BIM Birlesik Magazalar AS

IST:BIMAS.E

Earnings Call Transcript 2022-Q2

[Serkan Savas, executive]

Dear analysts and investors, I'm glad to welcome you again our second quarter results webcast. I'm Serkan Savas, Reporting and Investor Relations Director. I hope you have all managed to follow the investor presentation via this zoom webcast, and the presentation is also available in our website. And now I will invite you to have a look at our second quarter results.

Now firstly, let's look at our highlights for the second quarter. And the headlines, and we are now in Page 4, the top figures are for the second quarter, our top line growth accelerated in the second quarter on the back of the increasing inflation. And our quarterly sales almost doubled year-on-year to TRY 34 billion in the second quarter. And with the contribution of higher inflation, basket size grew by 57% year-on-year, while double-digit traffic growth will continue to take the consumers trading down and normalization in pandemic conditions in this quarter and also first half.

Here also, I would like to highlight that as a proof of this trading I would like to highlight that our market share in total FMG sector market increased by 2% in the first half of the year. And this is also a proof of our -- the trading down and also general market share back.

As the sales of -- the sales growth trend is above our targets in the first half of the year, we have revised up our 2022 guidance for the second time this year. We will be discussing this issue in late -- in the following pages. Rising inflation and declining purchasing power are having an impact on customer behavior and customers are more open to try their products. We also discussed this in the first quarter results call.

So accordingly, we see an uptick in private label level consumption, the share of the private products in total sales jumped to 64% in second quarter versus it used to be 60% same quarter last year. So this year, the private label share is slightly going up. And EBITDA increased by 83% year-on-year in the second quarter, while our EBITDA margin was 8.3%. We also elaborating the EBITDA margin in the following slides. Net income was TRY 1.7 billion, which represents 131% year-on-year growth with corresponding 4.9%.

And the final highlights in the Page 4, I will touch on the CapEx. CapEx, both in line with our guidance, which is 3.2% of our revenues in second quarter. We have added 287 new stores across all operations in second quarter and that brings us to around 11,000 consolidated stores by the year end.

And moving on to operational performance. We are now at Page 6. We are starting with the like-for-like sales, operating like-for-like, Page 6, we are in Page 6. Like-for-like sales increased by 80% compared to the previous year, and customer traffic increased by 14% in the quarter. So since the last part of the last year, we have been facing some improving trend in consumer traffic, traffic growth like-for-like, and this is the highest number, 14%, in second quarter.

Double-digit growth continued, thanks to normalization in pandemic conditions and trading down to the counters. As a result of -- as I mentioned before, as a lot of this trade tower increasing traffic, we have gained about 2% market share in the first half of the year.

In terms of baskets, like-for-like baskets increased by 57% in the second quarter, while our internal inflation was around 96% in the same period. Basket -- our basket size growth is lower than internal inflation, but I can say that basket growth is following the inflation with a time lag. And the uptick is intact. For example, it is following the inflation with a time lag first half in July and August is 57%. Basket size drop is approaching to 100% levels in July and August this year.

And next, about expansion on the store side, we are now at Page 7. On the store side, good pace of store opening continues in this quarter as well. We have opened 268 new stores, BIM Turkey stores, and 5 FILE stores in Turkey. And in Morocco, we have opened 12 stores. In Egypt, we have opened 2 stores. And in total, we have 11,065 stores by the end of the second quarter, including Morocco and Egypt. And BIM mini stores in Turkey also gained momentum and now it's reached to around 130 BIM mini stores in Turkey. And at the end of the year, it's like that we have opened more than 1,000 stores consolidated phases, but -- so it's -- we are -- expansion is on track.

And the next is about the capital expenditures. CapEx was TRY 1 billion in this quarter, corresponding to 3.2% of net sales, which is exactly in line with our guidance. In the first half of 2022, we have opened 2 new warehouses in Mersin and Ankara. And now we have 66 warehouses just in Turkey and [indiscernible]. And the construction of the 2 other warehouses continues and likely to be opened in the first part of the next year. Those are in Esenyurt and Samsun, 2 constructions are going on.

Apart from the new warehouse constructions, investments on our subsidiaries, premises, plans continues as well. You know that we are -- we decided to actually establish a biscuit and chocolate company. Now the biscuit and chocolates company plan construction recently started in Eskisehir and to be finalized in a 1-year period. And secondly, our second rice and pulse packaging construction plans of our rice packaging subsidiary is also going on in Mersin.

