We present our Q2 2023 forecasts for Turkish companies under our coverage..
We expect total non-bank profits to surge 27% y-o-y and 46% q-o-q; private banks’ profits to rise 9% y-o-y and 10% q-o-q
We expect strong results from autos, aviation, food retailers,and food & beverage; weak results from steel and petchems
Aggregate non-banks Q2 profits to grow 27% y-o-y and 46% q-o-q
The Q2 earnings season will kick off on 21 July (Arcelik will be the first of our coverage to report) and finish on 21 August for both non-banks and banks.
For non-banks, we expect the TRY’s accelerated depreciation of Q2 (36% against both USD and EUR) to have supported earnings, especially exporters and FX-linked businesses. Our estimates point to a y-o-y surge of 42% in aggregate revenues, 32% in EBITDA and 27% in profits. On a q-o-q basis, we expect increases of 24% in revenues, 53% in EBITDA and 46% in profits. For q-o-q comparisons, in addition to regular seasonality (such as in aviation), Ramadan (slow-down) effect shifting into Q1 and cessation of earthquake tax (one-off in Q1) should support Q2 profits.
For banks, we expect severe NIM pressure will be offset by robust fees and very high trading income. While core operating performance will look similar at all private banks, we expect 65% QoQ earnings growth at Akbank thanks to massive trading gains while earnings of other banks stay flattish.
Where we expect relatively stronger results:
Autos (Dogus, Ford, Turk Traktor, Tofas) – improved output, strong demand and pricing and FX (for exporters) should support earnings across the board Aviation (Pegasus, Turkish Airlines, TAV) – traffic remains solid especially on the international side, and cheaper fuel prices kick in to lift airlines’ profits
Food retailers, food & beverage (Sok, Migros, Efes, CCI) – earnings well supported on solid revenue growth (high food inflation), although pricing pressure could be seen. Food and beverage producers appears resilient on solid tourism growth and manageable margin pressure
Where we expect relatively weaker y-o-y results:
Steel (Erdemir, Kardemir) – EBITDA/t remains weaker y-o-y although some recovery from the 1Q23 lows likely with better steel prices and lower input costs
Petchems (Petkim) – expect earnings to improve sequentially on the back of the TRY depreciation and better plant operating rates but overall still remain weak. Chemical margins have not recovered from trough levels and demand continues to disappoint – which should keep Petkim’s earnings subdued.
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