Hello everybody, this is Beste. I am heading the Investor Relations department of Ülker Bisküvi. Here with me in the room is our CEO, Mete Buyurgan, and our CFO, Fulya Banu Sürücü. Today we will be talking about Ülker Bisküvi fourth quarter operational financial results. Now I am leaving the ground to Mete Bey. Mete Bey.
Thank you, Beste. Good afternoon, good morning, everyone. Thank you all for joining our investor meeting. I think most of you checked our deck in detail. Firstly, I want to update you about last quarter of last year since it is showing our performance trend in a great way. As you may know, our peak quarters are Q1 and Q4 regarding our chocolate sales especially. Other categories are more regular in the other quarters. So Q1 and Q4 performances are always very important for us. If I may share the highlights of the last quarter of last year, 2023. In terms of market share performance, we keep our leadership position in a strong way. Despite many newcomers penetrating into the market, we keep our market share strongly. We keep increasing our brand investments through mass media, digital, and consumer promotion.
Especially on the digital channels and the consumer promotions we are aggressively supporting our brands. It seems we are getting the full ROI of those investments actually as of last year 2023. In terms of operational and financial updates, we keep the pace of growth even better than Q3 of last year. Very successful top-line and bottom-line performance we had as a full year actually and the Q4 as well. Strong free cash flow generation was an important target for us and we did it in a good way. But most importantly, strong volume growth, which shows our healthy growth, was very important for us. And I think we are going to come to the next coming slides and you will see that we are having a very healthy growth both in terms of top line and bottom line through the support of volume growth, actually.
And of course, last but not least, our sustainability updates. As we are discussing in the previous meetings, we had put too much effort on sustainability efforts for almost eight to nine years. Sustainability initiatives are quite important. And right now we are enjoying the benefits of all those efforts in the last seven, eight, nine years. So I am going to come back to sustainability as a chapter in the next coming slides of the presentation.
If we look at operational performance for the full year, there are some pillars of our journey in excellence. Actually, one of the biggest drivers of our continuous success in terms of top-line growth, bottom-line growth, market share growth, and volume growth, of course, the biggest driver is the operational excellence for those achievements. Just to remind you what we did in the last almost 10 years actually, w e had started a new program actually at that time.
In 2013, we had launched a new operational excellence program, which is basically including a culture. In fact, it was focusing on cultural transformation towards end-to-end excellence. On the other hand, one of our biggest aims was eliminate silos and barriers in the organization in order to create or in order to transform the company into one team with a winning culture. So there were phases in our journey and right now we are in the phase four step, which is global benchmark and continuous improvement. And we are, in many cases, we are right now having great remarks, great recognition among all our global benchmarks in our industry. How we transformed our journey to a lean and agile way? Deployment of winning culture was one of our biggest targets, in fact. Layers and spans optimizations, removing silos, implement high performance work systems and cultures.
This was one of the most important initiatives, what we started to do our journey. Also, on the shop floor in the factories, manufacturing plants, transforming operators, investing on their trainings, was another important pillar for us. And lots of standard procedures, reward and recognition systems were still helping us in terms of our continuous success, a nd the lean transformation, lean organization. As I am always saying in our investor meetings, one of our biggest strategies is to be a low-cost offer to low-cost operating model while we keep investing in our brands, in our people in the organization. This is quite important priority for us. Through having a lean organization, we provided this agile winning culture, high performance organization, actually. Over time, especially in the last five to six years, we started to invest on digitalization and our MCC cost in the manufacturing plants. And of course, as a result of those initiatives, productivity were our priorities.
We had invested into digitalization, especially, particularly in supply chain and sales and marketing parts. We had invested on IoT, Internet of Things, in our factories. So in most of our factories, our manufacturing lines are talking to each others through IoT systems and it gives us a huge productivity and flexibility, and of course, agility as a result of those initiatives. Right now, again, last but not least, artificial intelligence implementation on top of all those IoT specified lines is one of our important priorities. But also we keep investing on our sales function for AI in order to get the full benefit of digitalization. So, as a result, as you may see on the graphic, our productivity has increased 35% in the last seven years, while our losses in the manufacturing, unproductivity losses, has been dropped almost 60%.