And apart from the warehouse construction and our subsidiaries plans construction, I would like to also say something about our solar panel investments. We also accelerated our solar panel investments on our warehouse roofs. We have already set solar panels to our 6 of our warehouses. So right now -- they are being operated right now, and 7 more warehouses roofs to be operated until end of the year. We are now accelerating this solar panel investments. So far this year, we have invested around $4 million to solar panels in the first half of 2022.

In brief, as you see, our investment appetite continues despite the higher cost. And we maintained our 3.2% CapEx sales expectations for the full year, we're exactly in line with our expectations.

And moving on to look at our financial performance. Now we are at Page 10, net sales and gross profits and growth margin progression. On quarterly basis, the sales almost doubled in second quarter and reached TRY 34 billion. The rising inflation and trading down supported our top line growth. And our internal inflation has continued its upward trend and reached 96% in the second quarter year-on-year, this is year-on-year growth.

As you see, actually, our gross margin slightly declined to 18% in the second quarter. One of the reasons is, of course, we also already mentioned a change in sales mix. In a period of the declining purchasing power of consumers, the share of commodity type of products, which naturally have lower margins, such as, for example, vegetable oil, sugar [indiscernible] et cetera, increases, this kind of basic commodity product sales increases. So this have the lower margins in all the retailers, including us. So consumers are demanding more basic commodities and private label products. And by contrast, the spot items share is coming down.

As you know, our spot sales, which contributed positively to our margin during the COVID period, which used to have around 8%, 9% share in sales, now it declined to 6% because people are more demanding basic products, basic quantities because of the decline in purchasing power and they're less initiated to buy spot products in these periods. But actually, I also would like to mention that now we are now entering school season. At late August, we will be selling our school articles, and we expect a very strong season for school articles. If school articles have higher margins, and this is also spot products, so we expect some kind of positive momentum in our gross margin from this kind of school articles in the late -- starting in late August and also September, it will be going on. So we are expecting some kind of positive contribution from this school articles and other sports.

And additionally -- and now the second maybe reason, some kind of decline in our gross margin, in terms of testing inflationary pressures on our product prices. In some cases, we may prefer to put a time lag in some examples -- in some cases. So this also sometimes leads to some slight decline in our gross margin. But as I said, in the coming periods, we hope to a little bit slightly improved, whether it's a full season of school articles.

And now we provide the breakdown of our revenues as of second quarter, we are now on Page 11. BIM Turkey operation has majority share in total revenues. And FILE is contributing better and reached around 4% of total sales in the second quarter. BIM Egypt is also contributed positively in this quarter and the first half, as we mentioned that there are some kind of recovery -- sign of recovery in Egypt right now. And also depreciation in Turkish lira in the last 1 year make the operations contributed to the consolidated sales.

In Turkey, regarding the product category, in Turkey the share of the private label increase in second quarter due to trade down and higher share of basic goods. Meanwhile, the share of the spot items declined from 8.5% in the second quarter of the last year to 6.1% in the second quarter of this year as the priority of the people was the basic food in this -- in the quarter.

And in the next slide, Page 12, we are actually presenting the graph shows the change in operating expenses as a percentage of revenues by item. As you see from the graphs -- graphic, actually, the personnel expenses contributed to profit margin in the second quarter. Despite the increase of our personnel wages before the second minimum wage regulation in June, what we did in terms of increase in wages, we increased the wages by 25% in June and followed by additional 10% in July. Actually, on concurrent basis, it makes around 37%, an additional wage hike in June and July.

Actually, we don't expect any pressure from the personnel costs during the second half since operating leverage is getting stronger due to rising sales. On the other hand, due to rapid increase in electricity and energy prices, the total expenses as a percentage of sales grows in the second quarter and also in the first half as well. But as we have the less energy exposures than the other formats due to lower refrigeration in the impact of the rising energy prices is literally lower to us.

Of course, these figures include IFRS 16 impact only. Therefore, the rent expenses are excluded in this chart. But maybe you may wonder about our rent costs. The rent costs sales ratio declined to our historic low levels, which is 1.6% right now in second quarter. It is 50 bps lower than the same quarter last year. As you see from OpEx management is fully under control and manageable, and operating leverage is working strongly in OpEx management.

