Koc Holding AS

IST:KCHOL.E

Earnings Call Transcript 2020-Q1

[Operator]

Ladies and gentlemen, thank you for standing by. I'm Constantino, your Chorus Call operator. Welcome and thank you for joining the Koç Holding conference call to present and discuss the first quarter 2020 financial results. [Operator Instructions] And the conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Nursel Ilgen, IR Coordinator at Koç Holding. Ms. Ilgen, you may now proceed.

[Nursel Ilgen, executive]

Thank you. Welcome and thank you for joining us. This is Nursel, IR Coordinator of Koç Holding. I have here with me our Finance Coordinator, Fatih Sertdemir. I would like to remind you that our presentation and the Q&A session might contain forward-looking statements, including the impact of the COVID-19 pandemic. Our assumptions are based on the environment in our businesses as we see them today, and this might be subject to change.

Before the call, we have summed up our e-bulletin, which contains a link to our earnings presentation. And after the call, you can also access our replay facility on our website. Now I would like to start the presentation by commenting on our positioning and recent actions. At the end of the presentation, we will have a Q&A session as always.

Let's start on Slide 2. We monitored the spread of the COVID-19 pandemic very closely. It's encouraging to see that daily number of cases have been on a declining trend in Turkey since mid-April, and new positive cases seem to have stabilized. Let me start with a brief update providing information about where we are starting today. COVID-19 has both social and business-related consequences. In terms of our social response to this rare and unfortunate situation, while it is almost impossible to exactly forecast the duration and the impact, we put health and safety above all. Soon after the reporting of the first corona case in Turkey in March, we quickly gotten adapted to home office setup, a statement of our agile and flexible working structure. During this period, we sustained customer services with a focus on digital channels and e-commerce. Currently, the majority of our workforce is working actively from home and work premises.

Starting from the first quarter, we applied social distancing measures by abiding with guidelines presented by the World Health Organization and had production suspensions in some of our group companies, which mainly affected production and capacity utilization levels. We are carrying out these actions and providing solutions to help alleviate negative impact of the pandemic on society. Our efforts range from campaigns to necessary equipment design and production. You can see some of the initiatives undertaken by our companies on this slide.

We are very happy to see that World Economic Forum has recognized and published these efforts on its website as good examples of corporate response in the fight against the pandemic. Regarding our business response in this volatile environment, one of the main priorities is maintaining the strength of our balance sheet. At Koç Holding, we have a diversified business portfolio and the effect of the pandemic on each business is quite different. On the back of our prudent risk management policies, we had a healthy and strong balance sheet prior to the COVID-19 outbreak. Hence, in our international operations, we could sense the storm coming before it actually begins in Turkey, which happened relatively late and we could evaluate additional borrowing needs.

Accordingly, based on the outcome of internal assessments and the stress test at both subsidiary and holdings level, our group companies obtained additional liquidity from the market. They have the ability to meet all of their financial liabilities and cover their fixed costs. As of end of March 2020, on a combined basis, our current ratio is 1.4x, and our net financial debt over EBITDA ratio is at 2.1x. Yapi Kredi Bank also has a strong liquidity position, that with all the regulatory thresholds. Overall, we are relatively comfortable in terms of liquidity.

Following COVID-19, we also made some adjustments in dividend payments. Arçelik decided not to pay any dividends for balance sheet strengthening purpose, given low visibility as well as sluggish demand in export in the international markets. Similarly, Koç Holding decided to reduce the dividend paid. For the time being, we do not see any underlying company to be in need of direct support from the parent company. In addition, at Yapi Kredi, capital ratios are well above the minimum requirements.

COVID-19 pandemic is expected to lead to the largest contraction in the global economy since World War 2 and a much bigger drop than compared to global financial crisis back in 2009. This means weaker demand from international and export markets. For resource optimization, our group companies have already taken various actions about operating expenses and capital expenditures to manage cash outflows and mitigate the impact of the pandemic. They came up with preemptive actions such as excess savings, utilization of short-term worker loans and postponing all nonessential capital expenditures.