Now at the moment, we are in a very, very good shape in all global benchmarks, I must say. As I talk about the numbers of layers and span of control, this is quite important initiative for us. We had increased the layers from seven to four. From CEO to starting position, there are just four grades actually we have. But on the other hand, we increased the span of control. This was one of the biggest driver, really, in terms of creating the agility in the organization. Also low cost operating model b ecause by this, through this initiative, we had created a fast decision or best decision-making organization, which keeps us ahead of the competition in most of the cases. Regarding our footprints of sales, actually right now, we keep our healthy shape. In 2023, last year, Turkey performance, domestic performance, were quite significant actually.
As you know, we are dealing with some high inflation and some other challenge. As we discussed in the previous investor meetings, as of last year, we had an earthquake challenge as well in the country. But despite all those challenge, especially in the second half of the performance, we did a great job. We did a great performance in the domestic market. In Turkey, exports is also significantly growing. North Africa is in line with its targets. Central Asia did a great job, and for the first time hit almost more than GBP 100 million of sales. Middle East keep growing actually in a very healthy way in terms of top line and bottom line performance, but also market share gain as well. So if you look at the revenue breakdown of our company, we have a balanced geographic revenue mix.
Actually, 65% is coming from our domestic sales, but also 35% is coming from exports and international markets. If we split by the division, domestic is 65%, Middle East 14%, North Africa 3%, Central Asia 4%, and our overall sales is 13% coming from exports. In terms of global market share, as you know, Ülker becomes a very strong regional FMCG company, and we are by far market leader in many other markets in our region, including Turkey, Central Asia, some parts of Eastern Europe, but also Middle East and North Africa and Gulf countries, actually. While in Turkey, we are a very strong leader in the total snacking market. In Middle East, we are a very strong leader in biscuits. We keep investing on chocolate and some other categories, especially in Saudi, in the Gulf countries, United Emirates and some others.
In North Africa, we keep our leadership in biscuits category again, in Egypt, and we keep investing on the other North African countries. We keep still investing on Egypt market as well. In Central Asia, you may know that Central Asia market is more like a chocolate market, sweet snacking market. So part of savory products are quite low. So chocolate count lines, we are in a very very good shape. We are number two in chocolate count lines in chocolate, and also we are number two in the biscuits category with a great progress in the last five years. You may remember from our previous innovation, previous meetings, investor meetings, webcasts, with that ours, almost 13.5% just for domestic Turkey market is coming from innovation. So innovation is one of our biggest, strongest muscle, becoming a strongest muscle, but also biggest drivers of our high rates of growth, actually.
In international markets, the ratio is 6.8%, and overall, which are consolidated sales, 11% of our sales growth is coming through our innovations actually, which is giving us also great base amongst the consumers, but also helping us to increase our penetration in many markets. This time, I would like to update you about our sustainability efforts, because we did a great job during our journey, and we had great recognitions as of last year and this year as well, at the beginning of this year. So I must say that as of 2023, we had fulfilled all our commitments, which we did almost nine years ago in 2024, sorry, in 2014. Right now, we have announced and commit our new pillars of our sustainability program. There are four important pillars of our sustainability program for the next coming 10 years. Our planet.
Other is value chain, creating a value chain and value together with our suppliers, farmers, and customers and consumers. Of course, our employees and colleagues are quite important pillar for us, and community which we are operating in. We are always investing on helping people in our visible markets. As of last year, we had committed decarbonization roadmap for 2020, 2050 as a net zero target. So, this is right now our global recognized commitment as Ülker. Initiating ESG program for our suppliers as well, we keep investing our ESG score, increasing our ESG score through the best governance models, but also we keep supporting our suppliers to be at the same level of Ülker. Enhancing Beyond Cocoa program, because there is going to be a regulation change as of next year in European Union countries, ensuring 100% deforestation-free palm and traceability to plantation.