Now let's look at quarterly EBITDA and EBIT figures. Our second quarter EBITDA was TRY 2.8 billion and margin of 8.1%. In the 6-month period, EBITDA margin was 8.2%, which is close to our lower end of our EBITDA guidance range. This is -- this decline is mostly coming from gross margin decline as we explained before, but we are still in our target range. We estimate a gradual improvement in EBITDA margin in the second half of the year. As I said, opening of the schools, we had a positive impact on sales mix, late August and also September. And operating leverage expects to continue to contribute to the profitability. So actually, we maintain our EBITDA margin guidance at 8.5%, plus/minus 50 bps. And quarterly EBIT was TRY 2.2 billion, and margin of 6.4%.

Moving on to net income slide. Our net income was TRY 1.7 billion versus TRY 725 million in the second quarter of last year. The main reason the top bottom line was the strong operating performance. And in addition, I would like to also mention that we also had some FX protected deposits. So -- and we have incurred around TRY 127 million gain from the FX protected deposits in Q2. And note that we wrote over the same amount of FX protected deposits in Q3 for 3 months as well.

And in the next slide, we are now on Page 15. We provide quarterly cash flow bridge. As usual, the main operations is the main contributor to our cash flow. And regarding net working capital, maybe most of you wonder net working capital, free cash flow contribution from net working capital improved well since the first quarter as we reduced the advanced payments, along with the ease in supply risks and maybe normalization in environments. And we expect further normalization in working capital in the second half of the year. And note that the inventory level seems a little bit higher actually in the first quarter, but the end of June is just before the public holiday Eid and [indiscernible]. So actually, we have kept inventory higher in the end of June. But in July figures, inventories coming down and net working capital is contributing better cash flow to our free cash flow.

And so as you see in the second quarter, a net -- change in net working capital is better -- much better than the first quarter. I would like to also highlight the decline in lease payments as the percentage of revenues, which declined to 1.6% from 2.1% in the same period last year. Please bear in mind that FX-protected deposits are not included in this slide since. It's stated as financial investments per IFRS growth.

And if we take the short-term financial investments as cash like assets, our cash and cash like assets remained the same during the second quarter, despite the dividend payment, first tranche of dividend payment around TRY 900 million. So cash flow is almost on track -- under control and is -- net working capital is contributing -- started to contribute positively in the second part.

If you look at the foreign operations in Page 16, Morocco continues to contribute to our net income. We have opened 12 new stores in the last part in Morocco, and total number of stores reached 604 in this country. Now in Morocco, we are working to accelerate growth in this country. But first, we have to improve our infrastructure -- logistics infrastructure. And the fourth warehouse now is under construction, and we plan to improve other -- our logistics infrastructure further by opening more warehouses and then likely to accelerate store openings in the country. My colleagues are working on its more openings -- more warehouse openings and then [indiscernible] openings. And owing to the modern retail share in Morocco is only 20%, maybe less than 20%, there's high growth potential for BIM in Morocco.

In Egypt, we continue our operations with 202 stores -- 302 stores, 2 of them newly added, and we have started to open some stores in Egypt and maybe 10 stores at the end of the year, we will have opened. And in the following years, also, we will be opening more stores because, as I said, there's some kind of recovery, some initial actions we have taken is working right now.

And next is about FILE operations, Page 17. We have opened 5 FILE stores in second quarter, and number of FILE stores reached 181. There is somewhat slowdown in FILE stores in Q2, but this is mostly because of Ramadan periods, and we still expect to open 50, 60 stores for the full year for FILE. Now FILE also expanding in Aegean and in the Anatolian side of Turkey. FILE online shopping platform, which was launched last year in May, now available in the 23 states. In Turkey, it reached 49 stores. As you remember from our previous call, FILE online sales reached around 3% to 4% of FILE total sales. I hope you all managed to experience the FILE online.

And finally, I will touch about our guidance -- guidance revisions. As you will remember, we revised our top line growth guidance after first quarter due to higher inflation and recovery in Turkish growth. As the inflation figures keep rising and our sales performance in the first half of the year exceeded our expectations, we revised our guidance once again. We increased our sales growth guidance for 2022 for the full year to 100%, to 110% sales growth interval. Meanwhile, we keep our EBITDA margin and CapEx guidance as it is.

And I would like to thank you for your attention today, and now I would like to open the floor for Q&A.

[Serkan Savas, executive]

[Operator Instructions] Thank you.

[indiscernible] the floor is yours.

