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

Hello, and welcome to Sisecam 2023 Year End Consolidated Financial Results Audio and Webcast Call. [Operator Instructions] Please note, this call is being recorded, and a replay option will be available for a full year after the event. Today, I'm pleased to present: Sisecam's CEO, Mr. Gorkem Elverici. Please begin your meeting.

Thank you. Good afternoon, ladies and gentlemen, and welcome to the review of our 2023 year-end earnings results webcast. I hope everyone is well since we last spoke, and today, I'm together with our CFO, Gokhan Guralp; and our IR Director, Hande Ozborcek. Now, I'd like to hand over to our CFO, Mr. Guralp, for the review of full year results.

Thank you very much, Mr. Elverici. Good afternoon, ladies and gentlemen. I would like to thank you all for joining us today. In today's webcast, we will be first walking you through our 2023 year-end financial and operational results by presenting business lines' individual performance. Afterwards, we will be providing details regarding our cash position and capital allocation. Operational and financial will be followed by Sisecam's approach to sustainability, then we will update you about the recent developments. As always, we will be pleased to take your questions at the end of presentation. Please be reminded that the presentation and the 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. Before we start presenting our company's 2023 year-end results, it is necessary to note that, pursuant to the Capital Markets Board Decision dated November 28, 2023 (sic) [ December 28, 2023 ] and numbered 81/1820, our company is subject to IAS 29 inflationary accounting provisions, starting from 2023 year-end. Thus, 2023 and comparative 2022 year-end financial results stated in this presentation contains the financial information prepared and audited in accordance with Turkish Financial Reporting Standards by the application of IAS 29, the inflation accounting provisions and are finally expressed in terms of the purchasing power of the Turkish lira as of 31 December 2023. At the end of the operational and financial review section, you may see a display of our key financials with our IAS 29 impact. On Slide 4, we would like to remind you that starting from 2023, based on a series of important amendments we made on our segmental reporting, we have been reporting individual performances of several business lines, namely our Architectural Glass, Industrial Glass, Glassware, Glass Packaging, Chemicals, Energy and Others. We do invite you to review the graph summarizing the amendments implemented by restructuring our Segmental Reporting approach. Slide 5 displays our key financial results. As can be seen on the first graph, we ended the reporting period with TRY 152 billion top line. While sales volume smoothened across all business lines, excluding Auto Glass and Encapsulation subsegment of Industrial Glass, lower local currency depreciation compared to annual inflation rate limited TL value of international sales revenue. Although we maintained our cost base dynamic product pricing models in all of our main operations and retrospective payments were recognized in accordance with cost push price change in Industrial Glass business line, buyer market dynamics kept the flexibility in price adjustments. Hence, consolidated revenue underperform the inflation and moved sought by 11% compared to 2022 top line expressed in terms of 2023 year end purchasing power. While navigating a challenging market environment characterized by global macroeconomic uncertainties triggered by sticky inflation, even during the global monetary tightening cycle and geopolitical unease, we took a series of strategic decisions ranging from early start of a scheduled cold repair to lowering gross pool waste, particularly in glass production facilities in the first half of the year, as well as in the last months of the year for optimized events and management purposes. Consequent per ton fixed cost increases were further expanded due to higher raw material prices and rise in labor costs throughout 2023, given the overall inflation. Despite this, our gross profit margin came in 28% versus 32% last year. U.S. Soda Ash operations with 52% gross profit margin is close to 350 bps to our consolidated profitability, which was 110 basis points higher than its contribution last year. Our adjusted EBITDA recorded at TRY 28 billion, resulted in an EBITDA margin of 19% compared to 22% of the prior year. Primary 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 a fixed rate fluctuations, net impact on trade receivables and payables, supported the profitability by OpEx to revenue ratio went up from 19% to 21% and depreciation to revenue ratio was flat at 7%. Our adjusted parent-only net income came in TRY 17 billion, down by 7% year-on-year, while the profitability was flat at 11%. TRY 4 billion monetary gains, stemming from a high portion of debt financing, intangible assets investments and inventory procurements, as well as lower net financial expenses supported the bottom line. Meanwhile, deferred tax expense impact of the net investment hedge, increased deferred tax liability due to indexation of nonmonetary items due IAS 29 inflationary accounting provision, higher use of incentives on capital expenditures and increase in deferred tax liability due to a corporate tax rate hike from 20% to 25%, resulted in a TRY 2.4 billion deferred tax expense. Moving on to Slide 6. We would like to see the segmental breakdown of our consolidated top line and adjusted EBITDA. Our portfolio of operations remained well balanced throughout the years, yet the significant role of Chemicals business line stemming up it being a pure hard currency play, was further supported following the acquisition of controlling stake in U.S. natural soda ash operations. The business line demonstrated leadership in both revenue and EBITDA generation, contributing 26% to the former and 39% to the latter. Architectural glass operations emerged as the second highest performers with 15 production lines in Turkey, Europe, India, Russia as well as a line in Egypt with partnership with Saint Gobain and including our news Automotive Glass dedicated