Türkiye Sise Ve Cam Fabrikalari A.S. (SISE) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Sisecam 2021 Year-End Financial Results Audio and Webcast Call. I will now hand over the call to Sisecam CFO, Mr. Gökhan Güralp. Please sir, go ahead.

Thank you. Good afternoon, ladies and gentlemen, and welcome to the review of our 2021 full year earnings results. We hope everyone is well since we last spoke. Today, I am with our CEO,. Görkem Elverici; and our IR Director, Hande Özbörçek. In today's call, I will first walk you through 2021 full year financial and operational results of Sisecam with performance review on a business line basis. Afterwards, I will continue with our cash position and the capital allocation. Operational and financial review will be followed by Sisecam's approach to sustainability where I will provide you our progress report on 2017 and 2022 strategy. I will also share the details on our renewed strategy and targets. As always, we will be pleased to take your questions at the end of the presentation. Please be reminded that our presentation and Q&A session may contain some forward-looking statements. Our assumptions and projections are based on the current environment and thus may be subject to change. Moving on to Slide 3. We ended the year once again with a record-breaking performance on the top line. We have an all-time high profitability on both EBITDA and net income levels on a one-off adjusted basis. Consolidated revenue with a year-on-year growth of 50% reached to TRY 32 million. Euro-based top line went up by 15% and recorded as TRY 3.1 billion. Thanks to the robust performance across all business lines with one single exemption, auto glass. Our EBITDA increased to TRY 8.6 billion. Local currency and euro-based increase in our nominal EBITDA were recorded at 73% and 33%, respectively. Even though 2021 was an extremely challenging year given globally higher inflationary environment, we left the reporting period behind with 27% adjusted EBITDA margin, up by 400 basis points compared to the level recorded in 2020. Larger scale of operations, wider catchment area and higher capacity utilization rates as well as cost pass through almost all business lines were the main drivers of the solid improvement in our profitability. Backed by below the operating line FX gains, one-off adjusted parent-only net income went up to TRY 8.1 billion. Our portfolio performance were supported by all 5 business lines, thanks to sales volume growth and cost pass-through. Architectural glass continues to be the highest top line contributor. It was followed by glass packaging and glassware segments. Chemical operations due to mainly hard currency decline in shortage price given 21 contractual terms had a sluggish performance. Auto glass operations weaker than expected performance was directly in relation with unsystematic risk. Moving on to Slide 4. Architectural glass operations sustained its outperformance throughout the year. Earlier this glass demand dominated the markets in all geographies we have been present as local manufacturer as well as we were exporters. We were fully equipped and well skilled to meet our end client industry's needs. Upward trend in building renovation, governmental housing and infrastructure projects, combined with the mobility on home appliance and furniture sectors, were the main drivers of the glass demand in Turkey. Continued process glass exports of the wholesalers pushed the demand further to the north. Meanwhile, the European markets were extremely mobile with called repairs at peer company level and limited flow of processed glass due to logistic constraints on top of the demand for glass as the most preferred insulation material coming from the construction industry. Stronger operations in Russia and India have also contributed to catching sales volume growth of 21% year-on-year. Price and sales mix combined with currency level impact, net external revenues went up by 85% compared to 2020. In our auto glass operations, on the other hand, we have experienced the inevitable impact of the everlasting global semiconductor industry shortage. Amidst temporary production halt of our main client OEM in more than [indiscernible], we managed to increase our sales volume by 3%. Gradually increase in aftermarket sales share, inclusion of new projects and hard currency-denominated revenue streams, have all contributed of this segment's 36% top line growth. On Slide 5, I will continue providing details on the last 3 business lines. Thanks to improved consumer sentiment with the ease of COVID-19-related restrictive measures and reopening of HoReCa, glass business line has rising, we had a very good performance. Volume sales ramped up by 17%, and mobility in our domestic market as well as in the international markets was healthy enough to accept product price increases, Further boosted by local currency weakness, segment-wise revenue increased by 53% year-on-year. Our glass packaging operations generated a top line growth of 37% on the back of 8 volume increase and 29% price sales mix and currency impact. Sales volume growth was even a split between Turkish and international operations through limited on the export side, while the share of international revenue stood at 60% of the segmental revenue. Finally, yet importantly, our chemical business line revenue went up by 37%. Although sales volume growth was visible across all subsegments, yet pricing was weak for our operations given 2021 contractual terms. Therefore, logistics expense and energy price increases could be reflected to product prices within the year. Hence, considering the existence of solid demand dynamics, major global soda ash producers