[Unknown Analyst]

Serkan. I just want to make a follow-up on your like-for-like revenue dynamics in July and August. You highlighted very strong basket growth, around 100% is substantial. And you have also double-digit traffic growth in the second quarter and the first quarter. I mean, is this still the same, the traffic momentum? Do you still experience traffic growing double-digit, which then may mean that you may have very high like-for-like revenue much higher than the inflation in the second half?

[Serkan Savas, executive]

Thank you, [indiscernible]. Actually, sometimes the mix change, sometimes the mix is turning to basket, sometimes the traffic. But still, we are maintaining strong traffic growth in July and August as well. Together with the strong basket size, the basket size is also growing. This is why actually we have revised our top line guidance for the 2022.

So in the first half, for example, our 6 months period, 88% top line growth, and we guided 100% to 110%. So in July and August, the momentum is still strong and getting stronger day by day. And in late August and also September after school season that maybe people actually come back from the vacations, we may have a better sales -- like-for-like margins. So in brief, the progression is almost same.

[Unknown Analyst]

And finally, on the employee cost side. So the total salary adjustment is close to 90%. Do you also get reimbursement from the government? I think this was incentivize as well by the government, but is it still working as it is promised?

[Serkan Savas, executive]

Sure. Yes, it's working, it's working. Right now, for minimum wage increase, the corporates are getting some kind of benefits from the government side. This corresponds maybe 10 bps, something like 10 bps, 15 bps sometimes. So we may have some other benefits going forward. So we are working on it to actually control our staff cost, control our other costs. But besides this, besides the government's benefits, actually, we are not facing any pressure because, as we said, 90% in wage increase, but we are targeting 100%, 110% sales growth for the full year.

But yes, we are sometimes getting benefits -- subsidies from the government side, it's still working.

[Unknown Analyst]

So you mean -- I mean 90% employee cost increase would mean like 80% on your side then? I mean, 75%, 80% in total after the reimbursement.

[Serkan Savas, executive]

This is not after, before the investments. Actually, in the first -- in minimum wage -- first minimum wage increase, our cost increased by 40%. In the second July and August, we increased the wages by 27%. So in total cumulative phases, it is 92% before the government's reimbursements.

[Unknown Analyst]

And with the government's reimbursement, it will come down below 80%, right?

[Serkan Savas, executive]

Yes, maybe 10 bps. Generally speaking is [ betting ] into our staff costs.

And [indiscernible] the floor is yours.

[Unknown Analyst]

Congrats on your quarterly results, and thanks for the presentation. Actually, I am so confused. The first one is regarding to recent development on the state-owned cooperative stores. The recent implementation by them on discounting on selected products I'm talking about. Should we expect you and the rest of the sector to follow them accordingly to allow your sales prices in parallel to them?

And my second question is, could you please give us an insight on possible market gain of those cooperative stores and possible margin pressure on your operations?

[Serkan Savas, executive]

Thank you [indiscernible]. Actually, first of all cooperative stores, yes, they initiated some kind of price reductions in the last few weeks. But they already have a higher price. Per our index, they already have higher prices than they used to have maybe 20% higher prices than BIM. Now -- and they actually decreased somehow -- some basic commodities. And today, they are still -- they have still higher prices in general on average. But in some cases, in some products, they decreased -- they are a little bit lower than discounters than BIM.

But actually, in BIM, for example, I can say that it doesn't have any margin pressure or sales pressures on us. In constructs, actually, for an example, our BIM stores closer to the cooperative stores are being affected positively in this actual period. Why? Because in some products, the people are struggling to find enough stocks in cooperative stores. So they are a little bit becoming angry. And so they are trying to find the same product in other closer stores.

So per our initial evaluations, actually, the closer stores are somewhat positively affected in terms of sales. But in terms of pressures, do we follow them? Yes, we already have lower prices. Maybe some few products, they are lower. So yes, this don't have any margin pressure on us. And they have around 1,300 stores, and we have more than 10,000 stores right now. So we don't expect any pressures on it since they are still, on average, higher prices standing. Is it clear?

[Unknown Analyst]

Yes. It's pretty clear. So maybe I can ask a follow-up question regarding to general economy regarding to this the recent development. Is it possible to experience a relief on inflationary pressure via this kind of implementation? Or second, cooperative are too small to impact on inflation in overall?