float line that was ignited in September 2023. This segment contributed 21% of our total revenue and 23% 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 consolidate top line and EBITDA were 12% and 5% respectively. Industrial glass operations had a limited impact, especially on the EBITA level. This was primarily due to the challenges posed by LTA based Auto Glass operations with OEM clients, given the setbacks impressing through cost increase effectively. Energy segment, which focused on presenting the financial results of our Electric Trading operations, accounted for 12% of our total revenue. However, its contribution to our EBITDA was notably minimal. On the next 2 slides, we aim to present the key takeaways regarding annual individual performance of our main business lines. This will provide a concise summary of how our glass and chemical operations have performed during 2023 in comparison with the prior year from both operational and financial perspectives. Throughout 2023, the Architectural glass business line demonstrated designs and adaptability, implementing inventory balance balancing strategies and region specific initiatives to maintain its positioning in key geographies. Influenced by capacity utilization and stock optimization strategies, ongoing cold repair process in 1 of the 2 lines located in Kirklareli flat glass facility, and the one carried out at India based float line, as well as fluctuations and categorical changes in demand, flat glass output was down by 15% year-on-year. While globally tighter monetary policies have limited financing capabilities of client industries catering mainly to construction and renovation sectors, sales performance varied across regions throughout the year. Despite challenges in the Turkish market, sales from Turkey, including exports remained silent, supported by inventory optimization strategies and improved competitiveness, particularly in the second half of the year despite a local currency devaluation at a limited extent. European operations experienced a decline in sales, particularly in the first half of the year, but show signs of recovery in the later part of the year, with Bulgaria-based operations, which cater to the country and surrounding regions, contributing positively. Russia and India operations maintained steady sales, with Russia showing vitality in demand following a period of muted performance. As a result, Architectural glass sales contracted by 12% year-on-year in volume terms. The business line faced down swings in product prices due to sluggish demand and abundance of low cost products. Additionally, a yearlong decline in energy prices led to downward adjustment in product prices. The annual contraction in Euro-based standard product prices stood at 27% based on year-end prices. Consequently, the revenue recorded by the business line operations decreased by 30% year-on-year to TRY 31 billion, while EBITDA margin moved down to 20%. Looking ahead, we do anticipate continued challenges in the market environment, including inflationary pressures and geopolitical uncertainties. However, opportunities for growth exist, particularly in export markets. The recent addition of new wholesaler and [ persistent ] clients in Latin America presents opportunities for expanded market reach. Furthermore, existing rate dynamics following the Suez Canal blockage may strengthen export competitiveness as well as limiting the flow of long coast imports. Regular tourist changes as 5% additional customs duty on imported float, laminated security and solar glass products and VAT policies limiting deductible VAT on import of products included in trade surveillance list may trigger local sales volume growth. The Industrial Glass business line comprising Automotive Glass, Encapsulation, home appliances and Glass Fiber operations achieved strong revenue growth, generating TRY 16 billion in net external revenue for the year, marking a 14% increase compared to the previous year. EBITDA margin moved north to 7%. This growth was driven by solid performance across subsegments, particularly Automotive Glass and Encapsulation, which accounted for approximately 85% of the division's total revenue. Retrospective payments recognized in accordance with cost push price changes in Auto Glass subsegment have lifted the business line's overall financial performance and EBITDA profitability to normalized levels. The Automotive Glass and Encapsulation subsegments saw consistent growth throughout the year with sales volume increasing by 10% year-on-year. This growth was primarily attributed to the recovery in automotive markets, both domestically and internationally. Robust sales performance to OEMs in Turkey and in Europe was visible thanks to accelerated client industry deliveries. Given the gradual alignment of OEMs purchases with respective order backlog, Russia operations contributed significantly to the subsegment's performance on the low base. Additionally, the auto replacement glass channel continued to play a significant role thanks to recurring business with existing distributors as well as new regions inclusion in our portfolio and accounted for 14% of consolidated Automotive Glass and Encapsulation revenue. Despite challenges such as weak infrastructure investments stemming from macroeconomic uncertainties and growing trend in imported product availability, the Glass Fiber subsegment demonstrated resilience and limited to decline in sales volume to 5% year-on-year thanks to additional spot sales in Turkey and changes in sales mix related to ongoing projects. However, pricing pressures persisted due to high stock levels and subdued demand, both in local in the surrounding regions. From Glassware business line perspective, the year began amidst weaker consumer sentiment compounded by uncertainties stemming from global macroeconomic environment and the aftermath of the devastating earthquakes in Turkey. These factors, as well as the abundance of entry level, low cost imports across all regions contributed to a subdued sales performance. Throughout the year, Glassware business line lamented strategic responses to navigate market challenges and capitalize on opportunities. International sales efforts focusing on newly launched