Arcelik A.S. (BIST:ARCLK) Q1 2026 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by. I'm Polina, your course call operator. Welcome and thank you for joining the Archelik conference call and live webcast to present and discuss the first quarter 2026 financial results. At this time, I would like to turn the conference over to Mr. Baris Alparslan, Chief Finance Officer, Mrs. Ninez Hule Yazgan, Finance and ERM Executive Director, Mr. Sezer Ercan, Investor Relations Senior Lead, and Mr. Sakin Aymak, IR, Capital Market Compliance Lead. Mr. Alparslan, you may now proceed. Thank you very much. Good morning and good afternoon, ladies and gentlemen.

0:45 Welcome to our first quarter 2026 financial results webcast. This presentation contains the company's financial information prepared according to TFRS by application of IAS 29 inflation accounting provisions. Here are the highlights of the first quarter of 2026. We generated 130.3 billion Turkish Lira in revenues, reflecting 8.8% real year-on-year decline. Despite suffered top-line performance, we delivered a meaningful improvement in profitability through disciplined execution and proactive procurement actions that protected our raw material cost base, resulting in a 1.1 percentage point year-on-year improvement in gross margin and a 0.8 percentage point improvement versus the previous quarter. Our UK margin improved by 1.1 percentage points year-on-year, with sequential quarter-on-quarter performance even stronger at over 1.2 percentage points.

1:39 Post-merger integration across our European operations continues to support operational improvement in the first quarter and helps to partially offset weak demand conditions through ongoing cost actions. Synergy delivery remains on track and in line with our initial targets. Seasonal Network and Capital Investments Temporarily Weighed on Cash Generation and Leverage, Resulting in a negative 19.2 billion TLB cash flow and increase in our net leverage ratio to 4.16 times at the end of first quarter. Through continued discipline in capital spending, our capex to sales ratio stood at 2.1% in the first quarter, reflecting a significant reduction in capital expenditure versus the same period of last year through tighter investment priorities. In the first quarter, our consolidated revenues declined by 8.8% year-on-year in real terms, mainly reflecting an unfavorable price and product mix, weak international demand and with competition remaining intense but broadly stable across global markets.

2:39 Our gross profit margin reached 29.8% representing a 1.1 percentage point year-on-year improvement supported by lower raw material costs secured through supplier agreements before the conflict and favorable euro-dollar parity despite continued pricing pressure across key markets. Higher gross profitability and savings from destruction initiatives supported 1.1 percentage points improvement in adjusted EBITDA margin while the normalization operating expenses remained gradual due to weight inflation pressures. Here you can see our revenue bridge for the first quarter on the left-hand side. In Europe, current revenues declined by 10.9% year-to-year, year-on-year, driven by a slowdown in both international and Turkish markets, primarily reflecting unfavorable price and mixed dynamics, followed by a decline in borders.

3:30 International revenues decreased by 9.2% year-on-year, while revenues in Turkey declined by 13.9% in the quarter. In real Turkish share at turns, international revenues were down 7.1% EUR a year, while sales in Turkey declined by 12%. Euro turns figures inquired smaller decline due to FX impact. On the right hand side, you can see our regional sales breakdown. Turkey accounted for 33% of total revenues in the first quarter, while Europe's share increased slightly and remained at just below half of consolidated revenues. Western Europe increased its share by 2 percentage points to 35%, while CIS and Eastern Europe remained at 14%. AFAC region accounted for 10% of consolidated revenues, while Africa and Middle East represented 8%, both broadly stable versus the previous series.

4:20 You can see the trend in sales wording across our main product categories versus market performance on the left-hand side. In Turkey, demand in the MDA6 market remained under pressure in the first quarter, with pricing and product leaks continuing to be the main headwind. Overall, MDA demand was supported by promotional activity and targeted discounts. Despite a 14% decline in MDA6 market volume, our wholesale data shows a 3% decline, significantly outperforming the market and resulting in record high market share levels. In ASEAN, moderate wholesale volume growth supported the top line, despite weak retail market data. TV sales remained weak during the period, although we again outperformed the market. Overall, given pricing challenges and unfavorable product mix impact, revenues in real Turkish trade at terms declined by 12% year-on-year.