This year, another very important development was the collapse in oil prices. Inability of oil producers to agree on production cuts and growing concerns regarding COVID-19, pushed the Brent oil prices down to around $18 per barrel at the end of March from $66 per barrel at the beginning of the year. The initial impact of the sharp drop in crude oil price results in an inventory loss for Tupras, which we will be discussing later. Good news is that oil prices recovered from March lows and now stands above $30 per barrel level.

With the first quarter results, our group companies reflected these developments into their 9-month forecast. Accordingly, company's previously announced 2020 guidance are withdrawn and/or replaced with a new set. They made the necessary disclosures regarding guidance and we will be discussing the group companies' updated expectations for this year in the following slides. In our base case COVID-19 impact scenario, we assumed the impact of the pandemic on production, domestic sales and exports to start trading a bit gradually from June to end of July, and normal operating conditions begin through August onwards.

Let's move on to Slide 3. In terms of our dividend income, this year's figure does not incorporate the dividends from our -- of our unlisted companies as well as potential dividends for the remainder of the year. As you know, Tüpras could not pay dividends due to a loss in 2019 statutory accounts and Arçelik decided to retain earnings, following the uncertainties brought by the pandemic. Accordingly, our dividend income amounted approximately TRY 1.1 billion. As a reminder, around 80% of our dividend income is derived from companies which have FX or FX-linked revenues.

In terms of our dividend payments, we managed just taken into account our dividend income, our -- the investment opportunities and our balance sheet management and risk principles, including our net cash position. Considering the extraordinary operating environment caused by COVID-19 that requires more prudent financial policies and our AGM enrolled distribution of TRY 531 million dividend payments corresponding to 12% payout ratio.

As a holding stand-alone level, we like to keep a certain level of cash to service the war chest against volatility as well as playing power in case of investment opportunities. As of end of March 2020, our net cash position at the holding level was $512 million and including Yapi Kredi Bank's AT1 investment, our net cash reached $715 million. Considering our dividend payments at the beginning of April as well as the cash outflow related with the acquisition of additional 9% stake of Yapi Kredi Bank and 54% share purchase of Tofas in May, our adjusted net cash position becomes $445 million, including Yapi Kredi Bank's AT1 investment. Overall, although 2020 margin entails some challenges, we are well prepared with our diverse businesses and prudent risk approach. Furthermore, our strong cash position is an advantage to benefit from growth opportunities as they may rise.

On Slide 4, you can see the main pillars of our solid balance sheet. As you all know, prudent management has always been a key focus area. At the holdings stand-alone level, as of end of March, we have close to $2.8 billion of gross cash and 78% of this position is in hard currency. Keeping an efficient level of cash has been our approach for many years, and it's allowed to maintain our resilience. In terms of our funding at Koç Holding's level, we had 3 Eurobonds outstanding as of end of March, while we paid down our Eurobonds issued in the 2013, amounting to $750 million in April this year. Following this, our gross cash decreased as much, while this has no impact on our net cash. We have no other debt of Koç Holding's stand-alone level. As a reminder, Koç Holding's ratings are BB- from S&P and BA2 for Moody's, 1 mark above [ Turkey's summer rating ].

We also have well-defined and prudent risk management policies that are applied and regularly monitored on a combined basis as well as at each underlying company. In terms of liquidity, leverage and foreign exchange position, we are at conservative levels. On a combined basis, our current ratio is 1.4x and our net financial debt over EBITDA ratio is at 2.1x. In terms of FX, we have a policy of keeping a neutral position as we remain zealous in our risk management rules. As the largest company in Turkey and being active in many diversified sectors, we manage our balance sheet to ensure that we always remain resilient against market volatility. Going forward, we'll continue to prioritize maintaining the solvency of our balance sheet despite challenging market conditions.