products and sales campaigns, combined with the mobility of -- in HORECA and retail channels, particularly in Central and Western Europe yielded positive results. A weaker market in MEA region was on site throughout the year due to main import restrictive measures, monetary policy regulations, and geopolitical tensions. Sales to the domestic market on the Others outperformed the previous year by 10% thanks to change in sales mix as well as an improved sentiment in the second half of the year, triggering HORECA wholesale and B2B channel demand. Despite the headwinds, the business line maintained the silence through premium product positioning and strategic pricing strategies and succeeded in keeping the sales volume contraction at 2% year-on-year. Going forward, import tax duty increased from 11% to 20% for non-WTO countries effective from the beginning of 2024, and ongoing Suez Canal blockage may hinder the flow of low cost import products to the domestic market. Glassware business line recorded TRY 18 billion top line while the EBITDA margin was recorded at 8%. The Glass Packaging business line encountered a dynamic market landscape throughout the year. Despite facing headwinds such as drop in construction and destocking downstream of the value chain due to high financing costs, as well as cold repair works in 3 furnaces, 2 in Russia and 1 in Georgia, the business line leveraged strategic initiatives to drive growth and navigate market complexities. Consolidated production records, a marginal 3-year year-on-year decrease. Meanwhile, the business line saw a mixed performance in sales volume across different segments and regions. While domestic sales in Turkey declined by 6%. International sales were almost flat year-on-year, thanks to mainly a higher performance of exports from Turkey, particularly in the second half of the year. Hence, consolidated volume sales underperformed the prior year by 3%. Local market dynamics were shaped by seasonal fluctuations in demand across the main industries such as alcoholic beverage, mineral water and food. Meanwhile, in addition to substitute product deficit, regulatory changes applied in Russia, including excise tax, introduction of RUB 7 per liter of sugar containing drinks in July and heightening tax on imported wines from 12.5% to 20% in August, impacted customer demand patterns and posed a lot of challenges and opportunities. Although geopolitical sanction and trade regulations affected our export capabilities from Russia, increased sales to alcoholic beverage sector were also visible thanks to especially newly launched local brands in beer segment, following ownership changes. We also extended our market reach through additional export to CIS countries. Adapting to changing costs, the Glass Packaging business line implemented product price adjustments in Turkey and in Russia. Meanwhile, subdued pricing conditions were relevant to export markets to remain competitive amidst aggressive pricing from European manufacturers. Consequently, Glass Packaging business line extended the year with TRY 27 billion revenue, down by 14% year-on-year, and 17% EBITDA margin. But last but not least, Chemicals segment comprising Soda Ash and Chromium Chemicals operations recorded TRY 39 billion net external revenue an EBITDA margin of 26%. The global Soda Ash market despite short term market tightness in certain regions faced challenges with oversupply, primarily driven by softened demand from major client industries amidst uncertain macroeconomic conditions. In terms of sales volume, the Chemicals business line witnessed varying trends. While Soda Ash sales volume remained relatively stable with minor fluctuations throughout the quarters, Chromium sales -- Chemical sales volume displayed more volatility. Despite weak demand and pricing pressures, we managed to keep our consolidated sales volume for Soda Ash flat, particularly, thanks to the overperformance of International sales. Although Chromium Chemicals ended the year with 6% year-on-year decline, recovery signs started in demand which typically acts as a proxy for global macroeconomic trends. The pricing environment for Soda Ash underwent downward pressure throughout the year, due to oversupply and declining natural gas spot prices, resulting in a significant decrease from all-time high price level record in Quarter 4, 2022. From a year-on-year and average per ton perspective, Soda Ash price grew by 7% in USD terms in 2023. Similarly, Chromium Chemicals faced a challenging pricing environment characterized by supply/demand imbalances and heightened competition from low cost imports, leading to weaker sales volume at 17% lower average per ton price on a year-on-year basis. Overall, our Chemicals business line demonstrated the silence amid market challenges and limited this year-on-year margin dilation at 100 basis points. While domestic sales were impacted by various factors including natural disasters and currency fluctuations, international sales played a crucial role in driving growth. Moving on to Slide 9. With our production facilities located in 14 countries, diversified operations portfolio and a wide range of products, we continue to cater to our clients across the globe. In 2023, international sales corresponded to 60% of our top line export revenue, 54% of which was recorded on sales to Europe, stood at USD 1.1 billion. Including revenue generation of Sisecam facilities located in the region, Europe accounted for 30% of our top line. U.S. market exposure through sales from U.S. Soda Ash facility as well as exports stood at 13%. Accordingly, our developed markets exposure came in at 43% On Slide 10, strong liquidity position was sustained in the reporting period too. We ended the year with USD 1.6 billion cash and cash equivalents including financial investments, which are mainly composed of Turkish corporates and financials, Eurobonds and fixed protected deposits. USD 1.3 billion worth net debt position translated into a 1.3x leverage which is well below our comfort zone of 2.5x for high CapEx period. Outstanding debt was USD 2.9 billion with a term structure of 54% long to 64 -- 46% short, and an interest rate structure of 76% fixed to 24% variable. 