Ulker Biskuvi Sanayi AS
IST:ULKER.E
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Ulker Biskuvi Sanayi AS
Earnings Call Analysis
Q4-2023 Analysis
Ulker Biskuvi Sanayi AS
Under the strategic guidance of CEO Mete Buyurgan, Ülker Bisküvi has maintained a dominant position in the market. Despite facing new competitors, the company has protected its market share through aggressive brand investment, particularly in digital channels and consumer promotions. The leadership's commitment to operational and financial excellence was evident in the last quarter with strong volume growth, contributing to healthy top and bottom-line performance.
Thanks to a decade-long focus on operational excellence, which included cultural transformation and the elimination of organizational silos, the company's productivity improved by 35% over seven years, and production-related losses decreased by nearly 60%. The restructuring, from seven layers to four, has resulted in a more agile and efficient decision-making process, contributing not only to performance but also to significant market share gains. .
Ülker Bisküvi boasts a robust geographic revenue mix, with its domestic market contributing 65%, supplemented by a strong performance in exports and international markets, accounting for 35% of total revenue. This diversified presence, with notable growth in Turkey, North Africa, Central Asia, and the Middle East, underscores the company’s ability to adapt and grow in varied market conditions.
The company has been proactive with sustainability and ESG initiatives, investing in a decarbonization roadmap and enhancing responsible sourcing programs such as Beyond Cocoa. Projects in Turkey have led to improved agricultural productivity and efficiency, showcasing the integration of sustainability into the business model.
Ülker Bisküvi recorded its best year in 2023, achieving double-digit top-line growth and significant increases in key financial indicators like gross profit (up by approximately 90%) and EBITDA (up by 9.5%). Net income grew remarkably, reaching 2.6 billion TRY, a testament to effective pricing, mix management, and operational efficiencies.
The company’s strategic investments across regions have paid off, with EBITDA margins rising impressively in North Africa, the Middle East, and Central Asia. The EBITDA margin in Central Asia, for instance, soared from 6.7% to around 17% reflecting the effectiveness of the company's regional management strategies.
The company's revenue increased from 47 billion TRY to 55.8 billion TRY, showing a 7.4% year-over-year increase when adjusted for inflation. The gross profit margin rose marginally from 15.9% to 16.2%, while EBITDA remained approximately the same, signifying resilience in a challenging economic environment.
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Beste, please go ahead.
Hello, everybody. This is Beste. I'm heading the Investor Relations Department of Ülker Bisküvi. Here with me in the room our CEO, Mete Buyurgan and our CFO Fulya Banu Surucu. Today, we will be talking about Ülker Bisküvi fourth quarter operational financial results. Now I'm leaving the ground to Mete, Mete Bey.
Thank you, Beste. Good afternoon, good morning, everyone. Thank you all for joining our investor meeting. I think most of you checked our deck in details. Firstly, I want to update you about last quarter last year, since it's showing our performance strength in a great way. As you may know, our fixed quarters are Q1 and Q4 with this regarding our chocolates, especially. Other categories are more regular in the other quarters. So Q1 and Q4 performances are always very important for us. If I may share the highlights of the last quarter of last year 2023, in terms of market share performance, we keep our leadership position in a strong way despite many newcomers benefited into the market. We keep our market share strongly. We keep increasing our brand investments through mass media, digital and consumer promotion, especially on the digital channels and the consumer promotions, we are aggressively supporting our brands. And we are -- it seems we are getting the full ROI of those investments actually in the -- as of last year 2023. In terms of operational and financial updates, we keep the pace of growth even better than Q3 of last year. Very successful top line and bottom line performance we have as a full year actually and the Q4 as well. Strong free cash flow generation was an important target for us, and we did it in a good way, but most importantly is strong volume growth, which shows our healthy growth was very important for us. And I think we are going to come to the next coming slides, and you will see that we are having a very healthy growth, both in terms of top line and bottom line through the support of volume growth actually. And of course, last but not least, our sustainability update. As we are discussing in the previous meetings, we had too much effort on sustainable efforts for almost 8, 9 years, and sustainability initiatives are quite important. And right now, we are enjoying the benefit of all those efforts in the last 8, 9 years. So I'm going to come back to sustainability of the chapters in the next coming slides of the presentation. If we look at the operational