Ulker Biskuvi Sanayi AS

IST:ULKER.E

Earnings Call Transcript 2022-Q2

[Operator]

Ladies and gentlemen, welcome to Ülker Bisküvi Second Quarter 202 Financial Results Conference Call and Webcast.

I now hand over to Verda Tasar, Investor Relations Officer. Madam, please go ahead.

[Verda Tasar, executive]

Thank you, Denise. Hello, everybody. This is Verda. Welcome to our second quarter financial and operational webcast. Here with me in the room are CEO, Mete Buyurgan, our CFO, Mrs. Fulya Surucu.

I now leave the ground for his remarks to Mete Bey. Mete Bey, please.

[Mete Buyurgan, executive]

Hello, good afternoon. I'd like to start with the key achievements in the half funnel this year. This is -- as you all know, this is really a very tough year in terms of many aspects. However, despite all those challenges, we achieved an outstanding results. In terms of market performance, we keep our leadership position in macro snacking business in Turkey, and we are keeping our strong market share position with 35%, and we have reached a record EBITDA margins with 20%, while we are having 118% top line net sales growth. Our low-cost operating model, resilient and dynamic organization enabled us to perform those outstanding performance.

If I may summarize the key highlights of the -- key financials of the half 1. I must say that we are having a very strong growth pace, which we almost reached to TRY 11.9 billion to net sales with 118% growth rate. One of the very good result but our gross margin despite very heavy challenge on commodity prices -- on packaging prices and on logistic costs. We have reached higher growth in gross margin than our net sales. Plus, in terms of bottom line, we reached 140% growth in terms of EBITDA, which is far better in terms of our net debt and gross margin growth, which -- as I mentioned in the previous slide, this is basically because of our low-cost operating model and our revenue organization, and proactive approach for to the problems actually.

Our gross margin has reached almost 30%, and our net debt position is getting improved versus last year. And our operating free cash is far better than last year as well.

If I may give you some update about basic -- most important headlines. Our strong productivity on supply chain and sales operations are the main drivers of our performance. We keep investing on our brands despite the crisis and challenge. Strong momentum in innovation under our key brands like Ülker, McVitie's and Godiva. Effective and balanced channel mix management we were far -- we were very careful on this to manage the channel mix management impact, and higher sales performance in modern channel sales with some value pack promotional offers in order to maintain our volume performance, not to lose any kind of productivity on our supply chain and operating [indiscernible]. Those are the biggest enablers of our results.

And as you know, we are challenging -- we are facing with lots of challenges around the world, not only in Turkey, in terms of especially global food prices are quite challenging, including commodity prices, packaging prices, but also logistic prices are quite a big challenge for the industry all around the world. On the worldwide battle against inflation, almost all the developed markets and developing countries are facing with inflation, but also as you may know that in Turkey, we are facing with further inflation challenge versus less in other regions and countries, markets. But also global supply issues, especially mainly due to Russia and Ukraine crisis like wheat and other raw materials, and energy, of course. But on the other hand, there are some positives as well on the challenge, some positive reliefs on the challenge, Turkey and KSA, Saudi Arabia, has just resolved the conflicts between the countries. So we started to export again, which is going to create another synergy for the second half of the year for us, for our retail business.

And as I mentioned, rising inflation and FX rates putting pressure on prices, and specially food products in Turkey. As you may see that we have very successfully managed the -- in the first half to pricing and our volume balance to integrate it. So in short, if you look at the financials, again, one of the most better signal -- positive signal for our business in the half 1 was, as you see, our volume progress, volume development, volume growth. We have almost 7% growth. So we must say that -- I must say that our growth is just not only from pricing, but also very strong volume growth as well, which is a very healthy sign for our business.

On the other hand, as I mentioned, net sales growth, gross margin growth and EBITDA growth are outperforming. We are having very strong performance over there. Only we are having an issue with the net loss part, net income part. As you know that we are having some unrealized fair value loss on securities, which we are expecting to be recovered, and it has been started to be recovered as of July. So after it's going to be maintained -- to be recovered. We are expecting a very strong -- an improvement in the net profit part as well.

So thank you. And also I will like to mention some good news as well. As you may know that we are very developed as company, as Ülker, on our sustainability efforts among our global benchmarks. And we are getting lots of awards on our constant initiatives and efforts, which we -- which makes us very happy. Plus we are getting some awards in order to be awarded head place to work and top employers from the global organizations. Those awards really makes us very motivated due to our efforts in those areas.

