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

Executive summary

• H1 2024 financials 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.

• Fiat brand retained domestic LV market leadership with a 12.3% share, 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.

• Interim financials prepared under Turkish Financial Reporting Standards and inflation accounting, with no material misstatements found by Deloitte.

Financial highlights

• Revenue declined 21% y/y to TL 60,254,914, driven by a 23% drop in shipments to 101,000 units.

• EBITDA fell 39% to TL 7.6 billion, with gross profit down 36.7% y/y to TL 8.9 billion and gross margin at 14.8%.

• Net profit for H1 2024 was TL 4,329,044, down 55.3% y/y, with PBT dropping 65% to TL 4 billion, mainly due to inflation accounting and high monetary losses.

• Q2 saw a 42% revenue decline and net profit down 81.4% y/y, intensifying bottom-line pressure.

• Total assets as of 30 June 2024 were TL 88,557,389, with total equity at TL 39,970,116.

Outlook and guidance

• PBT margin guidance lowered to 6%-8% for 2024, reflecting ongoing inflation and market headwinds, though one source notes guidance above 10%.

• Local sales expectation reduced by 20,000 units to 120,000-140,000 units; export guidance cut by 20,000 units to 40,000-50,000 units, though another source expects 140,000-160,000 domestic and 60,000-70,000 export units.

• Production volume forecast revised down by 30,000 units to 140,000-160,000 units, with another source guiding 170,000-190,000 units.

• CapEx guidance for 2024 ranges from EUR 150 million to EUR 200 million, with new vehicle investments on track.

• No specific forward-looking guidance in one report; management continues to monitor inflationary impacts and regulatory changes.