performance for the full year, there are some pillars of our journey in excellence. Actually, one of the biggest drivers of our success, continued success in terms of top line growth, bottom line growth, market share growth and volume growth, of course, the biggest driver is operational excellence for those achievements. Just to remind you what we did in the last almost 10 years, actually, we have started a new program actually. In 2013, we had launched a new operational excellence program. It is basically including how service -- in fact, it was focusing on transforming a cultural transformation towards end-to-end excellence. On the other hand, one of our biggest aim must eliminate silos and barriers in the organization in order to create or in order to transform the company into one team with a winning culture. So there were phases in our journey. And right now, we are in the Phase 4 steps which is Global Benchmark and Continuous Improvement. And we are, in many cases, we are right now having great remarks, create recognition in terms of among all our global benchmark in our industry. How we transformed our journey to a lean and agile way. Deployment of winning country was one of our biggest target in fact. So our layer sentence optimizations removing to silos implement high performance, work systems and cultures. This was one of the most important initiatives that we started to do our journey. Also on the shop floor, in the factories manufacturing plants, transforming operators jobs, investing on their training was another important pillar for us. and the last of standard procedures, reward and recognition systems. We're helping -- still helping us in terms of our continuous success and the lean transformation, lean organization, as I am always saying in our investor meetings, one of our biggest strategies to be a low-cost offer to-low cost operating model, while we keep investing on our brands, on our people in the organization. So this is quite important priority for us. And through having a lean organization, we provided this agile winning culture, high-performance organization actually, especially in the last 5, 6 years, we started to invest on digitalization and our MCC cost in the manufacturing plant. And of course, as a result of those initiatives, productivity is where our our priorities. We had invested into digitalization, especially particularly in supply chain and sales and marketing part. We had invested on IoT in terms of things in our factories. So in most of our factories, our manufacturing plants are talking to each other through IoT systems, and it gives us a huge productivity and flexibility and of course, agility as a result of those initiatives. Right now, again, last but not least, artificial intelligence implementation on top of those IoT live IoT space pipeline is one of our important priority, but also we keep investing on our sales function for AI in order to get the full benefit of digitalization. So as a result, as you may see on the graphic, our productivity has increased 35% in the last 7 years, while our loss of in the manufacturing and productivity losses has been dropped almost 60%. Now at the moment, we are in a very, very good shape in all global benchmarks by myself. As I talked about the numbers of layers and span of control, this is quite an important initiative for us. We have increased the layers from 7 to 4. So from CEO to a starting position, there are just 4 great sector that we have. But on the other hand, we increased the spend of control. This was one of the biggest driver really in terms of creating the agility in the organization and also low-cost operating model because by this through initiatives, we had created a first decision or best decision-making organization, which keeps us ahead of the competition in most of the cases. Regarding our footprint of sales, actually right now, we are having -- we keep our healthy shape. In 2023 last year, Turkey performance, domestic performance were quite significant, actually. As you know, we are dealing with some high inflation and some other challenges. As we discussed in the previous investor meetings as of last year, we had a port challenge as well in the country. But despite all those challenges , especially in the second half of the performance, we did a great job, we did a great performance. in the domestic market. In Turkey, exports is also significantly growing. North Africa is in line with its targets, Central Asia is -- we did a great job. And for the first time, it's almost more than GBP 100 million of sales and Middle East keep growing actually in a very healthy way on the -- in terms of top line and bottom line performance, but also market share gain as well. So if you look at the revenue breakdown of our company, we have a balanced geographic revenue mix actually the 65% is coming from our domestic base, but also 35% is coming from export and international markets. It is split by the division. Domestic is 65%, Middle East, 14%; North Africa 3%; Central Asia, 4% and our overall sales is coming from 13% coming from exports. In terms of global market share, as you know, which we have become a very strong regional FMCG company, and we are, by far, marketed in many other markets in our