Haci Ömer Sabanci Holding A.S. (SAHOL) Earnings Call Transcript & Summary

Good morning, good afternoon, depending on your time zone. Welcome to our Q4 '21 earnings webcast. This is Kerem from Sabanci Holding Investor Relations. Today, we also have our CEO, Cenk Alper Alba; and CFO, Orhun Kostem, here with us today. Let me now hand over to our CEO, Cenk Alper, for an introduction. Sir?

Good morning, good afternoon, ladies and gentlemen. We have an exceptionally strong year, both in terms of financial performance and executing on our strategic goal. We have achieved very strong results in terms of every financial and nonfinancial metrics in a very volatile environment, so the last 48 hours is adding another volatility to the whole world economy. Past 2 years once again proved us the importance of having a diversified portfolio to weather challenges. We'll go through the details of our results later on, but let me talk about what we have done related to our strategic goals in 2021. As part of a global strategic decision, our partner, Aviva decided to exit from multiple countries, including Turkey from insurance business. We have successfully managed this process and teamed up with our non-life partner, Ageas, in life business as well. This move not only provided us an opportunity to consolidate both businesses at Sabanci Holding level, but also paved the way for us to consider new opportunities in digital insurance and health technology ecosystems globally. In June, we have completed the Bunol acquisition, which is one of the major strategic directions of the group to be closer to our customers geographically and become a global player in the white cement sector, a step forward to become a sustainable building materials play. Also, this move continues, so we continue to keep our focus on expanding sustainable building materials by optimizing our grey cement network. To reach that purpose, we announced the sale of some of our cement and cement grinding plants in Central Anatolia. Competition Board approval is still pending for this transaction. We have initiated our long-awaited share buyback program to further enhance the value for our stakeholders. We are successfully running the program since our first transaction back in mid-November last year. To prepare our portfolio to electrified and connected new mobility ecosystem, we have acquired a local IoT player, Arvento, through our tire business subsidiary, Brisa and increased our stake in e-charging infrastructure through our electricity distribution and retail company, Enerjisa Enerji. On the other hand, we are proud to say that PMSA successfully completed first electrical bus sales to several European countries and U.S. version of this electrical bus is being tested in Silicon Valley nowadays. As part of our dynamic portfolio management strategy, we have completed the divestiture of the entire stake in Philsa with a successful use of financial instruments to eliminate the market volatility related to this transaction. All in all, we have touched almost every major strategic vertical throughout 2021, and these solid accomplishments strengthens our track records. Surely, the strong execution in 2021 raises the expectations for the future. We are confident that we will continue to deliver on our strategic targets. Coming to our strategy. So let me talk about our strategic targets that we are focusing on this year and onwards. This was first public to you with our Capital Markets place in 2019. In energy, investment in new climate and energy technologies is a major goal. We have already taken steps to expand our renewable fleet and targeting to become a leading player in green energy transition. So 65 megawatts of investments will be completed in 2022. We will be the first green hydrogen producer of Turkey, which was made public last week. Related to Industrials, our intention to grow further in composites is still in place despite the weak aerospace industry in COVID pandemic. Product and market diversification efforts in 2021 has strengthened the business fundamentals in long run. We continue to invest in tire enforcement, mobility solutions and electrical vehicle value chains. We are targeting to have an exposure in bio and recycled chemicals and sustainable building materials. As I mentioned before, regional and product diversification, including health and insurance businesses, is an important target for us within the financial services vertical. Of course, digitalization keeps being the major focus for us in financial services to further improve customer experience and efficiency both in banking and in insurance businesses. Aksigorta next, developed together with SabanciDx is a new generation insurance platform designed to improve user experience. As we have been stressing in the past couple of years, our