Ülker Bisküvi Sanayi A.S.

Hello, everyone, to welcome to We Care Biscuit's third quarter 2025 earnings call. Thank you for joining us today and for your continuous interest in our company. We appreciate your time as we review another solid quarter of performance, highlighting our continuous focus on sustainable growth, operational efficiency, and delivering value to our consumers and shareholders. With that, I will now hand it over to our CFO, Fulya Banu Surcu, who will walk you through the operational and financial results in detail. Fulya Hanım, please.

Thank you. Good morning, good afternoon, everyone. Thank you for joining us today for Ülker District 3rd Quarter 2025. Due to a last-minute change of plans, our CEO had to travel and could not attend this meeting. He apologizes for that and says hi to everyone. So today I will walk you through our operational performance, performance pilots and provide a deeper dive into our financials and segment performance. Discuss our balance sheet, strategic initiatives and conclude with our outlook. After the presentation, I will be happy to take your questions. To begin, Uliter continues to deliver strong results driven by our diverse product portfolio correct strategies and commitments to innovation. So let's begin with a snapshot of the microeconomic landscape in Turkey as we enter the last quarter of 2025. Despite ongoing global uncertainties, this country's GDP growth rate is projected to stabilize at 2.7% for this year. and it is expected to land at 3.7% for 2026 per IMF, higher than the world GDP growth of 2.8%. Two-year CDS spreads have shown improvements reflecting increased investor confidence and a more stable outlook compared to previous years. Inflation remains as a challenging topic, even though there is a significant variation when we break This is done by main items. As of September 2025, total inflation stands at 33.3% year over year. Consumer confidence index has shown gradual improvement over the past year, causing a positive shift in consumer outlook. In summary, we operate in a dynamic, volatile, macroeconomic environment. GDP growth remains resilient. We see an improvement in consumer confidence, but we are mindful of inflationary pressures and probable shifts in consumer confidence and behavior. So today's key messages is mainly six key messages I'd like to share with you. Agility, staying responsive, and emit volatility. Championing value and accessibility, ensuring our products remain affordable and widely available. Driving consistent growth momentum through innovation and execution. Leveraging AI-driven performance and operational excellence. Delivering impactful new product development and consumer-centric campaigns. Maintaining operational excellence and rigorous cost management to safeguard our margins. So, in summary, this is how we will continue to deliver value to our investors, our customers, and all our stakeholders towards the end of the year and continuing in 2026 as well. On the next page, we will talk about new product launches and their contributions. So, let's start with third quarter first. During the first three quarters of the year, we successfully introduced a series of new products, each closely aligned with evolving consumer needs. These launches delivered a meaningful contribution accounting for 4% of our snacking revenue in the third quarter. Our innovation pipeline remains robust with strong consumer engagement. Let me take a look at how the picture changes or how the picture looks as of nine months revenue contribution. For the first nine months, new product launches accounted for 13% of domestic and 6% of international snacking revenue, totaling 11%. This demonstrates our ability to drive growth through innovation. We continue to innovate both domestically and internationally, ensuring our portfolio meets evolving consumer preferences. Our sustainability strategy remains at the core of our strategy and our vision. We advanced our Beyond Hail Does Not and regenerative agriculture programs we published our 10th sustainability report, and we won the Sustainable Business Award for Carbon Management at Net Zero. Our social responsibility initiatives, like the mobile health service, continue to make a positive impact. When we take a look at the highlights in terms of corporate communications, We have continued to strengthen our corporate reputation through community engagement, sustainability, and brand storytelling. We are proud to be the main sponsor of the European Para Youth Games in Istanbul, supporting young athletes and inclusivity. With inspiring stories, we reached millions via digital and press channels, competing with hard video series. Our communication efforts have amplified our achievements. We have been awarded various platforms in various platforms for excellence in business, HR, digital transformation, safety, sustainability, and quality. So our people are our greatest asset. We are proud to be recognized as Turkey's happiest workplace for the fourth year in a row. We have invested