region, including Turkey, Central Asia, some parts of Eastern Europe, but also Middle East and North Africa, Gulf countries, actually. So in Turkey, we are a very strong leader in the total snacking market. In Middle East, we are a very strong leader in biscuits, we keep investing on chocolate and some other categories, especially in Saudi, in the Gulf countries, U.S. time and some others. In North Africa, we keep our leadership in biscuits category, again, in Egypt, and we keep investing on the other North African countries. We are still -- we keep still investing on Egypt market as well. In Central Asia, you may know that Central Asian market is more like the chocolate market, sit-staking markets. So part of savory products are quite low. So chocolate carlines, we are in a very, very good shape. We are #2 in chocolate suppliers in chocolate. And also we are #2 in the biscuits category with a great progress in the last 2 years. You may remember from our previous innovation, previous meetings, the investor meetings, webcast that are almost 36.5% just for domestic Turkey market is coming from innovation. So innovation is one of our biggest, strongest muscles, becoming the strongest muscles, but also biggest drivers of our high rate of growth, actually. In international markets, the ratio is 6.8%, and overall TR consolidated sales, 11% of our sales growth is coming from our -- through our innovation actually, which is giving us also a great base amongst the consumers, but also helping us to increase our penetration in many markets. This time, I would like to update you about our company statements because we are -- because we are -- we did a great job in our journey during our journey, and we had great recognition as of last year and this year as well, at the beginning of this year. So I must say that as of 2023, we had fulfilled all our commitments, which we did almost 9 years ago in 2014. So right now, we have announced and commit our new pillars of our sustainable program. There are 4 important pillars of our sustainable program for the next coming 10 years, our planet the other is value chain, creating a value chain and value together with our suppliers, farmers and customers and consumers. Of course, our colleagues, employees and colleagues are quite important pillar for us and communities, which we are operating in. We are always investing on helping people in our visible markets. As of last year, we had committed decarbonization road map for 2020, 2050 as a net 0 target. So this is right now our global recognized commitment chat, initiating ESG program for our suppliers as well. We keep investing in our ESG score, increasing our CVC score through the best governance model, but also we keep supporting our suppliers to be the sustaining level of cash. Enhancing Beyond Cocoa program because there's going to be a regulation change as of next year in European Union countries, ensuring 100% deforestation free pound and restoration. So this is -- right now, we are on a very good track. So we are in a very good shape. So we are ready to the new regulation as of now, right now. So we don't have any risk in terms of the change in regulation through our export and market businesses. We are planning to source 100% electricity from renewable sources in our factories as of the end of next year and supporting sustainability in our factories through digitalization and artificial intelligence as a result. In 2023, as of last year, we had some highlights actually. We had too many projects Beyond Cocoa, Beyond Hazzlenut programs, we are very successful programs and got recognized from the global organization to get highly recognized actually in those areas as a company. Water Risk Project, which we did in Turkey was a very important project, which was approved for 20% increase in wheat production while 30%, providing efficiency, Berartification projects together with Saban University and our patented R&D project for 13 years earlier RV project has won Sustainable Fruits Award, which was great achievements as of last year as well. So corporate social responsibility was another weak area, which we had a great recognition as well. But I would like to inform you about the progress as of January, we had a great news from London Stock Exchange as an independent search and assessment by London Stock Exchange, we were chosen, and we were awarded at a highest ESG score in the global food industry and tobacco industry. So this is a great achievement for us, which encourage us for our next coming actions, actually, but also in the SMP global sustainable book for the 4 times, we are maintaining our position as one of the 19 food companies listed worldwide. So this is another important achievement and progress for us. So those, in a nutshell, I must say we are in a very good position in terms of operational excellence. So this, I must say a sustainable efforts, but I must say that the biggest driver of our continuous development continuous success achievements are the operational excellence, brand investments, investing our people, creating diversity in organizing our organization and sustainable CFS actually. So thanks for listening. Now Fulya continue and give you some details in the financial information about our progress.