appetite and dedication for digital investments remains high. We are specifically focusing on building a digital ecosystem in artificial intelligence, advanced data analytics and marketing and cybersecurity. To underline wider use of digital is vital for us to improve the efficiency of our existing businesses and our target is to reap the benefits of this mega trend to accelerate and sustain Sabanci Group's growth. ESG was a very critical element in 2021. On this slide, let me explain you our efforts in ESG. Since we changed our group purpose to reunite Turkey and the world for a sustainable life leading enterprises in 2020, we have consulted more than 1,000 different stakeholder representatives including our investors committee and identify all material issues, in other words, the teams that we will focus on. Considering material issues for the whole group, we built our sustainability road map in 2021 with 80 group-wide actions in agreement with SPU Presidents and CEOs of all group companies. Almost half of these actions, 80 actions are being implemented already. We also agreed on the governance model for ESG initiatives and key performance indicators that will be monitored at the board level. Sabanci Holdings is the first company in Turkey that set up a sustainability committee at Board level. Our sustainability road map focuses on 3 main pillars. The first pillar is acting on climate emergency. We have been the first company in Turkey to set up a group wide net zero emission and zero waste targets by 2050 at the latest. The second pillar is maximizing our positive impact on people and society, this is in our DNA for the last 19 years. The third is fostering sustainable business models, especially being a player in digital and circular economy, leading energy and mobility transition. Thanks to all efforts in 2021, I'm happy to say that we have completed almost half of these ESG actions has undergone a major transformation, for instance, through embedding ESG in our capital allocation decisions, integrating ESG metrics such as diversity and climate indicators in our CEO and top management performance criteria, creating a taxonomy for Sabanci Group's sustainable products and services, setting a target to increase this share of SDG-related R&D innovation activities to 70% from the current level of 44%, improving our sustainable finance framework. For instance, in our energy business, 100% of current investment plans, worth of 565 megawatts are renewable energy. So the current 44% of renewables in total installed capacity will exceed 50% threshold in the coming 3 to 4 years. We will further accelerate our efforts to investigate new energy technologies such as green hydrogen. As an indication of this analysis, our team joined forces with 4 other entities to open up Turkey's first green hydrogen production plants. On the other hand, our industry group generates 28% of their revenues from SDG-linked products, while making up only 1% of our total Scope 1 and Scope 2 emissions. Alternative fuel consumption in our building materials has increased 2.5x in the last 4 years. They were Turkish industry average. Just this week, we have opened up a new investment in Afyon Cimento for alternative fuel consumption. In this Group, we have 36 transition products, making up 15% of their revenues by focusing on smart plant systems, data analytics, energy efficiency and increasing the use of waste as an alternative fuel and raw material sources. In banking, Akbank announced that they will provide TRY 200 billion of sustainable loan financing to our country by 2030. This is the first for a bank to announce how much finance it will provide to green economy. All these developments enabled us to make great progress in ESG ratings. Sabanci Holdings sustainability rating in the MSCI Index increased by 2 notches in the last 9 months. We expect another letter rating increase too. We are very proud to be the first and the only conglomerate from Turkey included in the 2022 Bloomberg Gender Equality Index, with the high ratio of women in management positions, application of equal pay for equal work and our practices that facilitate women's participation and retention in business life. The ratio of women in our BOD is 44%, while the ratio of female managers are 38% higher than the average of 22% in Turkey and 37% in Europe. We also became the first and the only company from Turkey info Forbes' World Top Female-Friendly Companies list. Some under holdings CDP climate change score increased by 2 notches and awarded by B, as well as taking its place in the management level category by maintaining this score in CDP water program. Brisa, Kordsa and Çimsa are among the global and local CDP leaders. Now let me pass the word to Orhun. He will detail and comment on the stellar financial performance in 2021.