80% of the gross debt was in hard currency. Meanwhile, hard currency share of cash and cash equivalents, including financial investments stood at 85%. Our net long FX position came in at TRY 10.7 billion. As of December 31, we are 457 million long in U.S. dollars and 105 million short in Euro. Moving on to Slide 11. We recorded TRY 21 billion CapEx compared to TRY 13 billion in the prior year. Considering the advance level for our investments, cash payments for taking Sisecam Resources LP private hence increasing our effective stake from '23 to approximately 31% and for the acquisition of 50% stake in Stockton Port Management, the total cash outflow in relation with investments reached TRY 28 billion. We ended the year with a negative free cash flow of TRY 9.5 billion. Moving on to Slide 12, we would like to update you on our ongoing projects. As you are aware, our strategy is to invest in our portfolio of operations and enlarge our catchment area through accretive organic and inorganic growth. On the one hand, we do continuously focus on maintaining our active market positioning. For this, we closely monitor the markets in which we operate. We met the market dynamics, we derive our expectations and we act on the future demand trends. On the other end, we work on new investment opportunities, be it in a new region or in a new business line, which may well serve our vision of being a global company. We are heavily focused on bringing in new production facilities and additional profitability, as well as moving up the share of hard currency and international sales in our revenue. Our primary goal is to be among the top 3 Glass and Chemical producers in the world. With the U.S. Soda Ash investment we made in 2021, we have already reached this goal in Chemicals business line. As a separate note, we would like to underline the very fact that we continue to be very keen on enlarging our natural soda ash operations in this state, and we will be thrilled to update you as soon as the permits for developing Pacific and Atlantic mines are granted. As you all know, we have quite a few greenfield and brownfield investments in Architectural Glass and Glass Packaging business lines. We also announced capacity addition projects in Mining and Soda Ash operations in Turkey, aiming to secure our internal raw material needs with the gradual commissioning of new glass production capacities in the next years. Our ongoing investments signal a high CapEx cycle spending over a period of 5 years and estimated to be worth up to USD 10 billion, including scheduled cold repairs, which are crucial for maintaining the state-of-art [ to restore the ] operative capacities. On Slide 13, you may see our key financials without the impact of IAS 29. Excluding the accounting policy change impact based on historical values, our revenue went up by 40% year-on-year. Year-end EBITDA level stood at TRY 35 billion, up by 25% year-on-year and EBITDA margin came in at 26%. Profit before tax of TRY 27 billion signaled an annual growth of 37% and net income for the period having increased by 25% to TRY 25 billion translated into a net margin of 19%. Meanwhile, our total assets and total equity have grown by 63% and 54%, respectively. From this point on, we will update you about the latest developments. On Slide 15, we see sustainability as the focal point of our operations and core component of our business model. In line with our vision of creating sustainable value, we are committed to taking responsibility along the entire value chain to achieve strong global transformation targets integrated with the United Nations Sustainable Development Goals. On Slide 16, you may see further strengthened sustainability governance of Sisecam to adopt and effectively manage the care for next sustainability strategy at all functions and levels. In addition, a sustainability scorecard was created by adding the actions planned to carry out sustainability studies on 2030 material issues and to achieve their goals to the scorecard of the senior managers of all functions. Moving on to the next slide, Sisecam maintains its place in the stock exchange Istanbul Sustainability index based on an evaluation made by Refinitiv, Sisecam's corporate ESG score is A minus. In addition, as a response to changing patterns in the Environmental, Social and Governance ecosystem, companies must report their positive impacts and negative impacts. We utilize data verification service from a third-party regarding our sustainability progress towards this need. On Slide 18, we have published our sustainable statement on our corporate website, which includes our goals and commitments regarding our sustainability strategy and is a guide to communicate our actions. On Slide 19, by signing the woman's empowerment principles, Sisecam undertakes to implement the 7 principles of Woman Empowerment Principles in every subject and level. Moreover, Sisecam signed the United Nations Global Compact in order to contribute to the creation of a common culture in the business world within the framework and of universal principles. Moving on the next slide, the Zero Emission Electric Vehicles enabled by Harmonised Circularity project was launched to contribute to a clean and competitive future by improving the circularity of electric light-duty vehicles and includes Sisecam as one of its partners. This innovative effort received a grant of EUR 250,000 from European Union's Horizon Europe program and in addition, Sisecam will implement PaneraTech's Digital Furnace Monitoring on all its furnaces. On Slide 21, Sisecam is among the partners of the South Marmara Hydrogen Shore, which is a European Union project with a total budget of EUR 36.8 million, for which EUR 8 million of grant support was provided. With this project, green hydrogen obtained from renewable resources will be produced and distributed. Sisecam will use green hydrogen in the production of flat glass. Furthermore, Sisecam has joined Hydrogen Europe as a project member. Moving on to the last slide of this webcast, Sisecam became a member of the European Solar Photovoltaic Industry Alliance, as well as a member of the European Clean Hydrogen Alliance. Dear participants, now we can move to the Q&A session. The presentation has been ended.