Thank you, Mr. Bey. Thank you to everyone for joining the call today. I am pleased to share that we delivered our best year average performance in 2023, all-time high revenue with robust top line growth, double-digit top line performance in such a year with follow-up challenges. We have adopted continous circumstances beyond our control, while being top on our spending and cost management. We delivered outstanding results with excellence every step on the way. Now on to the data. Before I start talking about numbers, I'd like to remind that until the inflationary section, inflation accounting section, all the numbers are not adjusted per inflation accounting. And we will -- I will also walk you through our numbers device for inflation accounting when we come to inflation accounting section as well. So let me start with Q4. Record quarters with double-digit growth on all KPIs. Volumes grew by 3%. Revenue growth profit 64% and 87% as net income growth was 94%. We delivered TRY 1.9 billion in net income and net debt to EBITDA reached by 1.5% below 56, which is below, we continue to strengthen our balance sheet further. When we take a look on our full year numbers are just a reflection of Q4 only. Total revenue, we see a double-digit growth of 66.4%. We owe this success to our successful pricing and effective and very successful mix management and positive contribution of higher sales. And gross profit and EBITDA also increased double-digit gross profit increased by approximately 90%. EBITDA grew by 9.5%. But again, I'd like to underline that both gross profit margin and EBITDA margin percentage increased significantly versus prior year, effective procurement, timer pricing, stable overheads and increased production efficiencies had this very successful numbers. And in terms of net income, we were able to count to 5.5% net margin reached TRY 2.6 billion net income on an overall full year basis, which is driven mainly by higher operational performance and EBITDA and favorable FX impact. On the next page, you may see the performance by category, biscuits, chocolate and cake all grew by in terms of volume and sales value. In terms of volume, you see a 1% growth in bisquit, 1.1% growth in chocolate and 1.6% volume growth in cake, which translates to 59.4% growth in revenue in biscuits, 71.7% in chocolate and cake sales grew by 74.5%. Turning to regional performance. Please see the international and domestic PnL and the breakdown, both in 2 markets, very healthy growth, both in terms of margins and figures. You may see that we were able to increase our margins, both in our domestic and international businesses and international gross profit grew to 39.5% from 36.1% and domestic ended up at 21.2% where this was only 26%. And this translated to excellent EBITDA numbers, which ended up 6.6% in domestic and 3.9% in international markets, with again increase in our EBITDA margins versus prior years significantly. I'd like to take you through some annual year-by-year EBITDA margin development in years. In North Africa, using the developments where we have started from 9.2% which to 14.2%. Middle East from 18.3 million in 2017 and leased to 20.71% EBITDA margin. And Central Asia, another very big success. So Vystarted with 6.7% EBITDA margin and ended up at approximately 17% EBITDA margin in total year of 2023. And you may see the EBITDA contribution of each region to our total category, Ulker consolidated numbers, 2.5% for North Africa, 13% for Middle East and 3.2% for Central Asia. Now shifting to balance sheet. We have made meaningful progress in our financial measures. These results represent a lot of discipline, focused on standing cash and working capital. Let me take a moment to take you through some key balance sheet highlights. So our focus on balance sheet continued throughout the year each quarter getting stronger and stronger. Covenant based net debt EBITDA reached 1.58. This is per our syndication contract calculation. And you see the results of our focus and disciplinary working capital in December 2023, we ended up with 86 days, very the first 97 days 1 year ago. We see the improvement for each KPI of working capital for the year. As we continue to strengthen our balance sheet by mitigating some risks like for edge, we continue to mitigate the FX risk by executing hedges. 