Earnings Report /

Ulker Biskuvi Sanayi AS: 2Q22 review – Weaker than expected bottomline

  • Realised TL649mn net loss, worse than our estimate of TL414mn net loss and consensus estimate of TL265mn net loss.

  • We currently have “marketperform” rating for Ulker due to depressed valuation.

  • However, there is no light at the end of the tunnel yet.

Cemal Demirtas
Cemal Demirtas

Head of Research

ATA Invest
18 August 2022
Published byATA Invest

Realised TL649mn net loss, worse than our estimate of TL414mn net loss and consensus estimate of TL265mn net loss. Deviation from our estimates could be attributed to higher than financial expenses and loss on financial assets.

Topline growth of 135.6% was 5.0% above of our estimates. EBITDA margin of 18.9% was 97bps below our estimate but 40 bps above consensus.

Ulker had c.€325mn short FX due to Onem Gıda acquisition. In our view, this acquisition had dilutive impact on Ulker’s valuation considering the acquisition price. We believe that most of the negatives priced into the share price but still lacks a catalyst. Ulker’s current mcap of US$316mn is closer to thelowest level during the last 10 years, which is 80% below 10-yr avg of US$1.7bn and 90% below 10-yr max of US$3bn.

Ulker management revised up its 2022E revenue guidance by 6.8% to TL,23.5mn, implying 88% growth vs our estimate of 72% growth.

Domestic and international volumes were in line with our estimates. Domestic snack sales volume increased by 3.9%  y/y in 2Q22. Supported by 115.8% y/y increase in domestic prices, domestic revenues increased by 124.2% y/y to TL3,465mn in 2Q22.  Supported by 107.9% y/y increase in average international prices, international revenues increased by 128.3% y/y to TL2,276mn in 2Q22.  Other revenues also increased fy 114.4% y/y to TL250mn in 2Q22

EBITDA margin of 18.9% was  97bps below our estimates but 40bps above consensus. International EBITDA margin was up  0.30ppt y/y to 21.5% in 2Q22 whereas domestic EBITDA margin was up 3.28ppt y/y to 17.2% during the same period. EBITDA of TL1,134mn was in line with  our estimate of TL1,135 and slightly above consensus est. of TL1,029mn. 

Ulker’ net debt increased to TL11.5bn in 1Q22 from TL9.7bn in 1Q22.  Increasing NWC and jump in FX losses due to c.€325mn short FX led to significant increase in net debt.  Based on 2Q22-end, Ulker’s  Adj-Net debt/EBITDA was up to 3.09x in 2Q22 from 3.22x in 1Q22, which looks high but not at a critical level..  Please note that we adjusted the net debt for TL915mn non-trade receivable from its parent company, Yıldız Holding, recorded in 2Q22.

Recall that Onem Gıda acquisition had a -TL3.7bn equity value dilutive impact on Ulker  in 3Q21 though it might be a strategic action for Ulker and its parent company.   This acquisition had negative impact on Ulker’s net debt position and its c.€325mn short FX position led to TL453mn FX losses in Ulker’s income statement in 2Q22 and TL449mn in 1Q22.  Ulker also recorded TL762mn loss on financial investments that have volatilite characteristics.