conducted 2022 negotiations by allowing the clients to secure the volume they require for the full year but at variable pricing terms subject to change on 3- to 6-month reviews of the cost of goods sold. This year's global soda ash market continues to be highly volatile parallel to the expectations of third-party market analysts. With the incremental production capacity we took online in our Bosnia and Turkey plants, our soda ash capacity went up from 2.4 million to 2.5 million tons per year. With the inclusion of the already operational mine, we started this year with a total production capacity of 5 million tons. Moving on the next slide. With our operations in 14 countries, naturally balanced operations portfolio, wide range of products business -- in all business segments and strong export capabilities, we continue to cater our products across the globe. In 2021, share of international revenues recorded at 66% and up by 800 basis points year-on-year. Export revenues, half of which were generated from sales to Europe, stood at USD 840 million. Including sales from Sisecam facilities located in the region, sales to Europe accounted for 36% of our top line. Including U.S. markets, our sales developed markets reached to almost 40%. On Slide 7, our strong liquidity position was sustained in the reporting period 2. We ended the year with USD 1.3 billion cash and cash equivalents, including financial investments portfolio, which is composed of Turkish financials and nonfinancials Eurobonds having similar to or higher than Sisecam ratings. Net debt position recorded at USD 788 million, which is post U.S. natural soda ash controlling state cash outflow of USD 450 million with leverage of 0.9x. Outstanding debt was USD 2.1 billion, down by USD 260 million with a term structure of 38% short to 62% to long and an interest rate structure of 53% fixed to 47% variable. We carried 87% of the cash and cash equivalents in hard currency as we continue to be short in Turkish lira to preserve our loan position in hard currencies and to fund our Turkish operations. Sisecam's net loan FX position came in at USD 440 million. As of the year-end, we are USD 830 million long and EUR 367 million short in Euro. Moving on to Slide 8. In 2021, our CapEx moved up by 41% and reached to USD 300 million compared to the same period last year, [indiscernible]. Measures towards the CapEx were in relation with scheduled called repairs and investments in addition to land acquisition in Turkey and Hungary for our greenfield flat glass and glass packaging investments. Cash conversion cycle lengthened by 4 days year-on-year rise in inventory days outstanding due to local currency depreciation. We ended the year with a negative balance of free cash flow side given noncash adjustments in relation with unrealized FX gains, increased CapEx, cash payment for the stake acquisition in US debt . As a final note about our operations, I would like to touch upon the investment decisions we announced throughout the year. As part of our strategy of enlarging our operations portfolio by bringing in higher generating assets, in the very beginning of June, we decided to go ahead with a greenfield investment in Hungary at EUR 255 million sites, 2 furnace investments with a total of 330,000 tons annual production capacity, which will be operational in 2023 and is expected to reach its full capacity by 2025. We have also decided to bring in our fifth furnace with an annual production capacity of 155,000 tons to our Eskisehir facility in Turkey. Estimated cost of this investment is equivalent to EUR 84 million and we do plan to ignite the furnace in 2023. Upon its completion, our domestic production capacity will increase to 1.5 million tons per year. Global glass packaging production capacity will reach to 3.2 million tons per year from the completion of this greenfield investment in Hungary. In September, to meet the rapidly growing glass demand in Turkey, we announced 2 new float line investments exceeding EUR 350 million with a total capacity of 600,000 tons per year in architectural glass and automotive industry dedicated to glass production. Once the -- these investments are completed, Sisecam's domestic float glass production capacity will be increased by 30% to 2.6 million tons per year. The lines will be operational within 2023. And close to the end of 2021, we acquired a land in Tarsus for our greenfield float line investment. In December, we successfully completed our U.S. Natural soda ash investment deal, which is the largest scale investment in our entire history. As you may recall, we increased our stake in Pacific mine from 50% to 60%, acquired 60% stake in Atlantic mine and 60% controlling stake in Ciner Resources port at USD 450 million. While Ciner Resources has 2.5 million tons of annual capacity, Atlantic and Pacific have in total 5.4 million tons capacity. Altogether, we will manage 8 million tons natural soda production capacity in the U.S. We will be operating the lowest cost capacity in the region. With our partner Ciner, we will invest USD 4 billion to develop Atlantic and Pacific projects in the next 5 years. On a pro rata basis, our total share for these investments will reach to USD 2.4 billion. As far as our balance sheet is concerned, including our growth projects we have already announced or are included to our 5-year strategic plan in glass production operations and scheduled called repairs, we expect our consolidated net debt to EBITDA to be around maximum at 2x in 2024, which is considerably lower than our comfort zone of 2.5x and we will sustain net loan FX position throughout the investment period. Majority the spending will be made in next 3 years from