Welcome and thank you for joining us today for Koç Holding's first quarter 2026 earnings call. This is Helin, IR Coordinator of Koç Holding, and today I'm joined by our CFO Doğan Korkmaz, our finance coordinator Özge, our IR managers Cansel and İsmail, to take you through our presentation and answer questions during the Q&A session.

Our presentation covers the company's unaudited financial results for the first quarter of 2026, prepared in accordance with Turkish accounting and financial reporting standards, including the application of IAS 29, inflation accounting. Please note that our presentation and Q&A session may include forward-looking statements and assumptions based on the current business environment, which are subject to change.

As a reminder, a replay of this webcast will be available on our website following the call. There will be a Q&A session at the end of the call.

With that, I'd like to hand the call to Doğan Bey to begin the presentation.

Welcome, everyone. It's a pleasure to reconnect with you this time through our holding company.

I'm very pleased to have taken on this role and to continue building on the strong foundations already in place. I look forward to meeting many of you in the period ahead.

Now, I would like to begin with a brief overview of the macroeconomic backdrop that defined our group's operating environment in this first quarter. The year started on a relatively strong footing, however, beginning in March, geopolitical developments have introduced volatility and weakened the outlook both globally and in Türkiye.

While the disinflationary economic program remains in place, tighter financial conditions and renewed inflationary pressures have emerged in this environment. The Central Bank has responded with a more restrictive stance, supporting stability, but increasing funding costs.

Meanwhile, the real appreciation of Turkish lira continues to weigh on exporters' competitiveness. In this setting, we remain focused on disciplined execution and prudent risk management.

As Koç Holding, we proudly mark a key milestone with 2026 as our centennial year. As Türkiye's largest industrial and services group, generating around 7% of country's GDP, our diversified portfolio and strong balance sheet continue to underpin our resilience.

This strength, supported by disciplined execution, is clearly reflected in our first quarter results. On slide 5, we highlight key takeaways for the quarter.

Our diversified portfolio, spanning defensive and growth sectors, supported performance in a mixed environment. Our solid net cash position provided financial flexibility alongside the distribution of 2025 dividends.

At the same time, both Koç Holding and our subsidiaries continue to take strategic steps to unlock value across the group. As we show on slide 6, our combined revenue exceeded 1.2 trillion Turkish liras in the first quarter on a 7% year-on-year basis.

Our combined profit before tax was up by approximately 66%, reaching to 30 billion Turkish liras. On a consolidated basis, profit before tax more than doubled to reach 20.

21.8 billion Turkish liras. Our consolidated net income was 522 million Turkish liras, significantly higher compared to last year's net loss.

In the consolidated financials, a higher effective tax rate limits the translation of strong pre-tax performance into net income. Tax expenses this quarter are mainly driven by the bank, Tüpraş, and Arçelik.

The increase in the effective tax rate is primarily due to banking taxes calculated on nominal statements at a 30% rate, non-deductible inflation accounting adjustments in IFRS, particularly for companies with high monetary losses, and rising deferred tax expenses following the end of inflation accounting in statutory financials. This quarter, finance segment was the largest contributor with 2.8 billion Turkish liras, followed by the automotive and energy segments, each contributing approximately 1.6 billion Turkish liras.

These offset the dilutive impact of consumer durables and other segments. On slide 8, the chart on the left presents the sectorial composition of our diversified portfolio's net asset value at quarter end.

The automotive segment accounts for 34%, followed by refining at 23%, and finance at 19%. Our portfolio diversification extends beyond sectors to include international exposure.

On a combined basis, 32% of our revenues form international sales in the first quarter. Including hard currency-indexed commodity businesses, approximately 47% of our revenues can be considered hard currency based.

Moving on to slide 9, at the holding level, we ended the first quarter with a net cash position of $969 million, in TL with 43 billion Turkish liras. We received the 18.8 billion Turkish liras as dividend income on a nominal basis and distributed 18 billion Turkish liras in late March.

Other cash inflows include the proceeds from the 2.1% share sale in Tüpraş by ABB in late March. Meanwhile, major cash outflow was our participation to the capital increases in few of our businesses.

On slide 10, you can see the main pillars of our balance sheet. We strictly apply and regularly monitor our prudent risk management policies at each underlying company and on a combined basis.

In terms of liquidity, leverage, and foreign exchange position, we preserved our conservative levels. Around 84% of net cash is in hard currency.

After this natural hedge, we had a consolidated long position of $159 million at the end of the quarter. On a combined basis, our current ratio is 1 1.16 times, and our net financial debt to EBITDA, excluding the finance segment, is at 1.5 times.

