Ladies and gentlemen, thank you for standing by. I'm Constantinos, your conference call operator. Welcome, and thank you for joining the Tofaş Türk Otomobil Fabrikası conference call live webcast to present and discuss the first quarter 2024 financial results. All participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by 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. Fabrizio Renzi, CFO; and Mr. Mehmet Ağyüz, CFA, Investor Relations Manager. Mr. Renzi, you may now proceed.
Good afternoon. Thank you, operator. Thank you all for joining our call today. We started the year with a good performance and a solid financial position that will allow us to properly manage the year 2024, which will be, for Tofaş, a year of transition. Transition towards a new product range, starting with the investment of and the launch of the K0 model in Bursa Plant. Transition to a new commercial setup with the opportunity to distribute in Turkish market all the Stellantis brands when the merger will be approved by the competition authority. Meanwhile, in April, we have distributed dividends for an amount of TRY 10 billion, in line with the consolidated policy of our company to reward its shareholders. As we explained in our previous call, starting from full year 2023, we have implemented the inflation accounting principles.
Now the restated financials we are going to provide give a better understanding of the operating performance, as the impact of the historical cost on margin is eliminated. In our guidance, we have confirmed a profit before tax of 10% over the year, even though we registered a lower margin in the first quarter due to the impact of the IAS 29 restatement. On the domestic market, with 13.5% market share, we were able to defend our leadership position in a market that is becoming more and more competitive. New players are entering the Turkish market with attractive products and very aggressive offers. Nowadays, 7% of the market is owned by brands not present in Q1 2023. On top of that, the actual Special Consumption Tax scheme is not providing any support to the most affordable cars locally produced.
All our range of products is subject to 80% taxation. In this challenging environment, in the first quarter, we tried to protect as much as possible our margins. Regarding export, we have registered a good performance of Fiorino in Europe, boosted by a positive trend of the LCV segment, but we are also very pleased to see the strong demand of people in the MEA region. Thanks to the successful presence of Stellantis in that region, now almost 50% of Tofaş export is commercialized in the MEA region. As a result of that, we are assuming a stable situation of the export volumes in the outlook 2024. With reference to the manufacturing area, the refurbishment of the L3 line is on track, and we are preparing the ground to make possible the launch of new models.
Technically, the Bursa Plant will be able to start the production of new models in Q4, but the final decision will depend from the commercial strategy of our partners. Finally, the strategic agreement for the acquisition of Stellantis Türkiye. As we disclosed in December, we are waiting for the final approval of the transaction by the competition authority. The dialogue is continuous and fruitful, and we remain confident that the process will be concluded positively. Now, I will give the floor to Mehmet for the presentation, and then we will be happy to take your question.
Hi. Good afternoon and good morning, everybody. In the first quarter of the year, Turkish automotive production grew by around 3% year-over-year to 377,000 units. Tofaş constituted slightly below 15% of the industry production with a production of around 56,000 units, which suggests around 7% or 8% decline compared to the first quarter of 2023. In terms of production mix, there is a slight increase in the PC production, which constituted 69% of our production; LCV constituted 31% of our total production in the first quarter. Our total shipments were parallel to our production, and we shipped 59,000 units, which was down by 7% compared to the previous year. Although we had a strong growth in the export side, which grew by 26% year-over-year, this was compensated, offset by the 16% decline in our domestic business.
In terms of our shipment volumes by the business, as you can see in the middle pie chart, the most visible change occurred in our passenger car business in the export side. Its share now constitutes 62% of the export shipments, which is around 24 percentage points higher compared to the previous year. In terms of total shipment volumes by the business, we maintain a balanced structure with 61% of our shipments going to the PC and the remainder for the LCV. Moving on to domestic markets. In the first quarter, although there has been a tightening in the macro conditions, domestic market was strong and grew by 25%, reaching to 296,000 units. This was mainly driven by the passenger car demands, which grew by 33% year-over-year, reaching to 233,000 units. LCV demands remained healthy, which was slightly higher at 3%, reaching to 62,000 units.
This shows the monthly evolution of the local retail sales. As you can see, in the first two months, there is a strong growth year-over-year basis, and the first two months' growth was mainly supported by the sales to the disabled citizens, which benefited from the SCT, Special Consumption Tax exempt sales, as the government determines the cap at the end of the year, and given the high inflation, there is a strong demand in the first two months of the year. Although March was also a record-high March month, it was also partly due to the pull-forward demands ahead of the local elections, as consumers were anticipating a level of currency depreciation, which may have triggered price increases, and so they put their demand forward. Actually, with April, we have seen signs of a slowdown, which may continue in the near term.