in AI training, R&D development, and well-being initiatives, earning 21 awards, including level goals at the International Business Awards, which is one of the most prestigious award programs in the business world. All these achievements reflected our ongoing investment in people, innovation, and operational excellence, positioning us for sustainable growth and continued success. So, let me continue with our operational performance. UK's geographic footprint continues to be a key driver for our resilience and long-term growth. Let me start with our home market, Turkey. Despite the challenging macroeconomic environment, which I have shared at the beginning of the presentation with all of you, we delivered 4.9% revenue growth and a solid 7.9% EBITDA growth, which is adjusted for inflation accounting number. This performance reflects our discipline, forward pricing, strong brand equity, and operational agility. Export operations delivered 19% revenue growth, supported by strong demand in key markets, and improved market execution. It is a decline of 8% primarily due to ongoing inflationary pressures and the depreciation of Turkish lira that impacted cost base and profitability. We remain confident that our export strategies are on the right track and we continue to prioritize sustainable growth and strength in our international markets. In Middle East, you see a 5.9% revenue growth, and in North Africa, there is a 29.5% revenue growth supported by strong momentum and pricing. It was slightly down by 0.7%, but we view this as a short-term margin normalization. Finally, in Central Asia, we achieved 11.5% revenue growth. Even though there was a decline in EBITDA, this was impacted by currency devaluation, input cost inflation, and overall, our geographic diversity continues to be a strategic advantage, helping us balance risk and capture growth across multiple markets. Turning to our revenue mix, We tried skill and which are clearly reflected in our top-line performance. As of the first nine months of 2025, we generated 80.9 billion Turkish lira in net revenue, with 71% coming from our domestic operations and 29% from international markets. And you also see on the same page that, I mean, the breakdown of the export international markets by export, Central Asia, North Africa, and Middle East as well. Let me take a look at our global market share. Ülker continues to hold the leading market shares in key categories across our core regions. In Turkey, we remain the undisputed leader In biscuits, chocolate and cakes with 34% market share. In Middle East, our strong presence in biscuit category continues with 27% market share. In North Africa, we are gaining ground especially in biscuits where our market share has reached 14%. In Central Asia, we are also an important player in chocolate with 14% market share. So, UCL maintenance, in summary, maintains leading market shares in Biscuit, Chocolate, and Cake in all the regions it operates. So, let me continue with the financial performance, how we delivered financially in Q3. In Q3 2025, we accelerated growth with balanced top line and margin improvements. Revenue, gross profit, EBITDA, and net income all increased year-on-year, reflecting our effective strategies and operational discipline. Let me take a look on a deeper perspective on each bucket for Q3. Volume increased by 0.7% from 172 tons in Q3 2024 to 174 tons in Q3 2025. Total revenue up 4.8%, reaching 25.4 million Turkish lira compared to 24.2 last year. The gain came again from our discipline pricing, promotions, and improved mix. Gross profit rose 13% to 7.4 million Turkish lira from 6.6 million Turkish lira in Q3 2014. Growth margin expanded from 27.1% to 29.2%, a 2.1% improvement driven by lower cost pressure and better product for academics. Ebitda grew 16.5%, delivering 4.5 million Turkish lira, up from 3.9 million Turkish lira a year ago. So net income reached to 1.1 million Turkish lira, demonstrating the strong path through from margin improvement to bottom line earnings. In this quarter, we are not just defending our margins in a challenging environment, but we are also growing them with revenue and profits both advancing versus prior year. So on a nine-month perspective, for the first nine months, we balanced growth and headwinds. While some metrics face pressure, our net net EBITDA remains at a healthy level, and we continue to focus on sustainable profitability. So for the first nine months, total volume declined by 1.5%. Revenue increased by 4.6%, reaching to 80.9 million Turkish liras. Gross profit increased, slightly increased to 30.2%, which is 24.4 million Turkish lira. And EBITDA remained at 17.8%, again with inflation accounting adjusted, which is quite a healthy number. And we delivered 5.7% net income of 4.6 million Turkish lira. And net debt EBITDA, this is just a calculation from the face of the balance sheet, 1.76. And over the coming slides, I will be sharing with you the net debt EBITDA from covenant calculation perspective, which is quite a low number and