[Operator Instructions] And our first question comes from Ece Mandaci.

I would like to ask about your prospects -- about your estimates for 2024. In terms of pricing, we are now seeing a pricing level in glass and soda ash, a pricing level as same or similar as the levels we have seen before the war times before 2022? So are these levels are now sustainable or would there be a tickup in pricing as well, considering the things you've mentioned about the extra measures on importation and increase in logistics costs? So that's about pricing and your view, I would very much appreciate if you can provide your view on Energy costs, and revenue growth trajectory, and this sustainable EBITDA margin level after the accounting changes? And could you also please provide your CapEx guidance for 2024 and '25?

You're the first, as usual. So, coming to the pricing area, I believe it is a little bit early to make a concrete comment on where the prices will be moving, because there are some conflicting messages received from the markets, to be very frank, because looking at the PMIs and looking at the pricing environment in most of the areas that we are operating, including both flat glass and soda ash, turns to be a little mildly positive in the last 2 months. But I believe it is still very early to make a comment about where they will be heading to, and whether a turnback in the pricing environment to more positive levels has been started or not. And this is what we have been experiencing in each and every other cycle. So I believe we will need a couple of more months to see this trend is ongoing and the competition is also aligning themselves with the improved pricing environment. As you know, that Sisecam has always been one of the competitors that is trying to push the pricing levels to, I should say, aligned with the realities of the business and the realities of the margin generation and during this lower end of the cycle, I should say, even if we don't know whether we reached the minimum point or not, we have always stayed at the more cautious side and tried to keep up with the pricing environment. So now things happening in the Southern border and in the Middle East, combined with all the war and the other issues around the logistic failures that has been experienced and so on, are on one side helping us for the pricing environment; and on the other side, putting some burden on the pricing on differentiated geographies. So, I can -- to conclude, I can say it's a very conservative, mildly positive, I would put it expectation we have as of now, but I believe especially through to the end of April and May, when we will be entering to the higher season of flat glass especially, which will also support the soda ash markets. We will see where the pricing will be going, but I can say that we are at least in a better position than we were a couple of months back. And coming to the sustainable levels. As we have always shared with you, on long term strategic guidance of Sisecam is always being at the north of 20% EBITDA and it is, although we are most of the time performing way beyond this, this is for the cautious times like we are experiencing right now, where we will -- we are having some diluted margins due to the differentiated reasons. And it is a combination of keeping up with the pricing environment together with being cautious with the volume that we are catering to the markets. And now we are working on both fronts to have an optimized production sales and stock levels, together with keeping up with the right pricing environment. So all of us know that it is a challenging environment as of now due to many differentiated reasons, but I believe that the heritage and the experience that Sisecam has for managing those cycles will be helping us with the improved technologies and management models we are using, thanks to the transformation we have been onboarding, especially within the last 5 years. So I hope this helps to get a better understanding of where we are standing as of now.

