Ladies and gentlemen, welcome to Ülker Bisküvi Q2 2023 financial results conference call. Remember that this call is being recorded. I now hand over the call over to Beste Taşar, Investor Relations Officer. Madam, please go ahead. Thank you. Hello, everybody, this is Beste. Welcome to our second quarter and first half operational and financial results. Here with me in the room, our CEO, Mete Buyurgan, and our CFO, Mrs. Fulya Banu Sürücü, is with me now. Now I leave the ground to our CEO for the opening remarks. Mete Bey? Thank you. Hi, everyone. Thank you for joining to our investor meeting for half one of this year. I would like to share some headlines regarding our operations in the very beginning of the presentation. As the headlines, I would like to say that I am very happy to share with you, we had a promising and very healthy top line growth almost in all categories. In fact, top line and bottom line, I must say. In terms of gross profit margin, as mentioned in the beginning of the year, you may remember, we were sharing our plans together with you. Our sourcing strategies and our tight management of our productivity efforts maintained very strong gross margin, which provided us like 3% higher than last year in terms of gross margin percentage. In terms of bottom line performance, EBITDA performance, we are exceeding almost TRY 4 billion due to very strong cost discipline and very strict SCMA management. We have optimized our debt structure with a very successful execution syndication strategy in the beginning of April of this year, in the beginning of Q2. It was a very successful re-syndication process. Also, you may know that we just have another action on our Eurobonds buyback, which demonstrates our strategies in order to strengthen our balance sheet actually, properly. We keep focusing on the execution of our strategy for sustainable growth and investing on our brands for the rest of the year. I'm very confident that we are going to hit our targets at the end of this year, actually. Fulya is going to share with you some revised year-end projections. As I mentioned, we are very close to back-to-school pre-sale time. Now all our campaigns, all our supply strategies, distribution strategies, promotion strategies are ready for back-to-school pre-sale time. We are confident again to have a very strong and successful back-to-school pre-sale time in our main markets. Regarding our performance numbers, our net sales reached to TRY 19.6 billion, which means almost 65% growth, actually, versus last year. In terms of EBITDA, we have reached TRY 4.2 billion EBITDA, which is 79% growth versus last year in terms of bottom line performance. As you may see, in terms of gross profit as well, we are heading towards 82% growth. All those three figures are showing the quality of our growth, in fact. As I mentioned in the previous slide, the sourcing strategies, tight low-cost operating model is of course our biggest enablers for us to maintain and to hit the targets beyond our expectations, beyond the expectations. In terms of net debt EBITDA ratio, our latest ratio is 2.42, which is still very healthy numbers right now, which we are going to share more details in the next coming slides. Both gross margin growth and the EBITDA growth is higher than our net sales. This is part of our strategy for sure. Right now we are expecting the same performance for the second half of the year, actually, as almost same performance. Shortly, we keep our leadership position in all our markets. We are very strong numbers, one player in wafer snacking business in our strongest country, strongest market, biggest market in Turkey. We are also doing very good in Saudi Arabia, in Egypt. In Central Asia, we keep growing very sharply. We are very much enjoying the performance of especially Kazakhstan, Azerbaijan, and some other countries' performance in Central Asia. The top line growth is promising, as I shared, and we will keep the momentum for the rest of the year. Now, Fulya, our CFO, will share with you some more details, further details through our operations. Thank you, Mete Bey. Good morning and good afternoon, everyone. Thank you for joining the call. We keep delivering strong and solid results every quarter over the years, and this quarter is no exception. When we take a look at Q2 figures only, we see the excellent performance in all KPIs. Let me review with you some numbers one by one. Revenue increased by approximately 60%, whereas gross profit increased by 77%. EBITDA growth ended up at approximately 69% and gross margin at 31.5%, which is a growth of 320 basis points versus prior year. Net-to-EBITDA from the balance sheet here is 2.42, but as you will see on the coming slides for covenants calculation purposes, the number is at 2.40, which we believe is at a very healthy level. When we take a look at consolidated operational and financial performance, you see the versus prior year growth in all KPIs, especially in terms of operational KPIs. Ülker's agile business model, its proven resilience to severe macroeconomic challenges drive these excellent results again in this quarter. We were able to drive top-line growth in all regions and categories in Q2. When we take a look at snacking sales volume, there is a slight decrease for each category. We were able to maintain it is in line versus prior year on overall. Snacking sales volume increased by approximately 59% for each category, biscuits, chocolate, and cake, 53%, 64%, and 57% respectively. Dynamic effective pricing model with mix management, proactive