KRVGD TI: Highlights on 2023 guidance and analyst meeting (Oyak Yatırım)

Kervan Gida shared its 2023 FY guidance in a presentation published on PDP which was also used during its analyst meeting today. The company is guiding for consolidated 2023 revenues of TL7.35bn which is mean of TL7.2bn-7.5bn range following 2022’s TL4.84bn revenues (Turkiye: TL3.9bn & Poland: TL928mn) which implies 52% y/y increase in consolidated terms. Consolidated 2023 EBITDA guidance is TL875mn (mean of TL850mn-900mn range) versus 2022 EBITDA of TL626mn. Guided EBITDA margin is 11.9% which is lower than 2022’s 12.9%. Relatively strong TL environment is expected to weigh on the exporter’s margins (especially in 1H23) which is also dealing with inflationary cost pressures. The company is trying to reflect global inflationary pressures to its prices globally as well and current parity levels also lowered attractiveness of previously margin-wise attractive exports versus domestic. Average USD/TL assumption behind the guidance is 21.13 which implies c28% annual depreciation. Average EUR/USD expectation is 1.04. Weaker TL will act as a positive catalyst for the exporter since sum of Poland revenue and exports from Turkey in 2022 revenues was 74%. 2023 capex is planned to be around EUR30mn (2022: EUR23mn) and includes sixth jelly line in Turkiye, second jelly line in Poland as well as investments on packaging, solar units, water treatment, DOPA (Digitalisation, Opex, Profitability, Automation Transformation Project), move of Istanbul plant to Akhisar in Turkiye and move of Brzeg plant to Nysa in Poland. With respect to developments on working capital front, further improvements (already taken place with Poland deal) on inventory and trade payables are seen likely going forward with DOPA (better inventory management) and higher contribution of Poland operations.

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