Thank you, Cenk. Good morning, good afternoon, everyone, once again. On one hand, obviously, I'm sure we are equally concerned about what is taking place in north of black sea at the moment. On the other hand, we are quite excited to share with you an excellent set of results for 2021 and the last quarter of 2021. First of all, let me say that we're looking at a very healthy growth. Our combined revenues have grown strongly. Our combined EBITDA and consolidated net income has grown even stronger than our top line, and obviously, that to some margin expansion in the period. This is inline with our midterm guidance that we have announced earlier. I will also like to underline the fact that our performance have accelerated in the last quarter of the year, especially coming from the bank. But nevertheless, I'm sure you must have noted that our non-bank business in general performed remarkably as well. Our bottom line has increased. And that's, on one hand, equally driven by our operational performance. On the other hand, obviously, we've enjoyed some one-off gains in the periods due to our treasury positions from mark-to-market basically. Now again, if you look at our combined revenues, we have seen rebounding from 2020 very strong local and global demand that assisted us in delivering a very strong set of top line growth. Our EBITDA, on one hand, benefited this pass-through of this top line growth. And on the other hand, obviously, we have reached remarkable operational efficiencies and through higher capacity utilization, we were able to deliver a 61% combined EBITDA growth. This is important given the fact that through the period, as we have discussed earlier, we've seen some of the raw material prices have been increasing quite high as well. Again, our net income has grown, our consolidated net income has grown by about 95%, so almost doubled in 2021. Obviously, it's driven by this good operational performance, but at the same time, as you're going to see in the remaining parts of this presentation, that we have been de-leveraging and therefore, obviously, looking at relatively lower financial expenses in this period. Now I'm going to move forward with discussing the rest of the financials now. On the next page, if you look at our non-bank business side, specifically, our operational cash flow was up by 15% to TRY 12.4 billion. Obviously, the strong cash flow generation helped us maintaining a very healthy debt profile. Our net debt-to-EBITDA at the end of 2021 stood at 1.2x. That compares to 1.5x if you look at the end of 2020 or even compared to the end of 9 months of 2021, which was at 1.4x. Now please also underline the fact that this does not include the proceeds that we have received from the divestment of our tobacco business, which was completed at the start of 2020. So all these actually liquidity figures, net debt figures do not include those numbers except for mark-to-market gains that we have -- we have accounted for in our P&L due to our risk management instruments. Now if you look at our liquidity on the non-bank side, excluding the financial services, it stands at about TRY 13.7 billion. And on the insurance side of our business, we know that the total funds were at about TRY 5.4 billion. This in return that you see on the next page, got us to a record high nonbank return on equity of 23.9%. And in the last quarter, I'm sure you must have noted with the performance of Akbank, the bank return on equity have also grown very remarkably. Therefore, we have also reached the highest ever return on equity on Sabanci Holding level on a consolidated basis. Our Holding Only net cash position more than doubled in 2021 compared to 2020, and it was at TRY 2.5 billion. And again, this does not include the proceeds that we have announced to be about TRY 2.7 billion coming from the divestment of our tobacco business, which was in early 2022. And again, at the end of the year, I'm sure you must have noted in the appendix of this presentation, that the FX portion of our cash was at 90%. Moving onwards and looking closer to the last quarter of the year, the combined revenues in the last quarter of 2021 grew by about 77%. And again, I'm happy to note that both in the banking side and the non-bank side of our business have accelerated their topline growth. The non-bank revenue, for example, grew by 83%, where the banking side is in excess of 60%. So in any case, growing much faster than what we have achieved in the previous quarter. On the non-bank side, this growth is attributable to our energy business. We obviously enjoyed having a complementary portfolio of energy businesses, a correct market positioning and therefore, an important contributor to the revenue growth. On the industrial side, as we have discussed throughout 2021, with the increased mobility, we have seen a better volume performance, a better market share performance. And of course, as these businesses generate relatively higher FX revenues, a favorable FX impact at the end of 2021. Our Building Materials business also was a strong contributor to our topline due to higher volumes and better sales mix. Coming to EBITDA. On the last quarter of the year, our EBITDA has grown in excess of 2x in the period. Obviously, the impact of our bank here is much underlined and the bank generated some 60% of the combined EBITDA in the period. On the non-bank side, obviously, the regulated asset base growth, as well as the higher spark spread, contributed to strong EBITDA. As you will remember, throughout 2021, we've also discussed that even though the hydrology was lower, this was more than offset by our portfolio of generation, a CapEx outperformance and a higher operational performance, especially in our natural gas plants has driven this EBITDA performance. Industrial side as well, strong top line growth was passed through the EBITDA performance and also amplified by a well-managed cost base. I'm sure you must have seen that the building materials contribution on EBITDA was not that strong. That is, again, as discussed owing to the fact that the -- especially the fuel cost has been gradually increasing since the second quarter of 2021 for that side of our business. Moving on to the net income. Obviously, the net income growth was very strong at 260%, both on the bank and non-bank side. And then there is, on a consolidated basis, there is almost an even contribution between our bank and our non-bank business. On the non-bank side, the growth of net income was 366%, obviously. This, again on one hand, was driven by strong performance on the energy business, obviously, on the back of a healthy balance sheet. And on the industrial side, also a strong operational performance and the continuous de-leveraging of some of our businesses on this side. Obviously, some other contributors were our financial services business closed at the end of the year. And again, obviously, we have enjoyed on our bottom line positive FX gains in this period. Now I will pass on to Kerem who is going to walk you through the details by each sector. Kerem?

