Türkiye Sise Ve Cam Fabrikalari (SISE) H1 2024 earnings summary

Executive summary

• H1'24 revenue ranged from TRY 85.8 billion to TRY 103.6 billion, with net income between TRY 4.9 billion and TRY 5.0 billion, both down sharply year-on-year due to inflation accounting and margin compression.

• EBITDA margin dropped to 9%–9.1%, with EBITDA between TRY 7.78 billion and TRY 22.6 billion, reflecting cost inflation and lower profitability.

• Inflation accounting (IAS/TAS 29) significantly impacted reported results, distorting comparability and reducing margins.

• International sales remained strong, with exports to over 150 countries and key markets in Europe and the U.S.

• Cash and cash equivalents increased, with a strong focus on operational efficiency and capital structure optimization.

Financial highlights

• Gross profit margin declined to 23%–23.2%, down from 28%–28.3% year-on-year.

• Net debt/EBITDA ratio stood at 2.6x, with net debt between TRY 49.2 billion and $1.9 billion.

• Free cash flow was negative at TRY -21.2 billion, mainly due to lower net profit and higher capex.

• CapEx for 1H 2024 was TRY 10.8 billion, with a focus on major projects and routine investments delayed.

• Total assets and equity increased, with assets up to TRY 369.1 billion and equity up to TRY 193.6 billion.

Outlook and guidance

• Management expects gradual margin improvement in the second half, with CapEx for 2024 to remain below $1 billion and flexibility to adjust based on EBITDA performance.

• Inflation accounting will continue until Turkey exits hyperinflation status.

• Sustainability targets include 2050 carbon neutrality and significant reductions in water use and packaging waste by 2030.

• Deferred tax assets from investment incentives are expected to be recovered within five years.

• No major investment projects canceled, but non-core and routine investments delayed or removed.