5:10 In Europe, recovery in MDA demand continued with modest volume growth, although no recovery in Euro terms has yet materialized due to ongoing pricing pressure driven by intense competition. Beko maintained its market leadership with broadly stable market share over the last few months. In Western Europe, the recovery trend continued in key markets such as the UK, Italy, Spain, and the Netherlands, supported by early signs of improvement in France. However, demand remained weak in Germany, Belgium, and Austria. Overall, MDA6 volume growth in Western Europe market was around 2% in the first two months. In Eastern Europe, demand was relatively weaker across key markets. Volume declined in Romania, while the contraction in Ukraine was competitive and more moderate. Despite moderate falling growth in overall Eastern Europe MBA market, Euro denominated sales reflected high single-digit decline in selected key markets, driven by pricing pressure and intense competition. As a result, overall growth in Euro turns across the region remained limited. In total, Europe accounted for 49% of consolidated revenues, with revenues declining by 8% in Euro turns.

6:18 Revenues generated in the African Near East region constituted 8% of consolidated revenues in the first quarter. Revenues in Euro terms declined by over 10% year-on-year due to ongoing conflicts and continued uncertainty in the Middle East. Demand in Africa remained relatively resilient. DeFi sales volume growth exceeded 7% in Q1, with over 10% growth in Euro terms supported by FX impact. Demand in South Africa remained strong, while growth in sub-Saharan markets outpaced the broader region. DeFi succeeded in maintaining price positioning and retaining free market leadership through targeted promotions. In the Middle East, we started the year with a very strong momentum. However, the course changed amid ongoing geopolitical instability and highly volatile news flow, leading to a more than 20% decline in Q1 Euro sales, primarily due to shipment disruptions linked to the US-Julan conflict.

7:10 We expect some of the deferred demand to gradually normalize as conditions stabilize. In Egypt, following the market recovery observed in recent quarters, Beko delivered strong performance, with MDA sales increasing by over 50% in USD terms in the first quarter, supported by more than 60% year-on-year volume growth. This performance was driven by continued market normalization, FX dynamics, and further strengthened by improved competitive positioning and market share gains across key MDA categories. Representing 10% of consolidated revenues, the APAC region was weighed down by consumer demand pressures in the first quarter, as disruptions in shipment flows and supply chains, particularly across ASEAN markets, negatively impacted operations. The decline in sales was also impacted by portfolio optimization initiatives, including the closure of the Rayon factory and sales shortages in the regions such as Thailand, Malaysia, Indonesia, etc. As a result, sales revenue declined by almost 15% year-on-year in Euro terms. Sharp slowdown in China, Japan, and Thailand, combined with stop-use demand in key regional markets such as Bangladesh and Taiwan, leads to overall weak regional performance.

8:20 These were partially offset by strong growth in Pakistan and solid seasonal demand in Vietnam during the festive period. In Pakistan, despite heightened geopolitical tension, increased regional uncertainty, cross-border tensions, and intense competition, Gollum delivered robust performance, with MDA sales volumes increasing by over 40% year-on-year in Q1. Revenue growth in Euro terms reached nearly 20%, marking another strong quarterly performance. In Bangladesh, Amid week, consumer demand driven by economic slowdown, political uncertainty, elevated inflation, and continued pressure on household income, Singha achieved nearly 2% rolling growth across major product categories in Q1. However, revenues in Euro turns declined by 8% year-on-year.

9:08 In Q1, we saw higher metal prices but lower plastic prices in the market year on year while margins were protected thanks to our procurement agreement secured a stable return before the conflict. On metals, prices increased in Q1 driven by a stronger sonotic environment, geopolitical disruption , ongoing anti-dumping investigations in Asia, and elevated energy-related processing costs. Looking ahead, we expect gradual stabilization supported by hedging and targeted pricing actions, especially in aluminum and copper. Importantly, thanks to previously secured contracts at favorable levels, we do not anticipate a significant cost impact in the first half. On plastic, prices increased in Q1 but remained wobbly in line with the 2025 average and still below last year's levels. The increase was mainly driven by supply constraints, including force majeure declarations and localized production disruptions linked to geopolitical developments.