69% of the open balance sheet is hedged. So FX is not a much risk for us anymore. And one of the key priorities of 2024 renewable financing, which is in progress. So let me take a moment to take you through the impacts of inflation accounting on our numbers. So before I go into detail of the numbers, let me take you through on a concept of conceptual very all these numbers have inflation accounting impact to our numbers. On our balance sheet on our asset side, we had nonmonetary items such as fixed asset inventory and prepaid expenses, then on liability side, we mainly have monetary items outstanding loans denominated in foreign currency. So with nonmonetary items being on our asset size created some monetary gains that impacted our PnL and that impacted our net income increase on our full year numbers. So this table on the page shows numbers prior to inflation accounting, which you have seen and which I have walked you through on a couple on the previous pages, and I shared and explained the reason, and the numbers just this translated to per inflation accounting impact. So revenue increased from TRY 47 billion to TRY 55.8 billion, which shows a 7.4% year-over-year increase versus prior year, whereby year numbers are also restated per reinflation accounting numbers. Gross profit in absolute value terms increased slightly from 15.9% to 16.2%. The margin decreased slightly. It shows a 43% approximately Urrego. Margin decreased slightly, mainly due to the revenue increase of revenue increase of the company. An EBITDA ended up approximately with the same number in net group value tons from 10.5% to 10.6% which shows a 38% year-over-year growth versus prior year. So we ended up with 19% margin, EBITDA margin, the inflation accounting is a life to numbers. We also wanted to share with you very clearly and transparently how net income transferred from 3.4% to 4.2%. As you can see, the revenue increase and the cost of sales impact, financing activity is unfavorable and the manager loss due to our balance sheet position, which I have shared with you very recently. In terms of outlook, so we will be sharing the outlook for 2024 in May when we share our Q1 numbers. But how we delivered in 2023, -- we -- our guidance on our latest guidance was TRY 43.5 billion. However, we exceeded our numbers in terms of net sales and EBITDA margin, we reached to 46.8%. We estimated 19.75% EBITDA margin, but we ended up to 22.3%. So excellent and outstanding results. For priorities, I hand over to our CEO.
Thank you, Fulya. Lastly, I would like to give some update about our this year existing year priorities for 2024. The first one is the inflation challenge versions. As you know, in some of the markets which we are operating in, there are some inflation in the channel still. So what we are trying to do is, of course, we are very experienced on how to operate on inflational markets, but also one of our biggest strength is our portfolio -- diverse portfolio. It's really helping us a lot of flexibility, creating flexibility. So this is number one. Second one is prices versus volume. Price actions are -- we are not hesitating to fix our prices based on the raw materials and packaging material prices. But volume growth is also one of our biggest priorities. So as we did in the last 7, 8 years in a very successful way, this is one of our biggest priorities. Investments in brand and innovation as showed in the presentation, this is one of our most important growth area actually. So we are looking for some existing innovations, flavor rotations, but also we are working on some new categories in our portfolio, which we need we consider that we are going -- it's going to give us another incremental growth area. Digitalization and acceleration. This is an endless journey, as you all know. So right now, as mentioned, again, AI adoption, especially for our supply chain logistics operations and also to our sales function, space operations is one of our biggest, biggest priority, keep modernizing supply chain operations. This is one of our most strongest competitive wage in our organization in our company. So we keep investing not only in our Turkey factories, but also impact in Saudi, in Egypt, in Kazakhstan. So we are always trying to be the best factory test supply in operations among all global benchmarks. And lastly, portfolio optimization. This is, again, a continuous process for us. We are always updating our portfolio through the expectation of the customers and the customers depends on the market. So this is a summary of our priorities for this year. Thank you very much for your participation. Now we are ready to answer reply your questions.
[Operator Instructions] Our first voice question comes from Ms. Erica Ive from MetLife Investment Management.
The first one will be on refinancing. If you can give us an update of where you are now, even at if Arecoproperly, you said that you would have started conversations in Q1? And then the second question would be on consumer demand. And I appreciate that you are not giving yet a guidance, but could you provide a bit of a trading update in the context of of increasing Coca-Cola prices and still high sugar prices and whether you find possible to pass them to consumers without impacting demand?
Thank you for the question. Related to refinancing, as I have shared, it is in progress. We will be -- you will be hearing from us soon. So once you hear from us, you can definitely come back with more detailed questions, but I can assure you that it's a high priority, and it is a very important project that we'd like to finalize as soon as we can. That's all I can share right now. Please stay tuned. You will be hearing from us very soon. And for the second question, I hand over to our CEO.