Now our CFO, Fulya Surucu, will give you some more detailed information about our operations and about our financials.

[Fulya Surucu, executive]

Mete Bey, thank you so much. So I will continue with our Q2 consolidated financial performance and happy to continue, and share with you that we also had very strong Q2 results. You see revenue grew by 125%, gross profit 138% and EBITDA growth 154%. The story shared by our CEO is the same story for Q2 as well. Gross profit growth higher than revenue, EBITDA growth than rules profit, and the numbers for Q2 are higher than the total half 1 results. So it shows our effective pricing strategy, tight cost control mechanisms that we have, and being able to reflect all cost increases to our prices plus effective supply chain, very successful operational performance management.

And in terms of gross margin, 160 basis points increase versus prior year, ending at 28.3% gross margin number. Net debt to EBITDA, when we calculated from the face of the balance sheet, it became 3.05, a significant decrease versus prior year. I also like to share that per covenant purposes with our banks, our net debt-to-EBITDA declined 2.9% and our interest coverage ratio is at 3.46%. Operating free cash flow import versus prior year. And I also like to share again the Q2 net income most is mainly driven by the unrealized fair value also for financial securities, which we expect to be recovered.

They are unrealized. They're hard to securities and which we expect to recover over the coming months and which will have a positive impact on our net income over the coming months and quarters.

When we go to next page, strong export new launches and investment in synergy products were the drivers of the successful quarter. So when we take a look on Q2, Q2 review analysis. In terms of snacking volume, all of our categories increased versus prior year. Increase in biscuits, chocolates and cakes overall 5.2%, and biscuit, chocolate and cake by 5.2%,3% and 23.3%, respectively, in all categories in terms of volume. As Mete Bey mentioned, we were able to increase our volume despite all these challenges -- challenging environments, and it translated healthy and big increase in terms of revenue by 125.8% and in all categories, biscuits by 137%, chocolate 111% and cake 171%, approximately, increase in terms of sales value.

And only includes total half 1 in Q1, plus very strong Q2. They drive an exceptional performance in terms of half 1. Again, the same story, we were able to increase our volume by 5.6% in terms of first half of the year. Biscuit, chocolate, all of our cake categories increased versus prior in terms of volume, and also 118% revenue increase by all categories with biscuit, chocolate and cake take over 100% growth by all categories.

Now let's take a look on domestic and international businesses. I will start with Turkey, how we performed in Turkey in this quarter. Lot #1 in total snacking with 35% market share, we were able to maintain our market leader position in biscuits by 40%; chocolate, 40%; and cake 20%. And let in new product sales continues and Turkey NPD sales contributed 15% of the total domestic sales in Q2, and you can see on the page, some of the products that came out as new innovations, and we have a new category on the cake channel, and you can see our new innovation products related to this category.

And I'm also happy to share that we have a great pipeline in terms of innovation over the quarters and years as well. In Turkey, quarter 2 was very strong. Volume increased by 3.9%, 4% in all categories total volumes and snacking revenue was 124% and gross profits increased by 150%, and EBITDA -- a huge increase in terms of EBITDA as well in terms of exclude. But again, I'd like to highlight that not only in absolute values, we were able to increase our margins.

Gross profit, it was 20.7% last year, now it's 23.7%. EBITDA, 14%, now it's 17.2%. So huge increase versus prior year in terms of margin, again, which clearly shows that for an effective pricing strategy, supply chain management and cost control, we have all over the company.

And for Q1 and for Q2, these were exceptional half 1 results for our domestic business in Turkey. So when you take a look at the numbers, volume increased by 7.5% total volume and snacking revenue increased by almost 117%. Gross profit increased by 129% approximately, with a margin increase from 23.4% to 25.1% and EBITDA margin increased by 2.5% reaching to TRY 1.3 billion EBITDA in terms of our first half year results for Turkey.

When we take a look at our export business, we again see the same momentum here. We maintain our strong position in our international businesses as well. We maintained our market leadership position in Saudi biscuit #1 with 25.5% market share. Biscuit #1 -- in Egypt, #1 position and chocolate 13.6% market share in Kazakhstan -- in Central Asia Kazakhstan region. So new products and innovation is at the heart of our strategy. Here, we can -- we see that in our international business, our new products sales contributed 4% of our total international sales in Q2 2022. And you can see some of the innovation -- new innovation products on the page as well.

