Şişecam 25/q2

Türkiye Şişe ve Cam Fabrikaları A.Ş. was founded in 1935 by İş Bank, and the company this year celebrates its 90th anniversary. The Group consists of a holding company, 55 subsidiaries, 1 joint venture, 4 associates and a 1 joint activity. In this article, I will examine the financials of Şişecam for the second quarter of 2025, and elaborate the relevant issues for the shareholders.

Şişecam is among the world’s most prestigious manufacturers and with its 90 years of corporate history, it has a considerable experience and high degree of specialisation. As a global company it has production activities spanning 14 countries on 4 continents, and sales in more than 150 countries.

Şişecam was on track to become one of the top three global producers in all its core business lines. On this path, increase on sales were accompanied with profitability and solid margins. However, in 2023, I have pointed the possible adverse effects of inflation accounting on company financials, and gave a break to DCF valuations due to complications at data.

As a result of global setbacks, political, economical factors and company related issues, the value creation objective wounded. Consequently, these factors are reflected on share price in the market. Let’s have a look at the essential factors to understand the background of it. Below, I have plotted the operating profitability of the company with operating income (black) and operating profit margin (blue). There was a continuous and strong declining trend since 2022/q4. The negative and volatile figures in operating profitability was disturbing. On the other hand, since the end of last year we witnessed a recovery in income and continuous progress in margins. At this quarter the company made it to positive territory, and 2024YE seems like bottom in the hindsight (assuming no shocks to the system).

This is one of the metrics that I attach high importance. Because what happens here, goes directly to the share price. I have prepared another chart to show this relation. Below you see daily closing prices for the shares (black) on the right axis and earnings per share figures for every quarter on the left axis. After reaching its intraday peak at 55.64 TRY on 21/05/2024 share price took a nose dive. Cyclical and geopolitic factors definitely have their fair share on this fall, but declining EPS is my favourite explanatory variable in this case. I even thought (as well as many other market participants) 2024q3 would end this downward trend, but we have learnt that there was more to come. That’s why price and EPS diverge in that period. Türkiye İş Bankası A.Ş. had also bought many shares before the year end, but I’ll come to that topic later on. I was already at buying side at that time and increased my shares. Then the stock price hit the bottom at 32.08 TRY and since than stock price increased more than 32%, which is a good return in a short period of time. Interestingly, I was once again at the same page with İş Bankası at share buying, but a step ahead.

Having said that, the company went through a change at top level management, but at the recent documents it is confirmed that the company is committed to its long-term objectives. We have seen high inflation periods, tight monetary policies, high interest rates and rising energy costs. Downturn in demand, dim macroeconomic outlook and a low growth on top of that. All these factors distorted the company’s financials, but it seems like the worst might have left behind. But be careful! This does not necessarily mean a strong recovery and immediate rise in share price. However, I’m happy with cost control, efficiency and return to profitability.

On March 1, I have published the Stock Analysis for Şişecam and showed the stock performance both for price movements and returns. On that article there was a comparison of share performance with BIST100 Index. Year to date decline in share price was 22.1% and return of the Index at the same period was 26.7%. Based on this divergence and the hope of management actions for better financials I have acted, and until now the outcome is satisfactory. I will update that article soon, too.

Now let’s delve into recent financials of the company.

But a quick reminder: Due to application of inflation accounting in accordance with TFRS, TAS 29 and the announcements made by the Public Oversight Accounting and Auditing Standards Authority, financial statements are adjusted. And as I do not use any ready data, but prepare whole figures myself, there might be discrepancies, errors or mismatches. In such cases, please refer to official documents of the company and use figures at your own risk.

Executive Summary and Key Financials

On the audio conference call, Mr. Can Yücel, CEO of Şişecam, explained the key drivers shaping the business environment. He provided details on developments, various setbacks and steps taken to improve the situation. As I depicted above, cost control and efficiency are essentials for return to profitability and this comment from his notes gives confidence: “In 2025, we launched our ‘Efficiency Management Program’ to implement a more comprehensive and systematic approach to improve efficiency… we will remain focused on cost-saving and simplification initiatives.”