Now I would like to briefly summarize our first quarter performance, focusing on our main sectors. Let's start with Energy and Tüpras on Slide 5. The domestic market for refined products continued its upward trend in the first 2 months of 2020 before the spread of COVID-19 in Turkey. We saw 8% year-on-year increase in diesel and 7% growth in gasoline sales volumes. On the other hand, jet fuel consumption was flat, mainly due to lower number of commercial flights. In the first quarter, Tüpras domestic sales volume and export volumes were lower year-on-year, resulting in 15% fall in total sales volume.

When we look at the refining margins, we see $1.80 per barrel decline in the Med Complex margin to $1.80 per barrel due to lower crack margins, except for gasoline. On the other hand, Tüpras net refining model of $0.60 lower than Med Complex margin due to inventory losses despite advantages in product yields and crude selection ability of the company. Tüpras overall net refining margin amounted $1.20 per barrel versus $4.20 per barrel during the same period of last year, mainly due to inventory loss effect and vehicle crack margins. In terms of capacity utilization, in the first quarter of 2020, Tüpras operated with 85% capacity utilization rate, mainly because of crude oil unit maintenance work and practice planning to prepare for storage management. White product yields improved by almost 8 percentage points to 85.7%, thanks to the efficient use of conversion units.

Based on the development, year-end expectations have been revised for Tüpras within April. Accordingly, Med Complex margin expectations lowered from down $1.50 per barrel to $2.50 per barrel to $1 to $2 per barrel, while Tüpras net refining margins is reduced to $3 to $4 per barrel from $4.50 to $5.50 per barrel. Tüpras also changed refining related CapEx guidance from $200 million to $125 million in 2020. Capacity utilization will be around 80% to 85% which includes a 2-month production suspension of Izmit refinery from 5th of May to 1st of July, in line with the contraction in demand.

On the LPG side, consumption increased by 6% in the first 2 months of 2020. Aygaz, the leading player in the LPG sector, focused on profitability, and therefore, sales volume recorded 7% contraction in the first quarter. For 2020, Aygaz expects flattish cylinder and around 17% decrease in auto gas volumes, while for itself, market share is expected to be similar compared to 2019. Accordingly, looking at the Energy segment, it's contribution to Koç Holding combined operating profit and consolidated net income was negative. Bottom line was negative mainly due to the heavy inventory losses stemming from a sharp fall in crude oil prices towards end of March.

Let's move to Slide 6 and discuss the developments in the auto segment. In 2020 until mid-March, Turkish auto market continued to recover on the back of cheap loans with falling interest rates. After a 23% contraction in 2019 for the whole year, the first quarter witnessed 41% year-on-year growth in domestic sales volume, with very strong demand for passenger cars. In this period, we focused on profitability in the domestic market. Accordingly, our total market share decreased 3 percentage points to 24%, following the expiry of incentives at the end of 2019, despite market share gains in light commercial and heavy commercial vehicle segment.

On the export side, our group market share declined 7 percentage points to 35%. During this period, Ford Otosan sales volume was 25% lower, mainly due to COVID-19. Similarly, Tofas witnessed 11% decline in its export volumes, which is passenger car exports performed better than registrations in EU. Note that our company's suspended production started from the fourth week of March, except Tofas, which stopped on the fourth of April. When we look at the these total figures, production was down by 6% in the auto market during the first 3 months of the year.

Total revenue performance of Ford Otosan and Tofas increased by 1% and 12%, respectively. Domestic revenues were the main driver for both companies, supported by volume growth and pricing discipline. International revenues decline was limited due to strong euro against TL, also supported by euro-based cost-plus contracts, and in the case of Tofas, take or pay. These contracts allow our companies to remain resilient in periods of TL depreciation. For both companies, international revenues contributed around 70% to 80% to their total revenues.