So this is right now we are in a very good track. So we are in a very good shape. So we are ready to the new regulation as of now, right now. We do n't have any risk in terms of the changing regulation through our exports and the market businesses. We are planning to source 100% electricity from renewable sources in our factories as of end of next year, and supporting sustainability in our factories through digitalization and artificial intelligence as a result. In 2023, as of last year, we had some highlights, actually. We had too many projects. Beyond Cocoa, Beyond Hazelnut programs were very successful programs and got recognized from the global organization to get highly recognized actually in those areas as a company.
Water Risks Project, which we did in Turkey, was a very important project, which was a proof of 20% increase in wheat production, while 30% providing water efficiency. Biofortification project together with Sabancı University and our patented R&D project for 13 years. Aliağa Wheat project has won Sustainable Food Awards, which was great achievement as of last year as well. So corporate social responsibility was another big area, which we had a great recognition as well. But I would like to inform you about the progress. As of January, we had great news from London Stock Exchange. As an independent search and assessment by London Stock Exchange, we were chosen, and we were awarded as the highest ESG score in the global food industry and tobacco industry. So this is a great achievement for us, which encourage us for our next coming actions, actually.
But also in the S&P Global Sustainability Yearbook, for the fourth time, we are maintaining our position as one of the 19 food companies listed worldwide. This is another important achievement and progress for us. So those in a nutshell, I must say we are in a very good position in terms of operational excellence. So this, I must say, a sustainability effort, and I must say that the biggest drivers of our continuous development, continuous success achievements are the operational excellence, brand investments, investing in our people, creating diversity in our organization, and sustainability efforts actually. So, thanks for listening. Now Fulya will continue and give you some details in the financial information about our progress.
Thank you, Mete Bey. Thank you to everyone for joining the call today. I am pleased to share that we delivered our best year's average performance in 2023, all-time high revenue with robust top-line growth, double-digit top-line performance in such a year full of challenges. We have adapted continuously to circumstances beyond our control while being thoughtful on spending and cost management. We delivered outstanding results with excellence every step of the way. Now on to the data. Before I start talking about numbers, I would like to remind that until the inflation accounting section, all the numbers are not adjusted per inflation accounting. I will also walk you through our numbers revised per inflation accounting when we come to inflation accounting section as well. So let me start with Q4. Record quarter with double-digit growth on all KPIs. Volume grew by 3%. Revenue growth profits 64% and 87%.
EBITDA 93% and net income growth was 94%. We delivered TRY 1.9 billion net income. Net debt reached to 1.5x below 56%, which is below 2x. We continue to strengthen our balance sheet further. When we take a look on our full year numbers are just a reflection of Q4 only. Total revenue, we see a double-digit growth of 66.4%. We owe this success to our successful pricing and effective and very successful mix management and positive contribution of higher sales. Gross profit and EBITDA also increased double digits. Gross profit increased by approximately 90%. EBITDA grew by 91.5%. But again, I would like to underline that both gross profit margin and EBITDA margin percentages increased significantly versus prior year. Effective procurement, timely pricing, stable overheads, and increased production efficiencies helped these very successful numbers.
And in terms of net income, we were able to come to 5.5% net margin, reached TRY 2.6 billion net income on an overall full year basis, which is driven mainly by higher operational performance and EBITDA and favorable FX impacts. On the next page, you may see the performance by category. Biscuits, chocolate, and cake all grew in terms of volume and sales value. In terms of volume, you see a 1% growth in biscuits, 1.1% growth in chocolate, and 5.6% volume growth in cake, which translates to 59.4% growth in revenue in biscuits, 71.7% in chocolate, and cake sales grew by 74.5%. Turning to regional performance, please see the international and domestic P&Ls and their breakdown. Both in two markets, very healthy growth, both in terms of margins and figures. You may see that we were able to increase our margins both in our domestic and international businesses.