10:05 Early procurement already covers most of our needs for the first half, limiting new-term exposure, although some pressure may persist in Q2. Overall plastic prices are expected to increase by around 10% in 2026, with normalization taking time. With that, I leave the floor to Milan for summary financials. Thank you for your space. The recorded $130.3 billion structure in consolidated revenue should present an approximately 9% yield decline year-on-year and an 8% decline quarter-on-quarter. Gross profitability increased by 114 basis points year-on-year and by 79 basis points over the last quarter. Operating profit margin also increased, increasing by 71 basis points year-on-year and 85 Bezos points, sequentially.

10:55 Other operating expenses had a negative impact on the bottom line, amounting to €0.6 billion extra in the first quarter. Net financial expenses improved by 12% year-on-year but were higher than last quarter, mainly reflecting the shift in our net ethics position at Durand, which reduced usage requirements, holding the expansion of our health policies to include subsidiaries. Overall, you've recorded 7.4 billion per share in net financial expenses in Q1. The net monetary position increased by 8% during the year. 6.2 billion Turkish lira with a sharper sequential increase driven by higher inflation in the first quarter. As a result, we recorded 0.3 billion Turkish lira profit before set and 2.2 billion Turkish lira net loss attributable to minority interests corresponding to a negative 1.7% net margin for the period.

11:54 Finally, adjusted EBITDA came in at $8.3 billion per issue, with a margin of 6.4%, reflecting the continued sequential recovery trend. Please note that one of expenses are excluded from this calculation amounting to 555 million Turkish Lira in the first quarter including inventory related monetary gains and the net monetary position affect attributable to EDITA related items. Our EDITA margin would stand at 6.8% in the first quarter. EDITOS marks are a shelf of leverage stood at 4.16 times Markings for seasonal networking capital investments in the first quarter. Note that the first quarter is typically when we build up receivables and inventory for the upcoming high season, including AC, cooling, and freeze rates for the summer season, as well as the Eid al-Adha holiday. As sales volume and collections accelerate throughout the second half, deal leverage into the roots backing.

12:57 Reducing leverage remains to be our top priority. We continue to utilize the incredible capturing in all the collections within the quarter. The remarkable capturing in all the collections stood at €578 million and €780 million respectively. Within the first quarter, in finance, a 110.54 million euro decrease in total is compared to the last quarter. As a note, first quarter is not a tax increase for all covenants. You may find the details of our debt currency breakdown and the affected interest rates of our loan and bond portfolio on the right-hand side. Total earnings amounted to 249.2 billion Turkish lira with an average maturity of 1.2 years. Our average effective funding rates, including loans and bonds, were 36.8% for Turkish Lira, 4.4% for Euro, and 8.3% for US Dollars.

13:56 On the bottom left-hand side, you may see our cash currency breakdown totaling 79.5 billion Turkish Lira, with well-diversified cash holdings across currencies, 47% of our total cash is denominated in Euro, 13% in US Dollars, and 17% in Turkish Lira as of March. Euro denominated borrowings constitute 56% of our total borrowings, while USD and Turkish Lira denominated borrowings account for 14% and 18% respectively. In terms of the debt maturity profile, long-term borrowings account for 36% of total borrowings, Reflecting the upcoming maturity of €350 million green bonds in May and the technical preference for shorter-term insurance amid expectations of upcoming 4-0 cuts. Excluding the notional cash flow and company credit card balances, the share of short-term borrowings stands at 54%.

14:59 Following the redemption of the green bonds and the utilization of upcoming long-term faculties amounting to €300 million, we expect the maturity profile to normalize to approximately 45% or 55% between short-term, term and long-term debt by the end of the year. Starting from the top left, you can see our adjusted EBITDA margin bridge. The main driver of the 1.1 percentage point improvement in EBITDA margin was the expansion in gross margin. This was particularly All set by high operating expenses as a percentage of sales, while one's adjustment provided a mitigating impact. At the top line, our net working capital to sales ratio stood at 22.1% as of March, broadly in line with both year-end levels in our guided range.

15:54 Moving to the bottom left, our capacity to save change growth came in 2.1%, reflecting continued strong discipline and prioritization in investment allocation. Please note that this figure also includes capitalized amortization expenses. Finally, at the bottom line, free cash flow was impacted by seasonal working capital bills, resulting in an outflow of 19.2 billion Turkish Lira at the end of the quarter. With that, I will now hand it over to Bush Faye for the macro outlook and our guidance. Thank you, Milana. We are practically revising our 2026 international sales guidance in light of recent year political risks and continue to closely monitor global uncertainties as the trajectory evolves. We remain attentive to evolving macro and geopolitical conditions and will revisit our assumptions once a clear visibility framework is established.