If we check the outlook for the first half of year; Şişecam has produced 2.8 million tons of glass, 2.2 million tons of soda ash, and 1.9 million tons of industrial raw materials. Based on consolidated figures, share of international revenue accounted for 62% of total revenue, in cumulative terms. The rest of the revenue comes from domestic sales. This ratio is stable around 60% in general.

Below you will find the key financials of the company for two consecutive quarters (in stacked pillars) and cumulative figures (as blue marks). I have also compared those figures for the same periods of previous year. Consolidated Revenue is down by 13.0%, from 116 billion TRY to 101 billion TRY in H1’25. Gross Profit improved slightly from 26,5 billion TRY to 26,9 billion TRY. I follow the financials of the company since 2011/q1 and noted the very first negative EBIT figures recently for Şişecam. In this period both quarterly and cumulative figures for EBIT returned to positive. Operating Income increased from minus 1,739 million TRY to 2,031 million TRY in the quarters of 2025. Cumulative data increased from minus 2,490 million TRY to 292 million TRY (from H1’24 to H1’25). Finally, Parent only Net Income is doubled from 2025q1 to 2025q2, from 1,329 million TRY to 2,652 million TRY. But in cumulative terms and compared to H1’24 it still lags behind.

The chart above might not cheer you up, but when it comes to margins, you see the improvement and cost controls. Here are the quarterly changes for three key financials. Gross profit margin increased from 23.7% to 29.4%. The change is 576 basis points (bp). EBIT margin increased from minus 3.6% to 3.9%. As a last item, net income margin is also in progress. At the end of second quarter, increase is 228 bp from 2.8% to 5.0%.

Şişecam | Segments and Regions

Following the same methodology for Key Financials, you can see the Segmental Breakdown of Revenues from 2024/6 to 2025/6 in cumulative values. Except Chemicals, all other segments recorded gains from 2025q1 to 2025q2. Chemicals decreased from 11,815 million TRY to 11,089 million TRY in 2025q2. The columns represent values in million TRY and marks point out the cumulative changes in percentage. Glass Packaging (29%) and Energy (30%) are the stars of quarterly data. Industrial Glass increased 18% in the same period. When we compare the cumulative figures; Energy had the worst decline with 52% from H1’24 to H1’25. In the same period Glass Packaging increased from 21,367 million TRY to 22,189 million TRY, and almost all other segments are below last years’ same period levels.

Consolidated sales volume for Architectural Glass went down by 5.0% YoY mainly due to challenging market conditions. Domestic sales volume remained resilient. The operations in India and Russia experienced 15.0% YoY decline in combined sales volume. The automotive glass and encapsulation division accounted for 90% of the Industrial Glass segment’s revenue. Glass packaging was top line contributor with 24% share. This business line achieved a 9% sales volume growth and 5% pricing increase. The performance of Glassware business line stayed under pressure due to concerns over a global recession and low risk appetite.

The chart above shows the net sales by segments at the end of second quarter of 2025. Figures are for 2025q2 in 1,000 TRY. Glass Packaging is leading with 12,514 million TRY and this is 24% of sales total of 52,580 million TRY. Architectural glass is at the second place and figures are 11,882 million TRY and 23%. You can check the composition for other items from the pie chart on the left.

If we look at the regional breakdown of the net sales for 2025 in quarterly values, we see that Türkiye is leading with 44% of all total. The corresponding value is 23,100 million TRY. Europe is following it with 11,894 million TRY and the share is 23%.

Breakdown of Income Statement

At this point, it is apt to see where this 52,580 million TRY Revenue comes from at the second quarter, and how it evolves to Net Income (parent only). In the following Sankey Diagram, I have plotted the revenues by segments on the left hand side. Then, I have deducted 37,101 million TRY Cost of Sales and obtained 15,479 million TRY Gross Profit.

