Ülker Bisküvi Sanayi A.S. (ULKER) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Ülker Bisküvi's Q2 2024 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. [Operator Instructions] I will now hand over to Beste to introduce the call.

Thank you Kim, hello everybody. This is Beste from Ülker Bisküvi's. Welcome to Ülker Bisküvi's second quarter financial and operational webcast. Here with me in the room are CEO, Mr. Mete Buyurgan; and our CFO, Fulya Banu Surucu, to discuss the second quarter results. I'm now handing over to our CEO, Mete bey and start the webcast. Mete bey, please go ahead.

Thank you, Beste. Hi, everyone. Welcome to our second quarter investor meeting. Let me share some key highlights before more detailed information. As you know, one of the most important priorities for us as Ülker is market share. We are always -- it's always a big priority for our existing markets, which we are operating in. And I can say that we are keeping our leading position in every market, which we operate actually, especially in the domestic market. I will try to say in the last 3, 4 months, we keep increasing again our market shares. In terms of operational, financial update, we keep the pace on our consistent operational performance across key metrics. Effective product mix and supply chain management, operational management is in a good pace again and key focus on operational profitability. As we are going to announce in the next coming slides, we are having very great performance on our profitability levels. In terms of sustainability, we have implemented -- we had started to implement our sustainability program about like 9 years ago and we are right now becoming a global benchmark standard actually. So we got so many awards, but one of the key highlights for our sustainable program as a new news is our Ülker Bisküvi Turkey factories have received the Zero Waste to Landfill certification. This is another groundbreaking milestone for our sustenance program. Right now, we are working with third parties as well, so we are focusing on regenerative agriculture program together with our farmers. So this is going to be another new face, new chapter of our sustainable program in the next coming 2 years. As you may know that there is a slowdown in domestic markets based on the government action in order to reduce inflation. And almost every segment of the consumption -- in every segment, consumption are decreasing right now based on the -- depends on the slowdown in the country, in the economy. In fact, as you may remember from the first quarter investor meeting, we had faced a slowdown in advance on our AOP assumptions. So we are confident through our performance but also we are confident on the next coming quarters how we are going to manage the slowdown in a great way actually. So we are in line with our targets, the year-end targets and also, we are getting precautious. On the other hand, we are having lots of advantage versus slowdown in the economy and the consumption. Thanks to our low-cost operating model, it is giving us a huge agility and the flexibility to keep our profitability levels in the same manner. Another important update was -- for highlights is our bond initiative as of last June, a month -- 2 months ago almost. I would like to thank our CFO, Fulya Banu and for all our team for their leadership. And of course, our -- based on our operational performance, we had the first sustainability-linked bond issue, which was like USD 550 million and the maturity date is 7 years actually. And the interest rate is quite competitive versus other Turkish entities. So another important news at that time was, for the first time in the history of capital markets in Turkey, 3 notch rating increase at one time by S&P. So it was another important success for our company in terms of -- based on our results again and based on all our efforts for years, consistent efforts for years. Coming to operational performance, mostly our success in the profitability and the growth is relying on our operational excellence performance actually. So we are having a net loss reduction. Still, we keep reducing the net loss. This is, again, a global gold standard right now. Our ratios are becoming like a global standard, industry standard. We are deep diving on our existing production lines, and we keep gaining or creating some extra volumes, capacities on the lines. One of the most important initiatives in the last 2 years was end-to-end Value Stream Mapping projects to all factories so that we are refocusing, reengineering all our processes depends -- based on the best optimum agility and simplifying the process essentially. And IoT process has been finalized in all our factories. Right now, we leverage digital technologies for designing future of manufacturing. This is giving us a huge opportunity in terms of getting the real-time data from our production lines so that all our manufacturing supply chain teams can easily make consistent and bold decisions through the real-time data, which gives us an opportunity in terms of reducing the cost as well. So lost time accident rate is another standard for us, a very important standard. In the last 10 years, actually, this is a journey, endless journey. So we keep decreasing the lost time accident rate in all our operations, which is another quality sign of our operational excellence. Most of you know that our -- we keep progressing consistently in our operations and in all our geographies, which we operate. And as you know very well, again, our vision of being a leader player in our region, we are stick with the targets, and we keep accordingly actually -- we keep progressing accordingly. In Turkey, our growth rate in terms of revenue is 8.5%. Please note that this is all inflation-adjusted numbers, excluding North Africa data. Turkey exports is decreasing based on the -- there are 2 dimensions why we are decreasing in our export business. Firstly, the exchange, FX rates are very stable, but more importantly, we are shifting some of our products to our respective factories in their respective markets in order to be more competitive in the region. So this is another impact, actually. North Africa is not inflation adjusted, of course, 62%. As you may remember in the last year, North Africa performance part, a little bit struggling based on the very high inflation, but they had -- our team in North Africa had a great start for this year, and they keep growing very fast. In Central Asia, we integrate success story for years actually consistently in the last 6 years in Central Asia. In overall Central Asia, there is not a big problem in Azerbaijan, Uzbekistan, Kyrgyzstan. In those markets, we keep growing but only the key markets, Kazakhstan, similar to Turkey, there is a significant slowdown in the economy as therefore, in the consumption, so it is affecting our EBITDA and revenue growth. But again, I am confident that we are going to have an increasing pace, starting with the back-to-school piece also, especially in Q4, which is the highest season in the region. It's -- it has been started to slow down, started in Central Asia in Kazakhstan as of January last year -- this year. So this is still the same situation, but we will see, I think, a sharp increase in Q4. And Middle East is keep growing in terms of EBITDA and in terms of revenue growth. So as a result, our revenue is split. 69% is coming from domestic, while 31% is coming from our international business. In terms of regional market shares, Turkey, we are still very significant ranking companies -- ranking players almost in every sub-categories. Middle East, we keep our strong position -- leadership position in biscuits. North Africa, again, we keep our leadership position in biscuits; and Central Asia, we reached 16% market share in the chocolate category, which is #2 in some of the markets as a result. One of our most important growth engine is innovation for years if you follow us very closely. So in domestic market, 12% of our revenue is coming from innovation, while 7% is coming from international sales for innovation -- through innovation. So overall, 10% of our revenues, net income is coming from our innovation and NPD projects actually. So as I mentioned, this is being more and more significant, more strong pillars of our growth. And I believe that it's going to be -- keep the pace for the next coming 3, 4 years through this capabilities and strong muscles of innovation. So that's the summary, a quick summary of the operational performance and our strategy update. Now our CFO, Fulya, will keep going -- keep informing you about financial performance.

