Ford Otosan posted TL2,802mn net income in 1Q22, 8% above our estimate of TL2,587mn and 5% above the consensus estimate of TL2,672mn. Despite TL839mn higher than expected net financial expenses, TL470mn higher than expected operating profit and TL597mn higher than expected tax income led to TL215mn higher than expected net income.
Ford Otosan’s EBITDA increased by 64% y/y to TL2,971mn, 1% above our estimate of TL2,938mn and 1% above the consensus estimate of TL2,948mn in 1Q22. EBITDA margin of 10.7% was 29bps lower than our estimate of 10.9%.
Based on our 2022E estimates, the company trades at 7.6x 22E EV/EBITDA and 7.9x P/E compared to its 5-year historical multiples of 8.0x and 9.2x, respectively.
Total sales volume was down by 14% y/y to 91.5K in 1Q22. Domestic sales volume decreased by 29% y/y to 15.1 units in 1Q22, whereas export volume was down by 11% y/y to 76.4K units during the same period. Ford’s domestic LV market share decreased by 70bps y/y while declined by 58bps q/q to 9.3% in 1Q22. Accordingly, consolidated revenue boosted by 72% y/y to TL27.9bn in 1Q22, 4% above our estimate.
FROTO maintained its 2022E guidance. The company maintained its Turkish industry volume guidance at 800K-850K, implying 4-10% increase in 2022E (ATA Est: 791K). The company maintained its domestic sales volume guidance at 90K-100K, implying 23-37% increase in 2022E (ATA Est: 90K). FROTO maintained its export sales volume guidance at 350K-360K, implying 21-25% increase in 2022E (ATA Est: 336K). FROTO maintained its CAPEX guidance at EUR620-670mn CAPEX for 2022E, in line with our estimate of EUR660mn.
FROTO’s net debt increased to TL9,832mn in 1Q22 from TL4,832mn in 4Q21, mainly due to TL4.6bn cash dividend outflow and TL648mn q/q increase in NWC. FROTO’s inventory and payable days increased by 10- days and 2- days q/q respectively in 1Q22, whereas the company’s receivable days declined by 4-days in the same period. The cash conversion cycle increased by 4-days q/q in 1Q22. As of 1Q22-end, the company has TL457mn net FX long position compared to TL593mn net FX long position in 4Q21-end.
The company will hold a teleconference on Thursday, April 28th 2022, at 16:00 Istanbul Time.