Koç Holding (KCHOL) Q3 2024 earnings summary

Executive summary

• Registered TRY 14.7 billion net income on a combined basis for the first nine months of 2024, but a consolidated net loss of TRY 1.9 billion due to inflation accounting and monetary losses.

• Portfolio diversification includes significant international exposure, with 48% of revenues from international sales and 90% of NAV from listed assets.

• Maintained a strong net cash position of $853 million at end-September 2024.

• Largest exporting group in Turkey, accounting for ~7% of the country's total exports.

• Major business combinations included the acquisition of Whirlpool's European and MENA operations, Bıçakcılar Global, and Kemer Medical Center.

Financial highlights

• Combined revenues for 9M24 were TL 2,575,902 million, with operating profit down 72% and net income down 88% year-over-year.

• Dividend income in the first nine months reached $903 million, expected to total $1.2 billion by year-end.

• Gross profit margin contracted sharply, with gross profit down 40% year-over-year.

• 87% of 1.6 billion gross cash is in hard currency; only debt is a $750 million Eurobond maturing March 2025.

• Earnings per share for the period were (1.45) Kr, compared to 20.85 Kr in the prior year.

Outlook and guidance

• Domestic demand expected to remain weak in Q4 2024 and H1 2025 due to ongoing tight monetary policy.

• Automotive may see a slight improvement in early 2025 due to regulatory factors; energy segment (Tüpraş) expected to maintain performance.

• Appliances segment anticipates small growth in 2025, especially in Europe.

• Yapı Kredi targets mid-to-high twenties ROTE and double-digit real loan growth, with NIM expected above 4.5%.

• No decision yet on Eurobond refinancing; will assess in Q1 2025 based on liquidity and investment needs.