Thank you, Mete bey. Good morning, good afternoon, everyone. Thank you for joining our call. Let me begin with the highlights for Q2 results. We delivered a solid Q2 and first half to the year. Volume grew by 1%, delivering at 153,000 tons and revenue landed TRY 15.3 billion. Gross profit grew by 4%. Our EBITDA grew by 3% on an absolute basis. But despite many challenges and volatility, we were able to deliver gross margin and EBITDA percent increases again this quarter, like we did in every quarter in the last 2.5 years and this quarter was no exception. Net income landed at TRY 1.3 billion profit, significant improvement versus prior year Q2 results, and we were able to close the quarter 2 on a strong basis gross profit at 30.6% and the EBITDA margin is 19.2%. When we take a look at the volume and revenue contribution by category, snacking volume remained flat with almost 0.1% contraction in Q2, driven by the change in category and product mix. Snacking sales value slightly decreases mainly driven by low FX impact and big shift from second quarter and first quarter. If you remember, first quarter sales revenue and volume growth was record high. And in Q2, we were expecting this slowdown and then a normalization and stabilization. And we will also talk about our full year guidance over the coming slides as well. Let me take a look on the regional breakdown. Domestic versus international, it is much more clear how FX -- stable FX versus inflation balance impacts us unfavorably. On a domestic basis, total revenue stayed almost flat, whereas gross profit increased by 13%, and we landed at 27.2%, which is significantly higher than what we had in the prior year in the same quarter and EBITDA landed at 19.1%, 3% increase versus what we delivered last year. On an international basis, total revenue, yes, there is a slight decrease. There's a decrease in terms of revenue. Gross revenue and EBITDA exclude value decreases are driven by the decrease in total revenue in absolute value terms. However, both gross profit percentage increased from 34.4% to 38.6% and EBITDA landed at 19.3% in our international markets, which is a very healthy level. On our consolidated financials, the first 6 months of the year, we delivered very solid strong financials. Total volume grew by 9%, revenue 4%, gross profit 12%. And you can see the gross profit margin reaching from 29.2% to 31.4%. EBITDA, we landed at 20%, whereas the first half of last year was at 19.1%. So our EBITDA margin and gross profit margin keeps increasing. Net income, 3.6 positive, whereas it was almost a breakeven in the first half of last year. Our balance sheet gets stronger and stronger. As you know, our 3 pillars, capital strategy focus continues and improved significantly. Net debt/EBITDA decreased to 1.3 based on the calculation from the face of our balance sheet. So we wanted to share the EBITDA percentage development in years for our regions. North Africa increasing from 11.5% to 14.2%, and in the first half, it's 14.8%. Middle East -- there's also a slight increase on the Middle East EBITDA margin from 20.7% to 21.9%; and Central Asia decreasing to 12.4%, mainly due to the macroeconomic volatilities and positions that we face in Central Asia. Balance sheet highlights. As Mete bey mentioned, we completed Eurobonds very successfully, first sustainability-linked Eurobond of Ülker Bisküvi 7 years with very favorable rates. So a significant -- importantly, financing is completed very successfully with significant demand from the market. And from covenant perspective, based on the covenant per our syndication contract, we ended up at 1.19. So our balance sheet, our cash position is getting stronger and stronger. Again, our 3 important pillars, capital strategy and focuses, liquidity, cash and stronger balance sheet, you can see all the actions we are taking pay off. Working capital days, we were able to decrease it from 110 days last year to 95 days, a huge focus on key working capital items. Here, the target is not to minimize. Here, the target is to optimize it so that we can utilize all of the resources much more optimum. And in terms of highlights, our total hedge is around 50%. And as Mete bey also mentioned, we have received an excellent rating increases from both S&P and Fitch. As of today, we are above sovereign by 2 notches by S&P and 1 notch above sovereign by Fitch, thus reaching that -- our balance sheet is -- our balance sheet strength is also appreciated and recognized by our rating agencies and by the market as well. And in terms of outlook, we did not change our outlook. In Q1, we shared with you that we are going to end up with TRY 85 billion net sales with an EBITDA margin of 18.5%. Even though there has been a small slowdown in Q2 in terms of sales, we believe that in Q3 and Q4, we will be able to cover everything and we will be able to land a net sales of TRY 85 billion and EBITDA margin of 18.5%, which we shared with you in the prior quarter. And in terms of priorities, we shared with you very clearly our key priorities for 2024. All the priorities, all of our focus are in line what we have said, as you can see, inflation, pricing, investment in our brand and innovation, digitization, and supply chain and portfolio optimization will continue to be our key priorities in 2024 as well. So thank you so much. I hand over to Mete bey again.