late 2022 to 2025. Once the Atlantic and Pacific operations reach full capacity in 2027 and 2028, and as it is already the case for Ciner, we expect to generate USD 1 billion to USD 1.2 billion EBITDA with 70% free cash flow conversion. And very recently, we acquired the Italian company one of the world's leading refractory materials manufacturers with an annual production capacity of 6,000 tons for EUR 22 million. Although this investment is a fraction of our CapEx for the next 5 years, we believe it is a -- it has a strategic importance. Having referred in our portfolio it will allow us to secure our refractory needs and manage supply chain-based risk for our new furnace investments and scheduled furnace maintenance process going forward. On Slide 9, I would like to take the opportunity to share a new chapter on our sustainable journey. We are now ready to launch our sustainable strategic care format for the year 2030, which is driven by the needs of societies and evolving challenges of our planet. This strategy introduced clear and compelling targets in the pursuit of the United Nation's sustainable development growth on dynamic assessment on ESG issues and backed by inclusive stakeholder consultation since 2020. This strategy is also supported by [indiscernible] a developed following broad screening of ESG risk and opportunities as well as quite substantial investment needs from a corporate plan approach with the contribution of more than 400 [indiscernible]. This diligent process enables Sisecam to have a sound and genuine strategy with specific targets for 2030. In the new period, we will remain committed in protecting the planet Earth and empowering society while introducing a new purpose called as Transforms Life. Moving on the -- on to Slide 10, recalling Sisecam's long and strong history on sustainable value creation, 2021 has been another remarkable year for enriching our legacy on sustainability. We received a highly prestigious sustainable business awards recognized as Sustainability of Turkey for our V Block product, which was the world's first antimicrobial glassware. As mentioned, we developed our 2030 Care for Next strategy with the target of moving Sisecam to the next level of -- on sustainability. Our strategy will allow us to take a larger role in providing sustainable solutions and products for the wellbeing of societies and the planet. Our venture capital investment on a biotechnology solution has been a clear sign of this moment. The planet-friendly innovation called BASALIA technology is to produce hydrogen gas energy while capturing CO2 emissions as core output of 0 pollution process. Natural soda ash investments we have added to our operations portfolio very recently is a clear sign of our vision on value chain sustainability as well. This investment is to help our CO2 and water footprints of our soda ash business line and is integral to our sustainable targets for 2030. On Slide 11, you may see the list of targets set as part of our 2017 and 2022 sustainable strategy and respective progress. We achieved some of them yet as we are sure you will all agree that the last 2 years were exceptionally challenging due to everlasting pandemic and we experienced certain setbacks in our sustainables too. We have already learned our lessons, and we are ready to kickstart once again with our new strategy. Moving on to the next slide. As underpinned by the pillar of protecting the planet in our new strategy, we have adopted a clear vision of becoming carbon neutral by 2050. At Sisecam, we do recognize the stark reality of climate crisis. Summer of 2021 has been a clear proof of global warming with the most devastating climate disasters we faced. Sisecam has been -- will act with the full responsibility as an active partner in the solution to the climate crisis for the next. We have already begun investigating opportunities for adopting a science-based target for 2030. We are fully aware that shifting to such path required adoption of best available technologies as well as pioneering for breakthrough ones. We are determined to invest on an electrical furnace in the upcoming period given our strong R&D expertise. We are also exploring science on [indiscernible] technology for solar melting in addition to the implementation of advanced technologies, including but not limited to advanced furnace control technologies with heat recovery, increased boosting and colored use where technology is possible. This low carbon pet by 2030 will make Sisecam more resilient to transitional risk of European Union Green Deal and its integral component Fit for 55 package as well, while lowering risk simulated by other emerging measures of carbon pricing around the globe. We also aim to increase our renewables CapEx by 8x. We target to have a 53-megawatt installed renewable energy production capacity by 2030, primarily for our plants on electricity consumption. We have been also purchasing green electricity credited with international renewable energy certificate for our central office building here in Istanbul. We aim to further benefit from other opportunities in other operation geographies in upcoming term. With respect to water use, which is one of the key topics of ESG for Sisecam, we are determined to reduce our water footprint by 15% compared to the level recorded in 2020. To achieve this goal, we will shift to closed loop cooling water systems by standardizing roof top rain water collection systems or plants. Moreover, we will invest in Basalia technology at our soda ash production plant where we will recover and reuse discharge water coming out of municipal waste water plant. This is going to be one of the advanced examples of industrial