Operating Expenses stood at 13,448 million TRY and sales, marketing expenses are dragging the profits with 8,622 million TRY. General and Administrative Expenses were at 4,607 million TRY and R&D Expenses stood at 218 million TRY. Transportation expenses (5 billion TRY) and Indirect salaries and wages expenses (3,9 billion TRY) are two major burdens. Operating income finally recovers with the control on these cost items. Operating Profit in 2025q2 is 2,031 million TRY and after adjusting for other operating, investing and financial items, Şişecam ended the second quarter of the year 2025 with 3,877 million TRY Income Before Tax figure. As the 1,206 million TRY Tax Expense deducted from that sum, Net Income for the period became 2,671 million TRY. Profit attributable to equity holders of the parent is 2,652 million TRY, which is roughly 66,7 million USD.

Şişecam | Financial Risk Ratios

Financial risk ratios for Şişecam look healthy. Both the Financial Leverage that the company uses and the Debt-to-Equity ratios are higher due to eurobond issues and ratios are 0.47 and 0.88 respectively. Net debt to Equity ratio stood at 0.55 at this quarter, which is higher than previous quarter. When it comes to liquidity ratios Current Ratio is down from 1.69 to 1.20 in 2025q2. Quick Ratio is also below previous quarters figure, which currently is at 0.76.

Şişecam | Share Buyback and Dividends

Şişecam has previously announced a buyback program on 26.02.2021 and made its first purchase on 15.03.2021. After reaching the first criteria Şişecam announced a second, supportive program. For further details you can read my article on Şişecam Stock Buyback. On June 30th of 2025 three year period was concluded and share buyback program is now over.

In the chart below you can see share prices (daily closing) in white color, and buybacks in yellow (in Turkish lira). The most recent share buyback was on October 15, 2024 with a 1.000.000 share. And the net total from the beginning of the program reached to 70,778,416 with a share of 2.31 percent to the capital. In this period there were two instances of sale of shares from the buyback program and you can follow the details at the table.

And here on the second chart you can see another share purchase for Şişecam shares from the market, but this time it is not a part of buyback program. These are share purchases by Türkiye İş Bankası A.Ş. At the end of 2024 and before the end of second quarter of 2025 İş Bankası conducted aggressive share purchases. Particularly on this subject, I’ve asked Mr. Can Yücel, whether there might be another share buyback program by Şişecam on the horizon, but as there is no concrete development on the issue he replied kindly that the program is over and it was final. And for the İş Bankası those were on selective basis and obviously he could not comment on those.

As we all know share buybacks are important for share holder value, but it is not the only instrument to that end. In addition to search for the best returns to the invested capital, Şişecam also pays regular dividends with an increasing ratio each and every year.

Şişecam is one of the companies that I follow closely and have in my global portfolio for years. Investors were definitely not happy with the continuous deterioration in stock price, but I hope recent strong come back did help to take a breath. Considering the time value of money there are also other burdens for investors, too. Erosions in operating profitability melted the value creation. I hope ‘Efficiency Management Program’ works well and helps to cut costs and increase productivity. Because Şişecam has a market share and solid sales, but controlling the costs is the key for creating a strong operational profitability. With the recovery in EBIT and profitability, share price reflected a positive improvement.

I hope this figures, analysis and calculations are also useful for you, too. For further documents and news please check Şişecam Investor Relations and use their official figures when in doubt.

With this opportunity, I’d like to thank to Şişecam management and all employees for their efforts and performances, who work for the best of the company and to create sustainable value.

Ergun UNUTMAZ, 22.08.2025

You can check my previous works by clicking the links.

ŞİŞECAM 2024/q4
ŞİŞECAM 2024/q3
ŞİŞECAM 2024/q2

Stock Analysis SISE

I wish you all the best.

Disclaimer

General information and statistics that are provided herein this article acquired from official sites and public resources. Thoughts and comments belong to the author and do not represent any other third parties’, public/private institutions’ or organisations’ point of view.

The information contained on this article is not an offer to buy or sell securities, foreign exchanges, indices or any other financial instruments. Works on this blog also comprise educational materials, translations, summaries and experience sharing essays. I do not provide any kind of financial services. For the investment advices and recommendations, please refer to registered institutions and authorised bodies. Parties, who gets information from this website, accept to bear the possible benefits and risks at their own responsibility, and act through their own initiative.