Subsequent to the quarter, we drew down the $600 million club loan, as previously disclosed. With that, I'll hand over to Helin to walk you through the key sectorial developments in the first quarter.

Thank you. Let's begin with the energy sector on slide 12.

The energy segment's contribution to our consolidated net income in the first quarter was substantially higher at 1.6 billion TL, compared to 100 million Turkish lira in the same period of last year. Refining operations navigated a highly volatile quarter, with geopolitical tensions threatening global supply balances and driving sharp movements in crude prices and crack margins.

The demand in Türkiye grew by 2.4% in the first 2 months of the year, driven by the 13% increase in gasoline and 6% in jet fuel demand, while diesel demand remained flat. Within this landscape, Tüpraş delivered strong operational performance with record-high first-quarter utilization of 95%, higher production volumes supported value generation.

This translated into robust financial performance and a strong balance sheet, reinforcing overall financial resilience. Net refining margin of Tüpraş reached $9.4 per barrel, well above its guidance range of $6 to $7.

However, the company maintains its guidance given the ongoing global uncertainties impacting the sector. On the LPG side, domestic demand remained soft in the first 2 months of the year, with total consumption declining by 5% year-on-year.

Despite the weak market environment, Aygaz achieved 5% year-on-year growth in domestic retail sales volume, and including wholesale and operations in Bangladesh, total sales volume increased by 2% in the first quarter. During this period, Aygaz further strengthened its position in Türkiye, reaching a market share of 27.3%.

Let's move to slide 13 and discuss the developments in the automotive segment. Automotive operations faced a tough quarter, with lower volumes, a more competitive market environment, pressure on export profitability, and rising cost dynamic.

The domestic automotive market contracted by 4% year-on-year, mainly reflecting a high base and calendar effect. Weaker consumer sentiment and rising macroeconomic and geopolitical uncertainties weighed on demand and slowed fleet renewals.

Despite these headwinds, we maintained strong positioning, both domestically and in export markets, supported by disciplined execution. Ford Otosan accounted for 33% of Türkiye's total vehicle production and 75% of commercial vehicle output, while Tofaş contributed around 11%.

Our combined share in the domestic market reached 34%, up by 5 percentage points since year-end. On the export side, the European passenger car, which is EU plus United Kingdom, grew by 4%, while the commercial vehicle market expanded by 3%.

Against this backdrop, our group's export share increased by 6 percentage points to 49%. Ford Otosan's export sales volume remained broadly flat at 140,000, accounting for Türkiye's 41% of total vehicle exports.

During the quarter, Ford Otosan announced acquisition of Koç Finans, which is a group consumer finance company, to centralize its financing, aiming to enhance sales support and efficiency through integrated solutions. Meanwhile, Tofaş export volume increased by 155% year-on-year, driven primarily by a tripling of K0 model exports, following the launch of the Combi version in late last year.

The company continues progress on the K9 model with production scheduled for September, while also advancing preparations to unveil a new passenger car model. TürkTraktör revenues declined 40% year-on-year, primarily reflecting a sharp 68% drop in domestic tractor sales volume, partially offset by a 14% increase in exports.

The domestic tractor market contracted by 59% in the first quarter, primarily due to constrained financing conditions. Despite this challenging backdrop, TürkTraktör strengthened its competitive position, increasing market share by 6.3 percentage points to 44.7% over the past 3 months.

Otokar, our leading bus and defense company, recorded 8% year-on-year decline in revenue, mainly due to delivery of compensation related to the Romania contract. Following the completion of 194 vehicle deliveries in Q4, the company delivered a further 82 vehicles in the first quarter as part of this contract.

The backlog stood at €671 million at the end of the quarter, and this supports its medium-term visibility. In late April, Otokar signed an SPA to acquire Romania-based defense company Automecanica, subject to closing.

On slide 14, let's look at the consumer durables segment. In the first quarter of 2026, Türkiye's white goods market remained subdued, with demand constrained by pricing pressures and an unfavorable product mix, despite some promotional support.

White goods unit sales declined by 10% year-on-year, while exports fell 23% amid soft external demand. In this environment, Arçelik's domestic revenues contracted by 12%, reflecting an unfavorable product mix and pricing headwinds, while international revenues, which account for 66% of total, declined by 7%.

Despite top-line pressure, proactive procurement initiatives and disciplined execution supported Arçelik's margin improvement, both sequentially and year-on-year. In April, Arçelik divested its 60% shareholding in Arçelik Hitachi to Hitachi, in line with its portfolio optimization strategy.

This transaction remains subject to closing. Arçelik remains confident in the long-term growth potential of Asia and will continue its operations across India, Pakistan, and Bangladesh.