symbiotic relationship in water cycle. Since circular production approach is well embedded into Sisecam's way of the business, we have well achieved our respective target within the previous strategy term and now needed to leverage them for 2030. We aim at reducing our entire packaging waste by 50% and at increasing external glass cullet ratio up to 35% in glass packaging. Let me continue with the pillar of empowering society. We are committed to retain our vital role in transferring a glass heritage for -- to future generations and has been pioneering and actively promoting endorsement of 2022 by United Nations' International Year of Glass. We feel privileged to take part at the opening ceremony International Year Of Glass in Geneva soon and determined to display our leadership throughout the year and ahead. With respect to our equality, diversity and inclusion approach, now we have an increased target for women employment rate to 25%. We will support this target by mainstreaming women-friendly factory of standard and by introducing women's exploration program across the entire operations. We are also aimed at enhancing our inclusive workplace environment where Sisecam employees feel valued and reflected by policies that provides equal, fair, safe and respectful for human rights. We aim to reflect our inclusive culture to all our business areas and work to widespread this among our business partners. Other key material issues under this pillar consist of function-based and competitive talent with a clear target on increased number of trainings per employee a year. Additional goals include acquisition of new generation talent and enhancement of employee engagement. We have refreshed our net zero incident vision, which is to be empowered by integration of programs on safety leadership and cultural transformation program on occupational health and safety. We believe that this vision is not limited to zero incidents and shall also care for wellness of our employees through their life span. Hence, we are to expand our total wellness program and integrate it across regions. I will proceed with the final pillar of the strategy called as Transforming Life. Scoped under this pillar, our digitalized value chain has 3 clear and lean roles, including digital workplace environment, digitalization of corporate level of operations and decision-making based on data analytics. Prior to explaining our goal on sustainable products, let me recap on our product-based solutions in creating value for the society and planet. Our glass product solutions becomes more sustainable every other day for world's low carbon transition. Our coated and Low-E glasses provide energy and light control in buildings and responds to the needs of evolving policy such as innovation wave for Europe. We are also working intensely to support the clean mobile transition to provide auto glass solutions, while aimed at increasing our share in providing glass fiber for vital targets as well as high-quality glass for photovoltaic panels. On the road to 2030, we aim at expanding our portfolio and ratio of those sustainable solutions in turnover. At present, we partnered with 60 universities and companies from all over the world in the fields of R&D, and we strive to boost this goal in the near future. We have also initiated an in-house capacity building program on life cycle assessment for supporting improvement areas for more ecofriendly practices with design and manufacturing bases. We are proud to have played a leadership role in establishment of ecodesign criteria for glass products, which ended up in the issuance of Turkey's national environmental level criteria for the sector. As part of our supply chain sustainable division, we will soon introduce a supplier capacity building program on sustainability, and we'll seek for full commitment on our supplier code of contact by our entire suppliers by 2030. As final remarks of this slide, let me share that we are keen to reinforce our corporate vision through new partnerships on our sustainability goals. On Slide 13, let me also explain how we govern sustainability and execute this strategy at Sisecam. We have a dedicated committee on sustainability chaired by our CEO and coordinated by Chief Strategy Officer with members of chief officers. Updated committee structure and associated working groups are now aligned with our new strategy and organizational structure. Beyond the core functions of the given committee at the execution and monitoring phases in particular, the recently established committee at Board level chaired by Chairman of the Sisecam Board of Directors provides oversight as well as guidance and direction on sustainability by holding the mandate on endorsement of the strategy. I would like to touch upon our ESG performance. We have been eligible for the Istanbul Stock Exchange Sustainability Index since 2016 and now also complying with the stricter requirements against [indiscernible] on quarterly basis. We retain our above-the-average performance in most of the indexes. On our final slide, we are now going under verification process by a third-party assurance agency on our sustainability reporting and practice for the first time. The verification will be conducted in accordance with the international standards, and we are fully interested to learn further out of this process to improve our ESG practices. We are also glad to inform you that we will soon be launching a new and dedicated micro website on sustainability, which will allow us to disseminate information for all our stakeholders at a faster pace. So I have completed sharing the comments and the slides with you. Now we can move forward with the Q&A session.

