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

Hello and welcome to the Sisecam First Half 2020 Financial Results Audio and Webcast Call. [Operator Instructions] Please note this call is being recorded. Today, I am pleased to present Mr. Gorkem Elverici. Please begin your meeting.

Thank you very much. Depending on the time zone, Good morning and good afternoon, ladies and gentlemen, and I'd like to welcome you for the review of our first half results of 2023. I hope everyone is well since we last spoke. Today, I'm together with our CFO, Gokhan Guralp; and our IR Director, Hande Ozborcek. And now, I would like to hand over to our CFO, Mr. Guralp, for the review of our first 6 months' results. So, Gokhan, the floor is yours.

Thank you very much, Gorkem. Good afternoon, ladies and gentlemen. Regretfully, we were forced to cancel our company's 2022 year-end results webcast due to the unfortunate earthquake that struck 11 states in Turkey. I hope you are all well since our last meeting back in August 2022. I would like to thank you all for joining us today. In today's webcast, we will be first walking you through our 2023 first half financial and operational results by presenting business lines' individual performances. Afterwards, we will be providing details regarding our cash position and capital allocation. Operational and financial review will be followed by some insightful information on our operational excellence development program. Finally, we will be sharing Sisecam's approach to sustainability, while we will remind you of our strategy and provide you last year's progress report. As always, we will be pleased to take your questions at the end of the presentation. Please be reminded that the presentation and Q&A session may both 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, starting from this year, we have implemented a series of important amendments to our segmental reporting in the consolidated financials. These changes are crucial considerations for valuation modeling purposes. Firstly, a new business line named Energy has been created, encompassing the financial performance reporting of Sisecam's energy trading activities on both internally-produced electricity through cogeneration facilities and the energy procured from third parties. Secondly, Auto Glass business line has been expanded to include glass fiber and home appliances sub-segments and has been renamed Industrial Glass. As a result of these modifications, Chemicals business line has been simplified. We further simplified it by relocating mining and Oxyvit operations to Other segment. It is pertinent to mention that the financial performance of Stockton Port Management partnership, in which we made an investment in May 2023, is subject to stake adjusted consolidation under Chemicals business line. This is because Sisecam Chemicals USA, the entity to which we hold a 50% stake in this project, first within the purview of Chemicals operations. Lastly, home appliances sub-segment has been moved from Architectural to Industrial Glass category, considering the similarities in the production processes between this product category and Auto Glass. Additionally, Oxyvit's packaging activities have been transferred to Other segment, primarily due to their internal consumption nature. We believe our stakeholders and investors can better understand the financial performance of each business line and make informed decisions based on the revised segment reporting principles. Slide 4 is a quick display of our key financial results. As can be seen on the first graph, we ended the reporting period with a record-breaking top line. Carryover impact of cost-based dynamic product pricing models we deployed in all of our main operations with the exception of Auto Glass and local currency depreciation were the primary triggers for attaining TRY 58.4 billion top line as sales volume smoothened almost across all business lines. Consolidated revenue moved north by 45% year-on-year, while it was 6% higher than the revenue reported in the second half of 2022. Year-on-year growth in USD 2.9 billion top line was recorded at 9%. In a quite challenging business environment, marked particularly with global macroeconomic uncertainties, sticky inflation and a decline in consumption trend, given hawkish monetary policies, we took a series of strategic decisions, ranging from early start of a scheduled cold repair to lowering gross poll rates, particularly in gas production facilities for inventory optimization purposes. At this point, it is noteworthy to remind you that 2022, especially the first half, was especially high base. Dynamic pricing model has allowed us to pass through production cost increases with an immediate impact onto our product prices, while respective rises in per ton cost of goods sold had followed with a quarter lag due to inventory cycle. Despite this, our gross profit margin came in at 33% versus 38% last year. U.S. soda ash operations with 50% plus gross profit margin added 300 bps to our consolidated profitability, which was 100 bps higher than its contribution last year. Our adjusted EBITDA inched up by 