Regarding 2020 expectations, both companies made some revisions incorporating COVID-19 impact. We expect approximately 5% growth in the domestic market, pointed to 520,000 to 570,000 units for total auto sales. For Otosan, expect its retail sales volume to be around 55,000 to 65,000 units; while Tofas expects 72,000 to 78,000 units. Regarding exports, Ford Otosan expects volumes to hover around 225,000 to 235,000 units, approximately 30% lower compared to 2019 figures. Tofas expects around 35% volume contraction to 110,000 to 140,000 units. The impact of lower export of the P&L will be limited, as I mentioned earlier, thanks to euro-based cost-plus contracts and take-or-pay contracts. On the CapEx front, Tofas is targeting some increase from EUR 107 million in 2019 to around EUR 200 million in 2020, mainly related to [ Egea ] mid-cycle action as well as MCV and some of the new generation [indiscernible]. Ford Otosan expects CapEx to be similar compared to 2019 at EUR 130 million to EUR 150 million.

Let's touch from our tractor company, TürkTraktör. In the first quarter, TürkTraktör's domestic sales volume surged by 82%, with recovery in the domestic market since August 2019. During this period, the company's export volume was 12% lower, mainly due to COVID-19. Accordingly, TürkTraktör revenues grew by 46%. For 2020, TürkTraktör reiterated its domestic market guidance of 28,000 to 33,000 units, indicating high teens growth. Meanwhile, TürkTraktör is expecting higher increase in its sales volume with some market share gains while always maintaining focus on profitability. The company revises export volume guidance downwards due to lower demand in export markets.

In [indiscernible] we see solid performance from the auto segment of Koç Holding. Overall, the segment accounts for 65% of our combined operating profit and 14% of our consolidated net income. The auto segment's operating profit increased by 20% year-over-year. The main drivers of this positive performance were substantial growth in domestic market, solid export contracts as well as OpEx control and cost discipline. Better than the strong performance, auto segment consolidated net income surged by 61%.

On Slide 7, we can look at the Consumer Durables segment. In the domestic market, white goods sales units increased by 11% in the first quarter due to strong price consumption. In the international markets in the first 2 months, Western Europe recorded a slight increase of 3%, while Eastern Europe remained strong with 9% growth. White goods exports in the sector grew by 3%. Looking at Arçelik figures, domestic revenues increased by 26%, thanks to 7% increase in unit sales. On the international sales front, which constituted 62% of total, organic growth was negative at minus 8%, yet revenues grew by 6%, mainly due to FX impact supported by the acquisition of Singer Bangladesh.

In terms of profitability, solid domestic sales, stable raw material prices and one-off settlement income from the competition case were on the [indiscernible] of the quarter. These offset higher share of operational expenses in sales, mainly due to lower share of international sales. Arçelik managed to preserve key risk metrics. The company's working capital to sales ratio decreased further 26.4% from 27% in -- at the end of 2019. Leverage also stayed at comfortable levels, with a net debt-to-EBITDA ratio of 2.3x.

Regarding 2020 expectations, Arçelik decided to suspend guidance due to uncertainty in the global economy and the consumer durables industry stemming from the pandemic. Overall, the Consumer Durables segment operating profit increased by 33% and contributed 25% to the group's combined operating profit. Solid domestic revenues and stable raw material prices drove its performance as well as settlement income on competition cases.

Finally, let me also briefly talk about the finance segment and the development of Yapi Kredi on Slide 8. Yapi Kredi's net profit was at TRY 1.1 billion, corresponding to 11.4% return on tangible equity. The bank performance was driven by strong pre-provision profit, which increased by 23% year-on-year. Core performance strength was a driver behind the good performance, despite slight quarterly contraction in fees due to regulatory impact. Accordingly, revenues increased 22% year-on-year and cost increase was 20%, mainly due to the increase in regulatory costs in addition to actions taken against COVID-19.

In the first quarter of 2020, volume growth was healthy with ongoing TL focus. NPL ratio improved to 7.1%, with strength in the collections. Total coverage ratio stood at 7.3%, which remains to be the highest level among peers and reflects YKB's conservative approach. In the first quarter of 2020, due to a lack of full visibility, the bank has increased total provisions to TRY 2.2 billion, that represents 39% year-on-year increase. Yapi Kredi increased coverages for both Stage 2 and Stage 3 as well as other provisions. As a result, ordinary cost of principal of 1.86%. Due to limited NPL inflows and precautionary provisions, cost of risk reached 2.68%. The strong performance in this first quarter will provide some buffer for the deterioration in the upcoming months due to COVID-19. Yapi Kredi has ample liquidity, with $16 billion short-term liquidity and LCR of 206%.

