Hello everyone, welcome all, and thank you for joining us today. I am Bahar Efeoğlu Ağar, Head of Investor Relations at Ford Otosan.

We appreciate your participation in our conference call to discuss Ford Otosan's 2026 first half results. Before we start, please take a moment to review the disclaimer statements included in the presentation.

Joining me on the call are our CFO, Gül Ertuğ Gelişkovan, and our Corporate Finance Leader, Ünal Arslan. We look forward to reviewing our results and developments for the quarter, followed by a Q&A session.

Now I would like to hand over the call to our CFO, Gül Hanım. Gül Hanım, please go ahead.

Thank you very much, Bahar. Good afternoon, everyone, and thank you for joining us for our first half 2026 results call.

This quarter, our overall performance has been relatively weaker than what we had projected for ourselves for the period. We will start looking into the physicals and key dynamics of the market, but before doing that, I'd like to share a macro view with you, which has been substantially impactful in our results.

I believe it will be important for all of us to understand it, its effect to our business, and finally our reaction to it. On the screen now, my friends are reflecting key economic developments for the period.

In Türkiye, market conditions remained quite challenging. While inflation moderated compared to the prior periods, it still continued to run well above currency depreciation.

During the first half, inflation result was at 18%, whereas EUR/TL appreciation was only 5%. This divergence remained one of the most important factors affecting the sector's profitability and cost structure.

If you take a minute to contrast this data with that of last year's, in fact, you will realize that in the same period last year, it was in favor for our sort of business, but currently in this period, it has been significantly adverse. Another headwind came from the financing conditions.

Although the vehicle availability in the market improved compared to previous years, consumer affordability remained constrained by financing costs. You can check the auto loan rates, while relatively stable year-over-year, still remained close to 46% as of June, continuing to weigh on retail demand.

If we check the European side, in fact, the environment was relatively more supportive. Passenger vehicle registrations continued to grow, while the commercial vehicle market also showed growth during the first half.

However, we have to say that part of this recovery in fact reflects a low comparison base from last year, rather than a broad-based improvement in underlying demand fundamentals. Furthermore, geopolitical uncertainties continued to weigh on both business activity and market visibility across the region.

At the same time, underlying macro indicators remained relatively weak. Consumer confidence continued to deteriorate, inflation remained also for the European markets above target levels, and interest rates stayed at restrictive levels.

As a result, while vehicle markets expanded, the macroeconomic backdrop didn't provide meaningful support to the demand, and the recovery remained uneven across the key markets. Overall, the first half was characterized by softer demand, elevated competition, and a macroeconomic environment where inflation continued to exceed currency movements, this creating pressure on revenue growth and profitability across the industry.

Now putting this scene, I'd like to move to the next slide and mention about our highlights. Despite the challenging macro environment and intensified competition, Ford Otosan maintained resilient export volumes and sustained leadership in commercial vehicles in Türkiye market with 24.6% CV market share.

For overall ranking in the domestic industry, Ford Otosan came in the fifth position with 6.6% market share. This highlights the divergence between passenger car and CV dynamics in Türkiye.

Domestic wholesale volume declined by 18%, reflecting the weaker market conditions, together with pricing competition. Pricing was significantly pressured in the quarter.

Since FX not appreciating much, this left limited room in competing with imports pricing, whereas, like I explained on the earlier page, the costs associated with inflation, on-and-off lingering Middle East conflict, these weighed significantly on profitability, and mostly on our entrepreneurial business. I'd like to highlight this: not necessarily the export business, but our entrepreneurial business.

The demand across the key European markets remained softer than we anticipated during the first half. As a result, export sales declined by 4% year-over-year to 293k units, while production decreased by 3% year-over-year to 341,000 units.

Capacity utilization reached 73% overall, with utilization rates of 70% in Türkiye and 79% in Romania. This reflects the production levels aligned with the market demand.

Despite the softer demand environment, our integrated manufacturing footprint in Türkiye and Romania continued to support Ford's European operations. From a financial perspective, the macroeconomic dynamics discussed earlier continued to pressure both revenue growth and profitability.

The gap between inflation and EUR/TL movements limited revenue growth, while the timing of export sales was also unfavorable. Let me try to explain what I mean by this.

A larger share of export volumes was recorded during April and May when EUR/TL appreciation remained relatively limited, while stronger currency movements coincided with lower export volumes in June. As a result, both export revenues and other operating income were adversely affected during the period.

Just to refresh our memory, April had the Easter break and May had the Feast of Sacrifice. These mean shorter working months for us from production volume perspective.

A somewhat similar timing mismatch occurred in the domestic market in our wholesale figures. For a period of time, we had to keep some derivatives of our MCV stock on hold in the plant due to required quality checks of a potential quality issue.

We validated the quality, there wasn't an issue, and resumed the sales operations afterwards. However, in between, that time period affected our sales and stock position.

We got adversely affected. Our trucks operations were also more prone to the disadvantages of being locally vertically integrated a lot.

What do I mean by this? Vehicle, engine, transmission, all local, hence being substantially hit with inflation and unfavorable gap between EUR/TL and CPI.

Given that approximately 90% of our materials, the localization rate in Ford Trucks business, the divergence between inflation and currency movements had a more pronounced impact on the cost base. For Ford Trucks, I'd like to mention about one more point in this business line: VECTO regulation.

This is an important regulation which brings stricter European carbon dioxide emission targets for heavy trucks. Ford Trucks is pursuing a balanced VECTO compliance strategy focusing on accelerating zero-emission technologies while continuously improving diesel vehicle efficiency, enabling a gradual transition toward lower carbon transport solutions and reducing regulatory compliance risk in Europe.

Liabilities regarding penalties, these penalties mean if the fleet emissions exceed the regulatory thresholds, the brand will be subject to penalties, these liabilities are already baked into our financials. Once the registrations are in place meeting the overall emission target levels, these liabilities will be offloaded.

Their good news impact will not be into this quarter. The benefits will be recognized for the future period when they materialize.

