Q2 2026 We Soda Ltd Earnings Call

August 26, 2026

Operator: Good day and thank you for standing by. Welcome to the We Soda Second Quarter 2026 Results Webcast and Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star one one on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press star one and one again. If you wish to ask a question via the webcast, please use your Q&A box available on the webcast link anytime during the live event. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Chris Perry, Head of Investor Relations and Communications. Please go ahead.

Operator: Good day and thank you for standing by. Welcome to the WE Soda Q2 2026 Results Webcast and Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star one one on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press star one and one again. If you wish to ask a question via the webcast, please use your Q&A box available on the webcast link anytime during the live event. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Chris Perry, Head of Investor Relations and Communications. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, please press *11 on your telephone keypad.

Speaker #1: You will then hear an automatic message advising that your hand is raised. To withdraw a question, please press *11 again. If you wish to ask a question via the webcast, please use your Q&A box available on the webcast link at any time during the live event.

Speaker #1: Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Chris Perry, Head of Investor Relations and Communications.

Speaker #1: Please go ahead.

Speaker #2: Thank you very much, Nadia. Hello, everyone, and welcome to the We Soda Q2 and H1 results presentation. The call today will be hosted by Alistair Warren, our CEO, who is here with me, and our CFO, who joined us today from Ankara, Turkey.

Chris Perry: Thank you very much, Nadia. Hello, everyone, and welcome to the We Soda Q2 and H1 results presentation. The call today will be hosted by Alasdair Warren, our CEO, who is here with me in London, and Ahmet Tohma, our CFO, who joins us today from Ankara in Türkiye. They will take us through the main highlights and the financials for Q2 and H1 and then run through our guidance and then the outlook for the balance of the year. We will then move on to Q&A, where we will take questions from the conference call and the webcast, and we will keep the whole presentation to just under an hour and finish between 2:45PM and 3:00PM. Before I hand over, a quick word on how we are listening carefully to investor feedback, and hopefully you will have seen some changes today.

Chris Perry: Thank you very much, Nadia. Hello, everyone, and welcome to the WE Soda Q2 and H1 results presentation. The call today will be hosted by Alasdair Warren, our CEO, who is here with me in London, and Ahmet Tohma, our CFO, who joins us today from Ankara in Türkiye. They will take us through the main highlights and the financials for Q2 and H1 and then run through our guidance and then the outlook for the balance of the year. We will then move on to Q&A, where we will take questions from the conference call and the webcast, and we will keep the whole presentation to just under an hour and finish between 2:45PM and 3:00PM. Before I hand over, a quick word on how we are listening carefully to investor feedback, and hopefully you will have seen some changes today.

Speaker #2: They will take us through the main highlights and the financials for Q2 and H1, and then run through our guidance and the outlook for the balance of the year.

Speaker #2: We will then move on to Q&A, where we will take questions from the conference call and the webcast, and we'll keep the whole presentation to just under an hour and finish between 2:45 and 3:00.

Speaker #2: Before I hand over, a quick word on how we’re listening carefully to investor feedback, and hopefully you’ll have seen some changes today. First, we recently launched a new website with dedicated investor pages, making it easier to find our results and our reporting.

Chris Perry: First, we recently launched a new website with dedicated investor pages, making it easier to find our results and our reporting. Alasdair will say more about this in his presentation. Second, in today's press release, you will find expanded disclosure on our related party balances and financial definitions. We would obviously welcome any thoughts you have on any of this disclosure. With that, I will hand over to Alasdair.

Speaker #2: Alistair will say more about this in his presentation. Second, in today's press release, you will find expanded disclosure on our related party balances and financial definitions.

Speaker #2: We'd obviously welcome any thoughts you have on any of this disclosure. With that, I'll hand over to Alistair.

Speaker #3: Thanks, Chris. And hello, everybody. Good afternoon or good morning, wherever you are. We're really pleased with our performance in the first half of the year.