And international growth profit grew to 39.5% from 36.1%. And domestic ended up at 31.2%, where this was only 26%. And this translated to excellent EBITDA numbers, which ended up TRY 6.6 billion in domestic and TRY 3.9 billion in international markets , with again, increase in our EBITDA margins versus prior years significantly. I would like to take you through some annual year-by-year EBITDA margin development in years. In North Africa, you see the development where we have started from 9.2%, reached to 14.2%. Middle East from 18.3% in 2017, and we reached to 20.7%, 21% EBITDA margin. Central Asia, another very big success story where we started with 6.7% EBITDA margin and ended up at approximately 17% EBITDA margin in total year of 2023.
And you may see the EBITDA contribution of each region to our total Ülker Bisküvi consolidated numbers, 2.5% for North Africa, 13% for Middle East, and 3.2% for Central Asia. Now shifting to balance sheets. We have made meaningful progress in our financial measures. These results represent a lot of discipline focused on spending cash and working capital. Let me take a moment to take you through some key balance sheet highlights. Our focus on balance sheet continued throughout the year, each quarter getting stronger and stronger. Covenant-based net debt to EBITDA reached 1.58x. This is per our communication contract calculation. You see the results of our focus and discipline on working capital. In December 2023, we ended up with 86 days versus 97 days one year ago. You see the improvement for each KPI of working capital for the year.
As we continued to strengthen our balance sheet by mitigating some risks, like for hedge, we continued to mitigate the FX risk by executing hedges. 69% of the open balance sheet is hedged, so FX is not a nightmare for us anymore. One of the key priorities of 2024 is Eurobond financing, which is in progress. Let me take a moment to take you through the impacts of inflation accounting on our numbers. So before I go into detail of the numbers, let me take you through on a conceptual way how these numbers, how inflation accounting impacted our numbers. On our balance sheet, on our asset side, we have non-monetary items such as fixed assets, inventory, and prepaid expenses. Whereas on liability side, we mainly have monetary items, outstanding loans denominated in foreign currency.
So which non-monetary items being on our asset side created some monetary gains that impacted our P&L and that impacted our net income increase on our full year numbers. So this table on the page shows numbers prior to inflation accounting, which you have seen and which I have walked you through on the previous pages, and I shared and explained the reason. And the numbers just below it translated per inflation accounting impact. So revenue increased from TRY 47 billion to TRY 55.8 billion, which shows a 7.4% year-over-year increase versus prior year, where prior year numbers are also restated per new inflation accounting numbers. Gross profit in absolute value terms increased slightly from TRY 15.9 billion to TRY 16.2 billion. The margin decreased slightly. It shows a 43% approximately year-over-year growth. Margin decreased slightly, mainly due to the revenue increase of the company.
And EBITDA ended up approximately with the same number in absolute value terms from TRY 10.5 billion to TRY 10.6 billion , which shows a 58% year-over-year growth versus prior year. So we ended up with 19% EBITDA margin, where inflation accounting is applied to our numbers. We also wanted to share with you very clearly and transparently how net income transferred from TRY 3.4 billion to TRY 4.2 billion As you can see, the revenue increase and the cost of sales impact, financing activity is unfavorable, and the monetary gain and loss due to our balance sheet position, which I have shared with you very recently.
In terms of outlook, so we will be sharing the outlook for 2024 in May when we share our Q1 numbers. But how we delivered in 2023, our latest guidance was TRY 42.5 billion. However, we exceeded our numbers in terms of net sales and EBITDA margin. We reached TRY 46.8 billion. We estimated 19.75% EBITDA margin, but we ended up the year 22.3%. Excellent and outstanding results. For priorities, I hand over to our CEO.