I wanted to mention this, and usually I don't go into the deep down analysis of the different vehicle lines, but I wanted to deliberately mention about this because in earlier talks and correspondences with you through our Investor Relations team, I'm hearing from my team that some of you are questioning essentially the Ford business, the contract manufacturing business, highlighting some worries about is this business really cost-plus, can Ford Otosan recover its costs. I would tell you just to inform you to rest assured, yes, Ford Motor Company honors its contracts with us.

The bigger challenge especially we faced in this period is the challenges and headwinds are coming and affecting more on our entrepreneurial business, which is Ford Türkiye, the LCV, MCV, PV business, and Ford Trucks, including Türkiye and export markets. All of these factors combined together, they weighed on profitability, resulting in an adjusted EBITDA margin of 6% and adjusted EBITDA per vehicle of €1,438.

Despite these headwinds, we maintained our disciplined financial position, and our net debt to adjusted EBITDA stood at 1.75 times, reflecting prudent balance sheet management and healthy leverage levels. Finally, I want to mention, in our view, two important steps in our business we took.

Since our last earnings call, we completed the final acquisition of Koç Finansman, which is a strategically important step that expands our financing capabilities and supports a more integrated, seamless, end-to-end approach across our automotive value chain. The impact of Koç Finans operations, of course, since the acquisition completion happened on the 1st of July, its first impact will be visible in our report starting from third quarter financials.

The other important development I want to share with you is our Board of Directors approved Ford Trucks new cab project with a net investment of €364 million. Last night when we made the KAP announcement for the financials, also we have declared this news.

This investment is important to us. It is intended to support the long-term growth of our Ford Trucks operations in Europe while ensuring compliance with upcoming EU emissions and safety regulations, with the next generation cab planned to be introduced progressively from 2028 onwards.

It is a show of trust of both Ford Motor Company, Koç Holding, and Iveco in our engineering and development work. The program is aligned with the Ford Trucks product strategy, supporting entry into the UK market through the first right-hand drive derivative with low investment, and it is going to give us a boost on our business view.

Having said this, let me check if there is anything else I'd like to mention at this point. I think this covers the entire highlights that I wanted to highlight.

One more add to the point I made about this approved project: it is also going to support us in utilizing the project-based state aid, that's the incentive announced in April. We will be able to utilize it with this project.

Overall, we see primarily macro-driven profitability compression in our business. When I speak on the guidance, I will also mention about our reaction to it.

For now, for further details, let me leave the word to Bahar. Bahar, please.

Thank you, Gül Hanım. Let me continue with the main highlights of the Turkish automotive market.

After reaching a record 1.4 million units in '25, the Turkish automotive market started this year with relatively resilient figures. However, market momentum weakened through the second quarter as tighter financing conditions, deteriorated macroeconomic outlook, and geopolitical uncertainties increasingly weighed on demand.

While vehicle availability improved, these factors, together with longer holiday periods, more than offset the positive impact. Consequently, market contraction deepened from 4% in the first quarter to 12% level in the second quarter, resulting in an 8% decline in the first half of the year.

Looking at the segment breakdown, performance was mixed. Passenger car demand remained under pressure, while the light commercial vehicle segment proved relatively resilient and growing by 5% year-over-year.

The increasing share of this segment reached to nearly 12% level. This performance was supported by new model introductions by peers, as well as a partial shift in demand from passenger cars toward LCVs, light commercial vehicles.

With passenger vehicle prices increasingly exceeding 2 million TL threshold, affordability challenges and financing constraints have become more pronounced. On the other hand, replacement demand in the van and truck segments remained weak.

Despite the aging vehicle park, businesses continued to postpone fleet renewal decisions due to heightened macroeconomic uncertainty. Also, according to ODMD's latest data, the slowdown became even more evident in July, with 25% contraction.

As a result, the overall year-to-date market excluding truck decline reached to 11% level from 8%. We believe these figures underline the increasingly challenging demand environment and support our cautious view for the remainder of the year.

If we turn to our domestic performance, against this backdrop, our domestic sales volumes declined by 24% in the first half, and it underperformed the overall market. This was mainly driven by the discontinuation of the Focus model, as well as intensifying competition across several segments.

As a result, we ended the period as the fifth largest player in the market with a market share of 6.6%. Looking at segment performance, we maintained our first and second places in CV segments.

However, tougher pricing competition and increased availability from peers with new introductions pressured our overall sales performance. In commercial vehicles overall, we continued to hold our market leadership with a market share of almost 25%.

On the other hand, the sticky inflation challenged the competitiveness of especially Ford Trucks in the local market due to increasing manufacturing costs. Given its high local content ratio, Ford Trucks, which is our entrepreneurial business arm, faced greater cost pressure than fully imported competitors, and it makes more difficult to maintain pricing competitiveness.

On a more positive note, as also Gül Hanım mentioned in the beginning of our call, we announced a new investment plan for our Ford Trucks business with €364 million of planned investment through 2030. The program is expected to support compliance with upcoming EU emissions and safety regulations, while also strengthening our product offering and competitive position in Ford Trucks European markets.

In addition, we believe the acquisition of Koç Finansman will become an important contributor to our domestic business, particularly in the truck segment from '27 onwards. The acquisition will enable us to offer customers a more integrated end-to-end value proposition, financing, and after-sales services.

Let me move to our export markets performance. In the first half of '26, the European automotive market continued to recover, with passenger car and commercial vehicle registrations increasing by 6% and approximately 3% year-over-year, respectively.

However, the recovery remained uneven across segments and countries. While the van market returned to growth, demand in several key Ford markets, including Germany, France, and Italy, remained softer than expected, which is coupled with ongoing macroeconomic uncertainty and slower fleet renewal activity.

In contrast, the truck market benefited from a stronger rebound, supported by a low comparison base. Against this backdrop, Ford maintained its position as Europe's leading commercial vehicle brand for the 12th consecutive year.

As we also highlighted in our previous meetings, following an exceptionally strong market share of 17.2% in '25, which was supported by Ford's renewed product lineup, right now their market share normalized to 15.5% level, and it was reflecting a high base and improving vehicle availability across the market. In line with the normalized sales of Ford in this period, as Ford Otosan, our export sales units decreased by 4% year-over-year.

