Arcelik A.S. (BIST:ARCLK) Q4 2024 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by. I am Yaeli, your course co-operator. Welcome and thank you for joining the A S Unsp conference call live webcast to present and discuss the full year 2024 financial results. At this time, I would like to turn the conference over to Mr. Baris Alparslan, Chief Financial Officer, Ms. Minesulu Yazgan, Finance and ERM, Executive Director, Ms. Delal Albert, Capital Market Compliance Senior Lead, and Mr. Hezer Arkan, Industrial Relations Senior Lead. Mr. Alparslan, you may now proceed.

0:34 Thank you very much. Good morning and good afternoon, ladies and gentlemen. Welcome to our full year 2024 financial results webcast. This presentation contains the company's financial information prepared according to TFRS by application of IAS 29 inflation accounting provisions. We start with the highlights of 2024. Peko generated 428.5 trillion revenues with a gross margin of 27.6% in 2024, affecting a 16.4% sales growth year-on-year in real terms, mostly due to Europe and MENA acquisitions. Acquired entities close to up to 1.0% in gross profit margin in 2024. In Turkey, we observed a robust demand in both wholesale and retail markets in MD&A and air conditioning segments throughout the year.

1:23 Whereas international demand remains weak despite some improvements. After a period of three years, slowdown points can end in European markets. APAC region remains challenging in 2024. Our OPEC over sales ratio is 26.2% for the full year, implying an increase of 1.4 points year on year predominantly caused by increasing personnel and marketing and selling expenses. The impact of the acquired operations on our OPEC is approximately 0.5 points. We've recorded a weaker EBITDA compared to last year, with a margin of 5.3% for the period. The diluted impact of the acquired operations is measured approximately 1.1 points in 2024. Please note that our EBITDA adjustment excludes one of transaction expenses regarding zero and nano transactions.

2:12 Our Networking Capital Over Sales Ratio as of 2024 year-end is 21%. Reflecting the remarkable improvement of 4.6 points year-on-year with the contribution of the appositions. Our leverage is 3.8 times as of year-end due to the increase in our borrowings and info-ABTA, and this figure reflects an improvement compared to the last quarter thanks to the improved cash generation. As per the decision of Public Oversight Authority dated October 26, We have provided the breakdown of monetary gain and loss for full year results for the years 2024 and 2023 in detail in our financial report. According to this breakdown, 6.8 billion TL of monetary gain booked for the year 2024 was due to the inflation impact of income inventories.

3:00 Therefore, when the related amount is added back on top of our EBITDA, our NGL adjusted EBITDA margin is calculated as 6.8% and 9.6% for 2024 and 2023 respectively. This adjustment leads to a leverage of around 3 times as of 2024 year end. Please note that this is a performed adjustment presuming fighting of industries at least in line with the administration figures and the aim is here just to roughly decipher the impact of inflation accounting on the operating margin. In 2024, we delivered a 15.4% of revenue growth year-on-year in real terms, recording 428.5 billion TL of consolidated revenues. Inorganic growth was the main driver, whereas local sales remained sluggish and international sales were slightly poor.

3:50 Our gross profit margin for 2024 is 27.6%. which is 1.7 points lower year-on-year due to mainly pricing pressures, intensified competition, unfavorable $0 parity, and also higher manufacturing costs as compared to the last year. PECO recorded an exact EBITDA margin of 5.3% on a yearly basis due to lower gross profitability and higher OPEX as mentioned. In 2024, on yearly basis, local sales increased by 13.6% in euro terms. Drivers of the growth, their volume increased and price-production mixed almost evenly. However, real figures in Turkish lira reflect the Scottish performance in the local market year-on-year. This is simply because the growth in CPI for the period was substantially greater than the change in the FX rate.

4:41 International revenues increased substantially by 43% in Euro terms year-on-year, with the key contribution of inorganic growth. Acquired entities contributed to consolidated sales roughly 2 billion euros for the year. Organic sales volume remained bullish as the challenging pricing environment in international markets remained unchanged throughout the year. However, figures in Turkish thresholds 24.7% in international markets. You may see the quadrille figures below, which reflect a similar performance in comparison with the previous year's last quarter. On the right-hand side, you can see our regional sales breakdown. Turkey's share in total revenues declined to 32% in 2024 versus 37% last year. Europe now constitutes approximately half of the consolidated revenues with the impact of the transactions.

5:32 Western Euro's share in total revenues jumped to 33% from 23%, Whereas CIF and Eastern Europe market had 16% and remained the same. Revenue generated in APAC region dropped to 10%, whereas it was 14% for 2023. Africa and Middle East region generated almost 8% of total revenue in total, which corresponds to roughly one point decline compared to the previous year. You may see quarterly figures as well on the lesson side. In 2024, Demand in the domestic market in MDA6 was robust. Our sales volume grew by 6.3% in line with the market on a yearly basis. Q4 figures reflect a much stronger growth around 23% in sales volume, whereas our shares outperformed the market in the last quarter.

6:25 However, in real terms, the increase of Turkish lira revenues in MDA6 segment was much limited due to sales campaigns and product nifts in Q4. Volumes in air conditioning taglines reflect the growth over 20% in line with the market. In Q4, we underperformed the market in terms of sales volume. Our retail TV sales volume decreased by 14.2% compared to last year, which implies an underperformance on a yearly basis. Similarly, Q4 figures reflect a substantial decrease compared to the same quarter of last year with an underperformance. Relatively poor sales in TV segments, combined with a decrease in professional display solutions segments due to the postponement of the tenders for smart boards previously held in Q4 of last year, have suppressed overall local performance in Q4. In 2024, with sluggish local revenues in real terms, we generated 138.9 billion Turkish Lira revenues in Türkiye, where MDA-69 remained solid, unit growth and air conditioning were strong, unlike declining TV sales volumes.

7:27 In overall, share of the domestic market in total business corresponds to 32% of total revenues for the full year. Having 49% share in consolidated revenues in full year 2024, revenues generated in Europe increased over 66 points year-on-year in Euro terms with the contribution of the acquired operations. Consumer demand in Western Europe substantially recovered throughout the year in terms of sales volume. Unique growth as of November end was 1.6% points, pointing to a further recovery in Q4. However, there is no growth in Euro turns on yearly basis. In key markets such as UK, Italy, Germany, Spain, Belgium and Austria, solid growth has been observed in sales volume.