Thank you, Fulya. Lastly, I would like to give some updates about our existing year priorities for 2024. The first one is inflation risk challenge versus actions. As you know, in some of the markets which we are operating in, there are some inflationary challenges still. So what we are trying to do is, of course, we are very experienced on how to operate on inflationary markets, but also one of our biggest strength is our diverse portfolio. It is really helping us a lot of flexibility, creating flexibility. So this is number one. Second one is prices versus volume. Price actions, we are not hesitating to fix our prices based on the raw material and packaging material prices. But volume growth is also one of our biggest priorities. So as we did in the last seven, eight years in a very successful way, this is one of our biggest priorities.
The investment in brand and innovation, as shown in the presentation, this is one of our most important growth area, actually. So we are looking for some existing innovations, flavor rotations, but also we are working on some new categories in our portfolio, which we consider that it is going to give us another incremental growth area. Digitalization and acceleration, this is an endless journey, as you all know. Right now, as mentioned again, AI adoption, especially for our supply chain logistic operations, and also to our sales function, sales operation, is one of our biggest priority. Keep modernizing supply chain operations. This is one of our most strongest competitive edge in our organization, in our company. So we keep investing, not only in our Turkey factories, but also in factories in Saudi, in Egypt, in Kazakhstan.
So we are always trying to be the best factories, best supply chain operations among all global benchmarks. And lastly, portfolio optimization. This is again, a continuous process for us. We are always updating our portfolio through the expectation of the consumers and the customers. It depends on the markets. So this is a summary of our priorities for this year. Thank you very much for your participation. Now we are ready to answer, reply your questions.
Yes, my.
Thank you very much for the presentation. We will now be moving to the Q&A part of the call. If you have any questions, please press star two on your keypad. That is star two on your keypad for any voice questions. You may also ask a voice or a text question if you are logged in via the web, and we acknowledge the question from Mr. Muharrem from Kona Capital. We will get to it shortly. Our first voice question comes from Ms. Erica Ive from MetLife Investment Management. Please go ahead, ma'am, your line is open.
Hello, thank you for taking my questions, sir. The first one will be on refinancing. If you can give us an update on where you are now, given that if I recall properly, you said that you would have started conversations in Q1. And then the second question will be on consumer demand. And I appreciated you are not giving yet a guidance, but could you provide a bit of a trading update in the context of increasing cocoa prices and still high sugar prices, and whether you find possible to pass them to consumers without impacting demand. Thank you.
Thank you for the question. Related to refinancing, as I have shared, it is in progress. You will be hearing from us soon. So once you hear from us, you can definitely come back with more detailed questions. But I can assure you that it's a high priority, and it is a very important project that we'd like to finalize as soon as we can. That's all I can share right now. Please stay tuned. You will be hearing from us very soon. And for the second question, I hand over to our CEO.
Thank you for the question. Regarding your question about consumer demand. Right now, despite the inflationary challenge and the price increases in the markets, we keep observing the volume growth actually in main markets, especially in the domestic market, which is our most stronghold market. We are in a good shape, and we are confident actually in terms of expectations of volume. But also one of our biggest advantage is, versus adjacent categories like desserts and some other categories, our products, our portfolio is really very competitive for the consumers. It's a great choice for the consumers right now. And we keep observing the growth of snacking, not only in our markets, but also worldwide. There is a high rate of growth in almost all snacking categories, subcategories. And increasing raw material prices, of course, as we did in the last 10-15 years, actually, a lso, we are a very experienced company on this.
We are celebrating our 80th year within this year. So, of course we are having lots of actions. We are having some tools like sizing, pricing and so on. But also our finance and procurement teams, supply chain teams, are helping us, supporting our business through our heads or positions actually. So this is one of our important assets. And again, we are confident on getting the right actions through the raw material price increase. By the way, as I mentioned in the presentation, we are having a diverse portfolio, flexible portfolio. So it is giving us also a big opportunity in terms of managing the cost increases versus demand.