As a result, we continue to play a key role in Ford's success by producing more than 50% of Ford's global vehicle registrations. That concludes my side.

I will now hand it over to Ünal Bey to walk you through our financial highlights.

Thank you, Bahar. Good afternoon, everyone, and thank you again for joining us.

I'll take you through our first half 2026 financial results released yesterday and provide context on the key macroeconomic and financial drivers shaping our performance. In fact, you have seen this slide, but I deliberately included the same slide that Gül Hanım talked over at the very beginning of this meeting because most of the major reasons and macro backdrop behind adverse impacts that I'll try to explain are being summarized here.

In Türkiye, as you know and as you can see here, the euro appreciated by 14% year-on-year against the Turkish lira in the first half of this year. This is a year-on-year appreciation, while the CPI increased by 32%.

Under inflation accounting, as our prior year financials are indexed by CPI, and given that approximately 84% of our revenue is export-generated and largely euro-linked, this 18 percentage point FX-inflation gap created a significant translation and profitability headwinds. Along with that, even maybe more importantly, within the first half, the euro appreciated by 5% only, compared with cumulative inflation of 15%.

The divergence remained evident in the second quarter as well by a 4% euro appreciation versus inflation of 7%, and the comparison, more importantly here with last year, is also very less supportive as the euro appreciated by 27% in the first half of 2025. I'll not touch the demand side a lot, but Gül Hanım already mentioned, looking at the interest rates, consumer confidence weakened further in June, while auto loan rates rose to 46% from almost 46, 32.6%.

These conditions continued to constrain domestic purchasing power and pricing flexibility, and against this backdrop, we remained focused on disciplined execution, cost control, working capital management, and liquidity that we'll see in the coming slides. Moving to the financial highlights, we generated a revenue of 427 billion Turkish liras in the first half, down 12% versus the inflation-adjusted prior year base.

Export revenue amounted to 359 billion Turkish liras and represented 84% of our total revenue that I mentioned the impact in the previous slide, compared with 82% last year. The domestic revenue was 68 billion Turkish liras, down by 21%.

Our total volume declined by 4%, with export volume down by 6% and domestic volume down 18%. The revenue decline was more pronounced than the volume movement, primarily reflecting the widening gap that I explained between EUR/TL appreciation and inflation, constrained pricing in the domestic and truck businesses, and also an unfavorable sales mix.

Our gross profit again, as we can see here, was 29.3 billion Turkish liras, down 28% year-on-year. The key pressures were the timing mismatch between euro-Turkish lira movements and export sales, along with the widening gap that I explained between EUR/TL appreciation and inflation, higher purchased service and raw material costs amid inflation and, as we all know, geopolitical pressures, and constrained pricing environment in the domestic market and truck business.

Operating profit declined by 56% to 11.6 billion Turkish liras, and our adjusted EBITDA was 25.6 billion, down by 37%. The embedded lease impact totaled 3.5 billion Turkish liras, broadly stable year-on-year, while net other operating income decreased to 1.9 billion Turkish liras from 6.1 billion.

This decrease, which we see in income from investing activities line in the detailed financials, is mainly driven by again exchange movement, unfortunately, as I explained. This line includes valuation of leased assets, which is euro-denominated.

We carry around €450 million of leased assets, and as I mentioned, euro appreciation in first half of last year was 27%, and we have written good news through valuation of this €450 million worth of leased assets, which was only 5% this year's first half. If I move to profit before tax, that's 10.2 billion Turkish liras, down by 52%, while net income was 10.3 billion Turkish liras, down by 40%.

Net financial expense improved by 38% to 16.4 billion, primarily due to lower net FX losses, while the monetary gain remained broadly stable at 11.9 billion Turkish liras. This support was partly offset by investing income declining to 3 billion Turkish liras from 9 billion, reflecting the lower FX valuation impact on assets subject to embedded lease arrangements.

Tax was supportive in the second quarter, by the way, when we move from PBT to PAT, net income. The 4.3 billion Turkish lira tax expense recorded in the first half of last year turned into a modest tax income in the first half of 2026, including 2.8 billion Turkish liras of deferred tax income following the regulation establishing a 12.5% corporate income tax rate for manufacturing income.

This tax rate change led us to write good news over temporary differences for deferred tax calculations. If we move to the next slide, we see that consistent with these profitability trends that I mentioned, first half margins declined year-on-year.

Gross margin was 6.9%, down by approximately 1.6 percentage points. Adjusted EBITDA margin was 6.0%, down by approximately 2.4 percentage points, and operating margin declined to 2.7%.

Profit before tax margin was 2.4%, while net margin was also in line with 2.4%. In the second quarter, our adjusted EBITDA margin was 5.9%, showing relative stability compared with the first quarter, although still below the prior year levels.

If we look at per vehicle basis, our adjusted EBITDA declined to approximately €1,438 in the first half from €1,839 last year, and our profit before tax per vehicle decreased to approximately €573, reflecting the same FX, pricing, and cost pressures. If we move to next slide, here this is again a classic slide.

This slide summarizes the year-on-year adjusted EBITDA bridge. In fact, all the pressures that I tried to explain are visible here.

The orange colors that we see in the first column, which includes the embedded lease adjustment, but the correction to the gross profit, and the right-hand side, other operating income, basically coming from FX impact on short-term euro receivables, these are driven by the macroeconomic backdrop that I tried to explain, but we see an improvement and a good control on the operational expenses, and we partially offset the backdrop coming from macroeconomic and market-driven adverse impacts. Turning to the financial situation analysis, we maintained a resilient balance sheet again.

Our invested capital was 360.7 billion Turkish liras, down 8% from year-end on the inflation-adjusted basis, and our total financial debt declined by 13% to 168 billion Turkish liras, while net financial debt decreased by 4% to 112 billion Turkish liras. Net debt to trailing 12-month adjusted EBITDA increased to 1.76 times, as Gül Hanım already mentioned, from 1.49 times at year-end, primarily reflecting lower trailing profitability, but the ratio remains well below our 3.5 times threshold.