Alasdair Warren: Thanks, Chris, and hello, everybody. Good afternoon or good morning, wherever you are. We are really pleased with our performance in the H1 of the year. The Q2, as you will have seen from our detailed release, showed good progress by comparison with the Q1, and the results that we've observed during July and August are also consistent with that trend. So that, as you will have seen, we have reiterated our guidance for the full year at $570 million consolidated and 9.3 million metric tons of sales. Of course, the external environment is a challenging one. To be frank, that hasn't improved.

Speaker #3: The second quarter, as you will have seen from our detailed release, showed good progress by comparison with the first quarter. The results that we've observed during July and August are also consistent with that trend.

Speaker #3: So, as you will have seen, we have reiterated our guidance for the full year at $570 million consolidated and 9.3 million metric tons of sales.

Speaker #3: Of course, the external environment is a challenging one—and to be frank, that hasn't improved. But what we have done is really focus on a lot of self-help measures, driving out costs wherever we can, on both the production side and the cost to serve.

Alasdair Warren: What we have done is to really focus on a lot of self-help measures, driving out cost wherever we can on both the production side and the cost to serve, and ensuring that we remain nimble, and where we can, pass on cost increases contractually to our customers. We've had a fair degree of success on that. As you'll see from our numbers for the H1, we had sales volumes of 4.4 million metric. That will accelerate into the H2 of the year. Adjusted EBITDA of $245 million that Ahmet will expand on in a minute. But again, a good and accelerating trend that supports our full-year number. With our focus on being disciplined around capital expenditures, a free cash flow of just shy of $170 million, which again, is supportive of our full year guidance of 400. CapEx also remains on track.

Speaker #3: And ensuring that we remain nimble and, where we can, pass on cost increases contractually to our customers. We've had a fair degree of success with that.

Speaker #2: As you'll see from our numbers, for the first half, we had sales volumes of 4.4 million metric tons. That will accelerate into the second half of the year.

Speaker #2: Adjusted EBITDA of $245 million, which Ahmed will expand on in a minute. But again, this is a good and accelerating trend that supports our full-year number.

Speaker #2: And with our focus on being disciplined around capital expenditures, we had free cash flow just shy of $170 million, which, again, is supported by our full-year guidance of $400 million.

Speaker #2: CapEx also remains on track. We're really focused on getting value for where we're spending money and ensuring that we focus on the priorities against this challenging backdrop.

Alasdair Warren: We're really focused on getting value for where we're spending money and ensuring that we focus on the priorities against this challenging backdrop. You'll note that our leverage at the half year was higher than our year-end targeted levels. But given the improvement performance that we see through the balance of the year, that will be in line with target by year-end. Overall, whilst it's a tough external environment, we're very pleased with the way in which we've responded with a series of self-help measures. Now, just to expand on what Chris mentioned before, and we will do this on a quarterly basis going forward. We wanted to provide additional disclosure around related parties and other important non-commercial aspects that are impacting our business.

Speaker #2: You'll note that our leverage at the half-year was higher than our year-end targeted levels. But given the improved performance that we see through the balance of the year, that will be in line with target by year-end.

Speaker #2: So, overall, whilst it's a tough external environment, we're very pleased with the way in which we've responded with a series of self-help measures. Now, just to expand on what Chris mentioned before—and we will do this on a quarterly basis going forward—we wanted to provide additional disclosure around related parties and other important non-commercial aspects that are impacting our business.

Speaker #2: On the related parties disclosure, you'll have seen from our release earlier today, we've disclosed that of the $88 million of net funding that was provided to related parties since the beginning of '25, $63 million of that has now been repaid.

Alasdair Warren: On the related parties disclosure, you'll have seen from our release earlier today, we've disclosed that of the $88 million of net funding that was provided to related parties since the beginning of 2025, $63 million of that has now been repaid. We've provided additional color in the release around that. Of course, we've noted the feedback from our bondholders and other external parties, and our objective absolutely remains to reduce those balances over time. But we know that actually, when you look over that same period of 18 months, they've actually remained broadly flat. We've got strategies ahead of us that will enable us to fulfill our stated objective. In terms of the ETS, we note the announcement from the commission regarding the proposed reforms to the ETS.