And then we take a look on the financials Q2. Q2, you can see the increase in sales versus prior year in terms of volume, revenue, gross profit and EBITDA. And in terms of EBITDA also, we had some challenges in our international markets like -- I mean, like our CEO mentioned, Saudi and Turkey ties started to get strengthened, but prior to this, we had some sensitivities and issues. Now it's over. Some of our markets were hit significantly by COVID. Now they are giving recovers, and we were able to maintain and increase like our EBITDA margin as far as from 21.2% to 21.5% and a 139% increase in terms of EBITDA in absolute value terms.

And half 1 results, we see the same story here. In terms of EBITDA, 131% -- or approximately 132% increase versus half 1. And we see an increase in our gross profit margin from 21.8% to 22.4%, strengthening and sustaining our strong position in the first half of the year in our international businesses. Again, just in Saudi Arabia, Egypt and Kazakhstan, you can see the year-over-year growth of 17.5% revenue growth in FMC, IBC, Saudi Arabia, and Egypt 10%, and Kazakhstan totaled 71%. And you can see their EBITDA margins as on 20.8% and 10.8% and 14.6% EBITDA margins that they contributed to our total consolidated numbers.

We again wanted to share with you the latest update on our acquisition highlights. So with all the acquisitions, we have maintained over the years, we were able to reach the total of our EBITDA is -- 45% coming from international businesses, which sees that also 4% to 5%, our EBITDA is foreign currency denominated, so which is a natural hedge that we have in our business model. And we will also review how much -- how the EBITDA margins evolved over the years. But again, I'd like to highlight with our most recent acquisition of Önem Gida that we had in Q4 2021, in half year, in the first 6 months, this contributed incremental 3% at 300 basis points to our EBITDA margin. So 3% of our EBITDA margin is only mainly due to Önem.

And over the years, finally take a look on the trend analysis like North Africa, in 2016, EBITDA margin was 9.2%. Now it's 10.8%. And the total EBITDA contribution to our total consolidated number, 3%. Middle East, it started with 18.3%, now it's 24.1% -- current EBITDA margin, 24.1% and total EBITDA contribution is 19% for our total numbers. And Central Asia is 6.7% and current EBITDA margin, 14.6%, more than the double where we have started, and total EBITDA contribution 2.8%, but it is increasing day-by-day with their strong platform.

Balance sheet highlights. Net debt/EBITDA, 3.05. But again, as I have shared from covenant purposes with the banks, it's now 2.9. Make sure it's a breakdown mainly come the short term since our refinancing is due in April 2023. In terms of hedges, where we are as of today, approximately 45% of our -- of the net position is closed. So as of August, so we continued this momentum and executing cost currency swaps and hedges and forward.

So total as of August 2022 -- as of August 2022, total open position, it's out of -- total position is EUR 200 million is closed hedged by a cost currency swap a EUR 42 million Önem Gida purchases are hedged. And also our coupon payments in October is also hedged via forward and this momentum will continue. As you know, we started with EUR 500 million, all on position at the beginning of the year as our current position by 45% hedged position.

And on our last page, we also like to share with the [indiscernible] that based on latest 2022 guidance, we are increasing our guidance, revising to TRY 23.5 billion. And we still maintain our EBITDA margin. This is our expectation for the full year 2022. It was TRY 22 billion but now it is increasing to 23.5% with sustained EBITDA margin of 18.6%. As the full year expectation, we are revising our numbers. And [indiscernible] priorities -- balance of the year priorities will continue throughout the year to strengthen our business further and further. Thank you so much.

[Verda Tasar, executive]

Thank you, Fulya. We are now open for questions.

[Operator]

[Operator Instructions]

Your first question comes from Daniel Zaczkiewicz from Barclays.

[Daniel Zaczkiewicz, analyst]

I just wondered if I could ask about your short-term debt, and in particular, the loan maturities in April next year. Could you just update us on what your current plans are, and maybe what your contingencies might be? For example, would you consider reducing the size of your short-term financial investments if needed to help with these repayments?

[Fulya Surucu, executive]

Thank you for the question. Our financial securities is our guarantee for our debt that is maturing for next year. So our plan is either to refinance the total amount or decreasing the leverage of our total refinancing, which is due next year. And financial securities is the guarantee of that -- as Plan B, but that's the plan for now. And we feel confident with either of the 2 options.

[Operator]

The next question comes from Cemal Demirtas from Ata Invest.

[Cemal Demirtas, analyst]

My question is about your short disposition. I see you do some hedging, but what is the FX disposition as of the end of this year, this quarter? And maybe in August, you mentioned some numbers like should we make the calculation for your sensitivity to the currency fluctuations? That's my question. And the second question is about the financial assets in your balance sheet.