27% year-on-year and reached TRY 14.2 billion. Respective profitability margin came down to 24% from 28% recorded in half one of 2022. Fundamental reasons for EBITDA margin contraction were not different to the ones mentioned for the gross level. Yet net other income from main operations, measures of which stemming from FX rate fluctuations' net impact on trade receivables and payables, supported the profitability, while year-on-year rise in OpEx to revenue ratio was limited to 80 bps and depreciation to revenue ratio was flat at 5%. Our adjusted parent only net income came in at TRY 9.2 billion, up by 3% year-on-year. Incremental profit generated at the operating level was [indiscernible] given onetime earthquake tax expense booked in the first quarter and deferred tax expense stemming from accelerated use of deferred tax assets, given capital expenditures on the investments. On the Slide 5, we provide a segmental breakdown of our consolidated top line and adjusted EBITDA. It was evident that our portfolio of operations remains well balanced. Particularly noteworthy was the significant role played by our Chemicals business line, which operates purely in hard currency, in supporting our overall financial performance. This business line demonstrated leadership in both revenue and EBITDA generation, contributing 28% to the former and 38% to the latter. Within our portfolio, our structural glass operations emerged as the second highest performer with 14 production lines in Turkey, Europe, India, Russia, as well as a line in Egypt with partnership with Saint-Gobain. This segment contributed 20% of our total revenue and 21% of our EBITDA. Among our 7 business lines, Glass Packaging showed prominence by ranking as the third largest contributor, accounting for 18% of our total revenue and 17% of our EBITDA, whereas Glassware operations' share in consolidated top line and EBITDA were 12% and 13%, respectively. Industrial Glass operations had a limited impact, especially on the EBITDA level. This was primarily due to the challenges posted by LTA-based auto glass operations with OEM clients, given the setbacks in passing through cost increase effectively. Energy segment, which focuses on presenting the financial results of our electricity trading operations, accounted for 11% of our total revenue. However, its contribution to our EBITDA was notably minimum. On the next 2 slides, we aim to present the key takeaways regarding the individual performance of our main business lines. This will provide a concise summary of how our glass and chemicals operations have performed during the first half of 2023 in comparison with the same period of the previous year from both operational and financial perspectives. The revenue of Architectural Glass operations increased by 5% year-on-year to TRY 11.7 billion. However, the business line encountered challenges that resulted in 21% decline in sales volume, and the EBITDA margin moved down to 24%. Firstly, it is essential to highlight that 2022, especially the first half, marked a period of exceptionally high product sales. This surge was delivered by robust construction and renovation activities in our main operation areas, namely Turkey and Europe. Additionally, product prices moved in an upward trend due to the unstoppable rise in natural gas prices until last quarter. In contrast, the current year experienced a slowdown in the activities of main client industries, leading to reduced demand for architectural glass products amidst global macroeconomic concerns. Furthermore, European market operations were adversely affected by the presence of low-cost import products, which has intensified pricing pressures and led to reduced profit margins. The removal of energy surcharges had the effect of lowering prices as well. Turkish market faced multiple setbacks, including the negative impacts of earthquakes in February, election uncertainties, challenges related to imported product availability and persistent inflation. These factors further hindered the segment's performance. Additionally, the relatively strong local currency had a considerable negative impact on the competitiveness of local wholesalers in export markets. The combination of these factors necessitated strategic measures to address and support profitability. In response, global flat glass industry promptly adopted various strategies to cope with the declining demand and heightened competition. One such measure involved lowering the supply either by reducing effective capacity utilization or by implementing adjustments in the timing of scheduled cold repairs [ startings ] done earlier whenever possible. In January, we took our oldest flat gas production line located in [ Kocaeli ] Turkey offline for cold repair work. Similarly, we reduced the gross pull rate of the lines in Turkey and Europe. Additionally, in April, we renegotiated natural gas hedging contracts, which were signed for the majority of our European facilities' planned natural gas needs in 2023 at the beginning of the year to benefit from the continued decline in spot natural gas prices, thereby reducing the average energy cost to the highest extent