Thank you.
Okay. Thank you very much. Our next question comes from Mr. Cemal Demirtaş from Ata Yatırım. Please go ahead, sir. Your line is open.
Thank you very much for the presentation and congratulations for a very good result. And above all, I would like to thank you for your disclosure standards, your disclosure standards regarding inflation accounting b ecause so far it was one of the problems for the analysts or the investors to just see the trade and the costs, IFRS results. And during this transition period, it was very important for us to see the bridge and how things move. So thank you for being a good example for also other companies which are giving limited disclosure. Also, thank you very much. It is more critical than maybe the numbers, in my humble opinion.
And I want to go to my question. Regarding the outlook and the guidance, at some point during the year, are you going to share any guidance about the growth side or the top line and the profitability side? That' s my question. The second question is about the net debt to EBITDA ratio. It is more healthy now. Where do you think it will stand going forward? Do you have any target for that? You have Eurobond refinancing. And do you have any acquisition or divestiture in the pipeline? I would like to understand what is ahead, at least. It is a big question, but what is ahead for Ülker? Because during the 12 years, you had many ups and downs, and I think it is a new beginning for the last two years. So I would like to hear a little bit about your future plans, if you have any. Thank you.
Thank you so much for the question, and thank you for your kind words related to our disclosure. I am really happy and very pleased to see that it is well received by the market. In terms of outlook, as I have shared, we will be sharing our 2024 outlook when we issue our Q1 results, which we plan to do in May. And you will have a 2024 full year estimate by then. But from where we started, 2024 will be another very good year for Ülker Bisküvi. And your second question in terms of, I think you asked related to our net debt EBITDA covenants, if I did not misunderstand. Yes. Net debt covenant is very healthy right now, at a very healthy stage.
We made it very clear, again, I also made it very clear with our investment community, our key capital strategy priorities within the next two years, especially, where our strategies increase liquidity, decrease leverage, and strengthen balance sheet. And over the last two years, we are acting according these three strategies, three key capital strategy priorities, and we are taking all the actions according to that.
What I can tell you is that we will continue to do that to make sure that we continue to have a very strong balance sheet at the end of the day. A strong balance sheet will drive very strong and healthy covenants, which we plan to keep it below two, but I don't want to share an exact number. That is all I can share, that we will stick to our capital strategy within the short term, next two to three years. Related to your third question, I will hand over to our CEO.
Thank you for the question again. Regarding Eurobonds and our future strategies, first of all, we are very confident on Eurobonds syndication, reassessing the Eurobonds, and renewing the Eurobonds portfolio. So we keep working on this. But on the other hand, through our next coming year strategies, one of our biggest focus is still to decrease our debt position, despite our EBITDA to net debt ratios are very healthy. So this is one of our priorities.
Second, as we discussed with our teams yesterday, we had a great volume growth in the last five years, more than 100,000 tons. So we keep growing, and we would like to keep investing on our brands, but also for our capacity, actually. So, of course, very carefully, together with our finance team, supply chain team, we would like to make some choices on our capacity increase. And last but not least, as I mentioned, we are looking for some new categories, developing new categories, foreseeing the future. This is another important area which we are prioritizing right now.
Thank you, Mete. Thank you.
Okay, thank you very much. Our next question comes from Mr. Gustavo Campos from Jefferies. Please go ahead, sir. Your line is open.
Hello. Thank you very much for the presentation. Thank you very much for the results. I will also reiterate, much appreciated for the pre-inflation accounting numbers you provided. And speaking of which, would you mind providing just a little bit more color? I was looking for just two numbers, specifically the cash flow from operations before working capital, before inflation accounting adjustments, as well as your CapEx, i.e., the cash outflows from purchase of property, plant, and equipment. If you could provide those two figures, pre-inflation accounting, that would be very helpful and much appreciated. That is it for me. Thank you.
