, Fiat brand maintains its market share, although with a lower market share of 20%, and this was mainly due to discontinuing of MCV production. Overall, the LCV market share of Stellantis brands stood at slightly above 41% as of the end of last year.
Although Egea model since its launch, maintained its market leadership for now nine years in a row, Fiat brands moved down to second position with slightly below 9% market share, and due to the elevated competition in the local market. When we look at the PC market share of brands under Stellantis, it stood at slightly above 23% in 2024. Moving on to export business. In 2024, passenger car registrations in Europe was pretty much stable, although some big markets like Germany and France showed contraction. There was a 1% increase in the European registrations. On the other hand, battery electric registrations declined by 6%, now constitutes 14% of registrations, with the expiry of incentives, as well as the concerns about the second-hand car value of these vehicles.
On the other hand, LCV market was quite robust last year, which grew by 7%, and this was driven by good growth across all the main markets in Europe. As Tofaş, our export volumes stood at around 34,000 units last year, which is indicating a 45% decline. This was equally split between the passenger car and LCV segments. On the LCV side, phase-out of MCV production had an effect on our export volumes. Whereas on the PC side, temporary import vehicle ban at one of the main export markets in MENA region impacted our export volume performance on the passenger car. As you know, our K0 model is an export-oriented product, and it started in the fourth quarter 2024, and it's set to ramp up significantly in 2025, which will likely to mark the bottom for our export volumes in 2024.
You can see the monthly evolution of our exports figures here in the charts. It has been in the second half of the year, relatively weak. In terms of regional breakdown of our export business, although this may not be very representative due to our product transition stage, this chart may change drastically in the coming years. MENA region and Italy constitutes the bulk of our export shipments, whereas MENA constitutes 38% of our export shipments, and Italy constituted 39% of our export shipments in 2024. Looking into our shipments by model. On the left-hand side, on the export business, we shipped around 27,000 less units, and you can see this was mainly driven by the Tipo model, which we shipped almost 22,000 units, which is suggesting around 50% decline. Whereas also MCV shipments were down around 6,400 units at slightly below 10,000 units.
On the right-hand side, in the domestic business, we shipped 60,000 units less at 140,000 units in the local market. Egea, of course, our best-selling car, was the main contributor to that. We shipped 83,000 units. Although it is coming close to the end of its life cycle, it has continued to perform quite well. Fiorino, we shipped 17,000 units less as we stopped shipping this product in the second half of last year. Overall, in our total shipments, we shipped 174,000 units, which is around 87,000 units less compared to the prior year. Moving on to financial performance. You can see there is a snapshot of our financial highlights in this slide. On the left-hand side, 33% decline in our shipments results in a parallel performance on the revenue side, which reached TRY 120 billion , suggesting 35% decline.
We recorded TRY 9.5 billion of EBITDA, which is around 67% less due to the challenges in the local market and also challenges with the transition with our capacity utilization. Also with the effect of the inflationary accounting, and high net monetary losses on our P&L, we recorded a PBT of TRY 4.9 billion , which is around 80% less compared to 2023. This is a snapshot of our P&L. As you can see, the 35% decline in our revenues resulted in around 75% decline in our net profits, and we recorded a net profit of TRY 5.2 billion with a net margin of 4.3%. Looking in our balance sheet. We have a robust cash position as of the end of last year, with around TRY 20 billion , although we distributed around 10 billion of dividends.
With the declining volumes in the local markets, there is decline in our inventory and receivables with around TRY 11 billion , which was offset by increase in our trade payables. Also, we utilized the sustainability-linked loan, which we announced late last year for EUR 290 million , which is also reflected here in our increase in our long-term financial liabilities here. In 2024, we spent slightly below EUR 140 million of CapEx, and bulk of which was constituted by our investments in K0, which stood at EUR 105 million , while the rest of the CapEx was split between ongoing structural investments in our plants as well as our passenger car model. Moving on to outlook. After having two years in a row of record sales, we are expecting the local markets, we are expecting a slight retreat in the light vehicle demand.
We are expecting 900,000 to 1.1 million units in the local market. For Tofaş, we are looking for a domestic shipment volumes of 110,000 to 130,000 units, which is suggesting around 12% market share, similar to the last year's levels. On the export side, we are looking to more than double our export shipments, reaching to 70,000 to 90,000 units in 2025. As a result of this, we are looking for a gradual recovery in our production tempo, with 6%-20% increase in our production volumes, reaching to 150,000 to 170,000 units. In 2025, we continue to invest for K0, and we are looking for EUR 150 million of investments. On the profitability side, we are looking to attain above 5% PBT margin in 2025. Let me add this disclosure. These assumptions do not include the pending acquisition of the Stellantis Türkiye operations.
This marks the end of our presentation. 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 followed by one on their telephone. If you wish to remove yourself from the question queue, then 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 comes from the line of Kılıçkıran, Hanzade with JPMorgan. Please go ahead.