As Tofaş, we shipped 19% less to 41,400 units, compared to the last year. When you actually compare it with the more normalized phase of 2022, our shipments almost doubled in parallel to the market growth. The decline in our domestic market performance was driven by lower passenger car shipments, which declined by around 29%, reaching 25,000 units. Whereas, we outperformed the market in the LCV side as our shipments expanded by 6%, reaching slightly above 16,000 units. In terms of market share, Fiat brands were able to maintain its market leadership with a market share of 13.5%, albeit to a lower market share compared to the previous year. When we compare to the first quarter of 2022, the slide in our market share is less material, with 120 basis points decline.
This decline was driven by, as Mr. Renzi mentioned, increasing competition in the local market with new entrants to the market, as well as our reduced local producer advantage due to lack of any revision in the Special Consumption Tax brackets, which is done every year, essentially, which moved most of our products to the 80% SCT range for the vehicles below 1.6-liter engine. For the brands under Stellantis umbrella, the total market share was realized slightly above 30% in the first quarter of the year. In passenger car markets, we moved down to the second position with a market share of 10.2%. Although it marks a significant reduction compared to previous year, compared to the prior year, it should be viewed as a more normalized level for the first quarter.
Passenger car market share under Stellantis umbrella declined by around 11 percentage points to slightly below 27% in the first quarter. In light commercial vehicle market, Fiat brand moved to the market leadership position with a 25.9% market share, which is 60 basis points higher compared to the prior year. The main driver of this performance is, although it is coming to the end of its life cycle, our small LCV Fiorino is performing very strongly, as well as better availability of imported vehicles are the main drivers for this performance. The brands under Stellantis umbrella improved their market share by around 100 basis points, reaching above 45% in the first quarter of the year. Moving on to export business. In Europe, there has been a recovery in registrations in both PC and LCV markets.
PC markets climbed by around 5% in the first quarter, and hybrid, plug-in hybrid, and BEV were the main drivers of growth, although the pace of the growth has been decelerating. On the LCV side, the market remains healthy with a growth rate of 12% year-over-year and growth across all the main markets in Europe in the first quarter. As Tofaş, we outperformed the underlying markets with 26% growth in our export volumes to slightly less than 17,000 units. The main enabler of this growth is our passenger car exports, which more than doubled to 10,000 units, thanks to our sustained penetration into the MENA region, which we have been capitalizing on the wide distribution network of Stellantis in this region.
This shows the monthly evolution of our export volumes, which now we have a more favorable base, and we are expecting a more stable situation during the transition year. This slide shows market breakdown for our exports. As you can see, the most notable change is our shipments to the MENA region, whose share increased from 15% to 42% thanks to our passenger car shipments. Although it's important to note that this figure is relatively a low number as we are in a transition year, and this pie chart should change in the coming quarters as well as next year. In terms of our total shipment volumes by our model, in the exports business on the left-hand side, we ship towards 400 units of more exports. This was enabled by more than doubling of our passenger car shipments, which constituted almost 65% of our shipment.
Whereas our MCV model has been performing quite well with the stable shipments of more than 6,000 units. On the right-hand side, our domestic shipments, we shipped around 8,000 units less with 42,000 units. The main driver of this is our lower shipments in our good-performing product, Egea, which we shipped 10,000 units less due to the factors I mentioned before. Moving on to financial performance. In a nutshell, a 7% decline in our shipment units translated into 5% growth in our revenues, thanks to price adjustments as well as weaker Turkish lira compensating for the lower shipment. As a result, our EBITDA grew by 1% to slightly below TRY 4.5 billion. Our profit before tax declined by 17%. The gap between operational performance and the PBT is mainly due to application of the IAS inflationary accounting practices, which penalizes our cash-rich balance sheet through monetary losses.
This shows a snapshot of our P&L. You can see the 4% growth at the top line translates into around 2% growth in the bottom line, which are in an aggressive market with our growth margin being improving, which shows our pricing discipline, and with our net margin flattish at around 8.3%. Moving on to balance sheet. You can see we have a significant amount of cash of TRY 28 billion, which is similar to the year-end. I should note that this year we distributed dividends right after the end of quarter, around TRY 10 billion, which is not reflected here. On the inventory side, due to the declining activity in the market, it has improved slightly to around TRY 10.6 billion.