At least, could you give us some like color on the trends of those valuation because they are having significant effects on your bottom line, which is being depressed because of that factor, and I see around TRY 750 million. Should we expect some recovery in third quarter? Because we experienced the similar things in some companies like [ Elka ], they had some -- the financial assets, but please be no Eurobond or other things in their asset.

Mete, could you give us some color on the characteristics of that financial assets so that we can at least see the picture for the following 2? Otherwise, it's a big, big uncertainty for us to make any calculation for the outlook of Ülker.

[Fulya Surucu, executive]

Okay. I'll start with your first question. As of first half of the year, as of June, our total cost position is EUR 231 million, plus EUR 22.6 million. So our more total open position is EUR 273 million out of EUR 500 million for that we have started. So approximately half of disposition is still open, but we closed half of disposition starting from the first of January.

And your second question, yes, we had the financial securities for the prior -- I mean, a couple of more years. And over the prior years, we have performed very well. It performs over the market -- above the market. So -- but for the last 6 to 7 months with the markets down, it underperformed, and it did not performed as we have expected.

However, I mean, you know there are cycles in the markets, especially in security markets. It expects it started to recover. And as the month of June, July, this momentum started to increase again. Hopefully, we started to recover over the coming quarters. So you need to see it as a temporary cycle on and off. And over the last 3 years, thinly assess the performance of these securities, we see that they performed above the market.

So what is next, that is that we have definitely some options that we consider having all these securities and tying them like the treasury bonds or the fixed income bonds or deposits. This is definitely on the plan, but this is not something that we want to do on the short term, but this is something definitely that we have on the plan. Based on some temporary downs, yes, it was down. It is going to recover. We expect it to grow again, and we started to see the momentum starting in July as well. So that's my answer.

[Cemal Demirtas, analyst]

And as a follow-up to your short-term position. You mentioned that you have run EUR 273 million. Does it include hedging? And that includes the hedging excluding the hedging, what was your short FX position? And related to that question, is there any rate that shows how you're hedging first. Because in some companies, we experienced -- they were hedged to [indiscernible]. I cannot -- no problem to give the name. They were hedge positions. But when the currency moves rapidly, the hedge didn't work. So there are any certain level of the hedging point that you feel comfortable?

[Fulya Surucu, executive]

Yes. Let me share with you the summary. It's very transparent. We executed EUR 200 million cost currency swaps, okay? And out of this EUR 200 million currency swaps that we executed, we did starting from the beginning of the year. And now I can tell you that total average rate, and these are in euros, okay? And total average FX rate that we executed is I think [ EUR 16.15 million. ] And now you can take a look at value rerate. And our current MCM, both by the end of June and July is positive, more than $10 million or close to $15 million. This is the MCM value of our cost currency swap net or tax and net of interest expenses as cash of flow that we already gave. So we are doing good on that.

But again, we are not a trading company. So we are performing these hedges just to mitigate some risks proactively. And as of today, it looks like we proactively mitigated all of our hedges. And yes, the remaining position is open. We will see depending on the opportunities and depending on the market position. We'll continue this momentum. We will see, and we are observing it, and we established a hedge committee by CEO, CFO and the global CFO.

But mainly our current CEO, our regional CEO and a regional CFO, we are deciding on that. And third, we also executed forward for our coupon payment in October. This is in U.S. dollar, which is $22.6 million. And it looks like with the increase of U.S. dollar, it will be a positive for us as well, but we will see. I cannot see what the FX rate will be by the end of October. However, based on the forward rates, it looks like we will be in the money for the latest forward rate so far. So these are the numbers.

On top of that, there are some Coco purchases for our a company. And we have also executed in total EUR 40 million approximately of -- for these healthy purchases for [indiscernible] as well, which we keep ongoing. Once it is closed, we'll continue with the new forward for [indiscernible] as well.

[Operator]

The next question comes from Hanzade Kilickiran from JPMorgan.

[Hanzade Kilickiran, analyst]

I have a question on the operations. How do we see the current demand environment in Turkey and MENA markets? Is it still strong or has it started to upsell some softer demand in these markets? And would it be possible to guide us for your cost inflation in the second half based on your raw material contracts? I really wonder if you also fix your [ cost-co ] for next year, particularly on the raw material side.