Hello. Thank you very much for the presentation. I have three questions. The first one is about your future plans. How do you plan to utilize the expiring Egea platform in 2026 and offset the potential volume loss in the Turkish market? Second is about your dividend payout ratio. Could there be a dividend risk compared to, I mean, dividend payout risk, actually, compared to previous years, given the growth cash is now very close to potential deal value of the Stellantis distribution assets? The third one is that, are you concerned about the recent management issues in Stellantis after the CEO leave? I mean, may this create a timing risk on your future plans? Thank you.
Okay. Thank you, Hanzade. Going through all the questions. Regarding the Egea plan, this car is one of the best-selling cars in Turkey. If there is a value creation opportunity for us, we are always discussing and evaluating any opportunity to have it produced in the next years as well, but for the time being, there is no such plan. Related to the dividend payout ratio and dividend plan, this is of course the decision of the general assembly, not Tofaş management. As of today, we are in a net cash position, and we have a healthy balance sheet. The dividend distribution is a dynamic assessment taking into account all possible cash outflows and inflows, such as CapEx and M&A activities. So it will be the decision of the general assembly.
Regarding the relationship between Stellantis and Tofaş and the recent management change on the company, there is no negative issues on our side. The correspondence and the relationship is, of course, clear and healthy. There is no negativeness on our side related to the management change of Stellantis.
Thank you very much. Actually, I didn't want to mean about a kind of negative relationship, but I think you are planning some plans to expand the production in the recent years, I mean, in the upcoming years. So, probably these discussions have been already these plans have been already discussed with Stellantis. But with this change in the management, could there be a pause for a time, and then again the negotiations may start? Or you are very comfortable about the 2026 production ramp up?
As you know, the capacity utilization rate is around 40% at Tofaş. And it is for sure that such a low utilization rate is not sustainable in the medium term. And all parties are all aware of this fact and working towards it to create an additional value from Tofaş operations.
Okay. So the plans are currently intact, I understand.
Yes, definitely.
All right. Thank you.
Hanzade, Cengiz speaking. Regarding the shareholders relation and the new governance on Stellantis, I think you are also following now that Mr. Elkann has much more power, has much more, let's say, the operative power than the past. Mr. Elkann, who was the FCA main shareholder and now also is managing the board, not only the board, also the operational facts and decisions inside the company. We have a long knowledge companies, but also between Koç Holding and the Agnelli family and so on, Koç Group and Agnelli family and so on. I think these changes on the management side of Stellantis, what I see is a positive for us from Turkey side.
All right. Great. Thank you very much, Cengiz Bey .
Thank you.
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 into our written questions from our webcast participants. Oh, apologies. We do have an audio question. The next question comes from Aytunç, Uz with Ak Invest. Please go ahead.
Hi. Thank you for the opportunity to ask questions. I got two. The first one is, can you share some details regarding the increase in export revenue per vehicle in euro terms? I see a significant quarterly and yearly increase. Should we expect some sort of almost normalization in the first quarter of 2025? The second one is about trade payables. Again, there is a significant change there. There is a significant decline, both quarterly and yearly on trades payable. Should we expect some sort of an upwards normalization in the first quarter of 2025? Thank you.
Okay, thank you for the questions. Starting from the last one, regarding the trade payables. The main reason for the decrease in the trade payables is the decrease in the production volumes. We expect to improve our networking capital with the increase in the production volumes. For the first one, as far as I understand, you mentioned any restrictions on the export market, right?
No. I was actually talking about export pricing. Export sales revenue divided by export sales volume. There is a significant increase there in euro terms, of course.
On that one, the export volumes, actually, we do not foresee any significant change as well in terms of pricing and in terms of profitability. It will be a stable business for us in terms of profitability as well.
Okay, thanks.
Okay.
Maybe I can add something on the Mr. Uz's question . As you are referring to the fourth quarter, and although the numbers are low, we are starting to produce K0, which is a bigger vehicle, which could also result in slightly higher average pricing, euro pricing that you are referring to.
I see. I was actually thinking about maybe there was some sort of a take-or-pay, there was some sort of a reason regarding take-or-pay structure. But I see.
No, there is no change.
Okay, thanks.
The next question comes from the line of Demirtaş, Cemal with Ata Invest. Please go ahead.
My question is about the dividend side. Regarding the inflation effects on your statutory accounts, did you benefit from that or not? That is one of the points I would like to understand. Did it have any tax impact on yourself and the dividend side? The other one is about, again, the Stellantis competition boards. I know that every time we cannot give an exact date or anything, but I see that you are more constructive on that side. Should we talk about the months or quarters about that at least? It is like expecting news. It has been the issue of the market. I just want to understand how close we are. Not a signal, but at least should we wait another quarter? Any signals or anything, at least your perspective will be helpful.
If you do not share, it will be okay, but I think it will continue to be the speculators in the market. Of course, when the time goes on and on, the questions are rising. I know it is not under your control, the competition board decision for sure. Everybody wants to see that. But concerning the year of 2004, which was a difficult year in terms of the export and the volumes. You give the positive signals, and Cengiz Bey mentioned about some key issues. I understand, but any clarification, anything more you can say about this issue? Thank you.