16:49 We will continue to assess the situation prudently and act swiftly when needed while ensuring disciplined execution across all levels of the business. On the other hand, as the closing date for the sale of our 60% stake in the Acer Ixtaci business announced on 21st of April remains subject to regulatory approvals from the relevant competition authorities, and is expected to be finalized within 12 months, we are not making any additional revision to our year-end expectations related to this transaction at this stage. Going forward, upcoming actions of the CBRT will be a key determinant of any potential change in our domestic output in Turkey. In particular, any easing steps or greater flexibility around credit card installments and bank lending growth caps could act as a catalyst for demand recovery, potentially supporting a more visible acceleration toward the latter part of the year in a gradually normalizing, more consumption-supported environment.

17:41 In Europe, we continue to see a gradual improvement in macro conditions, although the recovery remains uneven and still weak overall. Consumer confidence is improving slowly, supported by early signs of real wage recovery and relatively stable employment levels. However, it remains below long-term averages, and households continue to be cautious in their spending behavior. While inflation has broadly converged toward target levels, near-term volatility persists due to energy-related shocks and geopolitical developments. At the same time, the ECB remains in a volatile phase with no expectation of an aggressive easing cycle under the current base case scenario, which limits the pace of demand recovery. On the external environment, ongoing geopolitical conflicts and elevated volatility in oil and energy prices remain key focus areas from a margin perspective.

18:30 In addition, EURUSD parity continues to play a critical role for our cost structure, with a stronger USD remaining a headwind. As a result, the resolution or de-escalation of ongoing conflicts will be an important policy factor for margin stability and visibility going forward. With that, we remain focused on delivering disciplined execution while navigating an increasingly complex macro- and geopolitical environment. With that, we can proceed to the Q&A. Thank you very much. The first question is from the line of Khan Zande, Bipili Kiran, with JP Morgan. Please go ahead. Thank you very much for the presentation. I have a follow-up question on the raw material costs. As you have not changed your guidance on margins, I wonder how you factor the rising aluminium prices and also increasing transportation costs to your guidance. Could this create any downside risk if it continues to be an issue in the second half of the year?

19:33 And how much has it reached in aluminium? Do you see any supply issue at the moment for your future buying in the second half of the year? And the second one is for the European markets. Do you see any issue in Chinese manufacturers in terms of supplying to the European market amid this conflict or they are still very strong in the European market in terms of availability? And finally, can you please guide us on the expected restructuring course for 2026 as it seems to continue this way as well? Thank you. Thank you, Anzale Hanım. So I think the biggest factor as it pertains to supply chain is the Strait of Hormuz.

20:25 Our direct exposure to the Strait of Hormuz both in inbound procurement and unbound shipment is relatively limited, so we do not anticipate a material disruption to our supply chain. We already operate through diversified logistics corridors and within a 30-90 days timeframe we would be able to further optimize routing and adjust sourcing so we are quite flexible on that front. The main impact in a prolonged destruction scenario would be cost related rather than supply related pertaining to your question. and higher oil prices, of course, would not only increase logistics costs but also affect transportation, warehousing, assembly, output fields, installation, etc., all of which have direct or indirect via fuel and energy-linked cost components.

21:11 We are passing this through as much as we can to pricing, especially in the markets where we have pricing power, such as Türkiye. And as I also mentioned during my script, we've secured raw material purchases at favorable prices, especially for the first half of the year. That would provide a partial buffer. and in addition, as we always do, the impact on cost of goods or cost of goods manufactured for that matter is expected to be mitigated through ongoing material improvement initiatives which we continue to do and hence through these initiatives we aim to offset part of the cost pressures And as I also mentioned in the past, it's also worth noting at that stage that our EDCA margin guidance was also already set conservatively, so which I think provides additional buffer in absorbing potential cost headwinds. So just to sum up, on the cork side, I think we're relatively protected considering the fact that the cost increases are coming with a lag.