Working capital requirement increased to 54.3 billion Turkish liras, and working capital as a percentage of sales rose modestly to 5.8% from 5.5%. The liquidity ratio was 97.1%, while the current ratio improved to 1.28.

Overall, our capital structure, I can say, remains prudent, with lower financial debt and improved liability-to-equity ratios compared with year-end. In the next slide, on cash flow, we see that net cash generated from operating activities was 19.2 billion Turkish liras, compared with, of course, 78.7 billion Turkish liras in the first half of last year.

The decline primarily reflects lower profitability that I mentioned, and a 2.4 billion Turkish lira working capital outflow, compared with a significant inflow in the prior year period. We are at a fairly balanced level in terms of working capital as we discussed in our prior quarter one results webcast.

This means in the last year we improved our working capital significantly, and we had seen the impact of that improvement, and this year we keep that prudent working capital level in our operations. Looking at the capital expenditure, that's 8.3 billion Turkish liras, down by 35% year-on-year, and represented 1.9% of sales.

As a result, free cash flow was positive at 10.9 billion Turkish liras, although below the unusually strong prior year level. Net cash used in financing activities was 23 billion Turkish liras, including 14 billion Turkish liras of dividend payment, almost 14, and 4.1 billion Turkish liras of net interest payments.

Despite these outflows, we closed the period with 56 billion Turkish liras of cash and cash equivalents, and with a very manageable net debt position. Finally, in the next slide, the cash conversion cycle remained stable at 17 days.

Inventory days were 29, receivable days improved to 36, and payable days were 48. This reflects, as I mentioned in the previous slide, continued discipline in working capital management despite the challenging operating environment.

Our balance sheet net FX position improved to a short position of 95.8 billion, including cash flow and natural hedges. The net FX position was positive at 56.3 billion Turkish liras.

Return on equity was 18.1%, and return on invested capital was 8%, both lower than year-end due to the profitability dynamics discussed. Even so, our balance sheet, liquidity, and risk management framework remain sound.

With that, I'll hand the call back to Mrs. Gül Ertuğ to walk you through our 2026 guidance.

Thank you for your time.

Thank you, Ünal. Thanks very much for the detailed explanation.

I believe so far we have been able to show a picture about what happens in the demand and the profitability. The macro has been working against us.

Due to this, we have been touching our guidance on certain key areas as a measure to enhance the final financial performance, improve the financial performance of our company. The first line item we touched is on the retail domestic volume.

First I should start with the industry. Based on this explanation, and also looking into the now July data is available, that also suggests the same thing, there will be, we are expecting a reduction in the overall industry size.

Formerly we were calling it in between 1.3 to 1.4 million units. Now we downward ticked it to 1.2 to 1.3 million units.

That's a reflection of the softening of the demand. Within that, looking into our retail domestic volume, we have reduced our projection to 75k to 85k.

This comes from a combination of both demand and our conscious and cautious choice of managing our sales together with the sales mix, both on a product mix and retail-fleet mix, because on this area we want to improve our profitability. Some of that cut over there is deliberate.

It's a deliberate choice that we are taking, not just necessarily demand is down, but we want to improve the overall profitability out of our units. We have certain measures we are taking that, if necessary, we can look into the details of it.

On the export volume, you see that we are not making a change. The Türkiye and Romania related export volumes are just intact.

The effect of the total wholesale volume is being updated due to the change we deploy in the Turkish domestic market. We protected our overall production volume.

However, because of the changes we have highlighted, since the contribution to the revenue coming from domestic market will be low, and seeing the euro conversion into TL on the export units, we thought it will be plausible to update the revenue projection into mid-to-high single-digit decline. Having deployed all of this, we expect our adjusted EBITDA margin to land at between 6% to 7% within the year.

This implies there will be improvements in the second half, and as I mentioned, through mix management, through better volume management, and with this volume management, better variable marketing, better pricing options, and also continued and enhanced cost-cutting measures, including also some of the resourcing activities being in place, and for some mix-related capacity enhancement, what I mean by that, if some of our vendors had an issue on the, let's say, for example, plug-in hybrids, we provided a better mix capacity on them, not on the plant, but on our suppliers. In the second half, we will be better supporting our volume.

Through the effect of these actions, we target to improve our profitability. The CapEx side remained the same.

The general investments regarding the plant maintenance, operational needs, and the product-related investments, currently we do not foresee a change over there. As a reminder, I'd like to once more emphasize that for the health of the plant operations and health of the quality, of course there is an element that we certainly do, some of the CapEx we certainly do, but some portion of that CapEx, since we have already completed the key transformation and the key vehicle deliveries, including the final bundle and final wave of our partner, we have optionality to postpone, retime, re-evaluate some of our product-related investment.

Currently at this point in time, we didn't touch it, we still keep it at €300 to €400 million, and I believe this completes my section. I will give the word back to Bahar.

Thank you, Gül Hanım. We will now open the floor for questions.

If you would like to ask a question, please use the raise hand feature in Zoom and we will unmute your microphone. Alternatively, you may submit your questions through the Q&A section of the Zoom, and we will address them.

Now we will start by answering audio questions, then move to written ones. First question comes from Hanzade, J.P.

Morgan.

Gül Hanım, Bahar, thank you very much for the presentation. I just want to make a follow-up on the export performance.

European demand has started to pick up in the second quarter from a low base, but Ford continued to lose market share in Europe. What are the main reasons behind this relatively weaker export performance in the second quarter, and do you expect this to be reversed in the second half of the year, and what will be the driver behind it?

The second one is about the gross margin performance, or overall profitability metrics. As more than 80% of your revenues are export, which are on cost-plus contract basis, I wouldn't really expect such a big swing on the gross margin.

I can understand that the product mix may be putting some pressure, but could there be also some waiver on the export contracts to Ford Otosan to Ford Motor to manage the gross margin side, the gross margin on their side, which could be also reversed in the second half of the year? Thank you.

Thank you, Hanzade Hanım, for the question. Let's start with the demand in export markets and how Ford performs over there.

Bahar mentioned about the change in the market share. However, as we see the market development and evolution, also including the partner units into the market with full portfolio, we do not see this as a big anomaly.