8:13 However, slowdown continues in France, albeit with a drop in pace. Having 33% of shares in total sales revenue, Beko preserved the market leadership with a slightly improved pricing ability in the market in 2024. Meanwhile, in Eastern Europe, demand growth was falling throughout the year. Major markets in the region point out for a substantial growth in November 2024. In Eastern Europe, having 16% share in total sales, Beko maintained its market leadership despite underperformance in the region. So, the revenue generated in Africa in middle East Asian cost us 8% of consolidated sales in 2024. In Euro terms, sales within the region grew almost 20%.

8:59 Main drivers of the growth were the contribution of acquired nano operations and solid growth in African markets. MDA demand in Africa region remained robust and resulted in a growth in DeFi sales revenue over 10% in Euro terms for the year 2024. Domestic sales growth exceeded the growth in exports both year-on-year and on a quarterly basis. These figures imply 10% growth in terms of units and euro on a quarterly basis. As another key market in the region, demand in Egypt was robust throughout the year. Decorated sales growth figures were 14% and 9% respectively in units and euro terms, respectively, despite the challenges in market conditions. Quarterly figures show a slowdown in demand in Q4 compared to the same period last year in Egypt. On the other hand, having 10% share in consolidated revenues, AFAC Home Appliances landscape remains challenging throughout 2024.

9:55 Revenues generated in the region reflect a decrease of over 2.5% for the year in Euro terms, whereas strong demand in Pakistan and Bangladesh softened the decline. In Pakistan, sales revenues showed a robust growth both in Euro terms and sales volume in 2024. Corresponding to 20% and 17% increase respectively. On quarterly basis, numbers reflect a lighter growth both in volume and Euro terms. In Bangladesh, revenue growth over 2% succeeded in Euro terms compared to last year, whereas volume growth was slightly higher. In Q4, growth was stronger compared to the same period of last year. In 2024, trends in raw materials prices were different for metal and plastic side.

10:41 On the metal side, raw material prices declined slightly compared to last year's average prices. This was mostly due to weaker global demand, high policy rates, and lower energy costs. We expect a similar price level in 2025 on the average, albeit gradual increases quarterly. Average plastic raw material prices were relatively high last year, despite the gradual declines in the second half of the year. This was due to weak demand, slowdown in growth, and lower capacity utilization in production. We do not expect a major change in prices on average in 2025. Now, I hand over the webcast to Comine to present the financial performance.

11:20 Thank you, Boris. Here is the summary of our full year 2024 financials as per inflation accounting for both yearly and quarterly comparison. Our Consolidated Revenues were 458.5% in 2024, deflating 15% growth annually and a 5% decline quarterly compared to the same quarter last year. Growth profitability decreased both on a yearly basis and compared to the same quarter last year. margins are lowered by 1.8 and 1.2 points respectively. However, numbers reflect an improvement in comparison with the previous quarter roughly around 0.5 points. Our operating profits and adjusted EBITDA margins were substantially deferred in 2020-2024 due to the lower growth margin and growth in OPEC.

12:12 Operating margins declined by 3.2.0 in year and 2.1.2 quarterly. On the other operating income and expense breakdowns, there are a substantial amount of items both on income and expense side in June 4. On the income side, we have recorded an income from the purchase price allocation regarding Europe and MENA acquisitions corresponding to roughly 17 billion TL. On the expense side, we have recorded a worth expense over 11.8 billion TL due to restructuring efforts. Combined impacts of these items have supported the bottom line 1424 and 2024 full-year results. Net financial expenses increased substantially by 46% year-on-year and doubled compared to the same quarter last year.

13:04 This is mostly due to increased net interest, expense in line with clothing debt and increasing housing costs. However, the improvement in financial expenses in comparison with the previous quarter is noteworthy which points out 18% decrease. A bond of income has been reported in the last quarter's monetary gain due to the recalculation of net monetary position resulting from the indexing of foreign subsidiaries' shareholding by the parent company. The recalculated amount has also been adjusted in the previous year's financials. As a result, we have recorded a monetary gain amount of 7.1 billion TL in the last quarter, adding up to 15.8 billion TL in full year plan 24 results, which supported the bottom line. The figure for 2023 was 22.7 billion TL.

14:00 Consequently, we posted a net loss of 2.2 billion Turkish Lira before minority in Iran, which corresponds to minus 2.5% net margin. Decline is 6.1.0 in Iran. Finally, with a margin of 5.3%, we have recorded and adjusted itself 22.9 billion Turkish Lira in 2014. We have excluded from section related running expenses The amount increased to 629 million Turkish Lira using adjustments. For its forming amount in the last quarter was 88 million Turkish Lira. Adjustments for 2023 and the same quarter last year were 1.2 billion Turkish Lira and 436 million Turkish Lira respectively.

14:49 As of 2024 year end, with an increase of 9.8 billion Turkish Lira in net, We have succeeded to meet the required level by increasing our receivable tax rate and early collection amounts above our ordinary utilization of the tool to improve liquidity. However, we anticipate an increasing improvement on the leverage side as the value of personal performance starts to support EBITDA throughout the year. You may find the details regarding our debt currency breakdown and effective interest rates of our loan and bond portfolio in the figure at the right-hand side with a total borrowing amount of 138 billion Turkish Lira and an average duration of 2 years. Our average effective Turkish Lira, Euro, Dollar funnel rates including loans and bonds were 42%, 5.2% and 8.5% respectively.

15:51 On the bottom left-hand side, we may see our cash currency breakdown for the announced 1.4 billion euro as of today. With well-diversified cash holdings among currencies, our cash and tax equivalents were 15.8 billion Turkish Lira. 35% of our total cash is in Euro, 21% in Dollar, 15% in Turkish Lira whereas the other currencies correspond to this many 29%. U.S. denominated borrowings constitute 41% of our total borrowings, whereas dollar and trust rate denominated borrowings correspond to 21% and 24% respectively. On the debt maturity side, when our notion of cash flow utilization and short-term tax management instruments' utilizations are excluded, less than one-third of our borrowings is due 20-25%.

16:45 As of 2024, year-ends are low-term borrowings comprise more than 55%, whereas short-term borrowings correspond to 45%. It was much worse than as of last year-end. On the upper-left corner, you can see our adjusted EBITDA margin breach. Narrowing growth margin and increasing effects were the main drivers of the significantly lower margin of 5.3% in 2024. The change in G&A had a positive impact over a year late in the margin, where one of the adjustments had a negative impact on calculations since transaction-related quantifications were larger in 2023. On the upper right corner, our networking capital to sales ratio around 21% for 2024 at this stage.