[Mete Buyurgan, executive]

Thank you, Hanzade hanim. I will reply your question. I'll answer your question. Demand situation -- regarding the demand situation, there is still strong demand, especially in our food items. But also in our category, in snacking, in biscuits and chocolate, especially, we are creating a very good option for the consumers versus subsidiary categories like these other deserve a [indiscernible].

So it is giving us a huge opportunity to keep the volume momentum for the second half. And especially in the third quarter, with regards to back-to-school period of time, we are expecting a strong demand again. So I'm very confident on Q3 volume demand. So I think we will keep the momentum at least in the Q3.

Regarding your second question about cost inflation, our raw material position, some of our main raw materials are cocoa, wheat, sugar and so on. So all 3 of them are very well positioned right now for edible oil as well. For edible oil, we got contracts, which is recovering our usage until to middle next year. Again, cocoa is totally closed for all the next coming years in the last -- in the next 1.5 years by the contract.

And also for the wheat, we are having a very good position right now after our initiatives in the last 2, 3 months after the new crop. So we are confident on in terms of our managing our cost inflation, plus business continuity. Because business continuity is quite a big challenge, which many of the global competitors are struggling in terms of business continuity, especially in the U.S. and some European countries because of the energy from lease raw material. So we are in a good shape right now in terms of business continuity as well.

[Hanzade Kilickiran, analyst]

Your second Q, I mean, you all guys can suggest some sort of margin weakness for the second half is cocoa because of these new contracts that you've already secured?

[Mete Buyurgan, executive]

Yes. It is mostly secured. But the fixed rates are quite important challenge. So we will see the FX volume today, for example, interest rates has been dropped down again. So the FX rates started to increase a little bit, slightly. But in terms of commodity price, yes, we are covered. But in terms of the FX rate, we are following up very closely in order to manage our prices for the next coming months and quarters.

[Hanzade Kilickiran, analyst]

And if we assume no change in FX, we don't know, let's say. So is it reasonable to assume that you are conservative on your EBITDA margin guidance?

[Mete Buyurgan, executive]

We are -- we may say it's conservative, we are comfortable with this because there are still a lot of challenges around the world in terms of business -- I mean in terms of -- especially on supply chain procurement side, plus there are a lot of challenges on the consumer side as well. So low income levels, very high rent rates so on, in Turkey especially. So we are a little bit conservative yet, but we are confident and comfortable without estimation during inflation.

[Operator]

[Operator Instructions]

The next question comes from Dmitry Ivanov from Jefferies.

[Dmitry Ivanov, analyst]

Can you hear me?

[Mete Buyurgan, executive]

Yes, we can.

[Dmitry Ivanov, analyst]

Yes. I have 3 questions. May I please ask them 1 by one. Maybe the first one on your export operations from Turkey. I think like if you look at the dynamic of the exports from Turkey, I see that in terms of the EBITDA contribution is gradually increasing. And if -- just correct me if I'm wrong, for you, it's one of the most profitable operations when you look at the EBITDA per unit that you procure and et cetera. Could you please elaborate a bit more about this expert operation?

Do you expect to export more because like it's like hard currency cash flows for your business and it's quite profitable. Are there any kind of restrictions, just the limitations just increase x percent to get more like in EBITDA -- hard currency EBITDA and et cetera. So any color on this export operations will be helpful. That's the first question.

[Mete Buyurgan, executive]

Let me answer the first question first. Our export expectations are quite high. As you mentioned, we are having -- we are not kind of traders, we are trying to create or build brands, invest our brands in many of the markets. So this is one of our biggest chance, and we are experienced as well. So we are always looking for some new markets, by the way.

But this is not only because of the FX devaluation, the devalued Turkish Lira, but especially because this is because our very capable and low-cost operating supply chain model. Our factory supply chain operations are quite competitive among versus our global competitors with a very high quality. So it is giving us a huge strength in order to achieve our export market.

On the other hand, what we are -- where we are focusing on is Central Asia is our focus region, but also in Middle East and North Africa and Sub-Saharan Africa are the growing regions but also Eastern Europe right now, we started to focus on, and we are growing very fast.

And as last but not least, in U.S. market, we started to export a lot in the last 2 years, especially, and most of the growth is coming from U.S. markets. So -- and the consumer demand is still very high in U.S. market. So it is giving us a very positive signal to keep the momentum on our export operations for the next coming quarters.

[Dmitry Ivanov, analyst]

Understood. Understood. Second question, actually, maybe about this upcoming maturity in April 2023. I guess my question is around [ visitation ] with Fitch because they placed you raising on rates of portion negative, and they're waiting for any kind of developments around this refinancing exercise. I heard that you have like 2 plans, Plan A and Plan B.