22:20 and or our ability to reflect the material improvement project to our Coastal Cool Scope. On the off-tech side, it is much more visible. But as I said, we have certain buffers and just the correction on the adjusted decay margin, it is 7.9% when we factor in the inflation-related adjustments in the first quarter. On the restructuring side, the remaining provisions in our balance sheets are around 35 million euros at this juncture. From a cash standpoint, the total can be expected for the year 2026.

23:07 Thank you very much. And about the tourneys. The big competitive tension coming out of Chinese is the same. Having said that, especially due to supply chain, as you know, the Korean and Chinese players are mainly impacted by straight performance, so we expect Some price increases from their part just to reflect the increase in transportation on their part.

24:03 So either they will have to eat up their margins and sacrifice some of their profitability or have to reflect pricing. The jury is out on that one but in any case the impact is working towards our advantage to be honest with you on that one. and thank you very much very clear. Thank you. The next question is from the line of Efinia Bistova with Barclays. Please go ahead. Yes, hello, good evening. Thank you very much for the presentation and for all the comments. That's very useful. I have one follow-up to the previous question.

24:48 So you mentioned that Part of the COGS pressure is expected to be mitigated with some internal initiatives. Could you please clarify what you are exactly referring to in this case? And then I have two more questions. So my second question is how are you planning to address the upcoming maturity of the Euro-denominated bonds? Do you plan to use maybe bank financing or maybe deposits from the asset sale? and that actually is my third question is what is the intended use of faucets from the recent asset sale and what would be the impact maybe on revenue and EBITDA. Thank you.

25:33 Thank you. The material improvement projects are the usual projects that we always conduct in our factories to reduce the production cost. that can be related to the design and or usage of materials and change of materials etc. So these are structural improvements in the material cost side which is the predominant share, which comprises the predominant share in a given product cost. For your second question, we will redeem our Eurobonds with our existing cash. We have enough cash at hand that was pre-funded before the year end in any case. Any incremental leverage that we're getting at this juncture as Minal and Melura too will be mainly to extend the duration of our existing loan and bond structure. And whatever cash infusion that we'll have from asset sales, be it Tashi, be it the remaining ones, I think it will be mainly used for the leveraging purposes.

26:39 Thank you very much. You're welcome. The next question is from the line of Cemal Denirdaz with Ata Invest. Please go ahead. Thank you for the presentation. My first question is regarding the effective tax rates. You have high deferred tax expense in first quarter. Could you just further elaborate that and should we expect the same trend to continue during the following quarter? The second question is about the one-offs related to restructuring, I guess, 555 million Turkish lira in first quarters. Should we expect some more in the following quarters or we are at the end of those, the major things? And the other question is about the net debt levels.

27:41 Will you have more efforts to cut the debt ratio, leverage ratio below four times? And coupled with this, I see some increase in the working capital in the first quarter further. Do you have any actions to take in the following quarter regarding this issue? Thank you very much. Thank you, Cemal. Regarding the tax expense, the increase in tax expense is mainly driven by the interplay between inflation accounting and changes in tax legislation. I've tried to allude to this in the past as well. We expect this trend to continue, because while inflation accounting is applied under IFRS, It is not being applied under Turkish Tax Procedural Law, as you know.

28:30 And non-monetary assets are carried at higher inflation-adjusted values under IFRS. So, we are only able to utilize the valuation, which is very limited under Tax Procedural Law right now as compared to the indexation level that is being applied under IFRS. So this divergence has widened the gap between IFRS and statutory tax basis and this will obviously translate into higher taxable amounts under tax procedural law going forward. So, that's one of the reasons. Another reason is, given the tax structure of ECO Europe, we are currently not able to utilize the accumulated losses fully, which is going to change as we progress.

29:21 And lastly, we do not have the same level of investment incentives as we do in the past, so we've used up most of them, as you know, our main investments are completed. So we can expect the trend to continue. But I must say that, and I'm sure you can track this from the audit report, the majority A portion which is almost 1.9 billion TL out of 2.6 billion TL is related to deferred tax expense, not carried tax expense. I'm sure you're seeing, observing a similar situation in other public-listed entities. That's an anomaly, unfortunately, which has got not much to do with the cash tax payments that we're paying throughout the years. Secondly, one of the expenses is related to reorganization, restructuring, consulting, litigation, provisioning, etc. You might see amounts here and there. I cannot comment on the magnitude, but we will have one of the expenses given we are in the midst of the transformation in any case.