possible. Due to mobility observed in the local market demand, we were able to achieve increased effective capacity utilization for our Turkey-based operations close to the end of quarter 2 2023. However, for our European operations, we have chosen to maintain a cautious management strategy. Given the prevailing market uncertainties and challenges, we believe it is prudent to approach the European market with careful consideration and strategic planning to ensure the best possible outcomes for our business in that region. With a year-on-year growth of 50%, Industrial Glass revenue, comprising of Auto Glass & Encapsulation, Home Appliances and Glass Fiber operations achieved TRY 5.5 billion, thanks to mainly the recovery in automotive industry, both in Turkey and Europe. Auto Glass & Encapsulation sub-segment, which accounts for 80% plus of the top line, had a sales volume growth of 7% year-on-year. Accelerated deliveries to OEMs with the clients' purchases getting gradually aligned with the orders backlog across all operating regions and sales to auto replacement glass channel supported the business line's outperformance. On the contrary, weakness in infrastructure investments, macroeconomic uncertainties stemming from high inflationary environment, and rising presence of import products in both domestic and global markets caused Glass Fiber sales volume to drop by 17% year-on-year. Meanwhile, EBITDA margin came down to mid single-digit level due to cost pressure. Glassware business line achieved a substantial 68% year-on-year revenue increase and reached TRY 7 billion top line, thanks to primarily the impact of product price adjustments implemented throughout 2022, as well as the ones put place in quarter 2 '23. Despite operating in a challenging environment due to persistent inflation, macroeconomic concerns and weaker consumer sentiment across the globe, as well as earthquake impact, sales volume remained relatively stable year-on-year. Against the abundance of imports from low-cost regions, thanks to the wide range of product portfolio, effective customers and channel targeting and sales incentives, mainly in HoReCa and retail channels, the business line successfully navigated through the headwinds. Sales to HoReCa channel accounted for 16% of the segment's top line, given stronger demand dynamics, especially in quarter 2 '23 in both the domestic and international markets, thanks to the season opening. Glass Packaging business line recorded a revenue increase of 50% year-on-year, owing mainly to carryover impact of product price adjustments implemented in 2022 as its sales went down by 9% year-on-year in volume terms. Top line attained TRY 10.2 billion, while profitability increased to 23%. With regards to the operational performance, it is important to note that the previous year presented an extended high base for volume sales in all operating areas, primarily driven by the sanitary measures implemented during the COVID pandemic and the subsequent increase in mobility and pent-up demand, following the easing of strict home advisories of the previous 2 years. From a regional perspective, several additional factors contributed to the decrease in sales at our Turkey-based facilities. First is, there was uncertainty surrounding elections, which influenced inventory management strategies of our client industries. The impact of earthquakes further affected the industry as it led to lower consumer sentiment and the reduced mobility in the HoReCa industry. Main clients have expectations of decrease in product prices due to natural gas tariff discounts announced by BOTAS affected sales in the region as well until the season opening. Moreover, the relatively strong local currency in the first 5 months of the year affected export capabilities. Considering these factors, we implemented a cautious inventory optimization strategy for most of the reporting period in the Glass Packaging segment. This approach allows us to manage our inventory levels prudently, while navigating through these challenges and uncertainties in the market. As the high season commenced, we were able to return to normalized capacity utilization. This adjustment in production capacity was aligned with this anticipated increase in demand during the peak period, ensuring efficient operations and meeting customer requirements effectively. Meanwhile, our Russia-based operations maintained its sales volume flat amid the lack of export to Europe due to the sanctions, thanks to increased export to CIS region, successful launch of new projects and deficit in substitute products. Additionally, we undertook cold repairs on 2 furnaces during the period, one in Russia and the other one in Georgia. We also invested in expanding the annual production capacity of our Georgia facility by 25%. Chemicals business line's revenue recorded a top line growth of 58% year-on-year and reached TRY 16.3 billion. The business line generated approximately 90% of its revenue from soda ash operations. Consolidated soda ash sales contracted by 4% year-on-year in volume terms, mainly due to lower construction at client industry level, given cautious inventory