In terms of capital, excluding the positive impact of the regulatory forbearance, buffers are 350 to 400 basis points higher than the regulatory thresholds. Q1 ratio was at 13% without forbearance actions. With forbearance, the number was 13.7%. This level represents 344 basis points buffer against regulatory limits. Total CAR stood at 15.8% with a buffer of 380 basis points. Yapi Kredi Bank provided potential risk to its previously announced full year guidance in the light of recent developments. Overall, the Finance segment combined operating profit was flattish year-on-year, while consolidated net profit growth was realized at 20%, thanks to higher effective ownership rates following additional share purchases of Yapi Kredi Bank in February 2020. In terms of share in total combined operating profit and consolidated net income, now it has the highest contribution among our main sectors.

If we move to Slide 9, we can talk about the overall results of the group, incorporating all of the segment trends we just discussed. On a combined basis, Koç Holdings were just at TRY 71 billion in revenues, TRY 2.4 billion in operating profit and TRY 3.6 billion in net income. Consolidated net income amounted to TRY 3.5 billion, mainly driven by 2 one-off items, both related with the Yapi Kredi Bank transaction in February 2020. First, a TRY 3 billion net gain resulting from the bargain purchase and change of control at Yapi Kredi Bank. Following the additional 9.02% share purchase at Yapi Kredi Bank in February 2020, we gained full control over the bank.

Starting from February 2020, the equity has been accounted for using full or line-by-line consolidation instead of previously used equity pickup method last year. Moreover, the transaction is in line with scope of IFRS 3 business combinations since there's change of control. Accordingly, in line with IFRS, purchase price allocation study is conducted. As a result, the bargain purchase on the additional 9% share and remeasurement of previously held 35% equity interest in Yapi Kredi Bank with acquisition date fair value, resulted in a TRY 3 billion noncash gain in our consolidated financials; and second, TRY 0.4 billion termination fee income from UniCredit. Briefly, Energy segment performance was impacted by the sharp increase -- sharp inventory losses that was more than offset by the aforementioned one-off items.

On Slide 10, we can see the breakdown of the consolidated net income performance. The biggest contributor was other, followed by finance and auto segments. Energy segment, on the other hand, contributed negatively due to the impact of Tüpras that we mentioned earlier.

Now I would like to wrap up our presentation on Slide 11. In summary, we maintained our disciplined management approach. Our balance sheet is strong with a solid net cash position, and our portfolio structure and diversification ensures resilience against volatility. Value creation, extending our global footprint and diversifying our businesses further are always the key priorities for us. Overall, we are well prepared with our solid and diverse businesses and tight risk control.

Going forward, we have the potential to further diversify our positioning both domestically and [ transcendentally ] to our investment while sustaining efficient level of liquidity. Thank you for listening. Now we can open the floor for questions.

[Operator]

[Operator Instructions] The first question is from the line of Farazi Dilawer with Loomis Sayles.

[Unknown Analyst]

Just a first question on the dividend income that you expect for 2020. Now I gather that you received all the income from all the listed entities that you have in your portfolio and the remainder is from the unlisted companies. Can you give us a sense of how much you expect from the unlisted companies? That's the first question.

Second question is, more broadly, just your view on the macro. I know there are a lot of moving parts, but do you have any kind of view -- assumptions around FX rates by the end of the year or interest rates in Turkey?

[Nursel Ilgen, executive]

So let me start with the dividend question first. On Slide 3, on the presentation, we have a table showing the dividend income coming from our subsidiaries. And there, you can see the unlisted portion under the other companies. So that portion is usually very minimal. And if you look at the last 4 years average, you can see that its range of between TRY 30 million to TRY 112 million. So that is a bit small portion compared to the total dividend income. And you may expect that the dividend that we have received in the first quarter is a strong indicator that this isn't going to be the main dividend income for this year for 2020.