Thank you for the question. Regarding your question about consumer demand, -- right now, despite the inflationary challenges and the price increases in the market, we observe -- we keep observing the volume growth actually in many markets, especially in the domestic market, which is our most stronghold markets. So we are in a good shape in those and we are confident actually in terms of expectations of volume. But also one of our biggest segments, which is versus adjacent categories like desserts, and some other categories. Our products, our portfolio is really very competitive for the consumers. So it's a great choice for the consumers right now. And we keep observing the growth of snacking not only in our markets, but also worldwide, there is a high rate of growth in almost all stacking categories, subcategories and increasing raw material prices, -- of course, as we did in the last 10, 15 years, actually, we asked. And also, we are a very experienced company on this. We are raising our TV within this year. So of course, we are getting having lots of actions. We are having some tools like sizing, pricing and so on, but also our finance and procurement teams, supply chain teams are helping us supporting our business through our heads or positions actually. So this is one of our important assets. And again, we are confident on getting the right actions through the raw material price increase. By the way, as I mentioned in the presentation, we are having a diverse portfolio, collectible portfolio. So it is giving us also a big opportunity in terms of managing the cost increases versus demand.
Our next question comes from Mr. Jamal Dimitros from Ataata.
Our next question comes from Mr. Jamal Dimitros from Atayatrics.
Thank you very much for the presentation, and congratulations for a very good result. And above all, I would like to thank you for the disclosure standard, your disclosure standards regarding inflation accounting because so far, it was one of the problems for the analysts or the investors to just see the trends and the costs, IFRS results. And during this transition period was very important for us to see the bridge and how things move. So thank you for being a good example for also other companies, which are giving limited disclosures. Also thank you very much, it's more critical than maybe the numbers in my humble opinion. And I want post my question. Regarding the outlook and the guidance. At some point during the year, are you going to share any items about the growth side or like the top line and the profitability side? That's my question. And the second question is about the debt-to-EBITDA ratio. It's more healthy now. What do you think it still stands going forward? Do you have any target for that? You have Eurobond refinancing? And do you have any acquisition or divestiture in the pipeline, I would like to understand what is ahead, at least in a peak -- it's a big question, but what is ahead for future? Because during the 12 years, you had many ups and downs. And I think it's net beginning for the last 2 years. So I would like to hear a little bit about your future plans, if you have any. Thank you.
Thank you so much for the question, and thank you for your kind words related to our disclosure. I'm really happy and very pleased to see that it is well received by the market. In terms of output, as I have shared, we will be sharing our 2024 outlook in the -- in our Q1 when we issue our Q1 results, which we plan to do in May. And we will have a 2024 full year estimates by then. But from where we started 2024 will be another very good year for us as Ulker Biskuvi. And your second question in terms of -- I think you asked related to our net debt-to-EBITDA covenants if I did not and Motion is really healthy right now at a very healthy stage. We made it very clear. Again, I also made it pretty clear with our investment community, our key capital strategy priorities within the next 2 years, especially where our strategies increased liquidity, decreased leverage and strengthen balance sheet. And over the last 2 years, we are acting according to 3 strategies, 3 key TF2 strategy priorities, and we are taking all the actions according to that. But I can tell you that we'll continue to do that to make sure that we continue to have a very strong balance sheet at the end of the day and strong balance sheet will drive very strong and healthy covenants, which we plan to keep it below 2, but I don't want to share an exact number. That's all I can share that we will stick to our capital strategy within the short term, next 2 to 3 years. Related to your third question, I'll hand over to our CEO.
Thank you for the question again. Regarding Eurobonds and our future strategies. First of all, we are very confident on Eurobond syndication, Eurobond, we reassessing the Eurobond and renewing the Eurobond portfolio. So we are -- we keep working on this. But on the other hand, through our next coming year strategies, one of our biggest focus is to decrease our debt position despite our EBITDA and EBITDA to net sales ratios are very healthy. So we -- this is one of our piapriorities. Second, as we discussed with our teams yesterday, we had a great volume growth in the last 5 years, more than 10,000 thousand tonnes. So we keep growing and we will try to keep investing on our brands, but also for our capacity actually. So of course, very carefully together with our finance team, supply chain team, we would like to make some choices on our capacity increase. And last but not least, as I mentioned, we are looking for some new categories, developing new categories, foreseeing the future. So this is another important area, which we are prioritizing right now.