Yes. Thank you. Thanks, Fulya. So as we have published and announced our 2024 priorities at the beginning of the year, so we were expecting, as you see on the screen, that inflationary challenges versus actions. So they're all in line with our strategies. We are getting the right decisions at the right time. So we are also trying to manage the cocoa price increase through our hedging policy. Of course, there is going to be a significant increase in cost in cocoa, however, we are in line with the global competition actually in terms of cocoa cost through our action. Prices versus volume at the half 1 results, as you saw that the volume increase is very significant versus last year, even we are ahead of our budget targets, AOP targets. So it is showing us the health of the growth actually, the quality of the growth of our company. We discussed about the innovation and our brands. Of course, we never give up investing our brands. So we keep investing on our brands. And in terms of share of voice, especially in our domestic market, we keep our leader position right now and digitization and acceleration of AI, as we discussed, like IoT, Internet of Things and robotic processes, we are in a very good shape. Supply chain, we always -- the endless journey to keep modernize our supply chain operations and our procedures. And also portfolio optimization is very important for us. So we are always optimizing our portfolio. So I must say that in a nutshell, we are in line with all our priorities, and we are in a good shape through our strategy -- versus our strategy. So thank you. Thank you very much for your participation. And now we are looking for your questions.

[Operator Instructions] So our first question comes from Evgeniya Bystrova from Barclays.

I have few questions, and I would like to go one by one. So my first question, in terms of your exports, you said that you're redirecting your sales from Turkey or exports from Turkey to other regions. Do you have any particular target in terms of revenue split between different regions, exports in Turkey or just in general, between domestic and international revenue? That would be my first question.

Thank you for the question. In fact, our target is about keep the international business split in terms of our overall revenues at between 30% to 35% actually as 4 years.

Okay. And in terms of redirection of exports, to which regions would you say is the key priority to redirect exports?

Yes. Of course, Middle East, Central Asia are still focused export markets, but also we are having a significant increase of exports in U.S. market, in some European developed markets, including U.K. as well.

Okay. So then my second question, you had international sales decline of 18%. Could you maybe please provide a breakdown in terms of what percentage or what part comes from volumes decrease or pricing or FX just to understand the dynamic?