management during macroeconomic uncertainty and earthquake effects. A glass packaging producer's facility, along with many textile industry clients located in the quick zone, has to temporarily, if not permanently, shut down operations. The earthquake had also led to supply chain disruptions as the international port situated in the affected area was temporarily closed. This caused a significant congestion issue at Mersin port used by our operations. We were able to mitigate the majority of the negative impact by adopting alternative routes to the level our products. Meanwhile, the maintenance work undertaken in quarter one '23 at the U.S. facility had a negative impact on that region's sales volume performance. Despite the global demand and supply market being balanced during the first half, pricing pressure emerged due to the cooling demand from the main clientele amid macroeconomic uncertainty. The expectation of a large-scale soda ash capacity introduction in Asia further wiped down the pricing environment. However, this expectation turned out to be incorrect as the investment only partially went operational. Nonetheless, the carryover impact of price adjustments made throughout 2022 took hold with cost increase, coupled with reporting currency depreciation was dividend in our financials. Moving on to Slide 8. With our production facilities located in 14 countries, diversified operations portfolio and wide range of products, we continue to cater to our clients across the globe. In the first half of the year, international sales corresponded to 64% of our top line. Export revenue, 57% of which was recorded on sales to Europe, stood at [ USD 560 million ]. Including revenue generation of Sisecam facilities located in the region, Europe accounted for 32% of our top line. U.S. market exposure through sales from U.S. soda ash facility as well as exports stood at 15%. Accordingly, our developed markets exposure came in at 47%. On Slide 9, our strong liquidity position was sustained in the reporting period too. We ended the period with USD 1.1 billion cash and cash equivalents, including financial investments, which are mainly composed of Turkish [indiscernible] and financials, Eurobonds and FX-protected deposits. USD 1.3 billion worth net debt position translated into a 1.1x leverage, which is well below our comfort zone of 2.5x for a high CapEx period. Outstanding debt was USD 2.4 billion, up by USD 144 million year-on-year, with a term structure of 65% long and 35% short and an interest rate structure of 77% fixed to 23% variable. 83% of the gross debt was in hard currency. Meanwhile, we carry 87% of the cash and cash equivalents in hard currency. Our net long FX position came in at USD 104 million. As of June 30, we had USD 300 million long in US dollars and EUR 202 million short in euro. Moving on to Slide 10. We recorded USD 357 million CapEx in the first half of the year compared to USD 189 million of the same period last year. Considering the advances given for our investments, cash payments for taking Sisecam Resources LP private, hence increasing our effective stake from 23% to approximately 31%, and the acquisition of 50% stake in Stockton Port Management, total cash outflow in relation with investments reached USD 602 million. We ended the first half with a negative free cash flow of USD 66 million, or in reporting currency terms, TRY 1.3 billion. Moving on to Slide 11, we restructured our operational excellence development program supporting the creation of competent resources, appropriate methodologies and value-generating process improvements at Sisecam, in line with our operational excellence strategies. Based on an approach in which online and field trainings are provided, our employees have got the opportunity to gain global accreditation in their fields of operational excellence, flourished with competencies they have gained and the value they have produced. Our programs, which were developed as part of our Care for Next strategy and dedicated to sustainable continuous development and we strive for also support the sharing of creative solutions, mutual learning and good practices throughout Sisecam. We manage our corporate integrity projects and share them internally, while disseminating best practices through this operational excellence platform created in accordance with the vision of [indiscernible]. This program supports our strategies and business results, covering our entire value chain by enabling the development of our human process and technological capabilities. On Slide 12, up until now, our process improvement project leaders, trained within the scope of operational excellence development program, successfully executed nearly 800 projects with the participation of approximately 2,500 employees and achieved a financial benefit of USD 50 million. We expect to bring in a USD 25 million additional benefit in the next 2 years. Moving on to the next slide, where we'd like to remind you of Sisecam's approach to sustainability and to provide you 2022 progress report. On Slide 14, in Care for Next sustainable strategy, we aim to create positive impact and value on a