initiatives to mitigate risks, and strong focus on cost control, whether it's supply chain or procurement, and our passion on innovation and new products delivered these results, as you see on our page, for each category, solid growth numbers for both sales and snacking sales volume in Q2 2023. For domestic operations, Ülker Bisküvi holds the market leader position in Turkey. We are a very strong number one in biscuits with 39% market share. Again, very strong number one leader in chocolate with 39% market share. We also hold a strong presence in cake category with 20% market share. As I have shared, NPD and innovation, we are very passionate about innovation as well. Even though we are an iconic brand in Turkey, present as a market leader for 80 years, we are also one of the most innovative companies in Turkey. As you can see on the page, 11% of total domestic sales is driven by new products. You see some of the pictures of our new products on the page. New products, innovation, and meeting the changing needs of our consumers is a high priority for the company, and we have a very strong innovation pipeline for the coming quarters and years as well. Let's review the solid results in our core market, Turkey. Let me take you through our business results in Turkey. As you all know, we have gone through some challenges in the first half of the year. Impact of earthquakes, elections in Turkey, macroeconomic challenges, monetary policies, and volatility, and effects and uncertainties were the main hot topics in Q1 and Q2 in Turkey. While navigating through all these challenges with extraordinary headwinds, we were able to deliver excellent results in our core markets, as you can see. Let me take you through our strong figures one by one. Flat volume versus prior year and 72% increase on revenue, strong growth in all categories. We have been delivering strong growth for gross margin increase on a steady basis each quarter, and we again did it this quarter as well. 28.6% gross profit margin, which is 4.9% higher than prior year Q2. This also translates Q2 EBITDA that came at 19.4%, which is 2.1% higher than prior year. Both strong Q1 and Q2 drive exceptional results in Turkey in the first half of the year. Again, our focus on cost controls and our strong strategies drive these excellent results in the first half of the year in our core market, Turkey. Flat volume, 81% increase in snacking sales, gross profit of 30.6%, which is 5.4% higher than versus prior year's half one. We ended up the EBITDA at 21.3%, which is a very healthy and very strong high EBITDA number. In fact, the same number in the last year was 18.5%, which also led to 108% increase versus prior year. Thanks to our agile decision-making model that transformed all these challenges into opportunities in our core market, Türkiye. International markets, we've sustained our solid business market positions in all of our international markets. Almost 24% market share position in Saudi, 19% market share position in Egypt, and 16.6% market share position in Kazakhstan. Same innovation and new product focus continue in our international markets as well. In Q2 2023, 6% of our total international sales were driven by NPD sales. When we take a look at our half one performance in our international markets, slight decrease in volume due to softer volumes in cake category and sizing activities. Sales increase of 45% and gross profit increased by almost 44%. We were able to reach 37.5% gross profit margin in our international markets, which drove a 22.5% EBITDA margin in the first half of the year, which is very strong and healthy. Our international operations, our mergers and acquisitions in our international markets drive the 36% of foreign currency denominated EBITDA, as you can see, which also brings a natural hedge to our financials as of half one. The most recent acquisition that took place in Q4 2021 drives an incremental 3.3% EBITDA margin as of half one 2023, 3.3% incremental EBITDA. When we take a look at EBITDA percent development in years for our international markets, we see the success story over the years. North Africa ended up at 15%, which is in an increasing trend since 2021. Middle East at 21.3%, where we kept pretty much the same EBITDA margin. Central Asia, let's take a look where we started in 2017 at 6.7%, and the latest one as of Q2 is 18.2%, which shows a real success story in Central Asia over the years. Our balance sheet highlights our disciplined and prudent financial management prioritizes three important pillars as part of our capital strategy that we laid out very clearly. Number one, maintain and improve strong liquidity position, preserve cash, strengthen balance sheet, and drive the company's leverage position to a healthier level. Here you see the results as of Q2. Despite we had a sharp hike in FX by the end of June, we ended up the net at EBITDA at 2.4 despite all these huge hike, and despite we have foreign currency denominated loan on our balance sheet, it's at 2.4. As the management team, our objective is to maintain and decrease this figure over the quarters and over the years. High focus on working capital paid off with 5 days decrease reduction on working capital days from 110 last year to 105 days. Mainly driven by effective inventory management, as you can see on the page. We continue to mitigate our risks by taking actions proactively. We continued our hedge transactions. As of Q2, our close position at 52% on the open FX position. As of today, it is approximately 60%. The increasing