As a result of the dividend payout, our shareholder equity declined by around TRY 7 billion, with TRY 35 billion as of the end of first quarter. Our CapEx: we spent EUR 9 million in the first quarter, and most of that was allocated to the K0 investment. Although this seems to be tracking lower than our expectation, our commitment for further spending is actually much higher than this figure. Moving on to outlook. Given the strong performance in the first quarter, whereas counterbalanced by our relatively more cautious outlook for the rest of the year, we are maintaining our local market demand outlook to 800,000 to 1 million units. Whereas we are decided to take a more cautious approach and reduce our domestic outlook by 20,000 units to 140,000 to 160,000 units, given the first quarter performance.
Whereas we are maintaining our export shipment outlook at 60,000-70,000 units. As a result, we are reducing our production volume outlook at the low end by 10,000 units and at the high end by 20,000 units to 170,000-190,000 units during this transition year. Whereas we are maintaining our EUR 200 million CapEx and our PBT margin target of +10%. Although this was lower in the first quarter, with the utilization of the cash position, we are expecting this to improve for the rest of the year. This marks the end of 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 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 has a question may press star one at this time. One moment for the first question, please. The first question comes from the line of Demirtaş Cemal with Ata Yatırım. Please go ahead.
Thank you for the presentation, and congratulations for good results. My first question is, as usual, about the competition board decision expectations. You mentioned during the presentation, but I would like to understand, is there any time limitation to that? Because last December, it was postponed, possibly. The next timeline: what could be the possible timeline if any decision will come out of this? Should we expect within one or two months? That is my first question. My second question is about the market conditions. So far the trend is above the expectation, possibly. In which quarter we should expect some significant decline, if any? Related to that, do you see any signal from the fleet side? Because they were not in the pipeline in the past, but now the credit interest rates are higher, so it might not be also effective for them.
I would like to understand the fleet and the retail demand side on the domestic side. Thank you.
Thank you for your question. Fabrizio speaking. For the competition authority, as I mentioned during my initial speech, we remain confident. Of course, your question is focusing on the deadline. As we communicate in December, the authority asked for an extension of the investigation. As you know, the extension is for additional six months. Now we are waiting for their feedback. To be honest, even though they need additional one month, two weeks, two months, we do not see any problem on this. We are ready to take any comment and to apply any solution and remedy that they will ask to offer us. For the moment, we continue to be very, very positive on this. Of course, we cannot say they need one month; they need two months.
Of course, we are exchanging a lot of data because, as you can imagine, the transaction is a relevant transaction for the Turkish market, considering that both company will exceed 30%, if we take into consideration the actual situation. As you have seen, our market share is going a bit down. Also, we are going to discontinue Fiorino in the second half, so there could be also some contraction of our market share. In a nutshell, we remain confident there is not a problem if the authority needs some more time to analyze all the data that we are providing.
Thank you. The next question comes from the line of Kılıçkıran Hanzade with JPMorgan. Please go ahead.
Thank you very much.
I think we haven't answered the second question of Cemal Bey. Sorry, Hanzade. Let's first answer, and then we'll take your question. Regarding the market condition, as you know, we had a not very good performing April. But now in May, what I can say, there is also now little bit complication in the market due to the GSR2 application at the beginning of July. For some brands, which is the cars that will not be sellable after the July first week, now they are trying to get rid of from this kind of stocks, cars. This, in May, artificially can also increase the market. What we are seeing also, this is impacting fleet customers because they are looking for the best opportunities in the market in this environment.
This let's say, a trade for the brands like ours, because you are seeing also from our margins, or we are trying to protect our margins under these circumstances of the market. But the retail part is doing well. This is, I think, promising for the coming months. After this GSR2 passage in July, we will see, I think, more normalized market. Of course, GSR2 will bring also some cost ups in the market.
Some players are already selling those kind of cars with the updated costs, but for some will be issue for the acceptance of the cost ups. What I see, we will see more normalized markets after June. Also, June will be under this pressure of GSR2 passage, mainly for the importers. Thank you.
Thank you, Cengiz Bey. Thank you.
The next question comes from the line of Kılıçkıran Hanzade with JPMorgan. Please go ahead.
Thank you very much. Cengiz Bey partially answered my question. I had a follow-up question on competition in the market. Do you also currently participate in the fierce pricing in the industry? You answered this. Do you expect competition to intense in the rest of the year, given that consumption may slow down? That is my question for the domestic market. Second, you highlighted that your PBT margin is going to be higher than Q1 in the rest of the year, given the reversal of the monetary losses, I understand. Is there any other driver to move the PBT margin above Q1 operationally? Thank you.