You might remember our 1-ton project. It started to hit the market in waves, in chunks, in bundles.

The starting point for that was first the Ford-branded units. In our earlier talks, I was explaining that finally we are approaching the end of that investment saga, and the last waves, last bundles of the Volkswagen units will also be in the market.

In a way, we can think that some of their units came slightly later than ours. Now since both parties have the full portfolio ready, and it's a successful vehicle, some of that pick-up from the partner side would be something to be expected.

Thinking that 17% level, something more than 17% levels, you could argue it's not a sustainable level in these demand and macro conditions. Everybody is running after certain campaigns and trying to promote their business.

Some part of this move in the Ford brand market share, we see it as normal. From a Ford Otosan perspective, since we are the producer of also those units, we don't see that as a problem.

We expect it to settle down on a normalized view. Over there, of course, in the market dynamics, and Europe is a mixed bag, in some of the countries we see demand up, in some of the countries not so much, but as a balance in our long-term projection, we don't see as an anomaly.

Instead, we see that we have been able to successfully conclude our commitments. We have launched our products, and now they are in the market just operating in the intended fashion.

I hope this answers the first part of your question.

Gül Hanım, basically you want to say that, am I right in this one, Volkswagen is taking some higher share in your overall exports, looks like, because of this ramp-up process? The market demand shift to Volkswagen products, and you don't expect this to continue to be like this.

You expect this to normalize, right? It's not Volkswagen gaining market share against Ford Motor, and in return, on a compound basis, there won't be then no impact on your side, no positive impact?

Can you hear me?

Sorry, maybe I couldn't explain it in a...

No problem. I have to be mindful of how I treat the Ford brand, because as Volkswagen with certain derivatives, which they didn't exist earlier, as those derivatives come into the market, this was something expected.

We were expecting Volkswagen to pick up some area, because formerly they didn't have it, but now they have it. That part, I'm treating it as normal.

Reading it with a Ford Otosan angle, since at the end of the day we are the producer of the 1-ton, I wouldn't read that as a negative sign. That was what I wanted to say.

Maybe if we just approach from a Ford angle and look into the Ford Pro market share, it looks as if declining, like I said, because now the derivatives are available. Some of it is normalization.

You are right in the terminology you use. However, with a Ford Otosan lens, since that was something expected, we are not reading it as a negative line.

Okay. All right.

You were not expecting this Volkswagen production to have a compound impact on your overall production?

No, it is supporting our production. When we look into the 1-ton segment, when we make our production planning, we don't disclose it separately.

We don't say this much Ford, this much Volkswagen, but we make our plans for the combined view. With respect to that, in fact, even if I'm not allowed to give a breakdown, but I can at least high level say this: what we were intending to have in terms of the partner volume, we were able to have it, over there we didn't have an issue.

Some of the maybe reduction witnessed over there could have come from the Ford brand itself. Overall, the projection and what we are producing, what we are doing is in line with our projections.

It supported our business view for the year of 2026.

Thank you.

You're welcome. Your second question was about the gross margin, how it affects us.

Over there, in fact, always what we say is we have contracts made with Ford Motor Company on vehicle line basis. Each vehicle line has a different supply contract, and within the supply contract, the variable costs are identified, what they are.

They are very clearly defined. The investment in hard currency, it's very clearly defined.

Investment recoveries over a certain period of time, equating with a time value of money concept in itself, they are also written, but you can imagine they are written with hard-coded euros. That is always honored by Ford Motor Company, and the mechanism how we make the transfer pricing to Ford when we make the vehicle invoicing is very clearly addressed in our contracts.

Over there, we can clearly say that Ford just recognizes this, and we do not have any issue in maintaining our contract health. If you are asking about the certain cost of goods sold related impact originating from the inflation accounting, since a non-cash monetary gain item is also visible, just talking about it with the partner, with our key customer, Ford Motor Company, under such setting, it wouldn't make sense in our opinion, and it would in fact, if we come back with such a thing, it could even be interpreted in a negative way, thinking that, okay, Ford Otosan is trying to change the structure of the business, Ford Otosan is not able to handle this headwind.

We don't want to do that. Instead of doing this, we try to explain the situation to them also, and just like our Minister of Finance advises us in every meeting, we try to look into total factor productivity, which means, okay, we have these headwinds, we have the incurred costs, how can we combat the incurred costs better?

Because at the end of the day, the better management of those costs will make our life easier with our customer Ford, and it will also make our life easier in the markets we operate ourselves as entrepreneur. That's why currently we do not foresee any change in the treatment of our contracts, and I believe this is also welcome with the point of view of Ford Motor Company.

Ünal, would you like to add anything else, any other comment that you would like to make?

I think not necessary, Gül Hanım. Your explanation was very good, I think.

Thank you. I hope this answers, Hanzade Hanım.

Thank you very much. Very helpful.

Thank you.

Next question comes from Yasin Sarıhan, Yapı Kredi Invest. Yasin Bey, please go ahead.

Thank you. Thank you so much for your presentation.

Actually, I have two questions. One is related to truck segment.

Truck segment had performed well in the past, and also it was a meaningful value driver for Ford Otosan. At this time, we've seen that volume is decreasing for a long time, and also the capacity utilization ratio is something like 40%.

Do you think that this is cyclical or structural changes in the truck segment? Also to what time do you think that there will be a recovery in the truck segment?

Also if you give us a little bit number about the truck segment, for example, how much EBITDA truck segment generate in the first half of the year, maybe in the 2025, for example, it will be give us a much more clue. My second question will be related to Koç Finans.

How did you calculate the leverage impact of the Koç Finans acquisition? Net debt EBITDA currently sits at 2 times, and after the post-acquisition, what level do you expect to rise?

Thank you.

Thank you, Yasin Bey. Let me start with your first question was regarding the trucks.

I just want to make a disclaimer that in our reporting as a policy, as a methodology, we are not segment reporting vehicle line by vehicle line. To give you a feeling about how to view truck business, I will try to give some highlights.