Thank you. Let's start with Energy. In Q4, Energy segment delivered strong performance and reached 96% year-on-year growth in EBITDA despite lower digitalized profits and continuous maintenance in hydrology. As energy recorded strong EBITDA as distribution segment's EBITDA increased by 147% in Q4, thanks to higher financial income based on increasingly rated asset base and higher denotation of midterm inflation assumptions. Moreover, CapEx outperformance was strong due to increasing CapEx investments and contract structure with the fixed terms set in the beginning of 2021, providing opportunity to benefit from the increase in commodity prices. As of year end, regulated asset base growth reached 20% year-on-year, in line with the increase CapEx as we have guided in previous quarters and higher inflation despite higher CapEx reimbursements. In the retail side of our Energy business, lower realized gross profits due to lower margin with the effect of dramatically increasing logistic and procurement costs, partially offset by higher liberalized sales volume and higher regulated gross profit due to higher procurement costs and inflation. Moreover, high gross profit contribution from new solar projects in Customer Solutions segment and declining doubtful provisions with improvement in customer payment behavior supported EBITDA growth in Q4. Despite higher financing expenses driven by higher average loan financing costs, the company's net income increased by 171% year-on-year thanks to positive contribution of strong operating performance. Looking at the Generation business. Electricity demand was up by 6% year-on-year in Q4, driven mainly by strong industrial growth and lower-than-average temperatures. Average spot and reduced prices increased by less than 177% in Q4, due to lower hydrogeneration by prevailing weakness in water form, higher electricity demand, offline capacity and increasing natural gas prices. And asset generation revenue increased by 143% year-over-year, mainly driven by a much higher spot logistic prices as well as Turkish lira and higher energy trading volume. Generation volume reached 3.15 terawatts, which is the optimum number of production to reach highest profitability level as far as spark spreads are concerned. EBITDA growth reached 77% year-on-year as natural gas and lignite profitability continue to drive higher spark spread enhancements in the duration business in Q4. Moreover, higher spot and logistic prices and our team's ability to commentate for us to capture market opportunities despite lower hydro generation due to extreme drought conditions. Net income also quadrupled due to EBITDA contribution and increase in investment tax incentive with higher future income projection based on higher future spot price and macro resolutions. Let's move on to industries. Segment's combined revenues increased by 74%, driven by volume growth, thanks to not only strong demand but also higher market share in both businesses. Specifically tire business, we managed growth in the basement market as well as increasing our sales in export products. The profitability in both businesses had driven by volume growth in the entire geographical footprint that offset global supply chain environments. In addition to strong growth, negative impact of higher raw material prices, offset by well managed logistics strategy and channel diversity in tire businesses. Coming down to the bottom line. Net profit grew by 131%, thanks to operation profit pass-through. Moreover both segment companies decreased their net debt to EBITDA, thanks to strong operational performance and effective working capital management, this is especially in the tire business. Tire business turned into a net cash position at the end of 2021, supported by a major improvement in the cash cycle, while tire imported business came back to even better levels compared to pre-pandemic. Our tire business, as we have mentioned in the first, grew faster than the market, owing to its open [indiscernible] network and productivity. Tire [indiscernible] business has benefited from its extensive welcome and global footprint and in turn, succeeding growing faster than market in Q4. Note that health improvement in the segment's operational performance sustained a very challenging environment. Moving on to Building Materials. Segment displayed impressive revenue growth of 123% during the quarter, sustained by demand in both domestic and export markets and increasing support of the recent [indiscernible] in Sabanci. However, despite fuel mix optimization, better energy margin and operational efficiency, leading to an improving OpEx sales ratio escalated fuel, energy, raw material and tire costs eliminated the positive impact of strong top line performance on operational profitability, which actually resulted in a 33% year-on-year contraction EBITDA in Q4. Supported by lower financial expenses, driven by higher FX gains, the [indiscernible] contraction remained at 30% year-on-year. Despite the weakness in EBITDA net income in the last quarter, full year EBITDA grew by 39% and net income more than doubled, thanks to solid performance in the first 9 months of the year. Our alternative fuel usage improved sharply 20% versus 12% last year, and our efforts to improve the fuel usage prevails with ongoing investments in Afyon plant, which is expected to become operational in Q1 2023. On Retail segments, combined revenues increased by 27% year-over-year, thanks to the improvements in the basket size, both in electronics as well as [indiscernible], bringing top line growth to 27% in 2021, well above the average inflation of 20% Meanwhile, e-commerce sales growth remained robust by increasing fivefold compared to pre-pandemic period in Q4 2019, and it share in total revenues, almost tripled, reaching 11% of total sales revenue in Q4 '21. Some topline growth [indiscernible] from related operating expenses translated into double-digit growth in operating profitability as adverse adjusted EBITDA increased by 27% in Q4. Yet adverse impact of high financial expenses continue to affect the bottom line growth of the segment in Q4, driven mainly by full retail. On the financial services, segment's top line growth were solid at 50% in Q4, led by a strong performance in all major life and nonlife business. In the life business, technical income increased by 51% driven by both growth in life protection volumes and pension assets under management. In the life business, technical income grew by 4% year-on-year. Although underlying results were adversely affected by the hike in motor claims costs with [indiscernible] and higher inflation along with unexpected rate of minimum wage increases. As a result, combined ratio deteriorated and became 127% in the quarter compared to 98% a year ago. Increased financial income and higher FX and interest rates, combined with solid technical income, resulted in an impressive 130% year-on-year bottom line growth in the segment. Moving on to banking. Despite the challenging environment among higher global inflation as well as the negative impact of ongoing pandemic, Akbank positioning enables the bank to leverage its strength while determining priorities for improving profitability. At Banking sheets, all-time high net income [indiscernible] almost 100% year-on-year growth. ROE came in at 17.9%, well ahead of full year ROE guidance, while before [indiscernible] was very robust at 26.2%. Robust share loan growth, strategic securities positioning as well as across the board stronger than guided fee income growth were supportive factors for the solid core operating performance. Its net cost of credit evolution has fared much better than the guidance, thanks to strong risk discipline through the cycle. For 2022, [indiscernible] focus continue to remain healthy profitable growth and customer acquisition while sustainability remains at the heart of the strategy. I now would like to hand over to our CFO to talk about our midterm guidance.