momentum on the FX mitigation continues. As you all know, we adopted more prudent treasury policies last year by monetizing the securities portfolio into bank deposits. As Mete Bey also has shared, we have gone through a very successful syndication loan by the end of April with very highly prestigious international banks, our finance partners. Again, on the syndication loan, we were able to decrease our outstanding loan. We replaced Yatırım Finansman $450 million outstanding loan with $330 million new refinancing, which was also another action that we took to decrease our leverage. Another transaction continued with another great initiative that took place in July. We bought back $50 million worth of outstanding eurobond as part of the strategy of decreasing the leverage of the company. With this transaction, we also decreased the outstanding eurobonds balance by $50 million. Our strong operations continues, and we believe that we will also have a very strong half two operations, and we updated our guidance at a higher level. We shared with you TRY 40 billion guidance in terms of net sales and 19% EBITDA margin in the last quarter's call. However, as of today, we are upgrading the revised guidance of sales to TRY 40.75 billion and EBITDA margin at 19.2%. We also like to share with you the trend analysis, starting from 2013, how our EBITDA growth margin, both in absolute value terms and margin levels, improved over the years. That also shows the strength of our business model over the years. Thank you. Now we will have your questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one. If you want to withdraw your question, please press star two. Your questions will be put in the order they are received. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Ecem Andas from Ünlü Securities. Please go ahead. Hi. Thank you for the presentation. I have two questions. One is on your Eurobond purchases. Will you continue buying your Eurobonds? My second question is that, given that there was an improvement in your working capital, and there's also a lower CapEx need, by year-end, should we assume a lower net EBITDA level for you? Thank you. Okay. Thank you for the question. Eurobonds was a transaction that we implemented to decrease our leverage. We will assess the opportunities over the coming quarters as well. This may continue. We definitely want to decrease leverage. That's all I can share. This may continue. It's part of our strategy. In terms of net EBITDA, we believe that we will continue to have a very strong half two. Based on our latest estimates, there might be a strong probability that net EBITDA will be slightly lower than this number by the end of the year. Thank you very much. Thanks. Short FX position, they will stay at current level or they have plans to reduce it more? Our current hedge position is 60%. If we see opportunities over the coming quarters, our objective is to increase our coverage more and more. Our short FX position, we expect it to decrease by year-end as well. Thank you. Thank you. Your next question comes from Erica Ive from MetLife. Please go ahead. Hello. Good afternoon. Thank you for taking my question. I checked, I saw in the account that you have a short-term debt of TRY 2.6 billion, while I remember last time you said that you were expecting to refinance all short-term debt. May I know what is it? It's TRY 2.6 billion. Thank you for the question. In fact, the short-term portion consists of two items. One of them is the accrual for the Eurobond interest that are due within one year. As you know, we pay the interest of Eurobond two times in a year. That's the accrual of it. The second one is, there is a small outstanding loan of Önem which is due next year. It's around €40, €50 million, which is also due within next year, which is outstanding as short-term loan. Isn't there anything else under bank loans? Because applying the end of period exchange rate, it look like actually the outstanding debt is a bit higher than €40 million, €50 million. I'm not taking into account the coupon. That falls under the issue of the debt instruments, if I'm correct. Basically, I see TRY 2.567. Yeah. Sure. There are also some letter of credits that are outstanding, but as part of the outstanding loan, all of the outstanding loan, most of it is already refinanced, and the maturity is April 2026, the $330 million. We can also send you the breakdown. The breakdown is Önem, plus letter of credits that are outstanding, and then the interest accruals of Eurobonds, which are due within one year, because we pay it on a semi-annual basis every year. That makes up the balance. If you need any further details, we can definitely send you the breakdown of the outstanding short-term loan. Understood. Thank you very much. Thank you. Thank you. Your next question comes from Hande Şabırkıran from J.P. Morgan. Please go ahead. Hello. Thank you very much for the presentation. I have two questions on your operations. You are experiencing very strong margins, particularly in Turkey, and you have been explaining this through strong pricing. Have you done any structural change in your distribution channels, particularly in Turkey, that may also explain this gross margin expansion, or this is really fully driven by pricing against softer COGS? I want to combine this with the pricing again in Turkey, do you see any difficulty in pricing the recent Turkish lira depreciation? On the international operations, what is the main reason for softer margins in MENA over the years, despite successful