Lila Kağıt CEO Ogücü: We Will Expand Our Target Markets with the Launch of Our Reel Paper Production in Erzurum by 2027

Foreks - Alp Öğücü, CEO of Lila Kağıt, one of the largest players in the cleaning paper sector with exports to over 80 countries across 5 continents, and Işıl Tireli, CFO, provided insights on the company's financial results for the third quarter of 2024, ongoing investments, and developments post-IPO. According to Lila Kağıt’s financial results for the third quarter of 2024, the net profit after tax reached 981 million TL, showing a 9.3 percentage points increase compared to the same period last year.

"We Are a Hygiene Product Manufacturer in Turkey and a Paper Manufacturer Globally" CEO Alp Öğücü shared details about the company's production structure and sales: "As Lila Kağıt, we today produce at an extraordinary scale on a single campus of 300,000 m2 with four paper machines. Additionally, our machine park, which includes 26 converting lines and 53 packaging machines, allows us to develop many different products. We export to over 80 countries, both in close and distant markets. While we operate in Turkey under our brands Sofia, Maylo, and UltraBerrak, abroad, we sell raw material in the form of jumbo rolls to cleaning paper manufacturers, as well as converting products as complementary goods. In the first nine months of 2024, despite the economic challenges in both national and international markets, we managed to achieve sales of 160,000 tons, increasing our sales by 15% compared to the same period last year."

"Our Erzurum Facility Will Bring a New Breath to the Sector" Following the IPO that took place in May 2024, Öğücü stated that they are focusing on new investments with the goal of sustainable growth in the cleaning paper sector: "Erzurum is an investment we started researching in 2018 and completed the business plan in 2022. We are establishing the first cleaning paper production facility in Eastern Anatolia and the Black Sea region. Unlike a production strategy concentrated in the western region of Turkey, our initial aim is to ship to markets with a population of over 30 million, including much of Anatolia and nearby markets such as Georgia, Iraq, and Azerbaijan, in a quicker and more cost-effective manner. At the same time, we will make significant contributions to the development of industry and employment in the region. We intend to start operations at our facility, which construction began immediately after the IPO and is still ongoing, by the end of 2024, weather permitting. We are planning for the converting section to be operational by the summer of 2025. With the start of jumbo roll production in Erzurum in 2027, we will expand our target markets."

"We Have Activated Our Solar Power Plant Project, Equivalent to 16 Football Fields" Emphasizing that effective and efficient energy management and investments in renewable energy sources are fundamental elements of their sustainability strategies, Öğücü continued: "In this context, we initially started solar energy production with a capacity of 12.5 MW on the roofs of our Tekirdağ Ergene factory. Covering an area equivalent to approximately 16 football fields, our solar power plant will be one of the notable projects in Turkey and the world, able to generate electricity equivalent to that consumed by about 10,000 households." Since they operate in heavy industry, Öğücü explained that such a large-scale plant meets 8% of the facility's energy consumption: "By investing in solar power at different locations, we aim to first complete the 50 MW commitment and then increase that investment to exceed 50% of our consumption. Through these investments, we will have an average annual advantage of $14 million in electricity consumption. As a second step, our application and urban planning permission for a land-type solar power plant in Bitlis have been approved, and we are currently in the environmental impact assessment phase. We aim to promptly activate a solar power plant with a capacity of 28.1 MW by investing in an area approximately the size of 50 football fields in Bitlis."

"We Achieved Net Sales Revenue of 9.3 Billion TL" Regarding financial results, Lila Kağıt CFO Işıl Tireli stated: "In the nine-month period, we achieved consolidated net sales revenue of 9.3 billion TL. Our net profit after tax increased by 9.3 percentage points compared to the same period last year, rising to 10.6%, with a net profit of 981 million TL. In the nine-month period of 2024, we are one of the top 100 publicly traded companies on Borsa Istanbul with the highest profitability."

"We Are in a Net Exporter Position" Tireli continued: "Through our export model, which has been the focus since the company’s inception and is the foundation of our business model, we naturally hedge against foreign exchange risk while maintaining a net exporter position. In this context, we achieved an export ratio of 73% in the nine-month period of 2024. Our low financial indebtedness and equity exceeding 11 billion TL are among our strongest financial indicators."

"We Aim to Continue Profit Distribution" Stating that they conducted a gross profit distribution equivalent to 88.42% of the previous year’s profit on August 1, 2024, during their first ordinary general assembly held after the IPO, Tireli concluded: "As a company that has made regular profit distributions in 10 out of the last 11 years, our aim is to continue profit distribution consistently with our past performance, depending on our financial position, the funding needs of upcoming investments, and the conditions of the sector and economic environment."