which is a very healthy number. So when we look at the breakdown, domestic versus international. Our financial performance is strong across both domestic and international markets, with notable improvements in EBITDA and gross profit. We continue to optimize our regional mix for profitability. Our domestic operations total revenue decreased by 3%, reaching to 17.1 million Turkish lira in Q3, 2025. Gross profit increased to, increased, increased by 10.2%, reaching 28.5% gross profit margin, delivering 4.9 million TL gross profit, and EBITDA margin on the domestic side is approximately 19.7%, close to 20%, reaching 3.37 million TL. Total snacks market in Turkey contracted approximately by 2.1% year-over-year compared to Q2 2025. And in line with this market contraction, our domestic volume also in Turkey declined accordingly, reflecting the broader industry trend. However, this was offset by strong 9.6% volume growth in 2020. exports and international operations, which contributed positively to our overall volume. In terms of international business, total revenue is up 26.1%, reaching to 8.32 million Turkish lira in total revenue, and we were able to deliver approximately 31% gross profit margin in international business, and delivering an EBITDA margin of 13.7%. So the breakdown, the domestic versus domestic and international shows two distinct dynamics, domestically improving margins despite lower revenue, demonstrating strong pricing power and cost discipline, internationally robust top line growth, but some margin compression due to effects and cost factors, both regions contributing positively. So let me continue on the consolidated volume and revenue contributions by category. Overall, total snacking revenue grew by 5.1%, supported by iteration and effective marketing. On this slide, we moved from regional to category level performance. Snaking sales volume grew 1.3%, reaching to 153 tons in Q3, 2025. Snaking sales value increased by 5.1%, from 23 million to 24 million, 24.2 million Turkish Lira. This value growth shows the positive mixed-end impacts more premium skills, successful innovation launches, and price discipline echoes all our core categories. And category mix, this list rose from 57% in Q3 to 59% in Q3 2025. Chocolate design slightly from 33% to 31%, reflecting context with pricing and portfolio adjustments. And cake study at 10%, continue to provide category diversification. Overall, Snacking Portfolio's revenue increase was supported by targeted product launches, optimized volume mix, and integrated marketing campaigns, both digital and in-store, aimed at strengthening brand equity and consumer pool. This strategy's focus allowed us to build value even on model volume gains. So on balance sheet finance, again, we closed the quarter with a very strong balance sheet. Our balance sheet remains robust. We have closed with 63% of our net position, secured a new syndication with our commercial banks and EBRD, and our covenant-based net at EVISA is at 1.11 as of September 2025. I'm sure you have seen from the news that our syndication loan is finalized with the commercial banks reaching to $250 million, five-year bullet syndication loan, the first in the Turkish private sector since 2020, with very prestigious led by JP Morgan and with very highly prestigious international banks, with 11 banks, we were able to complete the first five-year bullet syndication since 2020 in Turkish private sector. And very recently, we have also closed 75 million euro with EBRD with the same conditions. Again, a five-year bullet with the same conditions that is on syndication. So with all these new updates, our long-term loan is around 31%, short-term is 69%, and this will, over the coming months, this will change to long-term when we finalize. I mean, it's already finalized in October, but as of Q4, most of the loans will go to the long-term buckets on this table. So in terms of net debt EBITDA, it's 1.11. So you see our high focus on net debt EBITDA. And in terms of working capital, yes, there is a slight increase versus prior year, but it's mainly driven by seasonality. And we may go into detail if you have additional questions in terms of working capital. So for Outlook, We shared with you that a net sales growth of 3% and EBITDA margin of 17.5%, but with this volatile environment and uncertainties, we shared with you a range for net sales with plus and minus 1%, EBITDA margin with plus and minus 0.4%, adult Q3, and we also keep the same output for 2025, and we believe that we will be able to meet the target that we have shared with you. So this 5H growth model, you know, our CEO shared this with you. Again, most of our strategies is based on these 5H growth models that we have stated beginning of the year. which we are also very keen and very proud about. So that's all I wanted to share with you in terms of our Q3 performance. So we believe that our Q3 performance is quite strong, and I'm happy to take any questions you have for me.

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