30:32 But we will be publicly announcing whatever the number is going forward as we always do. On the net set and leverage, yes, we expect the leverage multiple to decline on the back of increasing ADTA in particular. And related to your last question, I can comment that as you know, a given year is a tale of two events for our series. There is a high seasonality in the business. We start the year with increasing inventories, receivables given the cooling and production and air conditioning season, especially 2Ks. The collection period starts and as we have observed in the last year, on the back of high season of Europe between September and November, we are able to increase our receivables, can be converted either via early discount and or factoring and statement schemes as we end the year. So we have to again end the year, the full year, to see the full utilization of factoring and the early discount on the receivable side.

31:53 We are pretty much cognizant of the inventory levels including slow pace and or the finished goods. and starting from the second half it's usually a collection and inventory dispatching period and Gibran as I also mentioned that we do not have The same magnitude of restructuring, hash restructuring expenses as compared to the last year and on the back of increasing EBITDA, declining funding costs, etc. I think we are in a much better position as compared to last year for the leveraging purposes. I think we demonstrated that the leverage net debt, be it on nominal terms and or leverage multiple metrics, is pretty much in control.

32:43 It's under check and I think this will be progressing in an elevated fashion and we will be in a much better position as we finish the year in 2026. We do not have a major CAPEX program. Right now, I think up until the first half, we will be mainly done with our financing program, be it redemption, be it redeeming or refinancing of the existing funding. So that's pretty much it. I don't think I missed anything, but please let me know in case you have any other questions. Thank you. One additional question about the euro-dollar sensitivity.

33:28 In the past you were more sensitive to euro-dollar parity. How sensitive are you now? And currently, you know, the Turkish Lira is Undervalid, Overvalid is always an issue, but I would like to understand how does it work on your side? You know, we see that demand side is the key thing, raw material side is not bad, but how do you see that trend, you know, increasing Eurodollar or TL, you know, depreciation in TL, could it have any positive impact or negative impact on your Asok, considering not only your balances but also the overall operating performance. Thank you.

34:21 Thank you. The level of sensitivity, the degree of sensitivity against euro dollar parity hasn't changed. In one of the calls I mentioned, a 0.01 change in parity impacted around 12-13 million euros from the cost of CUSTO gross profit. In absolute terms, but it's just, of course, everything else being held constant. So there are like many changes. There's an insuperability in pricing and product quality in any case. But of course, higher euro dollar parity is extremely conducive to our business. As, I mean, it's the problem of Every exporter in Turkey at this juncture for depreciation over the inflation is hurting us because we are always playing a catch up between wage inflation and being able to reflect pricing in our Turkish reported financials and as you know under inflation accounting everything is being indexed as per the CPI but in case the pricing does not go Hand in hand with this, you are being hurt in terms of margins.

35:34 Having said that, as the inflation is lowered and it goes down, any inventory related monetary gain amount that is being fed into gross margin, so like overall P&L is being actually normalized. The first couple of months of this year actually, we saw higher inflation levels. But one, I think, good observation on our side is that although we've seen such inflation levels, we have been able to pass through to pricing. And the gross margin, as you can see in our presentation, I think one of the best performance that we've managed to pull through was on the gross margin side. and of course the war is going to have some impacts but as I said to aim to be able to compensate this impact at the COGS and GHOSTS profit margin level but the jury is out. If there is a prolonged and heightened disruption of course we will revise our guidance accordingly but I think we're pretty much in line considering what's happening around the conflict.

36:46 Thank you Baris Bey. Thank you. The next question is from the line of Maxim Negrasov with Citi. Please go ahead. Yes, good afternoon. Thank you so much for the presentation. I have a question regarding the guidance. So you continue to guide basis of flat-ish growth in Turkey and now flat-ish growth internationally, even though we saw pretty material declines in the first quarter. I'm just trying to understand what It kind of underpins that guidance which implies improvement in the subsequent quarters and just mathematical implies, you know, kind of positive recovery. So maybe if you can talk about that on both markets and whether if the current situation continues you think there could be further downside to this kind of fetish outlook.