Speaker #2: We've provided additional color in the release around that. Of course, we've noted the feedback from our bondholders and other external parties, and our objective absolutely remains to reduce those balances over time.

Speaker #2: But we know that, actually, when you look over that same period of 18 months, they've actually remained broadly flat. And we've got strategies ahead of us that will enable us to fulfill our stated objective.

Speaker #2: In terms of the ETS, we note the announcement from the Commission regarding the proposed reforms to the ETS. We recognize that those aren't going to be quick in coming, but they are significant.

Alasdair Warren: We recognize that those are not going to be quick in coming, but they are significant in terms of addressing the concerns that we had around ensuring that there is no double counting of allocations. In other words, ensuring that there is a level playing field and ensuring that actually the tax legislation does what it is supposed to do, which is to reduce overall emissions over time, consistent exactly with how we have positioned our business over the last 15 years as a low carbon emitter. We welcome the changes that have been brought and also the proposals that will ensure that to the extent there has been any double counting by any parties, that there will be a clawback mechanism to capture those. Finally, with respect to patents, we note that Solvay has also made commentary on the same point.

Speaker #2: In terms of addressing the concerns that we had around ensuring that there's no double-counting of allocations, and, in other words, ensuring that there's a level playing field and ensuring that, actually, the tax legislation does what it's supposed to do—which is to reduce overall emissions over time.

Speaker #2: Consistent, exactly, with how we've positioned our business over the last 15 years as a low-carbon emitter. And we welcome the changes that have been brought and also the proposals that will ensure that, to the extent there has been any double counting by any parties, there will be a clawback mechanism to capture those.

Speaker #2: And finally, with respect to patents, we note that Solvay has also made commentary on the same point. The only issue I would like to mention is that this is a case that's been running for some time.

Alasdair Warren: The only issue I would like to say is this is a case that has been running for some time. We feel very robust about our position. We think it will take some time to resolve. Importantly, from the perspective of our bondholders and from our customers, the nature of this litigation claim, which is with respect to a specific part of the production process at Kazan, importantly, does not affect any of our other production facilities, and most notably, Eti. Therefore, we have responded by supplying product from those unaffected plants into the designated regions and accordingly, irrespective of what the outcome might be ultimately, and clearly we are currently contesting what has been put in front of us. Irrespective of the outcome, there will be no material impact on our financial or operating performance.

Speaker #2: We feel very robust about our position. We think it will take some time to resolve. But importantly, from the perspective of our bondholders and from our customers, the nature of this litigation claim—which is with respect to a specific part of the production process at Kazan—importantly, doesn't affect any of our other production facilities, and most notably ETI.

Speaker #2: And therefore, we've responded by supplying product from those unaffected plants into the designated regions accordingly, irrespective of what the outcome might ultimately be.

Speaker #2: And clearly, we are currently contesting what has been put in front of us. But irrespective of the outcome, there'll be no material impact on our financial or operating performance.

Speaker #2: And then finally, just before handing over to Ahmed—on our new website, to Chris's point—we've listened carefully to the feedback we've received, not only from our bondholders, but also other external stakeholders.

Alasdair Warren: Finally, just before handing over to Ahmet, our new website. To Chris's point, we have listened carefully to the feedback we have received, not only from our bondholders but other external stakeholders. We hope that you like what you see in terms of our new website. It is, I think, a much clearer platform, but from an investor standpoint, our intention is to continue to build on this and providing the level of disclosure that you would expect of a best-in-class international company, including more granular detail and more easily downloadable detail around both our financial operating and sustainability performance that will be added over time. We welcome any further feedback that any of you have got. We have already received quite a lot of positive feedback, but whether it is positive or constructive, we welcome it. With that, let me hand over to Ahmet.