17:34 The ratio was 25.6% for the previous year, which reflects an improvement of 4.6 points year-on-year. Quick wins from acquired operations supported the improvement in net worth and capital. Please note that heading to 12-month rolling data with yearly results, now we use 12-month average net worth and capital in calculations. On the lower left corner, you can see our capacity-based ratio of 5.4% and the trend 24 years, which implies an increase of 0.7 points year-on-year. These funds may only due to adjust to any bank and its investments that we have completed in 2024. Finally, at the lower right corner, you may see our free cash flow figures. Due to this cash generated from operations and growing capital expenditures, we have generated negative free cash flow of approximately 8.7 billion Turkish Lira in 2024 versus the negative amount of 18.1 billion Turkish Lira in 2023.

18:41 As we have stated in previous calls, we are anticipating an improvement in test generation capability in 2025. Now, I'll leave the floor once more to Boris Bey for our guidance.

18:53 Thank you, Inanna. So, still you may see our guidance and actual figures for the year 2024. With no real growth in local revenues in Turkish Lira terms and 43% of growth in international revenues in Euro terms, we partially met our guided numbers for 2024 on the top line. Slight less than expected contribution of acquired operations and slower recovery in international demand were the main causes of the deviation. On the EBITDA margin side, we failed to meet our latest guidance roughly by 0.5 points. This is mainly due to more than expected depreciation in the EURUSD after the US elections on top of slowly recovering international markets. We partially succeeded to meet our guidance for networking capital over sales ratio with a slight deviation around 1.4 for the year 2024.

19:40 Finally, we met our revised capex guidance around 400 million euros with an actual amount of approximately 375 million euros in 2024. Here you may see our 2025 guidance based on our recent forecasts and expectations for the year. We expect our local revenues to be flourished in real terms by the end of the year 2025. On international revenues, our expectation implies a growth of approximately 15% in Euro terms, supported by a full year contribution of acquired operations compared to three quarters last year. With a significant improvement in profitability, we expect an elite year margin around 6.5% in 2025, backed by positive impact of cost savings and synergies as we move forward with further necessary actions for more efficient operations.

20:30 We expect further improvement in our net working capital over sales ratio and go below 20% by the end of the year. Finally, our guidance for capital expenditures is approximately €300 million for 2025. So as we've disclosed in the previous quarters, we estimate savings of approximately 140 million euros through eliminating roughly 2,000 office positions across our global operations within a three-year time frame. Here you may see the recent update and realized figures in 2024 year-end. So far, we've completed almost half of our planned role eliminations as of by the end of 2024. So that concludes our presentation. The first question is from the line of Bithrova Eugenia with Barclays.

21:19 Please go ahead.

21:22 Thank you very much for the presentation. Congrats on the results. I have several questions. I would like to go one by one. So my first question is regarding your margins. So in fourth quarter, it seems that your margins were poorer than you initially expected. So what was the reason for that? And also for your 2025 guidance, could you please maybe provide a breakdown How much savings do you expect to generate in 2025 that would fit into 6.5% guidance? Thank you.

21:54 Sure. As explained as part of the presentation, the main reason in decline of margins is mainly euro-dollar parity, ongoing pricing pressure, especially in the international market. High level of interest rates in the domestic market and relatively low consumer sentiment. And high manufacturing costs on the back of real increases in salary and wages. And when it comes to your second question of the expectation of savings, especially from the turnaround operations from the Beko Europe side, we expect around 150 million euros of cost savings and synergies

22:37 in 2025 that would be factored in into the margin guidance.

22:45 Just to double check, you said 100,150 million?

22:48 Yeah, 100,150 million euros. Yes, yes.

22:52 Okay. Also, so my second question is regarding your cash flow generation. I mean, you reported slightly lower COPICs, but generally free cash flow was much better than after I think you had plans to refinance some of the shorter-term debt with a few other facilities. Could you please provide an update on your progress on that front? Thank you. Sure.

23:26 On the cash flow generation side, high control energies and accelerated collections of trade receivables was the main reason of extended cash flow generation. And in September and November, in particular, the European market was pretty strong, and for the local domestic market, Turkey continued to perform relatively well, contributing to the EBITDA generation. And on the capex side, we were in line with the guidance. Altogether, they let the denied cash flow generation and reduced leverage environment. When it comes to the refinancing of our funding, so we do not have a major redemption in 2025, and we do not expect any major capital expenditures. That's why the refinancing will be mainly on the networking capital related short-term debt on which we do not expect any problem given our extended credit limits in local market, domestic bond market and the hard currency borrowing environment especially in the bilateral lending.

24:34 We also have several plans to further extend the duration of our

24:41 Do you plan to conclude those extensions, the duration extensions during this year?

24:58 Yes, I mean, as the new debt funding facilities like ECH and some kind of Thank you very much. You're welcome. The next question is from the line of Diligirin Hazar with the J.P. Morgan. Please go ahead.

25:32 Thank you very much for the presentation and I want to hear a couple of us about these savings in 2024. So how many production plants have been closed so far and how many plants are you expected to close in 2025 and I wonder if these expected closures in 2025 also included in your EBITDA guidance or Your EDITAL guidance is based on the existing plant closures. So I just try to understand if there could be enough sight on the EDITAL margin if you close other plants in Europe.

26:14 Sure. In terms of plant closures, we've completed the closure of Yates in the UK as of 2024 year end. For our Polish operations, the ones that are announced in H&V Cloud, we expect it to conclude within the first half of 2025. And right now, the synergies that we expect from those closures are already bought in for our EBITDA margin guidance. And the remaining part is, as we announced in, let's say, for Italy operations the discussions are ongoing and you can follow up from the announcements as we followed you actually that's my second question so your capex guidance is 300 million euro does it include the Italy guidance capex without Italy so as it pertains to Italy as you know this is a highly sensitive topic concerning political discussions and the negotiations with the regulatory authorities are ongoing that 300 while calculating our synergies we've already bulked in or factored in our turnaround related OPEX and CAPEX to our synergy calculations and that 300 million euro is actually nearly a restatement of the required

27:46 turnaround OPEX and CAPEX to achieve those synergies And they include not only capital expenditures, they also include operating expenditures, IT-related expenditures, and or capitalized R&D-like expenditures. So that's why do not consider this as merely tactics. And the tactics guidance that we provided already includes the capex-related items as it pertains to Italy.

28:17 Okay, so in 2020 part, if you proceed on Italy, we won't see extra charges, right? I mean, it's already considered.