Thank you for the question, and again, thank you for the compliments related to our presentation. Again, I am very pleased to hear that. There is not a very big material difference. But we can get the detailed question and get back to you with detailed numbers, if you please send us an email. We will be happy to get back to you with more details. But I can tell you that there is not a material increase or decrease change versus pre and after inflation numbers.
All right, perfect. Thank you. And just an additional question. I know you're providing guidance on first quarter 2024, I understand, but if you could provide just a little bit more color on the strategy, specifically, given the high cocoa prices that we've seen over the last quarter or so, how you're planning to tackle it. Thank you very much.
Thank you. To start with the core question of cocoa. Cocoa is a major issue for the industry worldwide right now. On the other hand, we invested through our acquired Önem Gıda two to three years ago, as far as I remember. This is one of our most important assets right now, because we are to be a bean-to-bar company, so we keep all the margins from bean to the consumers, to the bar to consumers. We can easily manage the value chain accordingly, actually.
But on the other hand, it's a very major increase, of course, in cocoa. It is more than highest increase, highest price in the last 50 years. So we are having a position, of course, which is helping us for this year. And for next year, of course, there's going to be an increase. But we are confident, in terms of having the tools to convey the problem with the several solutions distributing to our flexible portfolio.
All right. Perfect. Thank you very much. Appreciate it again and c ongrats on the results.
Thank you.
Okay. Thank you very much. Our next question comes from Hanzade Kılıckıran from JP Morgan. Please go ahead.
Sorry, is it me?
Please go ahead. Your line is open.
Okay. Sorry. Hanzade. Mete, I have a small question. Do you export from Egypt to MENA markets? Because I just wonder whether this depreciation in Egyptian currency could be a marginal fortune for MENA markets if you are exporting. Do you also consider any M&A activity in 2024?
Hanzade, thank you for the question. Regarding the Saudi market, there is not a change in terms of, there is no inflationary—
No, not the Saudi market. In Egypt, there was a depreciation—
Okay
I mean, there was a sizable depreciation—
Yeah.
—and you have production facilities there.
We have a production facility which is one of our biggest assets right now in the market. So we don't consider any new M&A in Egypt right now. But we keep investing on our brands and products because we keep growing in Egypt as well. This is a very big market, which is almost 100 million people in the country. And we are going to use our Egypt factory in order to increase our exports visibility to some other African sub-Saharan countries, actually. So it's going to be a great base for us.
Mete, do you currently export from Egypt to MENA markets?
No.
I mean, like Saudi.
No.
It is only local.
We are trading in U.S. dollars, actually. 95% U.S. dollars, Hanzade.
No, not like this. I just wonder if you produce in Egypt and sell it to the Saudi market, you have some marginal fortune in MENA markets that means, because of the depreciation in Egypt. So if you export from Egypt—
Yeah, right. I got it. We have some exports from Egypt to some Middle East countries, especially Saudi. So it is kind of mitigating the risk actually. So yes, we have an increasing ratio of exports from Egypt to especially Saudi, and as I mentioned, to some other African countries.
Okay. Thank you very much. So basically, your highlight about your priority for 2024, I know you do not want to give some outlook at the moment, but you seem to be targeting at least inflation pricing in Turkey, I understand. And also, I think the international markets are sort of protected against the downturn because of these contracts or material contracts long-term. So is it reasonable to assume that your margin around 19% seems to be also achievable in 2024?
About 19% margin is our base right now. So we are confident to deliver around 19% EBITDA margin for this year as well. So I want to update you as well about the first quarters. So first quarters, we had a great start. So we are confident on this year margins as well, despite all the challenges.
Thank you very much, Mr. Mete.
Thank you.
Okay. Thank you. Thank you very much. Our next question comes from Ece Mandacı from ÜNLÜ Securities. Please go ahead. Your line is open.
Hi. Congratulations on the strong results in 2023. I have a question about the volume growth trends, since you have mentioned it as one of the major KPIs of yours. So as of the fourth quarter in international operations on a country basis, how—
Hello? Can you hear us?