Speaker #2: We hope that you like what you see in terms of our new website. It's, I think, a much clearer platform. But from an investor standpoint, our intention is to continue to build on this and provide the level of disclosure that you would expect of a best-in-class international company.

Speaker #2: Including more granular detail and more easily downloadable information around both our financial, operating, and sustainability performance that will be added over time. But we welcome any further feedback that any of you've got.

Speaker #2: We've already received quite a lot of positive feedback. But whether it's positive or constructive, we welcome it. So with that, let me hand over to Ahmed.

Speaker #3: Thank you. Good morning and good afternoon, everyone. I will take you through our financial KPIs for the second quarter and the first half.

Ahmet Tohma: Thank you, Alasdair. Good morning and good afternoon, everyone. I will take you through our financial KPIs for Q2 and H1. First of all, the theme I would like to take away is improvement. Q2 was better than Q1 across almost every metric. Before I turn to the numbers, one point on disclosure. In today's press release, you will find a new appendix that reconciles our adjusted EBITDA and our net backed revenue directly to the interim financial statements. We hope this makes our results easier to interpret. Let me start with the restricted group on slide 5 which excludes our assets in the US. As Alasdair said, the market has been difficult, and you can see that in the year-on-year numbers.

Speaker #3: But first of all, the theme I would like to take away is improvement. The second quarter was better than the first across almost every metric.

Speaker #3: Before I turn to the numbers, one point on disclosure. In today's press release, you will find a new appendix that reconciles our adjusted EBITDA and our netback revenue directly to the interim financial statements.

Speaker #3: We hope this makes our results easier to interpret. So let me start with the restricted group on slide five, which excludes our assets in the US.

Speaker #3: As Alistair said, the market has been difficult, and you can see that in the year-on-year numbers. Our adjusted EBITDA was $104 million for the quarter and $194 million for the first half, which was down around 25%.

Ahmet Tohma: Our adjusted EBITDA was $104 million for the quarter and $194 million for the H1, which was down around 25%, reflecting lower pricing in parts of Asia and Europe and higher energy and transportation costs. However, the trend is positive. Q2 adjusted EBITDA of $104 million was 16% higher than the $90 million we delivered in the Q1. We achieved that despite those same cost headwinds. For me, the more important story is the direction of the travel, the improvement from the Q1 to the Q2. Adjusted EBITDA was $83 per metric ton in the Q2, an improvement on the Q1 as our efficiency actions feed through. For example, rerouting ocean freight and improving vessel utilization to reduce our cost to serve. In short, the Q2 was better than the first on both an absolute and a per ton basis.

Speaker #3: Reflecting lower pricing in parts of Asia and Europe, and higher energy and transportation costs. However, the trend is positive. Second quarter adjusted EBITDA of $104 million was 16% higher than the $90 million we delivered in the first quarter.

Speaker #3: And we achieved that despite those same cost headwinds. For me, the more important story is the direction of travel—the improvement from the first quarter to the second quarter.

Speaker #3: Adjusted EBITDA was $83 per metric ton in the second quarter, an improvement on the first quarter as our efficiency actions came through. For example, rerouting ocean freight and improving vessel utilization helped reduce our cost to serve.

Speaker #3: In short, the second quarter was better than the first, on both an absolute and a per ton basis. Also, cash generation remains a strength of this business.

Ahmet Tohma: Cash generation remains a strength of this business. We delivered free cash flow of $74 million in the quarter, which was up from $63 million in the Q1, and $137 million for the H1. Our Q2 free cash flow conversion of 72% was actually up five points on last year and two points on the Q1. We also kept a tight hold on spending with CapEx for the H1 of $48 million, down 21% year-on-year basis. Moving on the consolidated group on slide six, which adds our US operations. As Alasdair described, the production issue at our Westvaco mine is now fully behind us. In fact, the mine is running at or above its originally budgeted run rate. You can see the effect in the volumes.