28:25 Yeah, sure. And to be honest with you, and also provided in the relevant disclosure notes of the audit report, we have fully provisioned when it comes to our turnaround operations going forward, including Italy, Poland, UK, etc. That's why you should not expect any more, let's say, further expenses that would be hitting the P&L in 2025 when it comes to those operations.

28:56 Okay, so that means that everything has been provisioned this year?

29:02 Yes, as it pertains to DECO Europe turnaround operations.

29:07 All right, thank you very much. And one final stop on this production plant closure, because I'm trying to understand, when you move all this production to Turkey, how much savings, I mean, how much do you say on the margin side? I mean, can you be really competitive with Chinese manufacturers in Europe afterwards?

29:27 Yes, I mean, these are our calculations, and we're not closing all the factories, just to correct. the ones that are mainly related to the dryer and cooking factories as announced in Vauxhall, Utsch and Yale in UK and we do not provide a full breakdown of the expected synergies when it comes to production, procurement, R&D or HR admin redundancies But the high level number that I provided to you is mainly related to production, procurement R&D as well as HR admin redundancy. So with impact, positive impact both in DT and OT eventually.

30:14 But I mean when I checked the prices in the UK I can see that you can price equal very close to your Chinese partners. So when you move the Whirlpool to Turkey, is it reasonable to assume that you can also price Whirlpool close to Chinese manufacturers in their segments and in their respective segments so that you can be more competitive in 2025?

30:35 Whirlpool is our brand that will be positioned on a highly premium basis. That's why I don't think that will be the Chinese benchmark is not the right

30:51 You don't have any clarity introducing the entry segments of these brands?

30:55 No, we have different brands like Indesit for the entry segments and for the premium segment we have Whirlpool, Hotpoint depending on the location that we have Whirlpool for example, Whirlpool in France, Hotpoint in UK so it depends on the region as well.

31:11 Okay, so Indesit is where right? I mean if I'm not wrong. Indesit is currently produced in Italy, right?

31:21 Indesit is produced currently in Italy, yes.

31:25 All right, okay, thank you very much.

31:28 You're welcome.

31:31 The next question comes from the line of the Mustafiun, Marwuz Atanbez. Please go ahead.

31:39 Thank you for the presentation. My first question is about domestic sites. I don't know if I missed it, but you expect a flattish market, a flattish Turkish lira revenue growth. How do you think the volume and the pricing side will be for this year, and what are the initial signals for the first half of the year? That's my first question. And the second question is related to negative goodwill sites and the restructuring costs you recorded. Maybe you can just repeat that part. From here, I see 17 billion from the acquisition and other income, and I see 11 billion Turkish lira for the full year.

32:38 regarding the restructuring so could you just give us maybe concrete numbers for fourth quarter and total years specifically in order to understand the effect of you know these two main factor in the fourth quarter and again after that I can ask some question about the monetary gain effect.

33:03 Sure So, in terms of outlook for Turkey, in accordance with our guidance in local sales, we do not expect significant growth in real terms. And here, let's say, diminishing expendable household income and limited monthly installment availability are the main hazards as we expect. And considering the high base impact in the first half, especially the full forward demand in the first quarter before the elections, figures for the first half is expected to be under pressure from our perspective. However, as the policy rates have come to a point of saturation, we expect to see a growth in demand in the second half of the year. And as you see, Turkey is always an active market. and the consumer German economy. So there is always more hope and more upside for Turkey, especially on the volume side.

33:58 So when it comes to the second question, the negative goodwill, yes, I confirm the numbers. The positive impact of the negative goodwill is 17 during Kishtira and for destruction costs and on which we provide a detailed breakdown under note 27 of the audit report. It's 11.8 billion that's provided on a general nature basis. And to be honest, this is a very detailed table where you can see the provisioning levels. and they are related to the same transaction and are recorded to the same year, 2024. The essence of negative food bill is obviously that the consideration of the transaction was 25% of Day for Europe operations and we acquired 75% of global operations.

34:52 And as part of the purchase price allocation study, all the fixed assets and the brands and intangibles were revalued. And the difference between those two considerations and the acquired operations resulted in that number. And we also, as part of the purchase price allocation study, cross-checked via commonly accepted valuation methodologies such as discounted cash flow, etc. These numbers do not include synergies, as per the methodology, and it shows the magnitude of the bargaining price in that transaction. And on the switch side, we have our restructuring costs.

35:41 Those are calculated based on our reliable estimates of probable losses that we expect going forward over the next couple of years, which are the detailed calculations behind it. And they refer to the announcements, so they match the announcements that we made so far in 2024, and we keep updating our disclosures as they fall due. And I presume you're going to ask for the monetary gain and loss that was recorded as one of these facts.

36:19 Yes, you know, that's my other question and you give details in, you know, 31, I think, of food notes. When I look at here, I see, especially when you put, like, you don't have an exact calculation, but at least for the first nine months, we had at the purchasing power of year end, We have around 11 billion Turkish lira in monetary gain in the nine months. When we come over here, we have an addition of 6 billion in fourth quarter. Could you further elaborate to that side? Sure. Should we impact? Yes, right.

36:59 Do you have any other questions? Then I can answer both of them.

37:02 Another one question is, when you give this food note, Could we say that, looking at this footnote, if you were not applied, if you didn't apply inflation accounting, your income would be 2.5 billion less. Is it a fair, just, you know, comment? Or do you share anything about, you know, that without IFS 29, what would your net income would be?

37:39 Sure, I mean, just to start from scratch, as you know, on the back of our annual full audit procedures, we were reviewing our accounting policies, and in line with the guidance of our auditors, we specified the impact of inflation accounting on the international subsidiaries under the equity movement table, with no net impact on the equity, and there is also, as you also realized, there is also obviously no impact on the operational line item, and the impact was Before that adjustment, the impact was handled under the currency translation adjustment, where it is now declassified under monetary gain and loss, and that's the essence of the increase. So, given this is a yearly impact, a long impact, as of the last quarter, you should actually distribute this incremental number throughout 2024 and come up with an adjusted Let's say potential sales figures for monetary gain and loss.

