Ulker Bisküvi Sanayi (ULKER) Q3 2024 earnings summary

Executive summary

• Q3 2024 was challenging, but results aligned with budget and annual targets, with strengthened leadership in Türkiye, MENA, and Central Asia, supported by value-added launches and proactive management amid rising costs.

• Innovation and new product development drove growth, contributing 13% of domestic sales and 7% of international sales, and 13% of total 9M'24 revenue.

• Operational excellence and IoT implementation increased capacity and efficiency, notably adding 4,000 tons in chocolate without additional CAPEX.

• Sustainability initiatives advanced, including a sustainability-linked bond, agroforestry projects, and farmer training.

• Major bond issuance and refinancing completed, supporting international expansion and growth.

Financial highlights

• Q3 2024 revenue was TRY 18.2 billion, up 2% year-over-year, while Q3'24 total revenue was 17,809 MTL, down 3% year-over-year; 9M'24 revenue grew 3% to 58,015 MTL.

• Gross profit in Q3 was TRY 4.9 billion, with a margin of 27.1%, down 9% year-over-year; 9M'24 gross profit was TL 17.4 billion, margin 30.0%.

• Q3 EBITDA margin was 15.9%, down 4-5% from Q3 2023; 9M'24 EBITDA margin was 19.6%.

• Net income in Q3 was TRY 470 million, sharply lower than prior year; 9M'24 net profit rose to TL 4.4 billion.

• Cash and cash equivalents at period end were TL 23.3 billion, up from TL 15.8 billion at year-end 2023.

Outlook and guidance

• Management targets a minimum 18% EBITDA margin for 2025, with FY24 guidance revised to net sales ~80.0BNTL and EBITDA margin ~18.2% due to weaker purchasing power and cautious consumer sentiment.

• Cash conversion cycle and receivables are expected to normalize in Q4 2024.

• Further price increases are planned for select SKUs and international markets as contracts allow.