Ülker Bisküvi Sanayi A.S.

Beste, please go ahead, ma'am.

Thank you, Michael. Hello, everybody. My name is Beste. I am leading the Investor Relations Department of Ülker Biskri. Welcome to Ülker Biskri's full year 2025 results webcast. Here with me in the room, our CEO Özgür Körükböke and our CFO Fulya Banu Sürücü is here. Now I'll leave the ground to our CEO, Özgür Bey. Please.

Thank you, Mr. Good morning, good afternoon, everyone, wherever you are. And thank you for joining UKB's fourth quarter and cool year 2025 earnings goal. I walk you through our results, strategic progress, and also 2026 roadmap. I'll start with key highlights, then review operation and financial performance, and close with our outlook and 2026 growth plan. And then, as usual, we will take a few questions at the end. Looking at the key highlights, 2025 was a resilient year despite of softer demand and regional challenges. We maintained our leadership in Turkey and sanctioned regional competitiveness. Innovation scaled strongly, contributing meaningfully to the growth. Balance sheet discipline remains as a core strength of ours, and ECG progress continues to differentiate Ülker in our sector as a pioneering company. Looking at the macroeconomic highlights, Turkey operated in a high inflation environment with low confidence consumer environment. Looking at the inflation, the inflation is around, we finished the year with 30.9% consumer inflation, where the PPI was slightly lower than that, with 27.7%. Looking at the breakdown of the inflation, the highest inflation we see in the education, with 66%, and rent following is 49.5%. and then after versus food with more than 28%. GDP expectations remain in slow single digits, reflecting a cautious backdrop compared to previous years. Consumer confidence stayed around mid-80 levels throughout the year. Despite of this challenging environment, we navigated these conditions with disciplined executions, and pricing discipline and cost control. Now let's look at the key messages that we would like to highlight today. We preserved our leadership position in Turkey and the borders MENA region. Top line, we close the year with a top line growth of around 2% in a global commodity volatility. and inflationary environment. The new product launch contributed 12% of our net sales, reaffirming Ülker's ability to capture shifting consumer trends. With our successful refinancing operations, we strengthened our liquidity visibility by extending our maturities to 2030 and 2031 overall. With one net debt to EBITDA ratio, Ülker continues to maintain its healthy balance sheet structure. By increasing our ESG score by eight points, we become the highest scoring food company in Turkey, which is a really strong strength of Ülker differentiating in the market. Looking at the new product launches, in Q4 alone, new product launches delivered 9% of the snaking revenue, demonstrating the strength of our innovation funnel and the speed of consumer adoption. Ucash's brands carry tremendous trust, which allows new launches to gain instant shaft visibility, strong support from retail partners, and rapid consumer trial. Our Q4 pipeline targeted the right consumer needs, taste-driven indulgence, portion control, gifting formats, and family-friendly concepts, all supported by strong in-store activation. The velocity of our launches was significantly above category norms, reinforcing that UCAR's innovation resonates quickly and deeply with consumers' needs. And looking at the full year 2025 revenue contribution of the new product launches, in domestic, Turkey, it contributes 14%. Here on the screen, you see the three-year contribution of the innovations. As usual, we share the three-year contributions. Domestically, it has a 14% contribution. Internationally, it is 6%, and in average, it boils down to 12% contribution. This sustained contribution confirms that innovation at Ülker is systematic, predictable, and repeatable, supported by strong R&D, agile manufacturing, and best-in-class distribution. Looking ahead, strengthening repeat purchase, premiumization, and export-ready concepts will help us unlock even more value from innovation across 2026. Now let's look at the sustainability. As highlighted, this year we strengthened our leadership in sustainability with measurable and globally recognized achievements. We maintained our number one position in the London Stock Exchange Group ranking and placed among the world's top 10 in chocolate sustainability. Our strong climate and supply chain strategy was reaffirmed with an A rating from CDP Supplier Engagement Assessment. We completed our transition to 100% recycled ready packaging. We launched the Structically Biofortified Limited Edition, which was developed with Sabancı University. and continue to advance our Beyond Cocoa and Beyond Hazelnut programs, deepening our partnerships