Turkey Q4 2020 earnings preview

-We present our Q4 2020 forecasts for non-bank Turkish companies under our coverage
-In aggregate, we expect a 40% y-o-y surge in profits, a 33% rise in EBITDA and a 19% rise in revenues
-We expect particularly strong results from Arcelik, BIM, CCI, Autos, Steel and Telcos, and weak results from Aviation and Tupras

Aggregate non-bank Q4 profits to grow 40% y-o-y and 21% q-o-q

We present our Q4 2020 earnings forecasts for non-bank Turkish companies under our coverage. The Q4 earnings season in Turkey will kick off during the week beginning 25 January (Arcelik will be the first of our coverage to report on that day) and finish on 11 March. Q4 was a quarter marked by the TRY’s recovery against the USD (by 4%), benefiting companies with USD costs and debt. For our non-bank
coverage, our estimates point to y-o-y growth of 19% in revenues, a 33% rise in EBITDA and 40% growth in profits. Excluding aviation, we project y-o-y growth of 28% in revenues, 50% in EBITDA and 105% in profits. On a q-o-q basis, we expect 10% growth in revenues, 1% growth in EBITDA and 21% in profits (17% profit growth ex aviation) in aggregate.

Expected highlights

We expect particularly stronger results from:

Arcelik – solid demand recovery, favourable cost base, lower interest expenses
BIM – rising demand on stay-at-home trends
CCI – better operational profitability with good cost control
Autos (Doas, Ford, Tofas, Turk Traktor) – continued momentum in local vehicle demand, strong opex control
Steel (Eregl, Kardemir) – significant increase in steel prices
Telcos (Turkcell, Turk Telekom) – ARPU growth in both mobile and fixed segments, relief in profits from FX pressure

We expect relatively weaker y-o-y results from:

Aviation (TAV, Pegasus, Turkish Airlines) – weak passenger traffic due to COVID-19
Tupras – weak margins and demand due to lockdowns



Source: HSBC Global Research