Koç Holding (KCHOL) H1 2024 earnings summary

Executive summary

• Growth outlook remains uncertain amid global geopolitical tensions and tight financial conditions, with Turkey experiencing economic rebalancing and a slowdown in domestic demand due to monetary tightening and reduced household purchasing power.

• 1H24 saw varying performances across segments, with consolidated net income dropping 95% year-over-year to TL 1,632 million due to sectoral headwinds and inflation accounting impacts.

• Portfolio diversification across sectors and geographies, with 30% of revenues from international sales and 47% in hard currency, supports resilience.

• Dividend income remains robust, supported by portfolio companies with FX or FX-linked revenues.

• The group operates in energy, automotive, consumer durables, finance, and other sectors, with a broad international presence.

Financial highlights

• Consolidated revenue for 1H 2024 was TL 1,009,725 million, up from TL 886,314 million in 1H 2023.

• Net profit attributable to equity holders was TL 1,632 million for 1H 2024, down from TL 36,165 million in 1H 2023.

• Net cash position at end-June 2024 was USD 712 million, with gross cash at USD 1.5 billion, 99% in hard currency.

• Dividend income in H1 reached TRY 23.7 billion (USD 737 million), with additional dividends expected in H2.

• Gross profit for 1H 2024 was TL 154,249 million, compared to TL 218,426 million in 1H 2023.

Outlook and guidance

• Domestic and export market slowdowns expected to persist through the next two quarters, with potential recovery in 2025 depending on economic policy.

• 2024 expectations for key subsidiaries include flattish domestic revenue for Arçelik, lower refining margins for Tüpraş, and double-digit real loan growth for Yapı Kredi.

• No planned changes to dividend payout policies, as inflation accounting effects are largely non-cash.

• Capital allocation remains focused on growth sectors, especially healthcare and manufacturing, with readiness to pursue M&A opportunities.

• Dividend income flexibility is maintained, with major payouts from Tüpraş and EYAŞ expected in 3Q24.