Quarterly Report • Nov 5, 2024
Quarterly Report
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Ford Otomotiv Sanayi A. Ş. 1 January – 30 September 2024 Interim Report
According to Article 10 of our Articles of Incorporation, all affairs and management of Ford Otosan shall be conducted by the Board of Directors composed of at least 8 members, the total number of the members shall be even, and shall be elected for a period not exceeding three years in accordance with the provisions of the Turkish Commercial Code and regulations of the Capital Markets Board. Save for the mandatory provisions of the Corporate Governance Principles of the Capital Markets Board with respect to the independent members of the Board of Directors, the General Assembly may replace the members of the Board of Directors at any time as deemed necessary. Two of the elected board members shall meet the qualification of independence stipulated in the Corporate Governance Principles regulations of Capital Markets Board.
In our Ordinary General Assembly Meeting held on April 3rd, 2024, the number of members of our Board of Directors was defined as 12, including 2 Independent Members. Our Board of Directors that would be serving until Ordinary General Assembly Meeting to audit 2024 accounts are as below:
| M. Rahmi Koç | Honorary Chairman |
|---|---|
| Y. Ali Koç | Chairman |
| James Kieran Vincent Cahill | Vice Chairman |
| Johan Egbert Schep | Member |
| Davıd J. C. Johnston | Member |
| Levent Çakıroğlu | Member |
| Haydar Yenigün | Member |
| John Davis | Member |
| Fatma Füsun Akkal Bozok | Independent Member |
| Prof. Dr. Katja Windt | Independent Member |
| Güven Özyurt | Member – General Manager |
| Josephine M. Payne | Member – General Manager |
In accordance with Capital Markets Board's Communique II-17.1. on Corporate Governance;
Fatma Füsun Akkal Bozok and Prof. Dr. Katja Windt have been elected to the Audit Committee membership. Fatma Füsun Akkal Bozok has been elected as the chairman, and Haydar Yenigün, Davıd Joseph Cuthbert Johnston, Prof. Dr. Katja Windt and Saibe Gül Ertuğ as the members of the Corporate Governance Committee which also fulfills the duties assigned to the Nominating Committee. Fatma Füsun Akkal Bozok has been elected as the chairman, and Haydar Yenigün and Davıd Joseph Cuthbert Johnston as the members of the Early Determination and Management of Risk Committee. Fatma Füsun Akkal Bozok has been elected as the chairman, and Haydar Yenigün and James Kieran Vincent Cahill as the members of the Remuneration Committee.
Ford Otosan's shareholder structure as of September 30th, 2024 is as follows:
| Company Name | Value of Share (TL) |
Number of Share |
Share Capital (%) |
|---|---|---|---|
| Koç Holding A.Ş. | 135,631,304 | 13,563,130,447 | 38.65 |
| Vehbi Koç Foundation | 2,880,501 | 288,050,137 | 0.82 |
| Koç Holding Retirement and Support Fund Foundation | 3,259,202 | 325,920,231 | 0.93 |
| (1) Temel Ticaret A.Ş. |
2,355,885 | 235,588,500 | 0.67 |
| Koç Group Companies | 144,126,892 | 14,412,689,315 | 41.07 |
| Ford Motor Company (2) | 143,997,037 | 14,399,703,676 | 41.04 |
| Publicly Held | 62,786,071 | 6,278,607,009 | 17.89 |
| Total Nominal Capital (TL) | 350,910,000 | 35,091,000,000 | 100 |
(1) At the Extraordinary General Assembly meeting dated September 29, 2022, Temel Ticaret ve Yatırım A.Ş. approved the partial demerger and transferred all of its shares in Koç Holding A.Ş. to Family Danışmanlık Gayrimenkul ve Ticaret A.Ş which 100% owned by Temel Temel Ticaret ve Yatırım A.Ş.
(2) Ford Deutschland Holding GmbH: 100% owned by Ford Motor Company.
In the first nine months of 2024, the Turkish automotive market experienced a 1% decrease, resulting in total sales of 879,088 units. While PC sales witnessed a modest increase of 1% and MCV sales grew by 13%, these gains were insufficient to offset the declines of 21% in LCV and 11% in heavy truck sales.
These figures suggest that the effects of the factors driving growth in the first half normalized in Q3, coupled with the tightened monetary policy and stabilization in the demand. Key factors in this market performance are: i) the rise in the upper price limit for the SCT exemption for disabled individuals, ii) robust domestic demand prior to the elections, iii) the General Safety Regulation (GSR) prompting competitive pricing strategies, and iv) reduced availability of LCVs in the market.