Okay. Thank you for the question. The main decrease is mainly from Central Asia. Middle East and North Africa businesses are on track. So both regions could manage to grow their sales volume by 5% and 3%, respectively. However, main decreases from Central Asia is due to a slowdown in consumption and overall economic contraction in Kazakhstan. And Turkey export is also down due to stable FX, the FX increase and inflation increases around 70%. And FX is pretty much stable, and that also impacts us negatively. So in total, those are the main reasons why the sales are down by 18%.

And in terms of cocoa prices, I didn't hear maybe properly. So what is your outlook for next year? Have you already secured the volumes and prices for next year or in which quarter do you usually procure those contracts? And in general, any color in terms of how much higher the cost might be also would be very helpful.

Thank you. Yes, this is an important question. So we are having almost 55% of coverage for next year. So we are already covered for the next year, for 2025, about 65% to 70%. We are always having -- 4 years actually. We are always having some mid- and long-term strategies for the procurement of supply in cocoa. And my perspective is about cocoa, we know there is right now a stabilization on cocoa prices. We are expecting better prices or lower prices after the second half of next year actually. Of course, this is still very high versus last [ 3 years ], but we are going to -- we are expecting some [ bullish ] relief after the second half of next year as well.

Okay. Did you say 55% to 70% in terms of volumes is secured?

65% in terms of volume, of course, right.

Okay. And my final question is about related part of receivables balance. I think there was a decrease quarter-on-quarter. Could you please confirm this? And also, if you could remind us what are the terms or amortization schedule for those receivables also would be very helpful.

Okay. Thank you for the question. The change is mainly due to FX fluctuations. So total receivable balance consists of different currencies. Like they compose of Turkish lira and also foreign currencies as well. Change in FX and accrued interest is the main reason why it has decreased.

And in terms of timing for its maturity, could you please remind us what is that?

Overall, it's 2 months, so it is 30 to 45 days.

No. I mean, so the balance with the parent that is outstanding.

It's been outstanding for a long time. I think it's been outstanding for some time. So...

And when do you expect that to mature or receive it back?

Working here -- we are working on the payment schedule.

Yes, we are working on the payment schedule and plan actually. There is no -- there will be no problem in terms of offsetting the receivables actually.

Our next question comes from Cemal Demirtas from Ata Yatirim.

My question is about the financing side. We don't see the details of the others. But when I make a rough calculation, you have TRY 1.6 billion, the FX plus the interest expense and some other non-operating costs, and it's a little bit higher compared to previous quarters. And we see that your debt level is declining. What should we expect for the rest of the year in terms of financing expenses? That's my first question. And after Eurobond issue, possibly your debt level is lower. And what might be the catalyst ahead for Ülker for further rerating? Do you have -- what are the plans for the future? And the last question is about the trend in the third quarter so far. How do you see the second quarter was weaker compared to the first? And seasonally, pre-school season, we should be seeing some recovery in the third quarter. How do you -- do you see that right now regarding the third quarter? And related to export question, your international revenue growth, one of my colleague asked the question. I would like to understand the impact of inflation accounting because in many other companies, we see the same thing here, international like Arcelik. Their revenue went down by -- international revenue went down by like 11%. But in reality, in dollar terms, putting the inflation accounting aside, the decline was much lower, around 1%, 2%. So is there any difference also in your numbers when you see the inflation accounting number, right? We see 18% decline. But when you look at with the rough international numbers, nominal numbers, we see lower pace of decline.

Cemal bey, thank you for the questions. So I will answer finance-related questions. Then I'll hand over to our CEO related to the trends and Q3 expectations. So financing expenses and the expectation for the balance of year, we do not expect any significant variation of what we have shared with you before. So our net debt-to-EBITDA targets are pretty much the same and our capital strategy profit is also the same, strengthening liquidity, decreasing the leverage and strengthening balance sheet. So the journey continues with also the numbers, including the working capital numbers as well. Related to refinancing, yes, Eurobond is final. What is ahead of us is the next syndication, which is due in April 2026, and we will start working on that on the second half of next year -- or second half or third or fourth quarter of next year in 2025. As related to inflation accounting, yes, exports from Turkey are restated for the new inflation accounting numbers. And international business revenue decreases as FX growth is below inflation, is mainly because other regions are not like MENA region and other regions are not restated for inflation accounting, where as we restated for Turkey numbers and the decreases as shared before due to FX growth in balance with inflation in balance. So for the third question, I hand over to our CEO.