global scale with practices and solutions focusing on the goals we set under the pillars of Protect the Planet, Empower Society and Transform Life. Our 2022 sustainability report, recently published with the theme, Together for a Sustainable Future, includes details on all the economic, social and environmental activities we carried out throughout the year within the frame of our Care for Next strategy and [ irrespective outputs ]. Third-party assurance services was obtained for 10 environmental and social parameters included in our GRI standards compliance sustainability report. In accordance with the scope of the assurance service, data assurance activities were conducted at all production facilities, and we had on-site audit at 6 of them. Moving on the slide on to 15, within the scope of Protect the Planet pillar, we aim to minimize the effects on nature, to reduce the amount of waste and to use resources efficiency. In this direction, we carried on our activities on energy efficiency, greenhouse grass emission reduction, water management and renewable energy use. Last year, we increased our renewable energy generation capacity to 10 megawatt peak through the introduction of new systems in our Italy-based facilities. Furthermore, thanks to our dedicated approach, we have saved 36,300 giga use of energy in total and recovered 6.8 million cubic meters of water. With the inclusion of U.S. natural soda ash business in our portfolio, we have reduced carbon and water consumption intensity originating from soda ash production by 50% in 2022. Additionally, we initiated evaluation studies in line with the TCFD framework to meet the expectations regarding risk assessment within combating climate change and adaptation and to contribute to the holistic execution of respective financial risk assessments. We will use this study for our internal risk assessment step. On Slide 16, in Empower Society, we are committed to creating value for all our stakeholders, including, but not limited to, local societies and communities in our fields of activities, our colleagues, business partners, customers and suppliers. The year 2022 has been declared as the International Year Of Glass by United Nations. As the main sponsor of the 2022 International Year Of Glass in our country, which we have named the Glass Age, we have explained the strategic importance of glass for a technological, scientific, economic and sustainable work on every platform. In addition, we have talked about the miracles of glass through symposiums, advertisements, installations, exhibitions, workshops and fairs, as well as communication projects and special events. Moreover, we had the 37th Sisecam Glass Conference with the theme of Inspiration for Tomorrow, celebrating the International Year Of Glass. Furthermore, by the end of 2022, we increased our female employee rate to 23% and the rate of female members in the Executive Board to 50%. Within the scope of our Women Expression program, we aim to increase the effectiveness of women in our organizational structure through mentoring programs. We provided 32 person hours of training in Turkey to increase functional personal competencies of our employees, and we are targeting to increase this value to 47 person hours by 2030. Moving on to the next slide, within Transform Life pillar, we support our 2030 sustainability journey with a more integrated, digitalized and optimized operational excellence approach. In 2022, Sisecam received the Environmental Product Declaration, EPD, certificate that has been independently verified and approved at international level across of 11 flat glass products. We are the first company to make this declaration in the Turkish glass sector in 2018 with the ownership of the EPD certificate for the flat glass product group. Also, we have completed life cycle analysis processes for our 16 sustainable products. Furthermore, as of the end of 2022, the number of suppliers that we have accepted Sisecam supply code of conduct has reached approximately 50%. Within our 2030 strategy, we aim to create a value chain in which all our suppliers fully comply with our rules and principles. We also started testing a digital twin architecture and created end-to-end digital twins or processes at 2 Sisecam factories. In this context, we collected data from 4,500 sensors, digitalized and integrated it into decision-making processes. As one of the first companies in Turkey to cater corporate R&D studies, we have created new technologies and have made inventions with the strength of our experience. In 2022, we conducted 54% of R&D expenditures for sustainability projects. On the Slide 18, in 2022, we published our sustainability policy, which includes our basic principles. We have also published our sustainability statement on our corporate website, which includes our goals and commitments regarding our sustainability strategy and which is a guide to communicate our actions. You are welcome to review our documents library for further details on our sustainability journey. Since I have completed sharing the comments and the slides with you, we can now move forward with the Q&A session.