Thank you, Kerem. You must have seen our midterm guidance before. Obviously, in the short term, there are a lot of uncertainties around us. But we are very excited looking ahead the short term, we're quite excited about the transformation of our portfolio and the potential that it brings. You've seen our revenue and EBITDA growth expectations, these are unchanged. You must have noted just to reiterate again that we would be increasing our CapEx efforts, looking forward, from about 5% in 5 years of 2021 to more than double as our midterm target as we move in to increase the share of FX revenues in our overall combined revenue. We would like to maintain a healthy balance sheet with our net debt to EBITDA to remain less than 2x. And obviously, in terms of transformation back to everything that Cenk Alper was saying, we expect the share of new economy in the combined revenue to almost double. Now in terms of capital return, I'm outlining you our capital allocation priorities in that sense. Our dividend policy has not changed, but I'm happy to also note that since November last year, we have our share buyback program in place. And I'm also happy to note that we are still looking at delivering strong return on equity performance as evidenced by our performance in 2021. Again, as noted, we have been the first conglomerate in Turkey to set a group-wide net zero emission and zero waste for target by 2050 as we conduct our business to deliver on these targets moving forward across the board. Now I will hand over back to Cenk for key takeaways.

Thank you. These are very attractive set of numbers. So let me wrap up. Our robust performance in 2021 and our ability to operate in a high inflationary period as well as managing currency volatility and balance sheet risk confirms our midterm targets that we all shared with you recently. We are fully confident that we will keep our strong momentum in the medium term. We are sparing a lot of time and resources to reach our 2050 zero targets. Parallel to our intent to double our CapEx in the next 5 years, additional improvement in sustainability will also be an important focus. In that respect, we will be doubling ESG-related R&D investments, which will be an important inflection point to reach our long-term sustainability targets. As I have mentioned in the beginning of the webcast, our strategic targets in energy and climate transition, sustainable mobility solutions, advanced materials and digital will be our major focus in reaching our medium-term guidance. Thank you for participating, and thank you for your time on this Friday afternoon to listen to our results and Sabanci Holdings strategic directions. Keep watching us.

Thank you, Cenk. I want to [indiscernible]. We are very clear about the messaging today, so we have one question for Hanzade. Can you please share your non-bank revenue growth guidance in 2022, and which sector may have shown some [indiscernible]?

Thank you very much, Hanzade. We don't necessarily give annual guidance and not at this relatively volatile period. But let me try to help you with this question. Obviously, going forward, in terms of top line guidance on the non-bank side, I think we expect strong growth from both the industrial business and the building materials business, and that is one. We obviously are still looking at potentially good growth from our energy businesses in general. We will need to see, obviously, how the general and cost environment for energy turns out. But top line wise, that's obviously beneficial for us. The insurance business, on the other hand, given the economic volatility, negative real interest rates and the potential increased FX scenario, could be good on the top line growth but may not be as strong as we would expect in other industrial or energy or, let's say, building materials business. So that could, say, we still look at strong growth, we still look at obviously growing in real terms positively, but that could maybe for you an indication of how different parts of our business will perform.

Thank you. There's another question from Sashank, similar question, thank you for the presentation. Given the volatile low material pricing environment driven by recent events how does Sabanci look at margin profile for 2022?

Again, Sashank, I won't be very specific about an annual guidance, but you're right, especially in certain parts of our business, as we discussed, for example, building materials is one of them, given the fuel cost increase we have seen it happening in the last half of the year. I think it's quite normal to expect as we move into 2022 in the first quarter and maybe first few months into the year, we will see that higher fuel cost environment will prevail. Normally, our expectation is -- that is going to normalize in the second half of the year, but that's obviously something we will need to look at. On the other hand, I think in other parts of our business, definitely, the -- as we expect the demand to be reasonably strong, on the industrial side, there should be reasonably acceptable performance, comfortable performance in terms of margins. And as you said, again, I mean, especially on the generation, this year was marked by lower hydrology, which helped us grow our profits in absolute terms. But margin-wise, as you remember, hydro delivers the higher from a mixed point of view. If we think of a normal year, which we can only talk about once we see April, and obviously, there is scope for better margin performance, but that's yet to be seen. And that is in certain parts of the business. On the insurance side, as I said, if the FX continues to remain high, there is a likelihood that the margins may not be higher. But nevertheless, it's -- from a Sabanci Holding point of view, it's good to be managing a portfolio of businesses, which obviously respond differently to different macro conditions.