Lastly, a few words on finance segment, with a particular focus on Yapı Kredi on slide 15. The finance segment turned strongly accretive, supported by robust revenue growth, margin expansion, and strong trading income, marking a clear shift from its past period dilutive impact.

Before I go into the details, a reminder that the references to Yapı Kredi's KPIs are based on its consolidated BRSA financials, consistent with the bank's disclosures, where banks remain exempt from inflation accounting. In the first quarter, Yapı Kredi's net profit in BRSA financials increased 78% year-on-year, driving the return on tangible equity to 31.5%.

Revenue growth was supported by solid core banking income and strong trading gains. Net interest margin expanded by 56 basis points quarterly to 3.2%, underpinned by widening loan-deposit spreads and effective balance sheet management.

Fee and commission income remained solid, supported by diversification. Fee generation continued to provide a strong natural hedge, covering around 90% of the bank's operating expenses.

At the same time, Yapı Kredi maintained cost discipline, while committing to further efficiency gains through data analytics and AI-driven cost optimization initiatives. On asset quality, Yapı Kredi maintained a stable performance despite challenging macro environment.

Net NPL inflows declined 13% quarter-on-quarter, while total coverage improved further to around 4%, reflecting the bank's continued prudent provisioning approach. Cost of risk stood at 176 basis points, in line with guidance.

The bank's diversified loan portfolio, low SME exposure, and conservative staging framework continued to support asset quality metrics. The bank preserved its capital strength, supported by internal capital generation.

Its consolidated capital adequacy ratio was 14.1% and CET1 ratio at 9.7%, positioning the bank well against potential market volatility. In the first quarter, Yapı Kredi also strengthened its presence in the fintech universe, finalized establishment of a dedicated crypto trading platform company, and announced a decision to establish a payment institution that will operate in the payment services area.

On slide 16, which is our last slide, you see a snapshot of our first quarter group financial performance on a segment basis. To recap of what we already touched in the first few slides is, on a combined basis, we registered a 1.2 trillion TL revenues, on a 7% increase, and 37.9 billion TL in operating profit, on a 33% growth year-on-year.

Our consolidated net income after non-controlling interest, as always, is at 500 million Turkish lira, was substantially higher compared to last year's losses, mainly on the back of improvement at the operating profit level. Thank you for listening, and now we can open the floor for your questions.

Yes. Good afternoon, or good evening.

I have a question regarding the consolidated net income, because we see a significant increase in the net loss coming from the other segment, right, despite an improved profitability in all kind of other segments. Just wanted, yeah, maybe you can provide any more color on that other segment loss, and I think it is 4.3 billion, which is larger than in the whole year of 2025.

What is the outlook going forward? Were there any one-offs affecting the first quarter profitability, and whether we should see a more pronounced recovery in the consolidated net income?

Thank you.

Thank you for your question. I'll take this.

The loss recorded in the other segment is mainly driven by the monetary loss associated with the net position held at the Koç Holding level. It is the standalone effect coming from Koç Holding.

In addition, only secondary to this, we saw operating losses across several companies in the retail, services, and healthcare sectors. These are largely, obviously, reflecting the seasonality in these sectors.

Compared to last year, our cash mix at the holding level was more dollar weighted rather than TL-heavy. This also resulted in lower interest income and FX gains, which further amplified the monetary loss.

In the current volatile environment, we also view this cash position in the Koç Holding level as a important strategic buffer, kind of a war chest, that provide us with flexibility and resilience. This also allows us to act opportunistically when attractive investment arise.

Going forward, obviously, the seasonality in other segments, as I mentioned, the retail, services, and the healthcare, that negativity will diminish because of going into the season in hospitality, in tourism, in services. The effect coming from having a bit more cash on the holding level will take its toll, probably on a decreasing trend, depending on, obviously, the inflationary trajectory.

Thank you.

Understood. Thank you.

Thank you for your question. We already have a number of investments in the healthcare space, and this organizational change is about bringing them all together in a more structured way under dedicated leadership at the holding level.

This also, obviously, will help us manage the portfolio more strategically, capture synergies, and leverage our existing expertise. It is not only a classification arrangement, not only because we have reached this critical mass in our initiatives within the health care space.

Obviously, we have high expectations for the future. At this point in time, it's only arranging what we have in hand, but in the future, we might come up with more long-term plans on that space.

Obviously, this part is all about dedicated leadership being selected and consolidating all those efforts centrally in Koç Holding. At the same time, this should be seen as a natural evolution in how we organize and oversee a sector where we are already active, rather than an indication of a significant shift in our near-term priorities.

It just reflects our intention to manage our existing footprint more efficiently, effectively at the moment, but we will continue to pursue opportunities in a measured, obviously, and a disciplined way, as we always do.