[Operator Instructions] The first question comes from Cemal Demirtas from Ata Invest.

My first question is about the outlook. You had a great year last year. How do you see the outlook or how do you see the output for the first 2 quarters? How do you see the visibility and some color on the profitability side? Do you see some improvements in the synergies? Or do you expect further synergies after the completion of the mergers, just any color on that? And do you see -- in your sector, do you see any -- for the full year perspective, do you see any threat from the changes in China in either way or the global perspective? It will be very helpful to see at least some indications about the [indiscernible] in Turkey and in your other markets.

Thank you. So trying to answer your question, whether there is a visibility, I believe it's a question mark for everyone, not only for us. But what we can provide as an overall comment for how we started the year and what is our expectation, what is good is still the market in almost all segments is a sellers' market. So for sure, the increase in costs and the inflationary environment, there's challenge for everyone, not only for us. So we are experiencing difficulties from our suppliers in our input costs and thanks to our strong position in translating these cost increases to the sales prices has been key to our profitability until now. And as long as the market continues to be a seller's market, we believe that this will continue to give us room to be able to transfer this cost increase. So looking at the industries, you have already seen that starting with Turkey, but also considering the inflationary environment almost any way around the globe, we have been able to especially transfer this cost increases to our sales prices, especially in the glass segment. And also with the improved pricing condition due to the renewed annual contracts, or I should say, this time, it is quarterly or half yearly contracts that we formed for soda ash has helped us to continue to perform strongly. So considering our expectations from additional synergies, you know that Sisecam has been in an ongoing transformation journey, especially in the last couple of years, which has been crowned especially by the merger process that has been completed back in 2020. And since then, we have continued to see the synergies, not only by cost synergies, but also improved in our market positioning and our market competitive position. And I believe it is important to remind that especially with the organizational changes that have been done by the end of last year or early this year, I should say, has been the end of the operating model transformation, which -- with minor adjustments or improvements that will be made throughout the year, we can say that Sisecam by the operating model and by the technology, together with the capital base, is now able to be ready than ever to fight against the global competition that is upcoming. So considering your question for China, you know that China, we have to consider in differentiated manner for different segments. But what I can sum up is China is as of now in almost all the business segments we are operating in is not one of the main exporters to the markets that we are catering to. Mainly, it was more a competitor in the previous years for business like glassware. But I don't know what to say thanks to or regarding the changes happening in the supply chain and the breakages that we are experiencing, they don't seem to be one of the main competitors moving forward at least for this year. But for sure, we are not in a position to wait and hope that things will be improved on our side for the breakages in the supply chain because I believe supply chain breakage is creating more risks and issues to any companies, including Sisecam and the benefits that it might bring in the business side. But considering soda side, the glass businesses, China doesn't seem to be one of the main competitors moving forward, especially with the market dominance we created, especially in the more regionalized businesses we have in glass. So -- and when you consider soda ash, China has become one of the net importers within 2021 due to many differentiated reasonings. And moving to 2022, looking at the increased demand, not only in China, but also around the world, it seems to be at most that they might be able to fulfill the requirements coming from their local market not to become an exporter to the rest of the globe. So I hope.

Okay. And as a follow-up I remember during the teleconference, I had a similar question about the visibility. And I remember that you were saying that visibility is a challenge until the beginning of -- like in the first quarter of 2020, I remember from that presentation. And for now, could we roughly -- I know the visibility is always a question. But could we, just with the perspective, say that at least for the first half of the year, do we see a similar visibility or we are just -- are we more shortsighted like because at that time, it was like 2 quarters visibility in many commodity sectors, I see 1 or 2 quarters' visibility. Could we say that at least until May, June, do you see a similar visibility as you shared in the past.