I have one more question. Maybe you can provide it in absolute terms, your CapEx guidance for 2024 and '25?

So we have already shared that for the upcoming 5 years, the CapEx will be roughly around USD 10 billion in total. And for 2024 the expected levels will be roughly around USD 1.5 billion, but I need to provide the caution that due to the challenges that might be faced in the supply chain, together with for the greenfields that we are building, including the one in U.S., due to the permit and licensing requirements and so on, there might be shifts across the years. So the total that we will be reaching will be by the end of the next 5 years will be USD 10 billion and this year's expectation will be USD 1.5 billion. We will be in a better position to provide you next year's figure, moving forward with the half year of this year and the end of this year's figures. Also concerning the realization percentage of the already ongoing investments, and especially the licensing and permits process of the U.S. investment, which is more or less half of the next 5 years CapEx investment.

And our next question comes from the line of Cemal Demirtas.

My first question is about IAS 29. On Page 13 you give some metrics, firstly, I wish you had complete comparison of at least the income statement and balance sheet to have better analysis or for transparency. I'm just mentioning that in all companies, by the way, and the leading example companies, but at least you shared some parts. Some companies did some medium transparency, I call it, or limited transparency and some of them didn't share anything. So they were lack of transparency. But there were also good examples who had much more transparency. I hope in the following quarters, as the companies become more ready, we have more transparent. The reason is, we know that inflation accounting will be with us for the following 2, 3 years, but at least during the transition period for better deliberating the companies, I think it would be necessary. And I just want to reiterate this comment with you too, because you are always a good example about your transparency and your earning list. So I just want to highlight that. Then I will go to my comment. Related to key financials, without IAS 29, maybe we should have EBITDA at the Analyst EBITDA. I think, it's your standard of EBITDA, if I'm not wrong. And the other one is net income. You shared the net income before minorities. So again, for the analyst purposes, in order to compare with our numbers, analyst EBITDA at least is a minimum standard and net income after minority would be very, very helpful. That's a comment and maybe if you share the numbers, I will be glad. And the others, I'm coming to the real question side. I would like to understand you gave some answer about the pricing environment and the cost side. I would like to understand the financing environment for you. You have huge investments and you have always a high CapEx. I'd like to know you have projects in U.S. and also in other regions. How are the conditions for you? Or do you expect any improvement in the financial conditions in the second half of the year? How things goes for you? And of course the China factors, and could you comment on that? Do you expect any change in the China factors affecting the regions you are operating? And maybe you can touch also Russia if -- it's not significant, but I would like to hear that.

Starting with the comments side, I respect all your comments, but I don't -- I have not been able to count how many times you mentioned transparency. And that is one thing with due all respect, I totally am against about Sisecam's being transparent or not. For any additional information that you may require, for sure, we are taking them as notes and you know how serious we are taking them. So any additional information that is required by your side or any other investor or analysts are welcome for us, and we will do our best to provide them as soon as possible on one to one and also on the webcast we will be having. But Sisecam has never acted in a way not to be transparent or share information with the investors or the analysts. So I totally refuse the comment on that side with all the due respect. So coming to the later parts like the analyst.