Turkish automotive industry sales were as follows in 9M'24.
| 9M'24 | 9M'23 | Change, % | |
|---|---|---|---|
| Passenger Car | 675,273 | 666,890 | 1% |
| Light Commercial Vehicle | 93,346 | 118,557 | -21% |
| Medium Commercial Vehicle | 81,273 | 72,128 | 13% |
| Truck (>16 t) | 25,027 | 28,278 | -11% |
| Other Heavy Commercial Vehicle (6-16t) |
4,169 | 4,103 | 2% |
| Total (3) | 879,088 | 889,956 | -1% |
(3) Covers all passenger and commercial vehicles excluding buses and midibuses.
Source: Automotive Distributors' Association (ADA) and TAİD
While PC industry share increased 76.8% (9M'23: 74.9%), CV (including LCV & MCV) industry share decreased to 19.9% (9M'23: 21.4%).
| The share of PCs in the total industry | ||||||
|---|---|---|---|---|---|---|
| 9M'24 9M'23 2023 2022 2021 2020 |
2019 | |||||
| 77% | 75% | 76% | 72% | 73% | 77% | 79% |
Source: ADA and TAİD
In the first nine months of 2024, share of import vehicles in both PC and CV (including LCV & MCV) increased YoY, and reached to 71% and 70%, respectively. In total (excluding truck & other HCV), the share of import vehicles was 71%.
| Share of import vehicles | PC | CV (including LCV & MCV) | Total |
|---|---|---|---|
| 9M'24 | 71% | 70% | 71% |
| 9M'23 | 69% | 52% | 65% |
| 2023 | 68% | 54% | 65% |
Source: ADA
In 9M'24, Ford Otosan maintained its 3rd rank with a market share of 8.5% (9.7%) (4) in total industry. Ford Otosan's retail sales decreased by 13% to 74,743 (86,023) units compared to the same period of last year. In the passenger car segment, while retaining our profitability focus our market share reached to 3.1% (3.2%). We maintained our undisputed leadership in the commercial vehicle segment with 26.9% (29.7%) market share. Our market share was 19.2% (29.7%) in light commercial vehicles, 36.4% (29.9%) in medium commercial vehicles and 25.0% (29.1%) in heavy commercial vehicles.
(4) Data inside the paranthesis represent 9M'23 numbers throughout the report.
In 9M'24, our total production volumes increased by 3% to 457,554 (444,504). This performance was supported by the increase in demand of new Custom and Courier that completed of the ramp up period.
The capacity utilization rate was 77% in Gölcük Plant, 81% in Yeniköy Plant, 57% in Eskişehir Plant and 88% in Craiova Plant. The total capacity utilization rate was realized as 82% (90%).
| Plant | Model | 9M'24 | 9M'23 | Change, % |
|---|---|---|---|---|
| Gölcük | 2 Ton CV | 119,668 | 122,834 | -3% |
| 1 Ton CV | - | 112,443 | N/A | |
| Yeniköy | Courier | - | 53,255 | N/A |
| New 1 Ton CV | 148,788 | - | N/A | |
| Eskişehir | Ford Trucks | 9,563 | 14,642 | -35% |
| Craiova | Puma | 119,880 | 141,330 | -15% |
| New Courier | 59,655 | - | N/A | |
| Total | 457,554 | 444,504 | 3% |
Our production volumes by model were as follows.
According to the European Automobile Manufacturers' Association (ACEA) (www.acea.be), although the total market in Europe contracted by 7% YoY in the 3 rd quarter, PC market increased by 1.2% and LCV % MCV market, our largest export market, by 7.5% in 9M'24. On the other hand, HCV market contracted by 6.7%. As a result, despite strong basis of last year, CV market grew by 4.9%.
| 9M'24 | 9M'23 | % | |
|---|---|---|---|
| PC (5) | 9,503,870 | 9,393,612 | 1.2% |
| 9M'24 | 9M'23 | % | |
|---|---|---|---|
| CV (5) | 1,728,069 | 1,648,039 | 4.9% |
| 9M'24 | 9M'23 | % | 9M'24 | 9M'23 | % | ||
|---|---|---|---|---|---|---|---|
| LCV & MCV (5) | 1,438,537 | 1,337,664 | 7.5% | HCV (5) | 289,532 | 310,375 | -6.7% |
(5) Including 26 markets in Europe and UK.
In 9M'24, Ford Otosan's export figures increased by 8% YoY and reached to 395,325 (366,231) units. Export revenues showed an increase of 5% YoY, reaching TL 316.1 (300.6) billion, due to a 8% YoY growth in volume.