38:41 And when you project going forward, obviously the indexation, I don't know whether you're projecting monetary gain and loss, but the indexation levels will openly change, so they will decline on the average throughout 2025. They can change on a monthly basis, but on the average, we expect them to be lower on the back of lower announced inflation figures. and going forward I mean once you come up with an adjusted number for 2024 you can the best way in my view is would be to wait for the first quarter of 2025 to see the monetary gain and loss number as potential sales and then project going forward for 2025 okay so I think you need to further maybe elevate we can always take it offline for further questions but you can track so you know the quarterly total monetary gain and loss numbers and then you have that impact for the last quarter the one of impact and you can actually decompose and decide the net incremental number and you can distribute it to 2024 because this refers to the full year is one of the classifications and then extrapolate from that on the backlogs especially for Q1 results.

40:09 We can help you with that to understand it better.

40:13 Also related to negative goodwill, we are not going to see another negative goodwill going forward but we will see restructuring costs you know maybe similar to that number for the full year or more or any indication on that so are we going to see in the first half of the year could you assume that or you know it's like the three-year process you already completed maybe half of it so I would like to understand any you know how are we going to see the bottom line going forward sure as I responded to the previous question

40:57 The restructuring provisions are largely done, so you should not expect anything related to the PCA and or provisioning of such magnitude. There might be some things here and there, but we consider ourselves largely slash fully provisioned as of 2024, so you should expect I won't say less, but almost minimal to none P&L volatility under other operating income and expenses as it relates to the provisioning, restructuring or GPA, et cetera, et cetera. So the expenses that will come will be on an actual basis going forward, not provisions. And we will obviously unwind those provisions with zero impact from the P&L. So they are already handled in 2024.

41:46 and maybe last question maybe you answered sorry again if I missed it but it is related to international parts you have 15 percent in ethics terms what would be the driver the pricing side versus the volume side again and in each region regions we are going to see improvements and just it's you know the China factors and the European factors really is the We don't know the answer, possibly, but when do we expect the recovery that will have some momentum on companies like you, which have the export potential and the growth potential.

42:42 Thank you for watching.

43:06 So, coming back to your first question, as you know, the closing of the PECOEUR transaction was done as of April the 1st in 2024. So, the numbers do not include the first quarter results of WorldCode. So, the main reason for the year-on-year increase of 15% is mainly related to that. You do not expect a major change. In Hormones and or in Pricing. Having said that, we'll be here on the back of the recovery in Europe and ECB's actions, as you know, have already started to stimulate the consumer demand. And that's why having inflation slow down and backed by the low basis like in Europe, we expect a relatively high growth in sales volume.

43:58 That would be of course balanced by the pricing pressure, intensified competition, But as you know, we have all these brands right now, Whirlpool, Handpoint, Beko, Indesit and the main strategy is going to be to position themselves, them, just to nullify the impact of the pricing competition. So, the silver lining or the light at the end of the tunnel has already started to come on steam, especially when it comes to Europe. Some regions, as I mentioned, like UK, Belgium, etc. In our case, I think more to come, but especially the first quarter is not going to be easy. But when I look at the initial results, we're more or less in line with our expectations.

44:58 and the great studs will be the main drivers going forward on which we see the hopeful signs when it comes to ECD.

45:12 Thank you. You're welcome. The next question is from the line of Jitney Tom with ACF Asset Management. Please go ahead.

45:24 Hi, good evening and thanks for taking my question. On the, just on the first of all, I couldn't access the presentation. I wondered if you could confirm what the adjusted EBITDA was in the fourth quarter in Euro terms and also what the percentage change was year on year.

45:45 One second. Why didn't you have access to the presentation to start with? I don't know, it wasn't on your website. Can you repeat your question?

46:05 Because I didn't catch that number that you're asking.

46:09 The adjusted edits are in the fourth quarter. What was it in Euro terms and how much did it change year on year?

46:19 We publish our results in Turkish Lira, let me tell you the Turkish Lira number which is 4.9 billion Turkish Lira in the last quarter of 2024 and in terms of margin it's 5.3% and that includes the extraction of one of the expenses related to the transactions in total that number is 629 million Turkish Lira and that is also So you know all this reports and without this the number is 5.2% but on an example basis the margin is 5.3%.

46:57 Okay and could you confirm what it was last year on a comparable basis?

47:03 Last year it was 5.7 billion Turkish lira, and this is an index number, so based on the current purchasing power, and on the adjusted EBITDA margin it was 6.3%.

47:17 Okay, great. And then with respect to your guidance, obviously your guidance for a higher margin in 2025, the fourth quarter was still relatively weak, and you started to come into the first quarter. I think these two quarters will be

48:00 much more determining and as I mentioned and I also provided some high-level numbers on the synergies that would be incremental to the operating profit when you I think you can easily calculate when you with that number and when you project a certain revenues going forward in line with our revenue growth guidance You will more or less end up with around 0.8 to 1% margin improvement on the back of our factored-in synergies. And obviously the impact of inflation accounting will also abate when we proceed to 2025, but this will be balanced on the gross profit level vis-à-vis the pricing pressure that might continue at least for the first half as you rightly pointed out so overall we've spent a lot of time in coming up with that guidance and we wanted to provide you with six and a half percent for 2025 for the entire year as an average and as you rightly point out we expect it to gradually recover towards the after end of the year okay great that's helpful thanks and then there's an article

49:20 In the news this morning that you may increase your investments in Italy from 110 to 300 million euros. I understand that you're in discussions with the government, so you probably can't comment on that number, but in terms of any additional investment that you commit to in Italy, is that likely to fall primarily in 2026 rather than 2025?

49:45 So the discussions around Italy, as I mentioned, it's a process that is dictated by political interactions, and as I said, that number, we do not consider it as an increment on top of what we've already provided. Obviously, the disclosures come in areas gradually. and that number is not only related to capital expenditures as I said that we've already factored in and or projected going forward expenditures related to our operations in Italy, be it as I said IT fees, operating expenses, be it capitalized and or expensed IND And this number is actually a restatement of the total expenditures that we expect over the next, let's say, five years, which is a long-term period going forward. And when you look at our CapEx guidance, and maybe you would recall that in our previous webcast, I mentioned that with the end of the expansion CapEx program like Egypt, Bangladesh, The transfer of Çayıoğlu to Manisa etc. is they are finished or almost finished now.

51:08 Going forward, our capital expenditures will be mainly on maintenance topics that we expect. And including those expenditures, I think more or less the number that I provided in the guidance would include all of it.

51:25 Okay, I understand. And then with respect to sort of a related question, you raised 500 million euros at the BCO level in 2024. Would you expect to need to raise any more in 2025 or 2026?

51:40 So 500 million dollars, you said, or euros? The euro there.

