Türkiye Sise Ve Cam Fabrikalari : Şişecam 2Q 2022 Earnings Review

EARNINGS RELEASE

August 2, 2022

Şişecam (BIST-100: SISE) reported financial results for the second quarter ended June 30, 2022

M. Görkem Elverici, CEO of Şişecam, commented:

"As our environment evolves from VUCA* to BANI* in the midst of volatilities and rapid changes, the macroeconomic, geopolitical and environmental uncertainties remain unsolved. Although lock downs caused by the pandemic have come to an end, Covid 19 is still a risk and concern. The world is bearing with big challenges such as Russia-Ukraine conflict, hyperinflation, risk of recession, energy shortages, logistic disruptions and even sudden lack of supply.

Şişecam, with a unique corporate culture of almost 9 decades, continues its growth journey uninterruptedly by differentiating through digitalization and transformation. The lean and agile structure of "One Şişecam" enables us to manage risks effectively with a proactive and data-driven approach. We continue to evaluate strategic opportunities prudently. Our long-term strategic plans and solid investments make it possible for us to grow continuously. Our cost optimization practices, effective production planning, healthy and optimized supply chain management and successful crisis management skills help us achieve our ambitious targets. Şişecam's functional based organizational structure is almost complete now. Our more agile and simple organization structure provides us the necessary infrastructure to adapt to the changing conditions of the new world.

On a global scale, second quarter of this year remained challenging operationally and financially for all companies. The risk of stagflation, sharp increases in energy and commodity prices and Russia-Ukraine conflict remained to be the major topics. Despite all of these challenges, we continued to operate at full capacity in our production facilities in fourteen countries on four continents. We remained committed to making investments contributing to sustainable growth as well as enlarging our client portfolio. We recently announced a new patterned glass furnace and a processing line investment on the same site in Mersin where we are in the process of constructing a greenfield flat glass production facility, that is one of the largest furnaces by capacity globally. This new investment will allow us to capitalize on the opportunities that arise in the rapidly growing global solar energy market and contribute to our strategy of producing sustainable value-added products.

I feel privileged for being the CEO of such a great company, with big aspirations to be one of the top three global players in all key areas of our business portfolio, for more than a year. We are definitely committed to taking smart and solid steps in order to realize our targets while managing risks and utilizing opportunities to maintain sustainable growth and create further value to our shareholders."

1

Consolidated Summary Financial Results for Q2'22

Summary Financials (TL mn)	H1'21	H1'22	YoY
Change
Revenue	12,777	40,232	215%
Gross Profit	4,553	15,642	244%
Gross Margin	36%	39%	325 bps
EBIT	3,491	9,988	186%
EBIT Margin	27%	25%	-250 bps
EBITDA	4,443	11,887	168%
EBITDA Margin	35%	30%	-523 bps
Net Income After Minority Interest	2,743	8,955	226%
Net Income Margin	21%	22%	79 bps
Capex	839	2,814	236%
Capex/Sales	7%	7%	43 bps
Adjusted EBIT*	2,759	9,253	235%
Adjusted EBIT Margin*	22%	23%	140 bps
Adjusted EBITDA*	3,712	11,152	200%
Adjusted EBITDA Margin*	29%	28%	-133 bps
Adjusted Net Income*	2,724	8,955	229%
Adjusted Net Income Margin*	21%	22%	94 bps
Analyst EBIT**	2,237	8,194	266%
Analyst EBIT Margin**	18%	20%	286 bps
Analyst EBITDA**	3,189	10,094	216%
Analyst EBITDA Margin**	25%	25%	13 bps

Q2'21	Q1'22	Q2'22	QoQ	YoY
Change	Change
7,091	16,974	23,258	37%	228%
2,617	6,853	8,789	28%	236%
37%	40%	38%	-258 bps	88 bps
1,807	4,320	5,667	31%	214%
25%	25%	24%	-109 bps	-111 bps
2,303	5,187	6,700	29%	191%
32%	31%	29%	-175 bps	-368 bps
1,395	3,576	5,379	50%	286%
20%	21%	23%	206 bps	346 bps
433	1,237	1,576	27%	264%
6%	7%	7%	-51 bps	68 bps
1,588	3,950	5,303	34%	234%
22%	23%	23%	-47 bps	41 bps
2,085	4,817	6,336	32%	204%
29%	28%	27%	-114 bps	-216 bps
1,384	3,576	5,379	50%	289%
20%	21%	23%	206 bps	361 bps
1,359	3,589	4,605	28%	239%
19%	21%	20%	-135 bps	64 bps
1,855	4,456	5,637	26%	204%
26%	26%	24%	-202 bps	-193 bps