Our next question comes from Mr. Gustavo Campos from Jefferies.
Hello. Thank you very much for the presentation. Thank you very much for the results. I will also reiterate, much appreciated for the pre-inflation accounting numbers you provided. And speaking of which, would you mind providing just a little bit more color. I was looking for, just to number specifically the cash flow from operations before working capital before inflation accounting adjustments as well as your CapEx, i.e., the cash outflows from purchase of property, plant and equipment. If you could provide those two figures pre-inflation accounting, that would be very helpful and much appreciate it. That's it for me. Thank you.
Thank you for the question. And again, thank you for the compliments related to our presentation. Again, I'm very pleased to hear that. There is not a very big material difference, but we can say we can get to a detailed question and get more detailed numbers, if you please send us an email. We will be happy to get back to a bit more details. But I can tell you that there is not a material increase or decrease change versus pre and after inflation numbers.
All right. Perfect. And just an additional question. I know you're providing you're providing guidance on first quarter 2024, I understand. But if you could provide just a little bit more color on the strategy specifically given the high cocoa prices that we've seen over the last quarter or so how you're planning to tackle it. Thank you very much.
Thank you for question on cocoa. Cocoa is a major issue for the industry worldwide right now. On the other hand, we invested to our named quarto and 2, 3 years ago, as I remember. So this is one of our most important assets right now because we are able to be a bean to buy a company. So we keep all the markets from being to the consumers to the bar to consumers. So we can easily manage the value chain accordingly, actually. But on the other hand, it's a very major increase, of course, in cocoa, it is more than like highest increase, highest price in the last 50 years. So we are having a position, of course, which is helping us for this year and for next year, of course, it is going to increase, but we are confident to -- in terms of having the tools to convey the problem with able solutions distributing to our flexible portfolio.
All right. Perfect. I appreciate it again, and congrats on the results.
Our next question comes from Rotary Kanchar from JPMorgan.
Sorry, is it me?
Yes, please go ahead. Your line is open.
Okay. Sorry, I have a small question. Do you export from Egypt to M&A market?? Because I just wonder whether the depreciation in Egyptian currency could be marginal opportune market if you are exporting. And do you also consider any M&A activity in 2024?
Kanchar, thank you for the question. Regarding the Saudi market, there is nothing change in terms of -- there's not a...
No Saudi market in Egypt. It was I mean that is a sizable depreciation and facilities there.
Yes. We have a production facility, which is our -- one of our biggest assets right now in the market. So we don't consider any new M&A in Egypt like. But we keep investing on our brands and products because we keep growing in Egypt as well. So this is a very big market, which is almost 100 million people in the country. And we are going to use our Asia factory in order to increase our export visibility to some other African Sub-Saharan ountries actually. So it's going to be a great space for us.
Excuse me, do you currently export from Egyptian Egypt to M&A market?
No, I mean, We are trading in U.S. dollars, actually. 95% U.S. dollar.
No, not like this. I just wonder, if you produce in Egypt and sell it to the Saudi market, you have some margin opportunity in M&A market, that means because of the depreciation in Egypt.
So... Project... Yes, right. are. We have some exports from Egypt to some Middle East countries, especially Saudi. So it is kind of mitigating the risk actually. So yes, we have an increasing ratio of exports from Egypt to especially Saudi and as I mentioned to some other African countries.
Okay, thank you very much. So basically, you are also -- I mean you -- I mean you highlight about your priority for 2024, I know don't want to give some outlook at the moment, but you seem to be targeting at least inflation pricing in Turkey, I understand. And also, I think the international markets are total protected against the downturn because of these contracts or material contracts long term. So is it reasonable to assume that your margin around 19% seems to be also achievable in 2024? -- that...