[Serkan Savas, executive]

Actually, of course, this is -- the cooperative store is owned by the government, and they are, of course, trying to actually increase the purchasing power of the people. But of course, there is some different dynamics. So for example, if -- for example last week, maybe you have experienced the news, there are lots of rush to the cooperative stores, for example on few products. But maybe most of them are the other traditional stores. They just buy good price and then sell in their stores. So this kind of price dynamics in the sector, it's not fair actually to break these dynamics in the retail sector. Otherwise, actually, this means that [indiscernible].

Yes, actually, I don't think this will have any impact -- material impact on the inflation side. But maybe the government actually is trying to improve the purchasing power of the people, but maybe for temporary, it will be actually temporary. Otherwise, the inflationary environment has not changed unfortunately in inflationary environment. First, we have to -- we have to break the real reasons, then actually we have to actually play with the prices. The costs are still rising unfortunately. So I don't think this will have any material impact on -- material inflationary price environments.

And [indiscernible] the floor is yours.

[Unknown Analyst]

Serkan, and congratulations for very good results. My question is about the seasonality. You mentioned that September is a school season. Could we expect some increase in the profitability side in the third quarter, considering the inventory levels and the other factors? I know that the growth might be accelerating. But like -- what are the initial signals from the profitability after the second quarter's 8.1% EBITDA margin?

And the other question is about the interest -- about effective tax rates. In first quarter, we had around 18%. And in the second quarter, we see 21% based on the recorded figures. How should we assume for the rest of the year?

[Serkan Savas, executive]

Thank you, [indiscernible]. Actually, seasonality, yes, school season is starting right now, and we expect a strong school season because last year, it was the COVID year. There wasn't any clarity last year. So the sales actually -- school article sales were weak last year. But this year, we expect -- and we also believe our price is very rational prices or low prices, but higher margin. So we expect strong school season in this quarter.

Profitability, so far, post Q2, the gross margin is actually going similar with the second quarter. Gross margin is similar. But as I said, school articles is likely to contribute something to our profitability gross margin side. But in the last 45 days period, the general profitability, the gross margin figures are almost similar with the second quarter, I can say that. But in the school season and maybe in September, we may have some positive contribution and positive contribution from the operating leverage as well.

Effective tax rate, yes, you are right. In the first quarter, it was 17%, now 21%. But because in the first quarter, we have benefited from some of the one-off tax benefits, some kind of different tax benefits we have. But in second quarter, there's not. So you can take the same 21%, 23%, 22% effective tax rate in the coming periods. We don't expect any other one-off tax benefits for time being.

[Unknown Analyst]

I see that you also recorded some gain from net other income sides. Could we assume this trend will continue in the second half of the year?

[Serkan Savas, executive]

Do you mean net financial income or other income?

[Unknown Analyst]

Yes, financial income and some items under the net other income.

[Serkan Savas, executive]

Yes. In terms of financial income, we incurred around TRY 127 million gain from the FX-protected deposits. We rolled out, it's around $38 million. This is we rolled out for 3 month periods. Of course, it depends on the FX Turkish lira. We don't, of course -- we don't prefer it, but we just want to prefer -- actually protect ourselves. It depends on FX evaluations.

In other income, we have some -- yes, this is positive momentum. We have scrap sales, actually better momentum. We are now starting to save our scrap boxes, something like this and some agreed parties. Yes, likely to continue going forward this kind of net income. But for financial FX-protected, again, from the FX-protected deposits, it depends on, of course, depreciation Turkish lira.

[Unknown Analyst]

And another question, Serkan, about the market share side. We don't have the full market, but at least we have the numbers for the listed companies. And in first quarter, your market share compared to other peers was more like a stronger. Maybe I don't -- it's like quarterly, I'm just looking at the quarterly and some international revenues insight. Is this quarter, a little bit lower, although you had the highest growth? But compared to first quarter, I'm just saying in the first quarter, you had outstanding comparison. In second quarter, the others also had some growth, not as much as you are, but closer. Did you see any base effect on that? And how do you compare your market share with the limited information, third quarter versus the second quarter?

[Serkan Savas, executive]

Thank you,[indiscernible]. Actually, in the first quarter, there's a big rush from some basic commodities and for -- people are rushing to general basic commodities to protect their purchasing -- decline in purchasing power. So then actually, we also in the -- for example, in the first 6-month period, per our data, per our some kind of FMGC market data, we have gained 2% market share. The others also may be gaining market share, but not as much as 2%.