with cooperatives in Ivory Coast and supporting local communities in the Black Sea region. In Gerson, in Black Sea region, we expanded good agricultural practices, gave training to our farmers, half of whom are women. Our regenerative agricultural pilots delivered promising outcomes, guiding our plan to scale to at least 10,000 DECAs. With these steps, our EHG performance rose to the top 3% of companies globally, reflecting our long-term commitment to responsible growth and resilient value chains. And looking at the corporate communication highlights, in 2025, our communications and brand initiatives significant increase in touch visibility and audience engagement. One of our strong friends is Cheesy Man, and the Cheesy Man, Aussie Man campaign, you know Aussie Man is one of the world-known football stars playing at Galatasaray. By the way, for the Galatasaray fans, congratulations for the last night's match. As you know, Galatasaray scored once a year against Liverpool in the Champions League. So with this Çizim and Oğuzhan campaign, this achieved remarkable impact, delivering 9 million reach and 29.1 million impressions. The İlker Chocolate Istanbul launch reached 4.3 million people. and generated five million social impressions, while the competing with their heart series highlighted the inspiring stories of five Paralympic athletes. I would like to just give a highlight on Ülker Istanbul Chakra, which was the social first innovation done first in our history. Taking Dubai as a kind of benchmark, which was a big success last year, which turned up as a kind of global trend, we as Ülker created Istanbul as a global trend in the chocolate industry, and which was a really big hit in the market. The Sustainability Press Conference further inspired these efforts, our efforts in the sustainability platform. Our Ülker My First Match project connected Ghibli with football communities through simultaneous films for the four major football clubs in Turkey. And Ülker being one of the biggest supporters of sports, it was a big highlight for our 2025 plans. Through our TMPK partnership, We strengthened our sponsorship presence and shared our long-term sustainability progress, including our net zero 2050 commitment and roadmap. Additionally, our leaders represented the company at 10 major industry events as keynote speakers, reinforcing our position and ensuring that we are more visible than ever. Our people and employer brand highlights, looking at these highlights, in 2025, we strengthen our people first culture and employer brand with major achievements. We are recognized as one of the world's best employers for the fifth consecutive year in the top employer certification. We are also recognized as Turkey's happiest workplace in the snacking category for the fourth time consecutively. Within our commercial talent program, which is designed to develop future leaders for our commercial functions, we welcomed six new talents to our organization. In 2025, as ambassadors of our Goya culture, we traveled a total of 20,000 kilometers across the country and captured the pulse of the field through 465 one-on-one meetings. We received equal salary certification, a world-known certification important for diversity, which confirms that at an international level that we ensure equal pay for equal work. Covering more than 5,000 employees, we achieved a 93.2% success rate in the statistical phase, which confirms that women earn an average of 1.2% more than men. Rüker became the first company in Turkey with over 5,000 employees to receive this certification, and also the first company worldwide in the snacking industry with more than 5,000 employees to be certified, which we are really proud of. In 2025, the Employee Engagement Survey included blue-collar employees and the Godaiba team for the first time. Our engagement score reached 89%, which is the highest level in the five years. We redesigned our diverse agenda in line with our IDE values. Our mentoring programs have brought 1,015 employees into our mentoring network since 2021, reflecting our learning organization culture. We launched in Turkish program. It will be good for you program for our blue-collar employees, reaching 750 employees. So after these highlights, let's look at our operational performance, which I'm sure you are all curious for. Looking at full year, in Turkey, we delivered 2.1% net sales growth. A resilient outcome given the sharp deceleration in consumer demand in the second half of the year, especially the unusually big December period, where purchasing power fell faster than anticipated. Ebitda erosion driven primarily by gross margin pressure. The category mix was also unfavorable. Chocolate is one of our highest margin segments and nearly half of our portfolio. And the chocolate market contracted by 7.5% in volume in the market in the last quarter. And