About 19% margin is our base right now. So we are confident to deliver about 19% around 19% EBITDA margin for this year as well. So I want to update you as well about the first First quarter, we had a great start. So we are confident on the this year margins as well despite all the challenges.
Our next question comes from Isimandesi from Unlu Securities.
Congratulations on the strong results in 2023. I have a question about the volume growth rate since you have mentioned it as a major -- one of the KPIs of yours. So as of the fourth quarter in international operations on a country basis...
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Just one second, we'll be reconnecting with -- Isima we have reconnected once again, your line has dropped.
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Yes, go ahead, -- please go ahead.
Yes, yes. Congratulations on the strong results in 2023. I was just wondering about the growth trends in international markets on a volume basis since you have also mentioned it as one of the major KPIs of yours. So at the fourth quarter, how was the trend on a country basis in international operations? And could you also provide your prospects regarding volume growth in 2024 in all markets?
Okay. Thank you. Thank you for the question. For Q4 of last year, it was a significant promising quarter in terms of volume growth. We had great growth in -- especially for the domestic part -- so domestic parts and that phase was giving us a great growth -- volume growth as well. Middle East is almost flat. North Africa, we are in Egypt, especially because of the high southern challenge. And also, we are restructuring the distribution model as well. So we had some decline. But overall, Turkey, Godiva and our third parties, of course, Godiva. And our Middle East and Central Asia are the drivers of the growth. So coming to this year, we are expecting volume at least volume growth, not as much as last year because last year was a different year in terms of growth in volume. We are expecting to grow, especially because we are facing -- we had a phasing impact as of last year. So we are heavy going volume increase this year, but not as last year's, I must say.
Our final question comes from Mr. Muharrem Gulsever, from Kona Capital Advisors. This is a text question. There are 4 parts to it. So I'll read them two by two. The first one is how much of your raw material need in 2024 is hedged? And at what cost did you hedge the main commodities such as cocoa, palm oil, sugar and wheat? The second question is, for the past 3 years in a row, you ended the year with $450 million to $500 million working capital. Is it possible to keep the overall working capital need at the same nominal level in the next 2 years?
Thank you for the first question. I can ask about Cocoa. We are having a position for almost 100%. Wheat is about 60 per -- more than 60%. Sugar, in Turkey, we are not having a conflict possibility. So we are having a physical were stocking on the 30%. And for the oil sale, we are almost having 90% covered actually right now as of today. Second for second question, I think, Fulya, you may answer.
Yes, you can assume that as an average. But as I have shared with our numbers that our focus to optimize working capital will continue throughout over the coming years as well. So I don't want to specifically mention any numbers, but $400 million, $500 million might be a healthy number to have an average number. But since our focus to strengthen working capital optimization will continue, I can only state to you very clearly that this number will get only better.
Thank you very much, I will now continue with the further two parts of the question from Mr. Muharrem. Question number 3. What was 2023 CapEx figure inflation adjusted? Do you have any sizable investment plan for the foreseeable future? And the final question, do you see the net debt -- where do you see the net debt at the end of 2024?
Thank you for the question. Our CapEx was around 2.2% of our revenue, approximately TRY 1 billion. So in 2024, we do not have significant CapEx projects or increases. So we expect to have it around 2% to 2.5% revenue as well. In terms of net debt, as I have shared, currently, we are below 2, around 1.5-ish. So our strategy will be to decrease leverage further and to sustain the strong balance sheet position in terms of covenants as much as we can as well. So we'll continue with this path and this is principle and strategy throughout 2024 as well. So we expect to have something below 2, but I don't want to restrict restrict give a number, but our strategy and our focus to decrease leverage and strengthen balance sheet will continue in 2024 as well.
Okay. Thank you very much. We see no further questions at this point. I'll pass the line back to the management team for your concluding remarks.
Thank you for your participation and complements and excellent questions.
Thank you. Thank you very much for your participation and contribution. See you next quarter.
And have a great session.
Yes.
Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you, and goodbye.