Cemal, thank you. For the third quarter's estimation and maybe the fourth quarter, we believe that slowdown in the economy will be going -- keep going actually. But one of the advantages for us is back-to-school period of time. The people are going to come back to the [ universities ], so every time, third quarter is always a fast-growing quarter for us. It's going to be more difficult, of course, versus previous years, but we are expecting again the fast growth pace in Q3 and Q4, especially Q4 is going to be very -- get very better than the others' first half actually, I must say. Any missing questions, Cemal bey?

No, that's okay. The one additional point in terms of your guidance, do you see any upside potential to our guidance? Because as far as I see, your inflation figures or expectations possibly were lower. Did you make any change on that side? So do you see any upside or downside to your revenue estimates?

Okay. We don't expect any upside or downside on our year-end estimation. And it's always -- it's much related with the slowdown in some major markets that we discussed like Kazakhstan and Turkey. So if there is going to be some positive momentum in terms of consumption, yes, we can make some upward positive estimation or correction in -- at the end of Q3. But as of now, we are sticking with the existing targets -- estimations.

So our next question comes from Ece Mandaci from Unlu Securities.

I just wanted to ask you about the volume performance. First quarter was extraordinarily strong. Second quarter, we have seen 1% growth on a year-over-year basis. I assume this is just snacking, right? It's not including the other part. So going forward, should we still see some growth or some contraction maybe, but you're also mentioning the back-to-school period for the Turkish market. So it would be helpful if you discuss more about the outlook about the volume performance specifically for Turkey. And as of the second quarter, this 1% growth, is it due to the growth in Turkish market because for other markets -- for Central Asia, you have mentioned the -- and for the exports from Turkey, you have mentioned the downside effects?

Thank you. Thank you for the question. In the first quarter investment meeting, we were saying that we are expecting a slowdown for Q2. And it was the case. In fact, we were expecting earlier slowdown, but April was quite strong like the first quarter. And in May, especially the impact of Ramadan, there was an impact -- negative impact on the consumption, but also in June, it was -- the slowdown was very strong, actually, in terms of demand. So this is, as I mentioned, what we expected and what we factored in our AOP plans actually while we were in the budgeting process in the last year. So we are expecting, of course, a very better quarter versus Q2 in Q3 because as you mentioned and as I explained previously, that back-to school period of time, schools will be opening. People will be getting back to their home from the summer houses and so on. So it's obviously giving us a positive impact, positive pace for the growth in terms of consumption. By the way, this is not special for Ülker. As you may know, and you may join to other retailers' investor meetings as well, in Q2, there is a significant slowdown in the retail part as well. So this is not just for snacking category, but also all -- almost all categories, including textile, fashion, automotive industry, furnitures and so on. So there's a serious -- there was a serious slowdown in Q2. By the way, we keep doing actually very well in August. We had a very good start in August and last month, in July, we were having -- we were in line with our targets, I must say.

Our next question comes from Leyli Cowell from Jefferies.

On my side, I also had a few questions I was hoping to ask. So yes, you mentioned a few of your targets for 2024. I was just wondering if you might be able to share your total debt target for the end of 2024.

Thank you so much for the question. So we do not disclose any net debt/EBITDA number, but we share very clearly our strategy, decreasing leverage or sustaining these numbers is our key priority. So we keep delivering very healthy net debt/EBITDA numbers quarter-by-quarter and based on that and based on our strategy, you can assume that this is our objective to sustain it, keep it or decrease it.

My second question would just be is it correct to assume that your pro forma cash position would increase since your 2025 bonds was not fully tendered. And if so, what would you plan to do with this extra cash?

So what we will do is -- so there are a couple of things that we will use this extra cash. First, financing cocoa, financing working capital. And until 2026, we do not have any big projects where we are going to refinance our syndication. But working capital, there might be also some still CapEx, not huge CapEx for our -- to increase or expand our capacity, might be the uses of cash.

Great. And then final question on my side. I was just hoping for maybe some elaboration on the performance of your exports over the last year and if you experienced potential decline and why.

Sorry, can you please ask again?

Yes. I was just hoping to understand more about the performance of your exports over the past year.

There is no problem with the volume in our export business, export part. So we are in line with last year's. So there is no decrease in terms of volume. This is basically coming from -- by the way, please note that there is some crisis in the region like Israel, [ Europe ], Palestine issues. But despite all those tension in the region -- Russia and Ukraine as well. So despite all the tensions, we didn't lose any volume in our export business. The reason of the decrease in the revenue part is just because of the FX -- stable FX numbers versus foreign exchange rates.