our own sales followed that trend in line with the market, creating a margin dilution despite of our strong market share leadership. Despite these pressures, Our underlying strength remains powerful, and we expect demand to normalize gradually throughout 2026. Exports grew by 8.3% for the year, with some EBITDA erosion, mostly due to the spillover from the Middle East market weakness. The Middle East was the most challenging region in 2025. Full year net sales declined by 1.4%, while EBITDA drove by 25%. The major driver was the severe FMCG market contraction in Saudi Arabia, where Q4 was the weakest quarter in the last two years, with the market down by 4.6% in value and 4.7% in volume. Low consumer confidence, intense promotional pressure across modern and traditional trade, and a rapid shift towards value-seeking behaviors all led to weaker volumes. In Q4 specifically, our EBITDA margin fell to 10.3%, the lowest of the year. This was not a structural issue with our brands. It was an external market shock compounded by a strong prior year base. North Africa remained a major bright spot for the company, for our company. Net sales grew by almost 29% for the year, supported by effective pricing, mix management, and solid commercial execution. In Q4, volumes accelerated with 14.1% growth, benefiting from a more stable inflationary environment. EBITDA margin improved by 233 bps, thanks to tight overhead control. This region continues to demonstrate strong consumer momentum and strategic importance for Ülker. Looking at Central Asia, Central Asia delivered 20.3% net sales growth for the year. EBITDA declined 11.8%, but this was fully planned. We intentionally reinvested our growth profit gains into marketing, distribution, and brand building to secure long-term share and visibility. Q4 was the strongest quarter of the year, showing clear momentum heading into 2026. This region remains highly strategic and our investments are already translating into improved consumer demand. In summary, despite of extremely challenging market environment, Full year 2025 was the year of diverging regional dynamics, strong growth in North Africa and Central Asia, resilience in Turkey despite of a sharp market slowdown, and clear external headwinds in the Middle East. Across the board, grand strength, our pricing discipline, execution power, and long-term investments allowed us to protect the business in 2025 and position UKR for healthier, more balanced growth in 2026. In Central Asia, Uzbekistan is an important opportunity for us, which we see as one of the most strategically important growth engines in our international portfolio. Uzbekistan represents a unique combination of scale, demographic strength, and category under penetration. With a population of more than 37 million people, which is the largest consumer market in Central Asia, and more importantly, it's a market where modern trade continues to develop and where snacking categories are still structurally young. This gives Ülker a long-run way for sustainable and profitable growth. First of all, Uzbekistan has strong market fundamentals. The total snacking market in Uzbekistan is estimated at around 1.27 billion US dollars for 2025, and it is forecasted to grow at approximately 7% cover through 2013. This is one of the highest growth rates across all the markets where we operate. The core drivers are clear, a young and growing population, rising disposable income, and the steady expansion of organized retail currently at only about 18%, which shows how early we are in the development curve. In short, Uzbekistan offers the kind of long-term demographic and economic fundamentals that support compounding growth for the next decade. Second of all, Uzbekistan has a strategic role in UK's Central Asia growth strategy. It's not only a commercial opportunity by itself, it's a strategic anchor market alongside Kazakhstan. These two markets together give us a strong hub in Central Asia, both in terms of manufacturing logistics and consumer reach. Positioning UKR as the long-term partner of choice in Uzbekistan trade is thanking our presence across the entire region, enabling us to scale innovation, optimize logistics, and run coordinated commercial programs that enhance efficiency. Thirdly, we have a strong focus on marketing, brand building, and consumer recruitment in Uzbekistan. Marketing investment in Uzbekistan is another core pillar for our efforts. We are building brand equity with localized communication, culturally stated creative content, and strong visibility programs for our core brands. We are expanding our footprint and route to market strength. We already had a meaningful presence in Uzbekistan, And our ambition is to build a fully nationwide footprint through direct distribution motor trade and focus distributors dedicated exclusively to Uyghur in traditional trade.