Okay. Thank you very much for the questions. As you mentioned, it is really hard to come up with an exact date on the Stellantis Türkiye acquisition, and we are in the same position as yours. We are waiting for the final decision of the board, and we have a positive expectation that they will give us green light. But the date and the exact timing is also unknown for us. Regarding the dividend distribution part, we do not have any concerns on the statutory accounts as well. From a technical point of view, we are in a position to distribute dividends. There is no harm done on the tax statutory part as well, and also from the inflation accounting side.
Thank you. One last point I would like to ask. You do not share the TAS 29 figures. But do you also still follow the operations or operating performance in that format too? Or when you look at the financials, which financials do you really look when you are trying to see the picture of the company? With inflation numbers or without inflation numbers, do you still look at those figures, or are you also reporting in that for your internal purposes?
We all have all the numbers, obviously. But looking at it in a high inflationary environment, I guess it is best to look at the inflation-restated numbers because it gives a fair representation of our performance as well. We have all the details. We are looking at it from a nominal perspective and inflation-restated as well. But as I said to you, it is the inflation restated numbers that really represent the operations of the company.
Okay. Because when I look at from the footnotes, I come up with $2 billion more if you had pre-inflation accounting numbers. I do not know if you comment on those things. But if we had pre-inflation accounting based on your monetary position, your profits would have been higher. And I think that would be because you are recording some monetary losses. And should we expect that to continue within the picture for the following maybe six, nine months?
Looking at the balance sheet structure, one can easily see that there is a negative effect of the inflation accounting. But as I said to you, that is the fair representation of the company. And if the balance sheet structure changes in the next month or throughout the year, of course, the monetary gain loss effect will change as well.
Thank you.
Mr. Demirtaş, have you finished with your questions?
Yes. Thank you.
Thank you. The next question is a follow-up question from the line of Kılıçkıran, Hanzade with JPMorgan. Please go ahead.
Thank you. Apologies for my basic question, but I am trying to understand the opportunity here. When you highlight the K0 in your volume table, it is given under Scudo brand name, which is, I believe, a brand name used by Fiat. I think the model is also called Opel Vivaro or Peugeot Expert in other Stellantis group companies. Are these brands also included in your export volume guidance in 2025?
Yes, definitely Hanzade.
All right. Okay. Thank you.
You are welcome.
Once again, to register for 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 into our written questions from our webcast participants. The first webcast question comes from Burcu Esin with Deniz Yatırım, and I quote. "Hello. Firstly, thank you for the presentation. Burcu from Deniz Yatırım. I have a few questions. After the 2023 financial results, you revised your expectations downwards every quarter. Did you announce your 2025 expectations in an optimistic scenario? Does it contain downside risk like in 2024?" This is the first question. If the management wish, I can take it one by one.
Yeah, sure. We can answer that one. These are the expectations for the year, and we are in the beginning of the year. Of course, we base it on realistic assumptions. Not too optimistic, not too pessimistic, but as you know, Turkish market is a very dynamic one. We can, of course, update as we see fit throughout the year. But for the time being, these are our expectations based on our realistic assumptions.
Second question. "If the competition board approves the merger tomorrow, how long will we see the consolidation? Also, what is your expectation for domestic vehicle sales after the merger?" This is the second question.
Okay. I read it as how long it will take for us to close the transaction. Once we have the green light from the competition authority, we will be really quick to close the deal and finalize the acquisition. It will not take more than a month to close the deal once we hear from them. And for the second question, it was talking about the domestic vehicle sales right after the merger?
Okay. Do you wish me to repeat the question, sir?
Please.
Of course. If the competition board approval approves the merger tomorrow, how long will we see the consolidation? Also, what is your expectation for domestic vehicle sales after the merger?
As you know, going to the second part of the question, once we have the consolidation, once we have the deal done, the Stellantis brands all together in Turkey will have 27% as of the year-end market share in Turkey. There will be, of course, a boost with the consolidation.
Third question, how will your EBIT margin expectation be revised after the PSA acquisition?
Okay. On that one, as you all know, per competition rules, we do not have access to the latest financials of Stellantis Türkiye. Once we have the deal closed, we will quickly update our budgets and our forecasts, and then we will, if needed, and for sure it will be needed, we will come up with a new guidance on the Tofaş consolidated financials, including Stellantis Türkiye operations.
Third question. After, excuse me, fourth question. After Egea production is over, will you be able to produce a model as strong as Egea in the domestic market? Can you tell us about your roadmap here? Thank you.
Hopefully, we will have a strong vehicle after that. As I mentioned to you, the capacity utilization rate is really low now, and it is not sustainable. There will for sure be new vehicles for the factory, but there is no tangible project yet. We are working on it, and we will announce it when it is ready.
Thank you. The next webcast question comes again from Mr. Burcu Esin with Deniz Yatırım, and I quote, "Do you complete 2024 with 140,000 or 143.7 thousand vehicles in the domestic market? There are two different figures in the presentation. Could you explain the difference?" Thank you.
Hi. Thanks for the question. One figure refers to the retail sales, and the other figure is the wholesale to our dealers. That's where the difference is coming from. Thank you.
Thank you. 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. We certainly appreciate your time today and your interest in our company. I wish you a good day.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.