Earnings Report /
Turkey

Ford Otosan: Higher than expected net income

  • Ford Otosan posted TL3,704mn net income in 2Q22, 17% above our estimate and 16% above consensus estimate

  •  Ford Otosan realized TL4,149mn EBITDA in 2Q22, 21% above our estimate and 22% above consensus estimate in 2Q22

  • EBITDA margin of 12.6% was 166bps higher than our estimate of 11.0%

Zeynep Erman
Zeynep Erman

Equity Research Analyst

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Cemal Demirtas
Cemal Demirtas

Head of Research

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ATA Invest
1 August 2022
Published byATA Invest

·         Ford Otosan posted TL3,704mn net income in 2Q22, 17% above our estimate of TL3,162mn and 16% above consensus estimate of TL3,183mn. Despite TL264mn higher than expected net financial expenses, TL759mn higher than expected operating profit led to TL542mn higher than expected net income.

·         Ford Otosan realized TL4,149mn EBITDA in 2Q22, 21% above our estimate of TL3,426mn and 22% above consensus estimate of TL3,395mn in 2Q22. EBITDA margin of 12.6% was 166bps higher than our estimate of 11.0%.

·         Based on our 2022E estimates, the company trades at 7.0x 22E EV/EBITDA and 7.2x P/E compared to its 5-year historical multiples of 7.9x and 9.2x, respectively.

Total sales volume increased by 63% y/y to 93.8K in 2Q22. Domestic sales volume increased by 18% y/y to 19.2 units in 2Q22, whereas export volume was up by 81% y/y to 74.5K units during the same period. Ford’s domestic LV market share increased by 80bps y/y but declined by 49bps q/q to 8.8% in 2Q22. Accordingly, consolidated revenue boosted by 212% y/y to TL32.9bn in 2Q22, 5% above our estimate.

FROTO revised down its export sales volume guidance for 2022E. 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: 81K).  FROTO revised down its export sales volume guidance to 330K-340K from 350K-360K, implying 14-18% y/y increase in 2022E (ATA Est: 339K).  FROTO revised down its production volume guidance to 410K-420K from 430K-440K for 2022E (ATA Est: 408K). FROTO maintained its CAPEX guidance at EUR620-670mn CAPEX for 2022E, in-line with our estimate of EUR652mn. 

FROTO’s net debt increased to TL18,733mn in 2Q22 from TL9,832mn in 1Q22 due to payment of 406mn EUR first installment of Romania acquisition.  FROTO’s days increased by 4- days q/q respectively in 2Q22. The company’s payable days remained flat q/q in 2Q22 whereas the company’s receivable days declined by 3-days in the same period. Cash conversion cycle increased by 2-days q/q in 2Q22. As of 2Q22-end, the company has TL507mn net FX short position compared to TL457mn net FX long position in 1Q22-end.