Domestic wholesale volumes were down 16% to 75,348 (89,816) units in 9M'24. Due to the decrease in the sales volume and lower pricing environment in the market, our domestic sales revenues declined by 21% YoY to TL 88.6 (112.3) billion.
Total sales volumes were up 3% to 470,673 (456,047). Total Revenues decreased by 2% to 404.7 (412.9) billion TL. The share of exports in sales revenues was 78% (9M'23: 73%).
Capital expenditures were TL 23.3 (23.3) billion including capitalized R&D spending.
TL 6.8 (7.2) billion pre-capitalization R&D expenditure was made for various product development projects. R&D projects are carried out in line with product programs and the number of R&D engineers is 2,402 (December 31, 2023: 2,298).
As of September 30th, 2024, Ford Otosan had a total of 24,610 employees: 5,198 salaried and 19,412 hourly. (December 31, 2023: total 23,701 employees: 5,338 salaried and 18,363 hourly). Ford Otosan continued to have the highest employment rate in the Turkish automotive industry. Our hourly employees are part of the Collective Bargaining Agreement signed on January 18, 2024, between Turkish Metal Union and Turkish Employers' Association of Metal Industries (MESS) and valid in between 1st September 2023- 31st August 2025.
In 9M'24, our profitability contracted due to:
Gross profit reached TL 40.3 bn, reflecting a 38% YoY decline, primarily driven by i) a 16% decrease in domestic volumes coupled with a competitive pricing environment in 9M'24 resulting increase in sales incentives, and ii) a 5% increase in the cost of goods sold, attributed to a 2% rise in raw material and 24% rise in production overhead costs. Net other income also saw a significant YoY decline of 87%, totaling TL 1.1 bn (compared to TL 8.3 bn in 9M'23). This resulted in a 57% YoY reduction in operating profit, which amounted to TL 22.9 bn. EBITDA and EBITDA excluding the currency impact were TL 32.3 bn and TL 31.2 billion, respectively, reflecting declines of 47% and 40%.
In the first 9 months of 2024, net financial expenses realized as TL 15.7 bn, up by 31%, mainly due to 234% increase in net interest expenses up from TL 1.9 bn to TL 6.2 bn (as a result of increased total financial debt and borrowing costs). In this period, a monetary gain of TL 16.8 bn (compared to TL 7.4 bn in 9M'23) was included in profit before tax, leading to a total of TL 26.9 bn, a decrease of 45% YoY. Consequently, net income was recorded at TL 25.7 bn, indicating a YoY drop of 38%.
Margins: Gross 10.0% (-5.6 pps YoY); EBITDA 8.0% (-6.7 pps YoY); EBITDA excluding other income 7.7% (-5.0 pps YoY); Operating 5.7% (-7.3 pps YoY); PBT 6.7% (-5.2 pps YoY) and Net 6.3% (-3.7 pps YoY).
€577 million and TL 1.6 billion loan repayments were made in 9M'24 where USD 500 million Eurobond, €1 billion and TL 7.5 billion were borrowed in new loans. Total debt level was TL 115 billion as of September-end, up from TL 87 billion at the beginning of the year. Cash balance as at the end of the period is TL 30 billion (December 31, 2023: TL 20 billion).
Ford Otosan continues to follow financial risks very closely and maintains prudent policies. The main policies regarding various risks are summarized in the Note 2 of the financial statements.