Thank you. So I can come up with the same answer, but we have to consider also considering that we had visibility in many markets, even in Turkey. Just please remember what has happened, especially in the last quarter, so many ups and downs, not only in the currency fluctuation, but also the shortages that has been experienced in the market, record high input costs. I believe for sure visibility is important, and as I mentioned to you, why I am stressing again that if the seller's market provides us a little bit comfort on, especially in the upcoming couple of quarters, but things are changing so frequently all around the world. And I believe how you are managing and coping with the risks and the performance you have put on the table is one of the most important things in this bumpy ride. So I don't believe any of the companies or even the countries or economies have the right to say we have a clear visibility moving forward because everyone is affecting each other, especially with the breakages that we are experiencing in the supply chain. Just to give you an example, if we were having the speech back in 2021 at the early days, everyone was expecting a considerable decrease in the energy prices globally and all the prices was aligned with this. And I don't believe I have to remind what has happened to anyone on this call, especially starting from the second half of last year. So what I can say, looking at our individual businesses, all the market seems to continue to be seller markets. The main drivers and the demand drivers seems to be right. We have experienced seeing a very strong demand coming from almost all segments. The only exception seems to be auto parts. But in fact, if the auto companies are able to get the required chips from the industry that they can start to align themselves with the highly increased volumes of production, I believe that we will be seeing very shiny figures coming from auto glass business also. But apart from this situation experienced in auto glass industry, for the rest, I believe that we will continue to have strong demand and strong profitability results.

The next question comes from [indiscernible] .

I also have a few questions. Maybe I should provide one by one. First of all, could you give us some color about the impact of natural gas cut in Turkey, I mean, in terms of its effects on the output level under profitability, maybe the health of the furnaces and overall view would be great?

Is it the effect of price or the shortages?

Yes, there was a 40% cut and then it reduced to 20%. It went on almost for a month.

Overall, we can say that it was limited to roughly around 3% to 4% in the total production capacity of all glass segments and including our soda ash business. So thanks to the alternative sources, we were able to convey has helped us. So the main issue, I should say, is not the natural gas in fact. So electricity shortages mainly are hurting us more. For sure, there are alternatives, we are trying to holding on that sense. But electricity, especially due to the higher usage of the life in glass packaging and glassware is hurting to some extent. But with the -- I believe, super performance done by a collaboration of our supply chain and production teams, we have been able to limit it to a couple of percentages, which can be easily recovered in the upcoming couple of months. .

Okay. And my second question in the chemical and packaging segment, I see a multiple decline in the EBITDA margin in the last quarter, I think more than 10% year-over-year if you exclude the other operating income expense. So my question has actually put it in the presentation that part of the reason that pricing cannot need to catch up with the cost inflation. So for this year, do you see a room for improvement into these 2 segments? And more specifically for the chemicals, I would expect a 20% increase in soda ash prices will be enough to cover the cost side of cost pressures.

So the things that you have experienced in the glass packaging and chemicals, we already tried to summarize the story with chemicals. So it used to be annual contracted commodity. And starting from the beginning of -- and with the input price increases, especially during the last quarter and the input increased ones even moving to the second half of the year has impacted the margin to some extent. But apart from this, especially with very much improved pricing conditions starting from the beginning of this year, which will be fully reflected, we believe, especially after the February end results, we'll be able to recover for the increases. And to be able to reflect any possible cost increases that might happen in the coming quarters, including this one, this year, we didn't make any annual contracts or multiyear deals. So they are more on a quarter or a half year based escalated formulation, which is mainly including any possible increase on the logistic costs or energy prices are directly reflected starting from the next month. And every other quarter or every other half, I should say, the prices are revised based on the changing market conditions. And this is more or less the same for glass packaging. Glass packaging normally, the escalation formulations were done annually or half yearly. Starting from the last quarter, we shifted to a quarterly, even monthly basis for most of our contracted ones and started to improve our pricing, so which has happened through to the end of the year, which was not fully reflected. And there has been some meaningful, I should say, considerable price corrections made, aligned with the cost increases. So we believe that the margins should be a little improved compared with the last quarter and more or less similar to what we experienced last year for glass packaging.