But when it comes to Plan A, when do you plan to announce some maybe transaction? Do you plan just to refinances in advance of April maturities and just to get rid of this rating negative? Because my understanding is Fitch can downgrade it as [indiscernible]. Where -- just any color on the timing of your Plan A, would be very helpful for us.

[Fulya Surucu, executive]

Okay. Thank you for your question. So I had meetings with our syndication and executives in -- by the end of June, both in London and Dubai, and I had a chance to talk to them about the refinancing. Yes, those 2 options are on the table. One of them are refinancing full and the other one is decreasing leverage. So as a new CFO, I started building very good and healthy relationships with our syndication banks.

As the next step, so we will start working with our -- with my team. We have already started working on it. And our road shows and our strategy will be kicked off sometime in Q4. It will be early October or November, depending on the conditions and the circumstances, both macros globally and locally. Two options are seriously on the table, and decreasing leverage is also another very strong option. But I cannot tell you right now the exact amount and how we are going to do it. And so they are in the face of situational strategy, and it will be finalized pretty soon. depending on the macros globally, locally and our company situation.

[Mete Buyurgan, executive]

And also I will talk at some figures as well. Despite the country risk so on beyond that, we are having very by far, a pretty close relationship with our bank partner sector -- finance partners for years. We are almost [indiscernible] 8 years, this year. So we are always very close -- working very closely, and it's not going to be our first refinancing. So we have all the experience on those refinancing. But also, I think our partners, financial partners, bank partners are quite confident with our history and with our partnership actually.

[Dmitry Ivanov, analyst]

Understood. Understood. Okay. Maybe last question, apologies, like on working capital, because we see that like first -- like in the first quarter and the second quarter, there was heavy working capital outflows related to inventories. What's your expectation on working capital in the second half of the year? Should we expect more like working capital kind of requirements? Or is there the expectation of some working capital release? So yes, this was my last question.

[Fulya Surucu, executive]

Thank you. In terms of working capital, with all of the items, we are assessing and working very closely on all of them. So as our CEO mentioned, we are very comfortable with the 4 key raw materials we have like sugar, wheat, cocoa and edible oil. So we have some contracts related to that. There might be some increases and decreases depending on when we are going to purchase them to guarantee and sustain our business continuation. But again, by the end of the year, we expect efficiencies in terms of working capital to generate more cash by year-end, and getting ready for our refinancing. So I can, overall, share our strategy in this format.

[Dmitry Ivanov, analyst]

So there is like at least expectation of neutral working capital for the second half of the year. So...

[Fulya Surucu, executive]

That's how we can summarize, but I don't want to emphasize any numbers. Things keep changing significantly. But that...

[Operator]

Your next question comes from Daniel [indiscernible] from JPMorgan.

[Unknown Analyst]

Can you hear me?

[Fulya Surucu, executive]

Yes, we can hear you.

[Unknown Analyst]

I just had a quick question. To what extent have you been impacted by the new BRC regulation limiting -- trial ending to the companies with high FX position. Has there been any significant impact on -- do you see any significant impact going forward?

[Fulya Surucu, executive]

Apologies. We couldn't hear you well. Can you please repeat your question? I think there might be an issue on the line.

[Unknown Analyst]

Can you hear me well, now?

[Fulya Surucu, executive]

This might be better, yes.

[Unknown Analyst]

Okay. So my question was just on the new [ BSS ]regulation, which was limited trial and the companies with high FX position. Do you see an impact on this going forward?

[Fulya Surucu, executive]

Do we see any...

[Mete Buyurgan, executive]

Sorry, there is too much echo on your voice. But did you ask inflation?

[Unknown Analyst]

No. The [ BRSA ] regulation on trial end.

[Fulya Surucu, executive]

I cannot understand.

[Mete Buyurgan, executive]

There's too much echo. So sorry, we could we are not understanding you clearly.

[Fulya Surucu, executive]

Maybe you can write your question, if that's possible.

[Unknown Analyst]

Yes. Sure.

[Fulya Surucu, executive]

Okay.

[Operator]

We have no other questions. Dear speakers, back to you for the conclusion.

[Fulya Surucu, executive]

Thank you.

[Mete Buyurgan, executive]

Thank you very much.

[Operator]

Ladies and gentlemen, this concludes today's webcast call. Thank you for your participation. You may now disconnect.