37:38 Thank you. Thank you. Starting with Turkey, Turkey started the year with an abnormally low feeling which we started to compensate immediately starting from February and currently April is also performing pretty strong. As you know, Turkey is an extremely dynamic market and It really responds very swiftly and is highly sensitive to the levels of interest rates, the consumer conducive macro-policies, etc. So, I think in Turkey, we have always been able to manage whitish growth in Euro or real terms, depending on the trajectory of Turkish trade appreciation versus inflation. So, in Turkey, we are relatively more optimistic.

38:27 On the international side, of course, Europe comprises a large chunk of the international venue. We are more on a wait-and-see mode because it's extremely seasonal, as I mentioned, so the crossover between Q3 and Q4 is very important. As I mentioned in the past, our new product introduction projects are still ongoing, so I think we can give Europe further chance. And on the international side, as I mentioned on the Middle East, we started to use very strongly actually but unfortunately the demand stopped immediately on the back of the regional war but this is just the right demand from our standpoint and if that comes back that can compensate some of the decline in Europe and I think the jury is out and if we see any Let's say the visible trend in the international arena, we will not refrain from changing our guidance.

39:40 Understood. Thank you so much. You're welcome. We have a follow-up question from Irina Bistova with Barclays. Please go ahead. Yes, sorry, just one quick follow-up regarding your assets, potential asset monetization, sorry. Do you maybe, of course, see any other assets in your portfolio that you can monetize? Are there any particular funds? Just any color on that would be very helpful. Thank you. Sure, I mean, we're always reviewing our assets portfolio dynamically and of course these are confidential projects and if there is something that can be shared with the public, we'll share accordingly.

40:27 Thank you. You're welcome. We have a follow-up question from Hazande Kikiligiran with JP Morgan. Please go ahead. I just want to make a follow-up on your Acer disposal. So basically, I mean, you get out of Thailand and also touch it. And now I think you still keep the JV in India. Is there any plan on India and how India is performing at the moment? As we announced, I mean, I'm sure you tracked our public announcements. We remain confident in the region's growth potential. and we will of course continue to invest in key markets including India, Pakistan and Bangladesh and Pakistan in particular is going extremely well at this chance as I mentioned you can really see from the growth numbers of course we do not share subsidiary level or JV level information as you know but we remain committed to such high growth regions and India is definitely one of them thank you Ladies and gentlemen, there are no further audio questions at this time.

41:39 We will now continue with written questions from our webcast participants. The first question is from Masoud Mohammed with Arcelic Hitachi Home Appliances, and I quote, We improved profitability but lost revenue. Should our priority now be growth or margin? I think as a consumer business of course growth is all that matters and we are always trying to pick our battles in the underlying regions in terms of pricing versus volume and I think For such a business, growth is always the main pillar of the strategy, but given the pressure, especially on the pricing side, and the changes in the business model overall, be it AI, be it the disruption of the supply chain, be it the disruption of the global trade, etc., all of our contenders, We are trying to change our business model to keep the margins in check.

42:53 The margins have eroded across the globe as you see in this particular industry and hence we will continuously improve our cost structure, reduce overhead etc. But I think at this point these are not conflicting The next question is from the line of Onur Yalinkic with Perform Import Foreign. And I quote, Thanks for the presentation. On the international side, we had a view that the Chinese price advantage in Europe, which we put at around 10%, could start to compress as freight costs rise alongside oil prices. And on top of that, with Chinese capacity being redirected away from the US and the Middle East markets into Europe, the competitive pressure could actually be moving into the opposite direction.

43:59 Are you starting to see any of this play out in the results? And when you combine that with the Made in Europe angle, is there any way to quantify the market share impact, either through volumes or unit trends? Thank you, I actually tried to touch upon that trend when I was discussing the impact of the war. This is actually, we expect this to work to our advantage, especially in Europe. Because there was a precipitous fall in the prices over the last couple of years. And to be honest, over the last couple of months, since the end of last year, we started to see stabilization in the pricing.

44:46 And although it's too early to call for a sustainable trend, we really see that our average sales prices are remaining relatively stable. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Alparslan for any closing comments. Thank you.

45:31 Thank you very much for attending our call and for all the questions and hope to see you in our following conference calls in the future. Thank you.