In my speech, I tried to set that there are important regulations coming in the heavy commercial vehicle segment for Europe, and usually Turkey usually follows Europe, whatever is applicable over there, Turkey follows that. Because of the way trucks are used, even if Turkey was not following that, a tractor owner in Turkey, road truck, construction tractor, when the fleets have their vehicles, it's common practice that they just travel around the Europe.

That's why we have to be mindful of those regulations, and we have to make our vehicle ready for those regulations. These regulations, you can think of like the Euro 7, the emission-related regulations, how we make the carbon dioxide, the emission go away in a much better view.

Regardless of the volume of our units, we have to be engaged in these regulations. Given the size of the business, given the macro backdrop we have talked so far, the vertical integration, the high local content of the Ford Trucks, you can imagine that there's huge investment also going on in Ford Trucks.

The final declaration we have made for this joint development program together with Iveco for the new cab, these are really important investments. Their per-unit implications are huge.

However, that is for the creation of the next generation business. If you are going to exist in this business, you have to do it.

This deploys to several other OEMs operating in this market. Iveco was one of them, and the joint development we are doing in this new cab program with them is we are sharing the engineering work together with them, and to the extent possible, we are looking for commonalities.

We are looking for better sourcing options. I'm not going to go into the details of the project over here, but all the macroeconomic backdrop we have counted so far, we are looking into it for each and every vehicle line.

We are creating the next generation and future vehicle of it. The reason why I wanted to highlight Ford Motor Company and Iveco when I said that this is a show of trust, you know that Ford Motor Company is no longer involved in the heavy commercial business.

They have been out. Their segments include the Model e electric versions, Blue conventional ICE vehicles, and Pro, where we operate, is their commercial vehicle line.

They are not in HCV, but when they declared recently the Ready Set Ford initiative, they were talking about adventure, thrill, and looking into the brand portfolio and brand DNA, Ford's thinking is that truck segment, heavy truck segment, what we do over there, is very well blends into the Ford Pro section. Overall, yes, you are right, the investment to be divided on the certain units will be large, that's a fact.

The company made its internal discussions, internal calculations, and came to the conclusion that for the overall portfolio view in the overall CV segment, this is the correct route to take. Wherever possible, when I say important resourcings, important partnerships, you can also think just like in the case of Iveco, we are sharing engineering, we will be looking into platform studies to pick the best partner for the best cost option and the best profitability.

That project is going on, and as a full-cycle Ford Trucks view, this is going on in line with Ford Motor Company involvement. As we roll these events, of course at start, when you are in the investment period until the recoveries are in place, that will have an implication on the profitability, but afterwards it will come back with the benefits.

I think due to our methodology and policy, this is the most I can declare about this one. For the Koç Finans, I think your second point was regarding the Koç Finans acquisition, since we have just concluded our acquisition actions, how we consolidate and the effects moving into our consolidated financials from Koç Finans, they will be visible in the third quarter.

At this point in time, I think it will be too early to call out something regarding that for the Koç Finans financials, but for how they will support the synergies, in fact, with the exclusivity we are doing on our action, now that they are our captive finance company, we have started seeing their benefits. I think Ünal can make maybe one more comment on the covenant-related question.

Yes, thank you, Gül Hanım. Of course, there will be on a consolidated basis impact on the leverage levels.

Koç Finans is a financial services business, their core function is financial intermediation through borrowing and lending activities. As Ford Otosan, as an industrial company, we do not consider its net cash and EBITDA contribution to be relevant directly for assessing Ford Otosan's industrial leverage, let's say.

Therefore, Koç Finans's net financial debt and EBITDA contribution will be excluded from the consolidated net debt over EBITDA calculation even for official covenant purposes. In fact, we are currently in the process of finalizing the necessary amendments to the financing documentation with our lenders.

Only we can say here is, as we announced publicly the Koç Finans acquisition, we paid around, let's say, rounded $130 million. The impact of this cash out on solo Ford Otosan or excluding Koç Finans impact, leverage would be around 10 basis points.

I can only say that one, but the other one, as I said, it's not directly related to our industrial leverage.

Thank you so much, Ünal Bey. I have one follow-up actually.

Gül Hanım, you mentioned that the financial reporting isn't in segmental basis. Can you at least provide us within the truck segment specifically, the EBITDA per vehicle is lower or higher than the group average, for example?

Could you at least clarify or say something regarding this EBITDA per vehicle?

I can't give a number, but I think when I say the entrepreneurial business affected us more, I think I answered that question. Normally speaking, on a normal year, as we have a saying for commercial vehicles, we say the bigger the vehicle is, the bigger the profitability.

That's the normal setting. Within this macroeconomic backdrop, I think this year we have seen that a little bit worse, and it reflected itself in the financials.

That's the most I think I'm allowed to say.

Okay. Thank you so much.

You're welcome.

Thank you. This is a reminder for audio questions.

There are no further audio questions. Let me continue with the written questions.

First written question comes from Murat Unur, Liberty. "There are reports about power shortages in Romania impacting the economy.

It seems like Ford has shut down production until August 19. If the reports I see are correct, can you provide the details around this and how it will impact production and the financials?"

The second question from Murat Unur is, "Does the new investment in the truck business or the acquisition of Koç Finansman impact your borrowing plans? Are you considering a new Eurobond issue?"

Thank you. Thank you, Murat Bey.

Let's start with the first news. I'm afraid that's wrong news.

There has been some development. We have also been notified about this through press and through some maybe investor calls, but that information provided is wrong.

In between 1st of August and 19th of August, Craiova plant is having its plant shutdown, which was announced to public disclosure platforms much, much earlier. It is our normal period.

In fact, in Türkiye currently we are in the shutdown period. We are together with Ünal kind of on duty.

Also in Craiova, this is the time where the plant engages with its maintenance operations. That news is not correct.

Plant is not shut down due to this reason. However, when we saw this news, we were also notified of it, we went back and checked what is the main reason we are hearing such a thing.

We investigated, and we learned that in fact, because of maybe you can call it, I don't know, climate crisis, there is a water level issue in the Danube River, and in the region in Romania, we hear that in an area called Cernavodă city, which is close to Black Sea area, which is far away from Craiova, there is a nuclear plant. In order to protect the nuclear plant operations, they wanted to divert the river and the water flow of the river over there as a kind of a precautionary act.