51:47 Correct, euros. I thought it was euros, yeah, that you raised the 500 million term at BCO. Do you expect to raise any more financing at that level?

52:00 I think if you either refer to the syndication that was done in August and a follow-up towards the end of the year We are not in need of long term funding per se. I can comfortably state that. But just to extend our duration, we are able to lock in relatively low interest rates in specialized lending such as ETA as I mentioned before. Then we'll hit the market. But to be honest with you, we're not in need of any long-term funding. And our first redemption will come on May 2026 for our BIN bonds. And September 2028 for our Euro bond issuance that was done back in September 2023.

52:55 So for 2025, We're not in need of a major redemption, so we're fully covered on that respect, and with an average duration of three years, we're really very comfortable in terms of funding needs going forward.

53:11 Okay, thank you, and then just last one from me. You mentioned that you had accelerated some receivables collections in the fourth quarter. Could you, was that related, or rather, did you increase your factoring during the quarter? Did that contribute to it or should we expect some reversal of that receivables collection benefit in the first quarter?

53:36 It was a mix of both early discounts that we're getting from our distributors and or factoring and the factoring interest rates are really highly favorable ranging from 100 to 150 basis points in terms of spread and we're actively using that. This is actually the beauty of that industry. It's highly cyclical and our networking capital is heavy, where you can play around with your trade variables going forward. But that does not mean that we've depleted our networking capital. So, it's just mainly based on the seasonality. And as I mentioned, September and November results, especially in New York, were very, very strong. and that's why these actually refer to the collection of these turnovers towards the year end and we continue to actively use such availabilities credit limits as we also migrated workflow operations but in a nutshell that's part of the funding synergies that we were expecting and secondly we've been pretty strong in controlling and reducing our slow-paced inventory levels and especially the raw materials inventory levels towards the last quarter.

54:59 And that strategy is going to continue within 2025. We'll be extremely stringent on our inventory management going forward. And just one note, because I mentioned that in the previous webcast, As you know, with the migration of the Whirlpool balance sheet, the asset had to recalibrate itself, especially on the net working capital. When you look at the free cash flow generation in 2024, which won't be cheap and are mainly run-off in my view, and the impact of that has been really reduced throughout the last quarter as promised. is that the negative net working capital investments that on the back of the migration of world poor balance hit and the ongoing capital expenditures were the main culprits. These won't recede in 2025.

55:53 And we have already started to see the positive impact throughout the last quarter. So on a cash conversion basis 2025 will be highly favorable in our view.

56:08 Great, and is it possible to give a number for the fracturing balance at the end of the year and also in the same sort of purchasing terms at the third quarter? Just to kind of give a sense of how fracturing changed and how that was used during the quarter.

56:26 I have the flow numbers, but Mine is now looking at the balance, the stock numbers as of recorded factoring.

56:37 Yes, sure.

56:39 Well, in the fourth quarter, the number was not really very different from the third quarter in terms of factories, but early discounts contributed the bottom line, like around 500 million euros, which were 387 million euros in the third quarter.

56:59 Okay, so increased by 120. Okay.

57:01 Yes.

57:03 Thank you. That's great. Thanks very much. Welcome.

57:09 The next question is from the line of Campos Gustavo with Jefferies. Please go ahead.

57:17 Hello, can you hear me? Yes, very well. Okay, thank you.

57:23 Yeah, I just wanted to confirm a few things. I was looking at your Outlook slide and just doing some simple math here, you expected like 400 you actually you generated around 430 billion in revenue in 2024 in Turkish Lira so that equates to around like 11 billion euros um you expect you know 15 percent right uh growth in uh in effect in effects for 2025 so apply your margin your expected margin of six and a half percent You have expected EBITDA of 850 million euros. Is that a fair nominal number? Like, did I do the math correctly here as far as your 2025 expectations in nominal terms?

58:21 Your math per se is correct, but I cannot comment on the exact number that you mentioned, as you can imagine.

58:29 Okay, okay. All right, my math is correct. Thank you. And that, you know, the dynamic will be mostly driven by cost savings and integration, right? Because you mentioned that pricing conditions may remain somewhat challenging in 2025, right? So most of any upside as far as your financial performance and your profitability will come from the cost side. Is that correct?

59:05 That's a fair assumption, but on the pricing side, we also have our plans, as I mentioned, in terms of positioning of the brand, so effectively utilize Whirlpool. And on every segment, we have a relevant brand to shake off the competition. As you know, in Turkey, we're a price maker, so we're pretty strong on the back of our exclusive dealership network. and in Europe we're putting a lot of emphasis on the positioning of our brand so it was a this year was a trial period I mean 2025 will be much more let's say comfortable in fighting off competition so we expect to nullify or eliminate the relatively negative impact of pricing having said that and as you rightly pointed out since the main In fact, positive impact is expected to come from synergies which have repercussions on the cross-profit and on the operating expenses side.

1:00:08 So it will be a mixture of both.

1:00:12 Understood, understood. Yeah, thank you. That's very clear. Secondly, I was just like, if you could provide a quick comment on your expectations on net debt. It was around like 2.4 billion euros. As of the end of 2024, are you expecting that to change materially one way or the other, like throughout this year and into end of 2025?

1:00:43 I cannot comment on an exact level, but in terms of a little leverage, we expect it to be reduced, of course, substantially on the back of reduced interest rates and I think you can more or less calculate the free cash flow generation including the interest expenses but be careful when it comes to the cash interest expenses because there are like when you look at the P&L there are some non-cash expenses like with discounts etc. So on the back of high inflationary environment and high interest rate environment, that number actually comprises a relatively large chunk of total net financing expenses that you see on a recorded basis in the P&L.

1:01:37 But I think it's a relatively easy task. And when I look at the broker consensus on that, you're doing a good job in projecting such numbers, but we're happy to help out on an offline basis, of course, within the Conscience of Confidentiality.

1:01:56 No problem. Yeah, thank you. That's very helpful. And then two last questions from my side. I'm looking at your capacity around 300 million euros and you said that is all just focused on maintenance activities at the moment. If you could provide some breakdown of discretionary and maintenance activities in this outlook that could be very helpful.

1:02:25 I can state that it's mainly maintenance, but of course there are some leftovers and transfers from 2024 in terms of expansionary CAPEX and, as I mentioned, as it pertains to the turnaround CAPEX for back-way rope restructuring, but it's mainly related to maintenance CAPEX in our existing factories. and new product investment as well, because I wanted to mention actually not in one of the previous questions, the question was whether only Italy factories produce inviscid, that's, I mean, predominantly yes, but there are like cross-sourcing initiatives and in some regions we also produce inviscid brands, so it's not only Italy, but predominantly yes.