sizing and new product introductions? Is there a strategy change in terms of channels? Thank you. Thank you, Hande. This is Mete. Regarding your first question, of course, there is a serious impact of right pricing, on the right time pricing. In fact, it's giving us a huge opportunity and value. Regarding your comment, you are right, as far as in the last especially one year, I must say that there is a very successful channel management as well, actually. We keep focusing much more on the profitable channels, actually, instead of low profit channels. It is giving us another opportunity to increase our profitability level overall in Turkey. Regarding your second question for MENA, the margins are a little bit decreasing, but there is a very high free inflation in Egypt, so it is impacting the margins a little bit. I think it's almost recovered. As of this month, there was some price increases again, so they are going to recover the gross margin loss for the rest of the year. The biggest impact is coming through product mix and also high inflation in Egypt. Okay. Thank you very much, Mete. When you say that you are managing your channel mix, have you also changed your distribution margins given to the channels, or this is completely coming from the channel mix change? No, we don't change any margins of distributors, customers. This is just- With the channel mix, actually. All right. Thank you. Thank you. Your next question comes from Dmitry Ivanov from Jefferies. Please go ahead. Yeah. Hello. Thank you for taking my questions. I have three quick, if I may. The first one on deleveraging. You mentioned that your target, your goal is to deleverage. Would it be possible just to quantify and provide more color on deleveraging? Are you looking to reduce absolute amount of debt? If so, by how much? Or what's your absolute amount of debt on the balance sheet that you think is comfortable for the business? Second question on the outstanding bond, which is TRY 600 million outstanding after the buyback. What's your latest thoughts on the refinancing of this bond? Because it's due in October 2025, so I think you have to make some decision already next year. Are you looking to refinancing the capital markets or syndicated loan or other sources of refinancing of the outstanding bond? The last quick question on working capital. What's your kind of guidance for the second half of the year in terms of the working capital? There were some outflows related to working capital in the first half. Should we expect some recovery of the working capital in the second half of the year? Thank you. Ladies and gentlemen, just one moment. It looks like we are having some technical issues. Okay, Mr. Ivanov, can you please repeat your question? Sure. Can you hear me now? Yes, we can hear you. Mm-hmm. Just three questions from me. First, on the deleveraging strategies. If you could quantify your kind of strategy, are you looking to reduce absolute amount of debt? If so, by how much? Or relative deleveraging. Second question on the strategy with regards to bonds outstanding, TRY 600 million, are you looking to refinance it in the capital markets or other sources? The last one is working capital guidance for the second half of the year. Should we kind of expect some reversal of the working capital, or additional build-up of the working capital? Thank you. Thank you for the question. Regarding your first question, we do not want to quantify the exact amount of debt or numbers. What I can tell you is our direction and guidance is to decrease net debt EBITDA as much as we can. I believe that something around net debt EBITDA 1.5-2.5 is a healthy level. This is the direction and guidance of the company that we aim to have over the coming quarters and years. Outstanding loan of Eurobond, yes, original maturity is October 2025. However, we will start working on it as soon as possible. Our timeline is beginning of next year. We will assess all the options and alternatives, and based on the options available in the market, we will definitely choose the most feasible one, the most cost-effective one, and hopefully close it as early as possible. Regarding working capital, you see the working capital improvement versus prior quarters and prior years. Our working capital base improved by five days versus prior years. This momentum will continue because internally within the company, we have high focus to have a very effective and efficient working capital. I think that you should expect, again, very healthy numbers in terms of working capital by the end of the year as well. Thank you very much. Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Erica Ive from MetLife. Please go ahead. Hello. A follow-up question on working capital. I can see here an increase in receivables from related parties, which has ballooned quite a lot to TRY 1.1 billion from TRY 269 million year-on-year. May I know what is it related to? This is related to business as usual activities. I mean, our business is growing. You have seen our sales numbers, and sales growth, and there is inflation. The increase is mainly driven by these two drivers, sales and inflation and growth. Okay, understand. Fundamentally I saw inventories and the other trade receivables having a different trend. What is the difference between trade receivables and receivables from related parties, if I may ask? These are receivables from the customers, but if you have more detailed questions related to receivables, we can get back to you on the balance sheet. Thank you. It would be