However, number one, this has nothing to do with plant closure. Number two, once the shutdown period is over and our plant comes back to its operation, the way our plant uses electricity power and the effect of this river, we are not in that zone.

Most probably we think Romanian authorities made a misstatement in their declaration, and now they are trying to correct that declaration. That's the information available to us, no worries, please.

Your second question, you said borrowing plans, are you considering a new Eurobond issue? For this Eurobond issuance, I'm going to give my standard answer.

As now we have the Eurobond in our portfolio as a very good funding source and a very good diversification, when needs arise, we will get back to this market. For the time being, we don't have a definitive, very clear call out there.

The only thing I can say is, if necessary, we can do that. You obviously see since we have already finalized the acquisition, in fact, the funding required for the acquisition was already secured.

I hope this answers your question.

Thank you, Gül Hanım. Next three questions are from Cenk Orçan, HSBC Invest.

Let me start with the first one. "Your revenue and EBITDA guidance point to a recovery in the second half.

Q3 started weak in terms of July domestic vehicle demand, and August is a break period. Your outlook rests on a recovery from September onwards."

Second one, "Do you have an update on the Made in EU proposal?" Third one, "Is it fair to say Romania's performance has not deteriorated as much as Turkish operations so far this year in terms of revenue growth and operating margins, and therefore its contribution to consolidated figures has improved versus last year?"

Thank you, Cenk Bey. Let's start with your first question, recovery in half two.

You are right. In fact, that's what we are intending.

We are taking certain precautions in our domestic market, touching the mix of the vehicle, retail-fleet mix, the overall vehicle line derivative mix, Koç Finans good utilization so that the entire value chain together with the financing of the vehicle, you can think of it like the value to Koç Finans, profits to Koç Finans versus the profits to the automotive business, plus enhanced cost reduction actions. We have certain plans to improve the financials.

Towards the end of the year, when we started the year in fact, we were expecting some ease on interest rates. The inflation was supposed to come down at a quicker pace, the interest rates would come down, and currently we couldn't see those, and we tried to explain that the weaker performance comes from that.

We still hope that there is a tendency to have the improvements on those fronts. Think that this Middle East conflict and Brent oil related inflationary pressures, we assume they are already in the numbers.

Moving from this point onwards, there should be easing coming out of them. Of course, you could argue Mr.

Trump is saying something one day, then it's changing, we are in peace, then we are not in peace, Hormuz is open, Hormuz is closed, but we think with a further projection, just keeping this lingering any longer is not going to support anybody, neither financially, economically, nor politically. That's why our projections, our bet is for normalization, and with the actions, with the conscious choices we make at our end, we are expecting improvement in the overall performance.

As I explained in the guideline, this will mean on some fronts lower volume, but better profitability with this management. We are on track for that, we are targeting to deliver that, and we believe we will be able to make it.

Maybe the last thing to underline, I had said this in my talk, but we also looked into the sales mix of the derivatives in both export markets and Turkey markets. To best answer the demand, we made some vendor-related capacity mix arrangements, and we hope to see the good results of those actions also coming in.

Of course, what I say is our projection is based on this. If we see further deterioration regarding the Hormuz issue, the Middle East conflict, or any other unknown criteria, there could be a downside risk to this also, but we're not planning for that.

We are putting our plans and projections based on this view, which I believe is the plausible one. Your other question was about the Made in EU proposal.

You said, do you have an update on that one? In fact, our position as company, and through our lobbying activities to both government authorities, and also European consulates, European NGOs, ACEA, several other areas within Turkey the Uludağ İhracatçılar Birliği, we are approaching this matter with a logic that the win-win case for everybody will be settling on a Made with EU concept.

We are happy that our attitude, what we do internally as Ford Otosan, and also our partner Ford Motor Company is also very active on this topic on their end, we see that the markings we have done on the draft, the proposals, the approach we have provided is gaining traction. It is not done yet.

We know that the draft will be kept on updating till the end of this year, end of December 2026. By that time, our target is to explain everybody the value we create in Turkey, not just automotive sector, but everything, because even if we are not an EU member, the Customs Union agreement makes it get the benefits from that settlement.

In order not to make that agreement fall into void, we believe this will be understood and the Made with EU concept is, I believe, now turning into a Turkey position, not just Ford Otosan position, but Turkey position. The Ministry of Trade, several other associations, they have been actively engaged in this.

It is an active agenda item on our President, Mr. Erdoğan.

I'm hopeful that on this end, the common sense will prevail, and we will settle down on the plausible view. Like I said, we will keep on following the draft development, and we will keep on actively acting it, providing our interventions to it by the December 2026 time period.

That's the update I can provide. Your last question was regarding Romania's performance.

For the case of Romania, even though we see some inflationary pressures in Romania, I would say that the Romania environment when compared to the Turkey environment, it is a much more stable area, and also the business agreement with Ford, how we produce, how we sell, the volatility over there, the management of the business complexities over there when compared to Turkey, it is much, much better. That's why the Romania movement has been more straightforward over there.

As long as we keep the volume in line with our plans, and as long as we have the RON/EUR relationship as projected, we wouldn't have an issue. Maybe you followed there are some developments also happening in Romania regarding their politics.

Their Prime Minister lost the vote of confidence, and over there there are also now some RON/EUR differences and maybe heightened than what Romania Central Bank issues regarding the inflation. There could be further headwinds, but we are mindful of them and we are tracking them carefully.

Certainly it is not as big a deal as Turkey conditions.

Thank you, Gül Hanım. Next two written questions come from Zeynep Erman, Ata Invest.

"Firstly, the company's operating margins have remained under pressure in 2025 and first half 2026 due to unfavorable FX environment and increasing competition. Do you believe the current competitive environment in the Turkish market has reached its peak, or should we expect pricing pressure to continue in 2027?

Secondly, now that the major investment cycle has largely been completed, are you evaluating any capacity expansions on new model allocations that could support medium-term growth?"

Thank you, Zeynep Hanım. Seeing the demand conditions in Turkey, I think the pricing pressure will still continue in the rest of the 2027, because on a softening demand, we don't see an issue on availability.