*Excluding one-off impacts

**Excluding other income/expense from operations, investing activities, investments in associates and joint ventures

FX RATES	Q2'21	Q1'22	Q2'22	QoQ	YoY		H1'21	H1'22	YoY
EUR/TL - p.a.	8,36	13,95	15,75	13%	88%		7,87	14,87	89%
USD/TL - p.a.	10,08	15,65	16,79	7%	67%		9,49	16,23	71%

2

Financial Highlights (Q2'22 vs Q2'21)1

• Revenue came in at TRY 23.3Bn, up by 228% YoY (EUR 1.4Bn, up by 97% YoY in EUR terms) o Organic +188%, Inorganic +40%
• Gross profit was at TRY 8.8Bn, up by 236% YoY with a margin of 38%

• 1. Organic +178%, Inorganic +58%
• Adjusted EBITDA came in at TRY 6.3Bn, up by 204% (EUR 377Mn, up by 82% YoY in EUR terms) with 27% margin
• 1. Organic +180%, Inorganic +24%
• Adjusted Parent Only Net Income came in at TRY 5.4Bn, up by 289% with 23% net margin
• 1. Organic +281%, Inorganic +8%
• Capex recorded at TRY 1.6Bn (EUR 94Mn) and Capex/Revenues stood at 7%
• FCFE of TRY 416Bn (EUR 25Mn) WC/Revenue was at 38%
• Currency Sensitivity: TRY 4.3Bn Net Long FX Position, EUR+USD share in Gross Profit is 11% (55% in Revenue, 44% in COGS) in H1'22
• Net Debt/EBITDA was at 0.9x

Segmental Analysis

									Q2'22	H1'22
Segmental Breakdown
of Revenue (TRY Mn)	2020	Q1'21	Q2'21	H1'21	2021	Q1'22	Q2'22	H1'22	QoQ	YoY	YoY	Q2'22 Topline Drivers (YoY)
Architectural Glass	4,960	1,640	1,987	3,627	9,170	4,871	6,322	11,194	30%	218%	209%	+2% volume, +216% pricing, prod. mix, currency
Auto Glass	2,382	747	808	1,556	3,230	1,234	1,697	2,931	38%	110%	88%	+7% volume, +103% pricing, prod. mix, currency
Glassware	3,197	793	1,061	1,855	4,876	1,838	2,484	4,322	35%	134%	133%	+4% volume, +130% pricing, prod. mix, currency
Glass packaging	5,449	1,225	1,813	3,038	7,472	2,699	4,254	6,953	58%	135%	129%	-5% volume, +140% pricing, prod. mix, currency
Chemicals	4,272	1,143	1,319	2,463	5,865	5,065	6,916	11,981	37%	424%	387%	+71% volume, 353% pricing, prod. mix, currency
Other	1,081	138	102	240	1,445	1,266	1,585	2,851	25%	1459%	1090%
Total	21,341	5,686	7,091	12,777	32,058	16,974	23,258	40,232	37%	228%	215%
*Based on Net External
Revenue

									Q2'22	H1'22
Segmental Contribution
to Revenue	2020	Q1'21	Q2'21	H1'21	2021	Q1'22	Q2'22	H1'22	QoQ	YoY	YoY
Architectural Glass	23%	29%	28%	28%	29%	29%	27%	28%	-151 bps	-84 bps	-56 bps
Auto Glass	11%	13%	11%	12%	10%	7%	7%	7%	3 bps	-410 bps	-489 bps
Glassware	15%	14%	15%	15%	15%	11%	11%	11%	-15 bps	-429 bps	-377 bps
Glass packaging	26%	22%	26%	24%	23%	16%	18%	17%	239 bps	-728 bps	-650 bps
Chemicals	20%	20%	19%	19%	18%	30%	30%	30%	-11 bps	1,113 bps	1,051 bps
Other	5%	2%	1%	2%	5%	7%	7%	7%	-65 bps	538 bps	521 bps

1reference to Appendixfor segmental breakdown analysis

3

Segmental Analysis (cont'd)