Okay. That's really helpful. I have also a very quick questions. First one is about dividend distribution. I mean, is it reasonable to assume similar payout ratio with the last year coming since this year's earnings are significantly supported by the FX? And obviously, domestic architectural glass market going forward given the macro challenges. I understand that the export price is quite strong. But for Turkey, do we see any downside risk to the churn volumes or this year's volumes?

For the dividend policy, as I keep on saying, for sure, we are trying to stick to the payout ratio that we have and even improve it where we find enough visibility for the upcoming years to continue. But as I keep on telling also every year or every half, I should say, we are only looking at the operational performance, especially we are not considering the FX gain, which is not in fact a gain but a tax payment creating devaluation only when we are calculating our payout ratio. So I believe it might be better to stick to the analysis version of the revenues, EBITDA and EBIT to be able to link with the payout ratios that we are linking ourselves because we are trying to exclude any one-offs or translation gains to be able to make visible payout ratio based on the operational performance. And I need to remind that when many of the companies were refraining from making any distributions in the last couple of years due to ever-changing market conditions, Sisecam continue to be aligned with the payout ratio strategy it has. And considering so many investments still ongoing, still we will try to stick to what we consider ourselves as a promise to our investors. So for coming for the domestic architectural markets, domestic architectural markets, especially starting from last year is no more a domestic market, I should say, because there are a couple of -- 3 dimensions that we need to consider together with the domestic one. First one, domestic market seems to continue to be strong. Although there are some volatilities and uncertainties moving forward, especially a possible increase that we are experiencing in the interest rates is not the headline interest rates, but especially the bank loan rates going up, that might create, for sure, a risk moving forward. But the thing is that together with Sisecam exporting itself, which has in fact decreased within this year when we compare with the other years, the domestic demand for exports in the secondary producers that we are catering to is going like crazy, increasing like crazy because most of the secondary glass producers that are based located in Turkey, especially starting with the breakage in the supply chain, but also then supported with increased market demand coming from, especially European and Middle Eastern markets, is now creating mainly the issues in the glass supply not being able to meet the demand in the market. And looking at from this dimension, most of the sales are done in hard currencies for this purpose. And when we discuss with the main dealers that we are working with, it seems that this year will -- with the backlog they have for their own projects, for sure the first half, but most probably the second half will continue to prove to be quite strong. And also the third level of export is the Turkish contractors going to abroad markets, building to use the glass products that they are used to. So there's a huge increase in the Turkish contractors abroad projects also, which they are building to either directly source from our own end product or source from the secondary glass producers that we are catering to. So all those 3 export dimensions, plus the domestic demand, proves to be very strong. And the main challenge for us seems to be how to be able to cater to the needs of the domestic market rather than not being able to sell in the domestic market. And I should also remind that we have already decreased the exports to the minimum levels that we can, especially last year. And there is a huge demand coming from the markets -- international markets with very good pricing conditions similar to that is in Turkey. So most probably, architectural glass will continue to have a very strong year again. For sure, we need to keep a caveat on one side for all the business lines, not only specific to architectural glass, that so-called techflation expected that might happen in the coming quarters or years around the globe will be a reality for everyone, not for only Sisecam, not for the glass industry itself. So -- and for a possible scenario like this, we are, for sure, making all the scenario analysis and mitigation tools are in place for us to fight with this upcoming market conditions better than our competitors.

Okay. I have a very quick follow-up on the dividend side. I understand it is it better to calculate last year's payout ratio based on the FX ratio of one-off ratio and then apply that ratio to do this year one-off and FX regional net income. Is that correct?

So I cannot directly provide you the formulation, unfortunately. But the thing is that, as I mentioned, we're excluding the one-offs and FX translation gains when we are calculating and analyst EBIT/EBITDA and net revenue calculation seems to be the closest ones, I believe, to reflect those calculations.

The next question comes from [indiscernible].

Congrats on the results. I have, in fact, a few clarifying questions. You've mentioned, not surprisingly, that the production of glass for automotive industry is still quite weak. So shall we assume that the volumes we saw in this business in the fourth quarter will be maintained in the first quarter of this year at this stage? What do you see?