In the first quarter, there's a big rush to BIM. And then we protected -- actually we protected our base. And not that our base -- actually our base is very high. Actually, quarterly basis, we have more than TRY 30 billion sales and others are lower. So if we have incremental TRY 1 billion sales -- more sales of -- it depends. The others increased their market share better than BIM. But generally speaking, in the first 6 months period, we dropped our 2% market share in FMGC markets.

Yes, in the first quarter, there is much more contribution, then it's almost stable in the second quarter. So we -- but I can say that we protected -- actually, we kept our sales dynamics, and we don't actually face any -- actually trade up or trade down from others. We are still -- in the July and August, we are still getting market share from the market. But we will see the August and September results to what extent we will be getting market shares.

Yes, you are right, it's a little bit slopped down in the second quarter, but we still kept some slight market share.

[Unknown Analyst]

And one last question about the store opening pace. Maybe it might be early, but could you say something for the following year, how penetration is in the retail markets?

[Serkan Savas, executive]

It's a little bit early to speak about it because we are doing our budgets. Our regions are doing their budgets in November or December. But generally, the dynamics in the market -- in the retail market is there's still room to go for everybody for retailers. So we are more than 10,000 stores. The others are also approaching 10,000, maybe more than 10,000 stores. But per our experience, we are not facing any cannibalism, internal or in external cannibalism. But yes, we are actually living in different environment, first COVID, then actually other high-inflation environments, maybe because of this.

But in the last few years, we are not facing any material internal or external cannibalism. So in general speaking, I can say that the pace is likely to continue -- opening pace is likely to continue, but I cannot definitely say anything about the next year plan. It's likely to be finalized late -- in the late this year.

And Mr. [indiscernible] you still have some questions? Does he have still a question?

And now [indiscernible] the floor is yours.

[Unknown Analyst]

My question is about gross margin front. You already talked about the increasing stake of private label sales. Is it possible that you provide us roughly speaking, how -- what percentage of the erosion is attributable to private label sales? And are they going at the same pace in July, August, should we expect a change on that front?

And my second question was about the scrap sales. You already mentioned, but I was wondering whether it has something to do with your higher number of closures? Is there something like that? Or I mean it's still negligible, very few, but is it a sign for any other development, I just try to understand?

[Serkan Savas, executive]

[indiscernible] the last question, the scrap sales is not a material sale. This is boxes, actually our product box, cartridge boxes sales, some kind of package sales. The recycling sales, something like that, recycling. So it's not about the closure of store, any material sales, something like that, if you mean that. So actually, it is something different from the last year. Last year, we were not able to sell those kind of recycling products -- recycling boxes -- packages. We cannot actually convert to cash.

But now actually legislation change. Now we are actually able to -- the companies are able to agree with some kind of recycling companies. And then you can convert. Again, this is the main users. So it doesn't coming from the store closures or other that. It's just scrap sales is cartridge boxes or recycling packages coming from. I'd like to talk you to some extent. And what percent is actually coming from the product label? Product label sales increased by 4%. And -- so of course, there is some kind of difference -- there's some kind of margin difference from product levels and branded products because product labels, we are not selling the basic commodities -- basic products, just we are selling this. And basic products are naturally lower margins in the retail environment.

So we have -- our product labels are -- have lower margins than branded products. I can say materially, yes, it's not so materially I can say. Maybe 20 or 30 bps is coming from this product label mix change. So -- and the other is coming because people are more tending to both product labels and branded products in basic commodities. And basic commodity branded products have also lowered margins, just nonfood side, maybe cosmetics, detergents are higher margins. But in this environment, people are most focusing on basic food commodities.

So maybe 20, 30 bps is coming from the private label switch. Private label share is, what's the trend in this post Q2? It's almost stable. There is actually -- there is -- we are not facing any uptrend, much more uptrend. It's almost stabilized right now.

[Unknown Analyst]

And just one clarification. You said for July and August, the internal inflation is above 100%. Did I get right, right?

[Serkan Savas, executive]

Internal inflation, yes, more than 100%, 110%, we have internal inflation, you're right.

[Operator Instructions] I think there is no further questions. So I would like to thank you for your -- for joining our second quarter results. And hope to see you again in our next quarter webcast, hopefully. Thank you very much. And if you have any follow-up questions, you can reach me and my colleagues Akif and [indiscernible] for your follow-ups. Thank you.