| Balance Sheet, Million TL | 30.09.2024 | 31.12.2023 | YoY Δ |
|---|---|---|---|
| Current Assets | 155,743 | 139,828 | 11% |
| Property, Plant and Equipment - Net | 86,830 | 77,708 | 12% |
| Total Assets | 314,934 | 294,826 | 7% |
| Current Liabilities | 128,958 | 127,890 | 1% |
| Total Liabilities | 213,556 | 195,638 | 9% |
| Shareholders' Equity | 101,378 | 99,188 | 2% |
| Million TL | 9M'24 | 9M'23 | YoY % |
| Total Revenues | 404,666 | 412,874 | -2% |
| Export (1) | 316,071 | 300,596 | 5% |
| Domestic | 88,595 | 112,277 | -21% |
| Gross Profit | 40,265 | 64,427 | -38% |
| Operating Profit | 22,943 | 53,704 | -57% |
| EBITDA (6) | 32,292 | 60,676 | -47% |
| EBITDA (excl. other items) (6) | 31,203 | 52,363 | -40% |
| Profit Before Tax | 26,941 | 48,978 | -45% |
| Net Income | 25,666 | 41,243 | -38% |
| Other Financial Data | |||
| Depreciation & Amortization (6) | 7,473 | 6,588 | 13% |
| Financial Income / (Expense) | -15,748 | -12,050 | 31% |
| Capital Expenditures | -23,341 | -23,323 | 0% |
| Cash Flow Statement, Million TL | 30.09.2024 | 30.09.2023 | YoY Δ |
| Beginning Balance of Cash & Equivalents | 20,642 | 22,631 | -9% |
| Net Cash from Operating Activities | 20,019 | 56,185 | -64% |
| Net Cash from in Investing Activities | -23,067 | -23,266 | -1% |
| Net Cash from Financing Activities | 19,301 | 2,810 | 587% |
| Monetary Gain/(Loss) on Cash&Equivalents | -6,817 | -13,199 | -48% |
| End of Period Balance of Cash&Equivalents | 30,134 | 45,514 | -34% |
| Financial Ratios | 30.09.2024 | 31.12.2023 |
|---|---|---|
| Net Debt / EBITDA (7) | 2.45 | 1.19 |
| Return on Equity (7) | 50.4% | 67.2% |
| Current Ratio | 1.21 | 1.09 |
| Liquidity Ratio | 0.77 | 0.69 |
| Current Assets / Total Assets | 0.49 | 0.47 |
| Current Liabilities / Total Liabilities | 0.60 | 0.65 |
| Total Liabilities/Total Liabilities & Equity | 0.68 | 0.66 |
6 Ford Otosan 9M'24 Interim Report
| Margins | 30.09.2024 | 30.09.2023 |
|---|---|---|
| Gross Margin | 10.0% | 15.6% |
| Operating Margin | 5.7% | 13.0% |
| EBITDA Margin | 8.0% | 14.7% |
| EBITDA Margin (excluding other items) | 7.7% | 12.7% |
| PBT Margin | 6.7% | 11.9% |
| Net Margin | 6.3% | 10.0% |
(6) Straight-line expenses related with embedded lease in Türkiye and Romania operations are included.
(7) The EBITDA and Return on Equity figures are based on a rolling 4-quarter basis.
In accordance with the financial statements prepared within the framework of Capital Markets Board regulations, out of TL 5,000,467,500.00 proposed to be paid as dividend in cash, TL 3,596,233,747.26 to be covered from extraordinary reserves, TL 1,404,233,752.74 to be covered from legal reserves; out of TL 500,046,750.00 TL second rank legal reserve, which will be allocated: TL 359,623,374.73 to be covered from extraordinary reserves, TL 140,423,375.27 to be covered from legal reserves.
Based on the calculations made in accordance with the tax regulations, TL 5,000,467,500.00 dividend to be distributed by paying gross TL 14.2500 (1.425,00%) and net TL 12.8250 (1.282,50%) for each share with a nominal value of 1-TL.
Total Turkish Automotive Market volume and Ford Otosan domestic retail sales guidance was increased as a result of the stronger than expected demand outlook in the domestic market for the full year. Export and production volumes are updated due to the sign of slowdown in the main export markets. CAPEX guidance have been revised due to calendarization of some of investment spending.
| 2024 Guidance | ||||
|---|---|---|---|---|
| 2023A | st Guidance 2024 1 |
nd Guidance 2024 2 |
2024 Last Guidance | |
| Total Industry Volume | 1,278 K | 800 K- 900 K | 1,000 K- 1,100 K | 1,100 K- 1,200 K |
| Ford Otosan: | ||||
| Retail Sales Volume | 114 k | 100 k – 110 k | 100 k – 110 k | 105 k – 115 k |
| Export Volume | 492 k | 560 k – 610 k | 560 k – 610 k | 530 k – 580 k |
| Turkey | 312 k | 350 k – 380 k | 350 k – 380 k | 320 k – 350 k |
| Romania | 180 k | 210 k – 230 k | 210 k – 230 k | 210 k – 230 k |
| Wholesale Volume | 610 k | 660 k – 720 k | 660 k – 720 k | 635 k – 695 k |
| Total Production Volume | 590 k | 650 k – 700 k | 650 k – 700 k | 630 k – 680 k |
| Turkey | 399 k | 400 k – 430 k | 400 k – 430 k | 380 k – 410 k |
| Romania | 191 k | 250 k – 270 k | 250 k – 270 k | 250 k – 270 k |
| Capex (fixed assets) | € 900 mn | € 900 – 1,000 mn | € 900 – 1,000 mn | € 700 – 800 mn |
| General Investments | € 96 mn | € 170 - 190 mn | € 170 - 190 mn | € 130 - 150 mn |
| Product Related Investments | € 804 mn | € 730 - 810 mn | € 730 - 810 mn | € 570 - 650 mn |
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