Tofas Türk Otomobil Fabrikasi Anonim Sirketi (TOASO) H1 2024 earnings summary

Executive summary

• H1 2024 results were below expectations due to weak Q2 performance, margin contraction from strong competition (notably new Chinese brands), and costs related to clearing non-GSR-compliant vehicles, with additional pressure from hyperinflation and lack of fiscal advantages for local cars.

• Interim period covers 1 January to 30 June 2024, with financials prepared under Turkish Financial Reporting Standards and inflation accounting applied due to hyperinflationary conditions in Turkey.

• Fiat brand retained domestic LV market leadership with a 12.3% share in H1 2024, but lost ground in passenger cars (9.4% vs. 16.3% last year) due to increased competition and tax bracket issues.

• Export volumes declined 5% y/y in H1 2024, with a sharper 34% y/y drop in Q2, mainly due to regulatory issues in MENA.

• Strategic focus remains on finalizing the Stellantis Türkiye acquisition and launching new models, with KO model production line refurbishment on track.

Financial highlights

• Revenue for H1 2024 was TL 60,254,914, down 21% year-over-year, driven by a 23% drop in shipments to 101,000 units.

• EBITDA fell 39% to TL 7.6 billion, with gross and EBITDA margins under pressure from local market pricing.

• Net profit for H1 2024 was TL 4,329,044, down 55.3% year-over-year.

• Profit before tax (PBT) dropped 65% to TL 4 billion, mainly due to inflation accounting and high monetary losses.

• Q2 saw a 42% revenue decline and an 81.4% net profit drop, intensifying bottom-line pressure.

Outlook and guidance

• 2024 domestic LV market guidance raised to 900,000–1,100,000 units.

• Domestic retail sales expected at 120,000–160,000 units; export shipments guidance ranges from 40,000–70,000 units.

• Production volume guidance revised to 140,000–190,000 units for 2024.

• CapEx guidance for 2024 ranges from EUR 150 million to EUR 200 million.

• PBT margin guidance for 2024 ranges from 6%–>10%, reflecting ongoing inflation and market headwinds.