The availability is there, everybody will be pushing for, fighting for that extra customer over there. I'm not expecting the pricing pressures to ease easily.

However, I'm expecting some of the macro conditions to improve, like I said, as the inflation comes down, as the interest rates come down, as we start to see that cycle, we can maybe move into a little bit more improved, more favorable area. My thinking is that the pricing pressure will still be there, we will be facing that, and we will be actively combating it.

For the big investment cycle that we have done together with Ford Motor Company in our product transformation to new energy vehicle having the BEV version of all our portfolio, and also the capacity supporting MCV, LCV in the MCV 1-ton supporting also the partner, yes, you are right, this has been largely completed. Currently we do not have any other new news to share at this point in time, but in the earlier part of the presentation I have already mentioned about the Ford Trucks piece.

We are currently doing a very important, very big investment on the Ford Trucks. You can think that it is kind of consolidating the entire commercial vehicle portfolio.

We have been doing some significant growth together with Ford Motor Company. We have done the 1-ton, 2-ton, electrification, we have done the Craiova acquisition, we have put the next generation Courier over there and their cycle plan related investments in the pipeline.

Ford doesn't exist in the truck segment, but we exist there, and with a commercial vehicle perspective, in fact, HCV is an important element of the portfolio. We are doing a significant investment over there, and we do not have any new investment to share at this point in time.

Thank you, Gül Hanım. Next question comes from Maria Kolesnikova from Millennium Capital Partners.

"Could you please walk me through the logic of improving second half revenue growth, sequentially lower revenue decline in half two versus half one, to make up your new revenue guidance? What are the factors helping it?"

Did you mean profitability growth or revenue growth? Because I think we said in the guideline that for the revenue, in fact, we expect a decline.

We didn't say revenue is going to grow. We said decline comes from two factors: in the domestic market, we will deliberately reduce the volume, it will have an impact in the declining manner contributing from the domestic side; and for the export, as these projections, the EUR/TL, how the economy management treats the FX control and what it translates, we think that that will be working in this manner.

That's why I tried to say that there will be a decline. Maybe I misunderstand the question, team, if Bahar or Ünal wants to contribute, please do so.

Maybe, Gül Hanım, I can try to answer as I understand if it's correct. Maria may confirm.

What I understand is compared to first half this year, our projection assumes in the second half we will have higher revenue. Compared to previous year, second half revenue decline, it's still in the guidance a decline, but will be lower than first half decline.

The basis of this now, what we can say is, as I tried to explain, 84% of our revenue is coming from export business. Although in the first half of this year the EUR/TL appreciation was only 5%, there will be an appreciation.

The assumption is that we don't know how much it will, but normally in line with the inflation, we expect a euro appreciation. If this happens, that will be a driver of the revenue growth.

On top of that, normally looking at just the Turkish domestic market even, but in the European markets as well, the second half of the year, especially the November-December period, is the campaign period and high sales months. This is the second reason that I can say that will improve revenue compared to first half of this year.

That's what I can say, but maybe Gül Hanım or Bahar Hanım, you can add if you want other items.

Thank you, Ünal Bey. Let me continue with the last question.

"I'm sorry to say I still don't understand what happened on the profitability front. Was the profitability decline entirely from the entrepreneurial business?

If it was from the contractual business too, how come? Appreciate if you could simplify the explanation for someone not very familiar with your business."

I think I had my best bet to explain that, but I understand it wasn't very clear enough. I'm thinking how we can do more on that.

Since we are not making a segment reveal, it is hard. I will defer this to the team.

If you have maybe a simpler way of putting it out there, other than the earlier explanation I provided, please go ahead.

Maybe, Gül Hanım, if you allow, very shortly I can try to address. As you said, we can't be in a very detailed position for that.

We tried to explain. First, the profitable decline is not entirely from the entrepreneurial business.

Of course, we tried to explain the pressure on the entrepreneurial business, which we mean Turkish domestic market business sales, both from Ford Trucks and other sales, and also Ford Trucks export business. That's the entrepreneurial side.

There are pressures there in terms of profitability, and that's why we are targeting to improve our profitability by balancing with the volume within the rest of the year, second half of the year. That's one part, but not entirely.

The other part, in fact, I can say at least as much as that important part is the contractual business. I think the question addresses contractual business rather than contracting.

Our contractual business, as we always say, it's very prudent, that's cost-plus markup. However, the profitability, the transfer pricing, all are in euro terms.

That's why I tried to explain the EUR/TL movements versus inflation movement is really important. Inflation part is not because of the cost-plus.

We of course include the inflation impact on our costs to our transfer price through cost-plus mechanism. However, comparison of the financials, as I tried to explain, is done over indexation.

What I mean is previous year's financials are indexed with inflation, but export business creates profit through euro, where inflation indexation is, just to remind, 1.32, it was 32% first half of previous year to first half of this year, 32%. We index everything from last year's first half with 1.32.

As you can imagine, our export revenues and export profits are converted to Turkish lira with the euro movement. Euro moved only, I think it was 17%, I'll just check, but it's very lower than inflation movement.

It was 14%. That creates a lower revenue and profit in terms of Turkish lira from export business.

The second part, again very shortly, is the healthy position for us in terms of export profitability is a linear increase in the euro versus Turkish lira, because this is not the only profit part. The transfer price overall is done in euro terms, invoicing in euro terms, and EUR/TL appreciation, a linear appreciation, creates an FX income for us.

If it's the other way around, this creates a pressure and adverse impact on our financials. I hope it's a little bit more clear.

If you have further questions, you can get in touch with our Investor Relations team. Thank you.

Thank you. As there are no further questions, I would like to turn the call over to our CFO, Gül Hanım, for her closing remarks.

Gül Hanım, the floor is yours.

Thank you very much, Bahar. Thanks to the team, and thanks to all our investor community for your continued interest in our company.

I hope our explanations and the files we provided to you have been helpful. If there has been any other thing for some reason we couldn't explain well, we will be at your service on our emails to support you.

Thanks very much, and until next time, take good care of yourself. Good evening.

Bye-bye.