The price war in the market, I think, till the end of June, will continue due to the stock management of the brands. I think after normalizing stocks level, in the second half of the year, the aggressiveness of the brands will be limited. This level of market now, of course, creating a big pressure on the margins for all players in the market. For this reason, for two months, I think the aggressiveness will continue. After, we will see more normalized periods from competition point of view into the local market.
For the second question, Hanzade, Fabrizio speaking. For the PBT, as I mentioned in this guidance, we have confirmed that 10% PBT for this year. This is our target, but this is also what we believe is achievable. We have not seen this margin in the first quarter.
Exactly the margin achieved is 8.8% PBT margin. As I tried to mention in the initial speech, we had a specific and extraordinary condition in the Q1. We end the quarter with a lot of cash in our hands and also huge amount of equity. In hyperinflation economy, with the effect of the restatement, this generates a negative monetary cost that you can see in our P&L. In a nutshell, we believe that the effect of the hyperinflation adjustment will be lower in the coming months because we will have less cash. We distribute the dividend in April. Most probably, if everything will go well, also, we are going to acquire Stellantis Türkiye in the coming months. We expect that hyperinflation will be lower the effect on our balance sheet as a consequence also in the P&L. We remain confident that this 10% can be achieved.
Fabrizio, thank you very much. I just wonder, is it possible also to comment without the inflation accounting? How was your PBT margin develop if you consider that cash was not a problem because of the accounting rules in the first quarter?
Hanzade, I do not like too much to answer this question. Which is the effect of the hyperinflation effect. I can remember you that the last quarter we published the PBT without hyperinflation; we were in the range of 20% PBT. We cannot say that the effect is 10%, because, as I tried to explain before, it depends how your balance sheet evolves. We cannot say that it is 10% the negative effect of the hyperinflation, because it is subject to fluctuation. Please take the 10% as a new guidance for the future.
Fabrizio, I try to understand if there was a positive development in the first quarter in terms of PBT margin if you were to report according to previous accounting rules. Because this quarter, as you explained well, monetary losses was a reason of the lower PBT margin, and this is going to reverse. In the meantime, have you also observed some sort of stable PBT margin if you did not apply this inflationary accounting into your financials?
Sorry. Okay, we clarified your question here. But the trend in this moment. We can say it's a stable trend. When we compare with the previous year, 10.9%, this is what we believe we can achieve also this year. So if you want, it's a stable trend. Of course, we have some concern about the coming quarter, because as Cengiz mentioned, the competition on the ground is very, very tough. But for the moment, we can say that we try to stabilize on the 10% our PBT margin. It will not be easy, but this is our target.
Okay. Thank you very much, Fabrizio.
As a reminder, if you would like to ask a question, please press star one on your telephone. Once again, to register for a question, please press star one on your telephone. Ladies and gentlemen, there are no further audio questions at this time. I will now move to our webcast question. Our first webcast question comes from Murat Bulut with Azimut Portföy, and I quote. "Hello. Thank you for the call. Do you see a material risk on the production and sales volume side due to GSR2 regulation? To what extent do you expect an increase in unit prices due to the requirements of the new regulation? Is there any change in the timing of production, or should we continue to expect it to be completed in fourth quarter 2024? Thank you.
For the material risk or the obsoletions, we don't see any risk because this regulation is largely split and planned, so we don't see any risk. Of course, we will be enduring some pressure to commercialize as much as possible all the cars that the company has in their stock. But in term of material, we use it to plan, organize very well the end of life of any product. So we don't see too much product. In term of effect of the new regulation, GSR2, on the price, of course, there will be an increase, but it's not an increase that will change the position of the car on the market. So finally, the impact will be not so huge. The remaining questions. K0. No. For the moment, we are in the final phase of negotiation of the K0 contracts.
For the moment, also for K0 start of production, we don't see any need to postpone. So the plan is in line with the expectation. So we don't expect further delay from this point of view.
As a final reminder, to register for a question, please press star one on your telephone. Ladies and gentlemen, there are no further audio or webcast questions at this time. I will now turn the conference over to Mr. Renzi for any closing comments. Thank you.
Okay, thank you. Thank you, operator. I would like to thank all the people who attended this conference call and for your interesting question. Have a nice evening.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling. Have a good afternoon.