											Q2'22	H1'22
	Segmental Breakdown
	of Adjusted EBITDA
	(TRY Mn)		2020	Q1'21	Q2'21	H1'21	2021	Q1'22	Q2'22	H1'22	QoQ	YoY	YoY
	Architectural Glass	1,001	566	701	1,267	3,372	1,772	2,223	3,995	24%	213%	237%
	Auto Glass	145	59	90	149	103	77	159	236	-223%	30%	-29%
	Glassware	551	229	289	518	1,215	422	504	926	-19%	84%	120%
	Glass packaging	1,635	365	534	899	1,973	626	838	1,464	-6%	72%	21%
	Chemicals	1,629	490	535	1,025	2,175	1,565	2,439	4,004	164%	220%	34%
	Other	18	-24	-58	-82	38	403	343	746	-1301%	-1799%	108%
	Elimination	-18	-58	-7	-65	-282	-48	-171	-218	-80%	-18%	1496%
	Total	4,962	1,627	2,085	3,712	8,595	4,817	6,335	11,152	67%	196%	73%
											Q2'22	H1'22
	Segmental Contribution
	to Adjusted EBITDA		2020	Q1'21	Q2'21	H1'21	2021	Q1'22	Q2'22	H1'22	QoQ	YoY	YoY
	Architectural Glass	20%	34%	34%	34%	38%	36%	34%	35%	-226 bps	64 bps	157 bps
	Auto Glass	3%	4%	4%	4%	1%	2%	2%	2%	87 bps	-184 bps	-186 bps
	Glassware	11%	14%	14%	14%	14%	9%	8%	8%	-92 bps	-609 bps	-558 bps
	Glass packaging	33%	22%	26%	24%	22%	13%	13%	13%	1 bps	-1,264 bps	-1,092 bps
	Chemicals	33%	29%	26%	27%	25%	32%	37%	35%	532 bps	1,189 bps	807 bps
	Other	0%	-1%	-3%	-2%	0%	8%	5%	7%	-302 bps	803 bps	872 bps
											Q2'22	H1'22
	Segmental Adjusted
	EBITDA Margin		2020	Q1'21	Q2'21	H1'21	2021	Q1'22	Q2'22	H1'22	QoQ	YoY	YoY
	Architectural Glass	19%	33%	33%	33%	34%	35%	33%	34%	-156 bps	-14 bps	94 bps
	Auto Glass	6%	8%	11%	10%	3%	6%	10%	8%	340 bps	-160 bps	-151 bps
	Glassware	17%	29%	27%	28%	25%	23%	20%	21%	-297 bps	-736 bps	-678 bps
	Glass packaging	30%	30%	29%	30%	26%	23%	20%	21%	-349 bps	-975 bps	-853 bps
	Chemicals	31%	35%	33%	34%	29%	27%	30%	29%	342 bps	-243 bps	-486 bps
	Other	1%	-6%	-14%	-10%	1%	21%	24%	22%	321 bps	3,838 bps	3,232 bps

4

Operational Highlights (Q2'22 vs Q2'21) 2

• Flat Glass: Architectural Glass & Auto Glass

1. Flat glass production, up by 7%, at 771K tons

• 1. 93% capacity utilization rate (actual output/effective capacity)
  1. Architectural Glass Division: up by 2% in sales volume
  1. Auto Glass Business Line: up by 7% in consolidated auto glass (converted from m2 to tons) and encapsulation (converted from units to tons) sales volume
• Glass Packaging
• 1. 3% increase in glass packaging production at 607K tons

1. 5% decrease in sales volume (flat domestic sales, exports down by 12%, sales from non-Turkey operations down by 6%) o 96% capacity utilization rate (95% in Turkey and 97% in Russia) (actual output/effective capacity)

• Chemicals
• • Synthetic Soda Ash

• 1. 2% decrease in production at 597K tons
  1. 96% capacity utilization rate
  1. Sales volume down by 1% at 591K tons (domestic sales down by 6%, international sales flat)
  1. 49% increase in average USD/ton price
• Natural Soda Ash
• 1. 2% increase in production at 606K tons

1. 97% capacity utilization rate

• 1. 8% increase in sales volume at 634K tons
  1. 43% increase in average USD/ton price
• Chromium Chemicals
• 1. 95% capacity utilization rate

• 1. 4% increase in sales volume at 32K tons (domestic up by 36% and flat international sales, respectively)
  1. 64% increase in average USD/ton price
• Glass Fiber
• 1. 8% increase in production at 15.4K tons

1. 88% capacity utilization rate

• 1. 3% decrease in sales volume at 15.5K tons
  1. 61% increase in average EUR/ton price
• Electricity
• 1. 4% increase in production at 201Mn kWh

• • 1. 106% increase in sales volume at 409Mn kWh
    1. ~450% increase in TRY/kWh average price
    1. TRY 806Mn revenues vs. TRY 71Mn in Q2'21
  • Oxyvit
  • 1. TRY 140Mn revenues vs. TRY 36Mn in Q2'21
• Glassware
• 1. 4% increase in total sales volume

2 Glass and chemicals volume figures are based on metric ton

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