Next question comes from [indiscernible]. Can you please elaborate on high inflation impact on business and Sabanci as a whole [indiscernible] followup impact on individual businesses [indiscernible].

I mean, it's more or less the same, [indiscernible]. Again, especially given the inflation part of our business in the energy distribution side, and our regulated asset base is driven by inflation, that is on one hand. On the FX side, we discussed different impact on the raw materials for different parts of our business. Obviously, I think the key is not the macro conditions per se. Obviously, what we need to watch quite closely is how it impacts household income and the general purchasing power across the board, which could be relevant from retail businesses to what have you -- on all of the businesses. But again, I can say that it would be good for us to be able to manage a portfolio of businesses, a diverse portfolio of businesses, which we expect to deliver hopefully a strong -- potentially strong set of results into 2022 as well.

Okay, next question is from [indiscernible]. What is the outlook for power generation? Hydro, gas, lignite for 2022?

Okay. Let me take that one. So [indiscernible] creates its hydrology plants with a statical approach by using the precipitation data of the past years. And as always, we start with a 50% probability. But we can say that 2022 started more productively in terms of hydrology than 2021, which was well below the average. We hope that it will be an efficient hydrology year in accordance with the production planning of our power plants.

Okay. The next question is from Eduardo. Could you please give us the breakdown of the value of non-listed assets in the NAV, mentioned in Page 24?

Thank you, I assuming you're referring to Page 24 in the appendix on the presentation, where we give you different listed companies and the total run listed, as far as I'm concerned there are a number of companies in there, but the majority should be coming from energy [indiscernible] which is obviously the high -- potentially the biggest nonlisted asset for us currently. Other than that, yes, I mean, this should be the highest contributor to that number.

Now the next question is coming from [indiscernible]. How do you see the outlook for energy generation business for 2022, given the increase in hydrology so far and higher electricity prices?

To give you a full number, I think we have to wait April, May, so that we can see the impact of hydrology to the whole year. Of course, the higher electricity prices has a positive impact. However, the input material gas especially under the current war scenario, gas prices will be the determining factor.

And I have a follow-up question from [indiscernible]. Having current macro conditions, would you expect a change in the profit contribution of bank and non-banking?

Thank you, [indiscernible]. I think, again, without being too specific, obviously, what you could expect to see, as we stated in our guidance as well, that in our non-bank businesses, we are looking at stepping up our CapEx for the midterm as well. So going forward, I think -- I don't expect operating profitability to be significantly worse, that's really unlikely. Having said that, we need to factor in that we need to invest more CapEx, and that could potentially increase the financial expenses for our -- some of our nonbank businesses. Nevertheless, the way we look at it is we still expect strong return on invested capital for those businesses and therefore, still a very healthy return profile.

We have other couple of questions from [indiscernible]. Is there any businesses that divests in the medium term while you are doubling your CapEx in your core business?

Yes. Our strategic plan is very clear and transparent to all of you. So while growing our core businesses, we want to further grow or transform the portfolio towards adjacencies and our plans are being detailed by our teams at SDUs. Of course, -- if we believe that any -- offer to any one of our business is adding value, that's always or a piece of our assets, we are always ready to evaluate the situation. But so far, we are happy with the current mix of our portfolio and we want to further improve that to benefit from the new economy, which for us is energy and climate transition, mobility and materials transition and digitalization.

Thank you, Cenk. I guess that's it. Thank you for participating, as Cenk has said, its Friday afternoon. As Cenk has stated again, keep following us. Thank you very much.

Thank you. Thank you very much.

Have a great weekend.

Let's hope that we have soon ceasefire in Ukraine, and then we have a peaceful world altogether. Bye-bye.