[Operator Instructions] The first question is coming from Ece Mandaci at Unlu Securities.

I just wanted to have an idea about your view about the soda ash markets and the flat glass markets in Europe and in your export markets and also in domestic market. Second quarter, of course, you have also mentioned there was a high base effect and decline in the pricing, particularly in the architectural glass. So is there any reversal of the trend going forward? Do you expect that with the reduction in the supply in Europe? And also, do you also still see downward pressure on soda ash pricing? And when should we see any potential bottoming out or a potential reversal of the pricing, that would be very helpful if you provide some insights.

Yes. I believe it's fair that I take this question. So, looking at what soda market and architecture glass market, I believe it's fair to answer this question from 2 perspectives, the production from Turkey and production in Europe for architectural side, and to some extent, I can say that for soda ash aside. So to just divide into 2, starting with the architectural glass, so you know that for a long period, starting almost like second half of 2020 until the end of first half of last year, we can say that the markets were a totally seller's market. The demand was high. The prices were going up. And moving to the second half of last year, starting with the expectations that the energy prices will go up, especially due to the conflict between Russia and okra, the markets became shaky and the energy pricing environment was too volatile. And that was like all companies were making their own bids based on the expectations in the markets. So the energy prices have gone up incredibly and went down incredibly again, which was lower than the expected levels, which [indiscernible] were saying the expected levels, it was the expectations of the market analysts for the energy side. So looking from those dimensions and linked with the reactions of some of our competitors in Europe, especially in architectural glass, trying to turn their inventories into cash as soon as possible, expecting there will be an incredible demand lowering and the market pricing game has started. As we have done elsewhere in each and every cycle or crisis period, we didn't enter into this game. So that lowered down the sales, especially in Europe, from the European productions to some extent. And the energy prices being high in Turkey and the currency regime that has been onboarded by that time wouldn't help a lot to increase the exports from the Turkish production also. But now, looking from where we are standing right now, we can say that the production prices -- the production cost of the Turkish premises are more or less par or even lower than what we entered to the increases due to the energy price expectations last year. And looking at the markets right now, so you know that the exports from Turkey is not coming from only one lever, which is direct exports of Sisecam to European market, but also the second processors are feeling themselves much more comfortable to export to European markets, the secondary processed classes, which is also helping us to sell to internal customers in Turkey for their export purposes. And also, we have implemented some additional support for the secondary processors for their exports to support their competitive position in Europe. So we believe that the markets are coming to a balance in Europe also. We cannot say that the demand is going up crazy, but at least it's coming to a balance, together with balancing pricing environment. And also, most of our competitors have gone through and ended their pricing gain. So the prices are coming to a much more balanced structure. So, I believe that both from our European production and even beyond this from our Turkish production, we will be in a better position to cater to the markets, European markets in the second half of the year, which we have already started to see in our July business. And coming to the soda ash market, together with -- again, it was a seller's market for a long period for sure. This is also a cyclical business. And the -- especially considering that the other side of the equation are also large conglomerates who are trying to enjoy the benefits of moving a little to a buyer's market and trying to bring the game to an even position for what has happened in the last 2 years. Also, there has been some, we believe, panic reactions by some of the competitors in Europe, especially due to the energy prices that they would be facing. Also, I can say that this market is coming to a balance in the European markets. For sure, the additional capacity that has been introduced to the market to some extent from the new Chinese production and the expectations of how this could affect the price has made some changes in the pricing environment, especially in the second quarter, I should say. But also the market has started to digest this capacity and the pricing environment linked with this. I believe the second half will be a better half, especially for the balancing out of both the production capacities and the pricing environment in both senses. And I believe, especially the production capacities we have and the cost structure we have, both in architectural and soda ash production from Turkey will help us a lot in the upcoming competition starting from second half. I hope this answer is enough. We can talk on this for minutes and minutes. But if you require anything specific, please let me know.