Thank you for that. I believe that will be a fair assumption. The thing is that we have also very considerable demand coming, especially from the secondary replacement market. But the thing is that we have already dedicated ourselves to many projects on the OEM business. And the visibility they have on their side proves for themselves that there will be a very strong production that is upcoming in the upcoming quarters due to a huge demand that has not been able to fulfill by production, especially within the last 1.5 years. We continue to produce so that we can cater their requirements, huge requirements that is expected to happen in the upcoming quarters. . So that's why we are also building up inventory in auto glass business, but that is not something that is going on forever for sure. But especially after the first quarter, if we see that demand is not still piling up, we may shift already -- I should say, we are planning to shift some of the production lines directly to the secondary market business.

That's perfectly clear now. My second question is, in fact, also a clarification of what you've already mentioned that there is still strong demand in all of your businesses except auto glass. You are enjoying the seller market. So my question is, shall we assume that in the first quarter, excluding out of glass business, the capacity utilization ratios in the other businesses should be similar to the one that you reported, which were, in fact, stellar to the one that you reported in the fourth quarter adjusted for this lost 3%, 4% volumes in Turkish operations stemming from the shortage of gas?

You're perfectly right. Just to make a blended -- to provide a blended picture, we are already operating beyond 90% capacity utilization in glass businesses. You know that they have differentiated realities in different segments. And for [Audio Gap] created small losses in volumes, we can say that they are fully operating with even beyond 100% capacity utilization.

So is it fair to assume that your backlog in terms of your order book is quite stable at this stage versus what you have seen in the fourth quarter?

Yes, we can totally come to that conclusion. So all the businesses, in fact, auto glass is also providing to be very successful by demand. But unfortunately, as the cars are not produced, they are not turning into revenues. So we are also talking with the OEMs how to be able to start turning them to revenues, not only us, but 400 differentiated supplier groups are negotiating the same with the auto industry. And I believe that as they have been able to just end the year the most probably very strongly, we may start to discuss something different as the suppliers and the auto OEMs, something different starting from the first quarter of this year.

Thank you so much. That's all from my side.

Look -- and just to remind, for sure, especially glass businesses, have their seasonality to some extent. But even in glass packaging, we have made the necessary moves to smoothen it. And looking at the demand as of now, it seems like the seasonality even doesn't happen.

The next question comes from Ece Mandaci from Unlu Securities.

And congratulations on the good numbers. I have a question regarding the working capital. We see that the working capital requirement has increased in the fourth quarter. You already mentioned in your earnings review that it was also linked to FX translation effects. So going forward, in the first quarter, should we assume some normalization or decline in the working capital over sales? The thing is -- my reasoning is that because now architectural glass has a higher revenue share. And of course, number of receivable days are generally slightly higher in the segment compared to chemicals, and maybe this mix effect could have some effect in the increase, and it might normalize with new contract pricing in the soda ash business, for example. Or how should we assume, I mean, in an inflationary environment, could there be a sharp Q-on-Q decline in inventory days? Could you just give a general view on that?

So it might be a little bit over exaggerating, if I say, there will be a sharp decrease in quarter-on-quarter. But for sure, there will be a normalization. One of the main reasons is that the acquisition we completed in the U.S. in the last quarter, the second one is the valuation effect coming, especially in our inventory. And I should say that looking at the overall business model or the portfolio, the increasing share of soda ash business, in fact, is lower inventory and better working capital business. And as we mentioned, the new investment is expected to bring beyond 70% free cash flow generation. The one to be completed in Atlantic, Pacific. And more or less, all the soda ash businesses not maybe as high as 70% in that sense, but better performing than the glass businesses in general. And I believe with the improved pricing environment and being able to see the translated effect of the increased currency also in the sales figures, not only in the inventories on an average basis, we will continue to milk the working capital ratios that we have. And I need to stress that the company, apart from all these things happening in very short periods of times, like quarters, has been investing extensively to continuously improve its working capital usage and the percentages. So one of the main reasons why we decided to further invest in businesses like soda ash is to improve our working capital and return generation performance in almost all dimensions.

Ladies and gentlemen, there are no further questions. Dear speakers, back to you.

Thank you very much. As we keep on sharing with you, so we will also meet with you with the half year-end results moving forward. And we would like to thank everyone for their participation. And as we mentioned during the presentation, and while we were trying to answer the questions, we believe that Sisecam will continue to deliver strong results, especially for the visible period of the half year. And for sure, we will share with you our perspectives moving forward, especially in the half year call that we will hold most probably late July or early August. .

Ladies and gentlemen, this concludes today's conference call and webcast. Thank you all for your participation. You may now disconnect your lines.