And regarding your question about the macro, well, yes, it's too early to talk about the macro and about the impact of the COVID-19 pandemic on the macro. But let me remind you that the Turkish economy grew by around 6% in the fourth quarter of 2019 and bringing the overall growth into Turkish GDP growth to 0.9%. And 2020 also took off a very good start, but COVID-19 is going to be -- lead to a deceleration in the economy for March onwards. So we're going to see the first quarter GDP results next week, and still, the main impact is going to be on the second quarter. And the consensus GDP estimates indicate some deceleration in growth and also the Central Bank expectation survey also indicates that. So currently, there is not so many data points available that explains the impact of the pandemic and on consumer spending, but we see sharp falls in real sector confidence index, consumer confidence index, manufacturing sector PMI and also the capacity utilization rates.

The good news is that when we look at the details of the latest consumer confidence index in May, we see a broad improvement, especially driven by some rebound in the probability of purchasing durable goods and autos, along with some improved expectations regarding the general economic situation over the next 12 months.

[Unknown Analyst]

Do you have -- is Turkey easing the lockdown now? I mean, is there a sort of a plan for normalization that's been announced?

[Nursel Ilgen, executive]

Sure. Yes. Yes. Well, actually, the weekend curfews, they have been implemented in the past few weeks and they are likely to continue until the end of this month. But there's also a gradual reopening of the economy that's begun since mid of May, with some travel restrictions already lifted for some cities. And shopping malls and hairdressers have -- they have already reopened, with strict access limitations. So there's a gradual reopening, and it will progress throughout the coming weeks. Domestic flights will start in early June and international tourism after mid-June. So these developments support our base case scenario, where we assume the impact of COVID-19 on production, domestic sales and exports would start trading gradually away from June to end of July, and we're going to see normal operating conditions from August onwards.

[Operator]

The next question is from [ Zaki Vistana ] with Barclays Investment Bank.

[Unknown Analyst]

With the change in ownership and control of Yapi Kredi, how should we think about the strategy of the bank going forward? Do you think it will make a big difference? Koç having a larger role with the bank? And that's my first question.

And then the second question just on your gross cash position, it's obviously fallen and since the quarter end, by around $1 billion. Do you have a level that you're happy with now? I know the issue in Turkey was the prefinancing but would you rather have a higher cash balance than currently to potentially support subsidiaries or make acquisitions? Or are you happy with current levels?

[Nursel Ilgen, executive]

Let me start with the second question. Yes, we have a very solid net cash position, both gross cash and net cash position, and we are very comfortable with our net cash level. And actually, we already paid down our Eurobonds, which was due in April this year, and we already prefinanced that Eurobond last year, if you may remember. So currently, we don't have any other -- any considerations about Eurobonds or any other additional borrowing at the holding company level. But of course, this is something that we have to discuss further, depending on the market conditions.

And regarding your first questions about the Yapi Kredi Bank, of course, at Koç Holding, in line with our investment strategy to consolidate our positioning further in the banking sector, in our existing sectors, we decided to increase our share in Yapi Kredi Bank. And that was an attractive valuation, by the way, when the opportunity arise. So that is also in line with our strategy to expand in the sector. And the cash outflow from Koç Holding, it happened already and we still maintain our full financial position.

And by the way, after the transactions, the finance sector share in our NAV is close to 18% as of first quarter. We are happy with this share positioning. And as I said, that was a strategic move, and we are happy with this diversification currently.

[Operator]

The next question is from a webcast participant, [ Will Jessemin ] with Loomis, Sayles.

And I quote, "Can you repeat the reason for the large increase in domestic TürkTraktör sales, please?"