Thank you for your detailed answer. I was also wondering about the Chinese imports to the European market and in the Turkish market. Do you see any change there? Do you see any decline in the competition there? And I hope this currency change also helps you to record a higher margin starting from July.

Well, this is an equilibrium equation. So even if they are not coming directly to the European markets for sure, where you can cater globally is affecting the amount of production and the pricing environment. So, soda ash is a global business, and most of the time, apart from what has happened in Europe in the second half -- or the last quarter, I should say, of last year, where the pricing environment was dictated to the European and the surrounding regions' energy costs, apart from some instances like this, this is more of a global game because like when Chinese producers cater to the like Asian markets, then it is affecting both your European or Turkish or U.S. business to some extent. But most of the time, when there is a huge capacity that is expected to come to the market, so everybody tries to get their own share before the capacity is there and secure the prices. And sometimes there's some also negative publicity about what is the size of the capacity coming to the market. So, as it has been already realized and what might be upcoming for the next year and the upcoming years is more or less much more visible now, I believe that all the competitors will be acting much more calmly, which we have been doing always as much as possible, will help to stabilize the pricing environment much more. And together with this, as I mentioned, if we do not see any dramatic cost increases in the local Turkish environment, especially due to the natural gas prices and so on and if they're in line with the expectations, I can believe that Sisecam will again be one of the most -- one of the cost champions of synthetic production, which will bring, to some extent, either additional capacities to sell or additional margins to enjoy. And one thing, as Gokhan has already mentioned, that the underperformance in the sales was affected not only with the pricing environment in soda ash, but due to the earthquake and the logistics environment, especially from Mersin port and Iskenderun port, which we have already taken the necessary supply chain precautions to be able to cater from some other ports that we were not using before. So, that will be helping us to get prepared for the upcoming competition also.

[Operator Instructions] The next question is coming from Ergun Unutmaz.

Despite global macroeconomic headwinds and political uncertainties, I'd like to express my gratitude for Sisecam's solid performance. It might have been much, much worse for this troubled time. And secondly, recently, I have prepared a comprehensive report on Sisecam's stock buybacks. And with this opportunity, I'd like to thank personally for your considerate approach on shareholders' best interest. That's really valuable. And my questions are on R&D and furnace technology. R&D share in operating expense is very low. Do you plan in the future to increase your expense in this area with the given 100% tax incentives on R&D expenses? And my second question is also related to that. Carbon footprint, green energy and cost efficiency are very important nowadays. And furnace technology with electric, hydrogen are very hot topics. Do you have an investment on this area with the new given -- efficient furnaces and compared to natural gas?

So let me try to provide some comprehensive answers. First, we would like to thank you for your comprehensive analysis also. We know that you have posted one more on last evening, and we have gone through this. So most of the things, I believe, that we are aligning to at least. So for the R&D part, Sisecam has always been the pioneer in this area. Now, we are getting prepared for, I believe, what we can call the new era of R&D for Sisecam, where we are with -- also using the One Sisecam opportunities, we have already initiated a program, what we call Plant of the Future, where we will be trying to onboard the newest technologies regarding both our sustainable key initiatives together with using the highest technology that is available and trying to also come together with our suppliers not to only optimize the furnaces with the procurement we are making but start with them from the initial thinking and the design so that we will have the most efficient and effective furnaces in all glass segments globally, considering both the costing side and also the sustainability perspective. So this is one thing that we have already started last year. We already initiated the discussions with the main suppliers. And this is not limited only with the Western Hemisphere, but also including the Eastern Hemisphere, I should say, to come up with the best that is possible. So we are willing to announce the outcomes of those initiatives when they become more concrete and in line with the Sisecam principles. When we announced something, we would like to be in a position that everything could be told in details and with numbers to our investors and for the overall market. But I can easily say that whatever we are doing every day, we have the inspiration of being better than what we did yesterday and having the focus to be able to achieve better results tomorrow. So we will be, in a more wide sense, I should say, using the global know-how and the global partnerships, both from the academicians and the universities, together with the suppliers that are able to generate the next-generation technologies. And for sure, this is very much linked with our sustainability initiatives, both our Care for Next 2030 strategies and also the 2050 targets that we already set, and we are not willing to be in line with Sisecam's principles as always, to be saying something which is not concrete with the backing up numbers there, but we would like to come and show a very detailed road map of how we will be achieving our targets in our Care for Next 2030 program with the numbers associated and a clarified roadmap. And I hope they are enough to answer your questions. If you require anything much more detail, please let me know.

There are no further questions right now from the audience. For closing remarks, I get back to the speakers.

So, thank you very much for all your attendance. So, as Gokhan already shared with you, we are really regretful that we have not been able to do the last year's end-year results webcast. But we hope that there will be nothing concrete like we experienced this year, and it will be a better year in the next half and for the upcoming year so that we will be meeting with you to share with you end of 2020 year results. And until that time, I hope everyone will stay safe and secure. Thank you so much.

This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.