good to understand a little bit more. Thank you very much. Please send your question, and we will get back to you definitely. Thanks. Thank you. Your next question comes from Cemal Demirtaş from ADA Yatırım. Please go ahead. Thank you for the presentation, and congratulations for the operational performance. My question is about the trends in both domestic and international markets. We see some volume decline, but also we see some price increases that just totally we see a growth in real terms, possibly, or close to real term. How do you see the picture in the second half of the year? I see your guidance, but still it looks to me like very cautious guidance. I would like to understand how do you see the trends in terms of the pricing environment? How do you see the competition, and how do you reflect the inflationary factors to your prices? That's my question. I would like to understand whether we are going to see any volume growth going forward, both in domestic or international, or we should, in high inflation environments, in most of the times we see downsizing of the packages. What's the sensitivity of consumer nowadays? That's my question. The other question is about, I see that you're merging biscuits and the Ülker Çikolata with Ülker Bisküvi, which I believe that it will be more visible together. Already you consolidate, but merging them should create some synergies. Maybe you should a little bit give some hint about the potential synergies from taking that action. Thank you very much. Cemal Bey, thank you very much. Regarding your first question, as you may remember that we had a very devastating earthquake in the beginning of the year, unfortunately, in Q1, which created too much volume loss at the same time. It was a very big disaster, but we achieved to recover the losses almost in second quarter, actually. Ramadan period time in April, the demand was very low for all the markets, for all the categories, for all FMCG. After April, Ramadan period of time, May, June, and in fact July, was a very great month, actually, in terms of volume growth as well, not only for the value growth. Therefore, I am expecting a strong volume demand in the second half of the year. As I mentioned in my presentation, they are very close by to the back-to-school period of time. We are expecting higher demand from the consumers. On the other hand, in a hyperinflation environment, we see that as a consumer sentiment, we are observing that consumers are not postponing their demands actually right now. This is also an advantage for us right now. Last but not least, I must say, our product categories are quite competitive versus adjacent categories like patisseries, like desserts. This is another big advantage for us to keep our volume demand by the consumers. These are the three important assets for us for the second half of the year. For the pricing challenge, pricing environment, we don't see any serious problem right now. As you are saying that due to hyperinflation, and in the last two, three months, there was too many increases on oil prices and other items in Turkey and also in Egypt. We are successfully reflecting our costs to our prices based on our strategies. You ask about the downsizing and so on. We have some little works on this. I mean, little studies. We are still looking for whether we need to do that. Since there is not too much volume loss, we don't want to make any kind of sizing, pricing actions. Instead, we are having a lot of RGM strategies, revenue growth management strategies as channel management, product management, category management. It's helping a lot. One of our biggest strengths, Cemal Bey, is we are operating in almost five categories in snacking. Which gives us a huge flexibility so that we can easily manage, rightly manage the shift amongst the categories in terms of consumption. Mergers. Fulya, you may answer for the merger question. Cemal Bey, thank you for your question. Our goal in the merger was to increase corporate governance efficiency and effectiveness, and to reduce costs by continuing our activities under a more focused structures, under one umbrella of merging our local subsidiaries, which operate in the same sector. I believe that this is a great initiative, and I believe that this will add a huge value to our company from many perspectives. We already announced the key highlights to our capital market support, and general assembly will be held next week on Tuesday, 22nd of August. Hopefully, we expect the project to close by the end of August, 31st of August. Maybe after that, we can share more details. I strongly believe that this is a huge efficiency, effectiveness project that will increase our governance and reduce costs, and which will bring us a much more focused structure under one umbrella. Yeah. It is also going to increase our agility, decision-making quality as well. Definitely. As I mentioned, we are looking for low-cost operating model in an agile way, in a resilient way. This is just for creating transparency, but also increasing our agility and resiliency due to less bureaucracy in the paperwork process, actually. Yes, definitely. Thank you. It's very clear. Thank you. Thank you. We have no further questions. Dear speakers, back to you for the conclusion. Thank you for your time. Thank you for joining our call. Thank you very much. Thank you. Looking forward for the next coming quarters. Thank you. Have a great day. Ladies and gentlemen, this concludes today's call. Thank you for participating, and now please disconnect your lines.