[Nursel Ilgen, executive]

Okay. Yes. Account, a little bit last year, the tractor sector in Turkey was depressed. And starting from August last year, we have seen some huge recovery in domestic tractor sales, mainly because of increasing confidence and also lower interest rates. Another reason was the support by the state banks in our bank, offering lower interest rates and also some subsidized loans, which started at the beginning of this year. So the domestic market growth was very strong and TürkTraktör gained some market share, which was impacted -- reflected, it is as domestic sales volume.

[Operator]

The next question is from our webcast participant, Umut Ozturk, with Oyak Securities.

And I quote, "Thanks for the presentation. Could you please repeat how the TRY 3 billion one-off and noncash gain was calculated?"

[Nursel Ilgen, executive]

Sure. So let me hand over to Fatih to explain it again.

[Fatih Sertdemir, executive]

Thank you. Nursel explained this. Let me explain in more detail. Following the 9% additional share purchase at Yapi Kredi in early February this year, we gained full control over the bank. And starting from this table, Yapi Kredi has been accounted for using the full consolidation method instead of previous use, equity pickup method. Since this change of control, this transaction is in the scope of IFRS 3 business combinations. Accordingly, in line with the IFRS, a purchase price allocation study has been conducted by an independent party. As a result of this study, the identifiable net assets of Yapi Kredi Bank was determined at TRY 42.7 billion, slightly above its current book value. And this increase is mainly related to the intangible assets such as brand value, which are included in the current book -- begin now.

So within this background information, let me explain the 2 pillars that constitute the TRY 3 billion one-off gain. The first one was the [ bond repurchase ] gain. As you may recall from our previous public disclosures, the share purchase was performed over a total equity value of TRY 18 billion, whereas the fair value of net assets acquired is determined as TRY 42.7 billion. So this was a bargain purchase, and this resulted, a gain in our financials. And the second pillar was the remeasurement of the previously had a total 35% equity interest in our Yapi Kredi Bank. The previous book value is now remeasured to its new book value, TRY 42.7 billion. So all in all, this transaction results in a TRY 3 billion one-off gain in our financials.

[Operator]

The next question is from a webcast participant, Berna Kurbay with BGC Partners.

And I quote, "Good evening. Considering all the business lines and geographies in your portfolio, would you expect any one of the regions standing out as recovering quicker than others from the pandemic? And do you see any difference between Turkey and -- versus Europe, for instance?"

[Nursel Ilgen, executive]

Yes, up until mid-March, we achieved these strong results, especially in Auto and Consumer Durables, with 41% and 11% growth in domestic market and with numbers even exceeding our budget. And yes, with COVID-19, our content saw a slowdown in both domestic and export markets. And they worked on the numbers and as you have seen in their revised guidance, for example, Ford Otosan, expects something like 12% growth in domestic auto markets. And that means a growth in the domestic market, while the company projects 30% decline in export volumes. And similarly, Tofas is also expecting 35% fall in export volume. And TürkTraktör, again, they didn't change the domestic market guidance, while they reduced the export volume guidance by almost 25%, mainly because of the contraction in the export market.

And Arçelik withdrew its 2020 guidance, so it's -- we cannot provide any numbers there. But as you can see from the revised guidance figure, domestic markets is expected to recover more earlier compared to the export market. And the second quarter is going to -- we're going to see the weakness mainly in the second quarter, actually, we started to see the initial numbers. We have the numbers for April, for example, for the domestic auto sales, which decreased by around 15% in Turkey versus much severe decreases in other countries, especially in our export countries. And similarly, in the white goods market in April, we have seen 11% decrease in Turkey. Again, much sharper decrease in European countries, in other countries. So we think that recovery is going to be stronger in Turkey going forward.

[Operator]

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you.

[Nursel Ilgen, executive]

Okay. Thank you. So before closing, I would like to extend our appreciation one more time to all participants. Moreover, if you have any further questions, you can always get back to us by phone or by e-mail. As a reminder, our presentation and a replay of this conference call can be found on our website together with the transcript. We hope to see you again in our next webcast, when we will be announcing our first half performance for 2020, if not sooner. Goodbye.

[Operator]

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling and have a pleasant evening.