1:03:17 so that the cross-sourcing requires new product investments which is already factored in our capex figures all right yeah understood that's also very helpful thank you the last question here I'm seeing your debt breakdown your total debt breakdown and there's still like a portion of funding that is in Turkish Lira which you know it can be like viewed as a bit expensive right given the current conditions in the market right now. Are you expecting this currency breakdown in your funding to change?

1:04:11 That's my last question, thank you.

1:04:22 You're welcome. When it comes to Turkish Lira lending facilities, the average duration is relatively low, let's say six months, and occasionally there are some domestic bonds which are like the one or three year duration, but they are like a small portion of our total Turkish Lira funding, so which means on the back of reduced interest rates, we're able to refinance and re-price them very quickly. So these are mainly short term. and when it comes to alternatives and we started and we started that at the end of 2024 is to utilize exit facilities and the interface of those facilities has started to fall below 30% which is a favorable number so I think and this is how we project In our mind space here is that the impact of the reduced interest rates will have a very positive impact for this year in terms of financing expenses starting from Turkish Lira. We're not locked in on Turkish Lira so we can easily reprice them. We're also keeping a close eye on our ethics position obviously.

1:05:36 and that's why we're not we have almost zero concern about lending and rollover of our lending facilities all right sounds good thank you thank you again for taking your time you're welcome thank you for the question the next question is from the line of Doshi Anjali with Naveen please go ahead

1:06:02 Hi, yes, thank you for the call today. Most of my questions have been answered. Just curious, you know, with regard to your margin outlook, I am curious about what your expectations are in terms of raw materials prices going into 2025, particularly the metal and the plastic side, and also curious about your assumption on Euro-US dollar parity into 2025 that you're using in the guidance.

1:06:32 Sure, thank you. On the average, we do not expect a major change in raw material prices on both sides, neither in metals nor in plastics. The demand-supply balance in those raw materials points to a, let's say, similar environment when it comes to the average level. And in terms of your dollar parity, I think current levels more or less reflects our expectations. Obviously everybody was expecting that they will be falling towards 1 or below 1. But I think as you can also follow, closely follow from the political statements, especially on the U.S. side, there is always a barrier or floor to that number and I think the rate cuts are going to go hand in hand going forward.

1:07:25 And I think there might be some downsides, but the parity levels currently reflect more or less what we expect for this year. and are also relatively in line with what we've budgeted or projected for this year.

1:07:45 Thank you.

1:07:46 You're welcome. The next question is from the line of Giri Kiran Hazade with J.B. Morgan. Please go ahead.

1:07:59 I do apologize, but I'm a bit lost in all these numbers, particularly on the debt side, so I'm trying to understand, when you say that we expect some improvement in free cash flow, do you mean that free cash flow is going to turn into positive in 2025? Yes, that's our expectation. All right. And do you, I mean, is there any possibility that you can also guide us about your working capital need? I mean, I know you put a number as persons so familiar, but I think it's based on IOS 29, so inventory could be a bit different. So are you planning to generate some sort of inflow from working capital in 2025?

1:08:38 I think the base case would be it should go in line with the change in sales, more or less. and we also always in our projections factor in some improvements a couple of days and in some areas some relatively more I guess it especially on the inventory side it's a never-ending target but obviously both on the payable and the receivable side the market is Let's say relatively known. But on the payable side, the workflow operations have really benefited in terms of extending our trade payables and I'm 100% sure you can follow that from the numbers and it's potential sales numbers as well.

1:09:26 And this is mainly related to the supply chain finance that we migrated. But you can, in your day stage, you can factor in and relatively Thank you

1:09:42 very much. And finally on this one, I understand you seem to be comfortable about this refinancing in 2025. So all these short-term loans are going to be refinanced in 2025 then, right? I mean, with probably 30-year loans.

1:09:58 We can redeem some of them, especially high interest rate ones that we see at every opportunity. This is what we've done back in the last quarter especially. We've redeemed the high interest ones, especially on the hard currency side. But in 2045, when I look at our credit limit versus the utilization, especially in the local market, There is like a 90% gap between those numbers and that excludes non-cash loans. So that's why we're really comfortable and the market is open in terms of credit minutes utilization. So we do not have a large chunk that will come. in 2025, we'll manage it in conjunction with our networking capital needs, which is always flexible, and you can juggle between your receivables, expanding your payable terms, inventories, and currently the sell-in-sell-out balance is pretty well, especially on the channels, both in Turkey and in Europe, mostly in most of the countries, and that's why we can generate cash out of Thank you very much.

1:11:38 The next question is a follow-up question from Dermatovsky, Maloguz Atanves. Please go ahead.

1:11:46 Thank you again.

1:11:47 My question is about my friend mentioned about the parity side and the raw material side. What about the label sides, especially in the Turkish side? We have, you know, the high service inflation versus maybe lower product inflation. How does it affect your competitiveness in global area? Do you see any improvements going forward on that side? Because you have 5.3% EBITDA margin without run-off this year and next in 2025 you expect some improvements. What would be the main drivers of that improvement? Just the base effect or? you expect some additional you know the the pricing or the lower cost but basically I would like to understand the labor side how Turkey's production is competitive and of course your you know the you have a comparison in some of your activity in Europe and other markets so could you just compare the competitiveness in terms of labor costs

1:13:07 Thank you. I think it's widely known now that the exporters, all of the exporters, be it on the textile side or be it on consumer durables and the automotive side, are suffering from high labor costs in hard currency terms on an hourly basis. We just see the news every day and discussions from the unions or regulators etc. So we do not, I think, when I look at the last couple of years, obviously the increasing wages of blue collar workers have been pretty profound and had a profound impact on the profitability and gross profit margins of exporters. And on the back of declining inflation, our expectation is that the worst is over on that side. I think, obviously, and Zeynep Erdoğan.

1:14:02 We also see some signs that If any, the salary or wage increases are now done on a forward-looking basis on the expected inflation versus the actual inflation or historical inflation. So there is some understanding as we see going forward, but obviously the levels are pretty high, almost in line with our Romanian and our Polish operation. This is a general issue which has been voiced over at every opportunity from the exporters.