Sorry, before getting -- Sorry, before getting to maybe I can rephrase, maybe transparent in disclosure of IAS 29, but overall I cannot say. You can of course always say you are very much transparent in your numbers, I mentioned. I don't want to be misunderstood. So just about this transition IAS 29, I wish you had more info. That's the point. But it doesn't maybe -- it shouldn't just mean all -- maybe that word should be -- think only in limited way, if I just mentioned it incorrectly. Sure. Perfectly understood. But the case is, you know that, that has been a new practice, although we were so used to it almost 2 decades ago and there's a time pressure for all the companies, including Sisecam, and including the complications that -- and the complexity Sisecam has. We have been trying to optimize the level of information with the timing. And if there are some improved benchmarks that we can use, for sure we will be looking at them as we are looking always and try to improve them every day like we are doing elsewhere. So together with the comments on that part, as I mentioned, we will try to provide further information in the upcoming quarters and we will try to provide more when we are doing the comparisons for the year end of 2020 year (sic) [ 2024 ] in the upcoming quarters, that we will be making the necessary comparisons.

[Operator Instructions]

And in a differentiated manner, to start with Soda Ash, you know there is increased natural soda ash capacity coming from China to the markets and they continue to increase the amount of capacities that are provided. So until now in the exports markets, they're not that much active. More of them are consumed internally or in the surrounding regions. But for sure, whenever a large capacity is coming to the market and especially is coming from natural soda ash, all the market players, the competitors, are cautious to give enough room so that it is not deteriorating the overall volume and pricing environment. As everyone knows the rules of the market by heart and it is, as I always mentioned, both sides of the equations are larger corporations that are so experienced in this industry. So I believe this digestion period is going on with the new capacity that is coming to the market, and the pricing environment together with the improved consumption coming especially from glass industry as we have started to experience in the last couple of months, as I mentioned, will be balancing out and we believe in the upcoming months and quarters, the pricing environment will turn to be to at least a mildly positive state. So -- and coming to Flat Glass market. So China has been active in differentiated segments on that. But due to the conflict that's going on in Middle East and due to inabilities of logistic capabilities coming from China, it is not that much severely affecting, in fact helping us with improving the pricing environment, while the demand has also started to improve, mildly positive. So it shows us that even if things improve in the Middle East, due to the logistic conditions, we may be able to keep up with the pricing, at least where it is right now. If not, we're able to improve. And on Glassware and Glass Packaging side, their presence is much more limited. So I believe it is fair not to comment too much of China's presence on those areas, especially coming to the European and the Middle Eastern markets, including Turkey on that front. So we have other competitors from far east, like -- in flat glass, like Malaysia, Indonesia and so on, who are trying to increase their penetration. But as of now, although their volumes has increased, the competition, although coming with lower prices, creating some challenges, but still manageable, I should say. And coming to the businesses in Russia, the only part that we are experiencing some issues, I should say, is Auto Glass operations due to the lowered capacity consumption of the overall market. Just to give you some high level figures, the overall market capacity on the production side, including ourselves, is roughly 3.3 million car-sets, where the demand as of now is roughly around 500,000 car-sets. So it shows that it is more or less 15% capacity consumption for the overall market, which is not a favorable environment. So we are working on that front with also our customers to understand the positioning on that side, and how we can do the optimization for ourselves and for themselves. And for the Other businesses, Flat Glass, Glass Packaging and Glassware, they're performing very strongly. The demand is already there in the markets as we are used to. So I can -- to sum up, I can say that for the Russian businesses, we are not experiencing any major issues, neither in sales side or in production, or the supply chain side, I should say. And the pricing -- sorry, the financing environment and the pricing linked with this, for sure, together with the rest of the world, we are very closely monitoring the opportunities that are out there in the market. I can easily say that Sisecam has never experienced any issues in financing due to their long lasting relationships we have with the multilateral and largest commercial global bank. And still there's a huge demand for us, both on the debt markets and on the capital markets. What we are trying to do is, trying to understand when the financing will be required and how the cost of financing will be moving, so that we do the right cherry picking aligned with our requirements. And also use differentiated tools like ring-fencing opportunities and so on, where we can be able to decrease the cost of funding as much as possible, especially for investments like we have in U.S. and in Europe. So, I hope that's an overall summary -- or an answer to your questions, and if there's anything you would like to highlight further please let me know.

[Operator Instructions] As there are no further questions, I will turn the conference back to you.

Thank you very much. So I would like to thank together with our team for your participation, and we will be trying to provide you updates as required together with our posting, and for any major events that might be occurring. So until the next time we will be meeting, I wish the good health and prosperity to everyone and thanks for joining us today.

This now concludes our presentation. Thank you all for attending. You may now disconnect.