[Operator Instructions] So we have a question from Hanzade Kilickiran from JPMorgan.

I have a follow-up question on the cost side. How much cost inflation do you expect in the rest of the year, I mean, based on your palm oil and also cocoa contracts? And I think for global confectionery companies, it looks like that 5% -- I mean, mid-single-digit growth is becoming a common consensus in hard currency. Is it also the same for you?

Can you repeat the second question again, please?

So for confection -- for global confectionery companies, it appears that around mid-single-digit cost inflation in hard currency is becoming a common consensus for the rest of the year. So is this also same for you based on your current cocoa contracts and also palm oil contracts?

Thank you. Thank you for the question. First of all, we don't expect a significant increase in palm oil. So we are again covered like cocoa, almost till -- to September of next year. So we are not expecting any significant palm oil increases. So there will be no impact on our next year plan and the year-end plans for this year as well. For cocoa, of course, we keep having an increasing cost on a phasing impact, quarterly basis. But as I mentioned, we are covered so that we can estimate -- or even next year cost actually. So we are going to have a clear cost structure for cocoa so that we are going to able -- we are able to monitor our desired prices for -- in order to keep our margins. So single digits for confectionery is not possible if we are operating -- if a company, multi-national company operating in chocolate category using chocolate because in cocoa prices is almost tripled versus 1.5 years ago, the price of cocoa. So there won't be one digit increase, but rest of cocoa, yes, right, especially wheat prices, nut prices even are having like single-digit increases, which are reasonable actually. So the biggest issue is the cocoa, I must say.

Okay. But given that euro is expected to be stable in the rest of the year, this still gives a margin advantage, which you plan to invest into price sizing and it's lower consumption, right? Because you keep your margin guidance stable, but actually, you have some room to improve your margins under this costly environment.

Yes. For the rest of the year. For this year, yes, you are right. We are expecting at least keeping our margins. But in order to eliminate the slowdown impact, we are -- we keep having more support to our consumer promotions and advertising, but we don't expect any lower margins, of course. So we are going to be in line with our target at the end, for rest of the year at least.

We have a follow-up question from Evgeniya Bystrova from Barclays.

Just a quick follow-up on your CapEx. Could you please share maybe your guidance for this year and maybe next year? And what are your key investments in terms of expansionary activities?

Yes. Thank you. We are very careful of our CapEx in the last 5 years, in fact, especially. Now at the moment, we are out of -- we are running out of capacity in some of the products, so we are going to have some investments on those specific lines, but it's not going to exceeding maximum like 3% of our net revenues. So we are going to be playing in a band of 2% to 3% to our revenue.

This is for this year and also next year?

Both, for this year and next year, right.

So we have a text question from [ Irfan Kamal ] from [ Philip Port ]. What is the reason for the decline in revenue in the Middle East?

There is no decline in Middle East actually. I think there is some misunderstanding. There is no decline in revenue in the Middle East part, only for the Central Asia.

Great. Okay. So we have another text question. And apologies if some of this has already been answered, but I will read it out. So this is [ Yadide Onabule ] from Bearing Asset Management, asks what's the outlook for volumes and pricing in H2. Number two, why international operations were weak in the second quarter? And number three, what is the impact of cocoa prices on margins? And how should we think about it?

In fact, we answered all those 3 questions previously through the other questions. But very shortly, we are -- in terms of volume and pricing, we are having our pricing actions on the right time. And so we keep -- we will keep our margins. In terms of volume, we are going to be sticking with the year-end estimation offered by international operations where we -- actually we discussed several times. So we cannot say our international operations were weak. Even North Africa and Middle East part despite all the tension in the region are doing great. So there's only a slowdown in Central Asia, not entire Central Asia, in only Kazakhstan market. Otherwise, Azerbaijan and all other countries, major countries are growing very well, keep growing very well. And the impact on cocoa prices on margins, as we discussed again, cocoa prices are having, of course, important pressure, creating an important pressure on margins. However, we are having -- we got the right actions even in the -- starting from the first quarter. So we don't expect a significant shrinkage on our margins for the chocolate products. But also we are having a very diverse category actually in our portfolio, so we are going to replace or recover some of our margins from other categories as well.

That's great. So I'm not seeing any other questions at this point. So maybe I can hand back for closing remarks.

Thank you, everybody, for joining Ülker Bisküvi's second quarter webcast, and I hope to meet in the third quarter results in November.

Thank you very much. That concludes the discussion for today. Thank you, and have a nice day.