1:15:02 We do not expect any major worsening from that situation. If any, if there is some real devaluation in Turkish Tira, obviously it will have some impact, some positive impact on MFTA going forward, but certainly with a lack of inventory turnover days, and there is a corresponding hit, UTS6 normalizes going forward above inflation on the bottom line given hard currency nominated lending, etc. So it works both ways. So there is a short-term impact and there is a long-term impact. It all boils down to the pricing, to be honest with you. So if you are able to pass through those costs and it is relatively easier on the back of a relatively low inflation environment to pass through such prices, I think The P&L of all the experiments will also normalize going forward.

1:15:57 So we do not expect a major benefit from that phenomenon or macro tailwind. Our main expectation for the year is from our own synergy extraction turnaround operation and normalization of our operations on the back of integration. and the ramp up of the recent investments such as Egypt, Bangladesh, these will really contribute heavily going forward. And if any macro support will come, that will definitely come on top of the numbers that were already shared in terms of guidance, I can comfortably state that.

1:16:43 Thank you. And one last question about the Whirlpool Deco or Deco Europe operations, I can say. How fast do you think the process go right now in terms of regulations? Because from time to time in such the mergers or acquisitions you face with some regulatory issues. So far, I think there is no problem. In the future, do you expect any difficulties on that front or you expect it smoothly? Because you're in a process and sometimes the competition boards and other organizations put some delay on some issues.

1:17:29 Do you see any risk of slower than expected integration?

1:17:36 I think we've come a fair way in terms of executing, especially on UK and Poland side, as you can follow from the press releases, announcements, news, etc. We haven't experienced anything. I think it couldn't go smoother than that, to be very honest with you. And the same applies to Italian discussions as well, as you can see. Obviously, the operations in Italy are much larger. It takes some more time, as you can see, but they're always in a constructive phase. So, we haven't experienced any roadblocks so far and it's been executed pretty successfully, I might say, and in a very, very short time period. So, it's been really accelerated. As you can see, we've completed all major provisioning as of 2024, including the PPA benefits that we got from the transaction. So it was a clean up in 2024, which I believe we're starting 2025 with a really clean slate and we will be significantly focused on our core operations on the operating line items.

1:18:47 and we have all the means, we have enough FTEU capacities, brands, I mentioned that before as well, and enough human capital. We'll continue to execute on our strategy and we haven't experienced any major issues so far. It's going pretty well, touch wood, in our view, collectively.

1:19:07 And maybe one last question about the inflationary context side. Did you make any sensitivity regarding the pace of inflation decline for 2025 in terms of the margin effect? Because right now we see declining inflation, pace of declining inflation, so we assume that the effect would be positive on the margins. If we're going forward, setter is putting all other factors same, Does the declining inflation could have a positive impact on your margins? Is that a fair assumption or did you make any study on that?

1:19:53 That's a fair assumption, obviously, but it's also a reclassification between the MGL as it pertains to the inventories and the growth process. So that's why we try to mention at the outset of this cast the impacts of the MGL. Inventory-related MGL to the margins on a pro forma basis, so that you can see that. But it will be a mere request. So, when you look at the profit before tax and or line items that are after MGL, you see the results. I mean, excluding financing expenses, so to speak, and rolls.

1:20:38 But when you just are only focused on the operating line items, yes, it's a fair assumption. But you have to look at every part of the P&L just to make a correct approach to the margins that we have and compare it against our historical margins. That's what we're trying to tell both the creditors, to the market, to the investors, and that was the essence of our script at the outset.

1:21:11 Thank you. You're welcome. Thank you. Ladies and gentlemen, there are no audio questions at this time, so we will move on to our webcast participant questions. The first question is from the line of Emre Dunman with Getirin Klinsman. And I quote, hi, thank you very much for the presentation. There is a significant decrease in your net debt compared to the previous quarter. What is the main driver? In 2025, should we expect a further decline in net debt EBITDA ratio? and Can the company generate positive free cash flow? What would your 2025 EBITDA margin guidance be if it did not include one-off items?

1:22:01 Thank you. I already answered that question. Cash generation is a mixture of EBITDA increase, lower net working capital needs and lower capex needs. The net debt EBITDA is expected to be reduced throughout the entire year. and I mean our guidance excludes one of items so it's six and a half percent in terms of EBITDA margin.

1:22:26 Thank you. The next question is from Mustafa Kemal Eski with FSSA and I quote thank you for the presentation you said that there is a horizontal expectation in the TL market in 2025 expectations. Since the increase in household good prices in the last three four months have an impact on Archelik? Did you have a clear expectation for the net debt slash EBITDA in 2025? 44% of debts will be paid in 2025. Do you spend your active cash for this or continue to convert it with debt instruments? Do you expect fluctuations in euro and dollar starting from the second half of the year? What did you consider the euro dollar

1:23:16 I think I already answered most of those questions, to be honest with you, so we can skip that question. Thank you. The next one is from Marco Kirner with Varianz. Does accelerated collection of receivables mean receivables factoring?

1:23:39 We said mainly it was related to early discount which is based on our relationship with our distributors and there is some increase in fact too but not much. Thank you. The next question is from Mikael Sotiel with Santec Bank. Good afternoon. I would be grateful for giving us some flavor about factors could lay behind the market recovery in Western Europe. Do you expect a positive volume effect? year-on-year in Western Europe in full year 25.

1:24:09 I answered that as well. We expect a more positive outlook for European markets. That has already started, especially in some regions. ECB's actions will be the primary driver to stimulate the consumer demand. So, inflation will slow down. And there is, of course, a low base effect over the last couple of years. European markets have suffered and we expect a growth in sales volume. Pricing. We will balance with our pricing and positioning actions. Thank you. And we have a follow-up from Amrit Duman, Yeterin Sinsman. In 2025, what should we expect the market outlooks in Asia to be? Is it possible to share numerical data with Volpec in India, market share, growth trend, etc.? ?

1:25:00 Well, World Bank India, our numbers are based on equity accounting. As you know, you can follow from our TNL. It's a very thriving operation in our view. And as it pertains to EFAC in 2025, the improvement in our market share continues. And January-November data points to a two-point increase, and we've reached almost 5% market share in refrigerated product books. while we have high expectations on the washing machine as well. At that category, market share increased by 3 points and reached 8.1%. So, APAC, although it's a very tough market, in some of the regions we will continue to increase our market share.

1:25:48 Thank you. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over again to Mr. Alparslan for any closing comments. Thank you.

1:25:58 Thank you very much for attending our webcast and for all of the questions. We can take any questions that you might have left offline and see you in our next webcast. Thank you very much.