Just once again, we will be—
Yeah.
—reconnecting once again from—
I think the line is off. Yeah.
Hi. Ece, we have reconnected once again. Your line has dropped.
Can you hear me now? Can you hear me now?
Yes, please go ahead.
We can.
Please go ahead.
Congratulations on the strong results in 2023. I was just wondering about the growth trends in international markets on a volume basis, since you have also mentioned it as one of the major KPIs of yours. So as of the fourth quarter, how was the trend on a country basis in international operations? Could you also provide your prospects regarding volume growth in 2024 in all markets? Thank you.
Okay. Thank you. Thank you for the question. For Q4 as of last year, it was a significant promising quarter actually, in terms of volume growth. We had great growth especially for the domestic parts. So domestic parts and our enhanced phase was giving us a great volume growth as well. Middle East is almost flat. North Africa, in Egypt especially, because of the high sudden challenge, and also we are restructuring the distribution model as well. So we had some decline. But overall, Turkey, Önem Gıda , and our third party is, of course, Önem Gıda , and our Middle East and Central Asia are the drivers of the growth. So coming to this year, we are expecting at least volume growth. Not as much as last year, because last year was a different year actually, in terms of growth in volume.
We are expecting to grow especially because we have a phasing impact as well as of last year. So we are going to have a volume increase this year, but not as last year, I must say. Hello?
Yeah. Thank you. Thank you.
Yeah.
Okay. Thank you. Thank you very much. Our final question comes from Mr. Muharrem Gulsever from Kona Capital Advisors. This is a text question. There are four parts to it, so I will read them two by two. The first one is, how much of your raw material need in 2024 is hedged? At what cost did you hedge the main commodities such as cocoa, palm oil, sugar, and wheat? The second question is, for the past three years in a row, you ended the year with $450 million-$500 million working capital. Is it possible to keep the overall working capital need at the same nominal level in the next two years?
Thank you. For the first question, I can answer about cocoa. We are having a position for almost 100%. Wheat is more than 60%. Sugar, you know, in Turkey, we are not having a contract possibility. So we are having a physical stocking on the 12-year, 30%. And for the edible oils, we are almost having 90% covered actually right now as of today. For second question, I think Fulya you may answer.
You can assume that as an average, but as I have shared with our numbers, that our focus to optimize working capital will continue throughout all the coming years as well. So I don't want to specifically mention any numbers, but $400 million-$500 million might be a healthy number to have an average number. But since our focus to strengthen working capital optimization will continue, I can only state to you very clearly that this number will get only better.
Okay. Thank you very much. I'll now continue with the further two parts of the question from Mr. Muharrem. Question number three, what was 2023 CapEx figure, inflation adjusted? Do you have any sizable investment plan for the foreseeable future? And the final question, where do you see the net debt at the end of 2024?
Thank you for the question. Our CapEx was around 2.2% of our revenue, approximately TRY 1 billion . So in 2024, we do not have significant CapEx projects or increases. So we expect to have it around 2%-2.5% revenue as well. In terms of net debt, as I have shared, currently we are below 2x, around 1.5x-ish. So our strategy will be to decrease leverage further and to sustain the strong balance sheet position in terms of covenants as much as we can as well. We'll continue with this path and with this principle and strategy throughout 2024 as well. So we expect to have something below 2x, but I don't want to restrict and strictly give a number, but our strategy and our focus to decrease leverage and strengthen balance sheet will continue in 2024 as well.
Okay. Thank you very much. We see no further questions at this point. I will pass the line back to the management team for your concluding remarks.
Thank you for your participation and compliments and excellent questions.
Thank you. Thank you very much for your participation and contribution. See you next quarter.
And have a great day.
Yeah.
Thank you very much. This concludes today's conference call. We will now be closing all the lines. Thank you and goodbye.