Speaker #3: We delivered free cash flow of $74 million in the quarter, which was up from $63 million in the first quarter, and $137 million for the first half. Our second quarter free cash flow conversion of 72% was actually up 5 points on last year, and 2 points on the first quarter.

Speaker #3: And we also kept a tight hold on spending, with capital expenditure for the first half of $48 million, down 21% on a year-on-year basis. Moving on to the consolidated group on slide six, which adds our US operations.

Speaker #3: As Alistair described, the production issue at our West Vaco mine is now fully behind us. In fact, the mine is running at or above its originally budgeted run rate.

Speaker #3: You can see the effect in the volumes. Second quarter sales of 2.34 million metric tons were level with last year and 12% ahead of the first quarter.

Ahmet Tohma: Q2 sales of 2.34 million metric tons were level with last year and 12% ahead of the Q1. While H1 volumes were down around 3% at 4.43 million metric tons, entirely coming from the Q1 disruption. Adjusted EBITDA was $131 million for the Q2 and $245 million for the H1, equal to approximately $55 per metric ton. The quarter was 15% ahead of the $114 million we delivered in the Q1. We grew EBITDA even as energy and transportation costs rose. This is down on last year, but our margins held up well relative to the broader market. Free cash flow was $93 million in the quarter, which was up 24% on the Q1, and $168 million for the H1. With the Q2 free cash flow of sorry, $168 million free cash flow of H1.

Speaker #3: While first-half volumes were down around 3%, at 4.43 million metric tons, this entirely came from the first quarter disruption. Adjusted EBITDA was $131 million for the second quarter, and $245 million for the first half.

Speaker #3: Equal to approximately $55 per metric ton. The quarter was 15% ahead of the $114 million we delivered in the first quarter, and we grew EBITDA even as energy and transportation costs rose.

Speaker #3: That is down on last year, but our margins held up well, relative to the broader market. And free cash flow was 93 million dollars in the quarter, which was up 24% on the first quarter, and 168 million dollars on for the first half, with the second quarter free cash flow of sorry, 168 million dollars free cash flow of first half.

Speaker #3: And once we look at operational efficiency, and we are reducing costs, and we are having commercial discipline. As in previous years, our performance is weighted towards the second half, and we remain on track to deliver our full year 2026 guidance.

Ahmet Tohma: Once we look the operational efficiency, we are reducing costs, and we are having commercial discipline. As in previous years, our performance is weighted towards the H2, and we remain on track to deliver our full year 2026 guidance. The step up we delivered from the Q1 to the Q2 is the first evidence of that check. As Alasdair highlighted, the first two months of the Q3 underpins our confidence in the full year. Turning to the balance sheet on slide seven, a slide as you will all recognize. We ended the H1 with net debt of $1.7 billion for the restricted group and $2.3 billion for the consolidated group, giving net leverage ratio of 3.9 times and 4.1 times respectively.

Speaker #3: The step-up we delivered from the first quarter to the second is the first evidence of that, and as Alistair highlighted, the first two months of the third quarter underpin our confidence in the full year.

Speaker #3: Turning to the balance sheet on slide seven—as you will all recognize—we ended the first half with net debt of $1.7 billion for the restricted group, and $2.3 billion for the consolidated group.

Speaker #3: Giving net leverage ratios of 3.9 times and 4.1 times, respectively. However, with our performance weighted towards the second half and the earnings momentum already evident in the second quarter, we expect leverage to reduce by year-end for the restricted group to approximately 3.7 times, and for the consolidated group to 3.8 times, consistent with our full year 2026 guidance.

Ahmet Tohma: However, with our performance weighted towards the H2 and the earnings momentum already evident in Q2, we expect leverage to reduce by year end for the restricted group approximately to 3.7 times, and for the consolidated group 3.8 times consistent with our full year 2026 guidance. On covenant side, as we explained in today's press release, under the new Senior Revolving Credit Facility, our financial maintenance covenant is tested only if drawings exceed 40% of the facility. The threshold hasn't been exceeded, and we remain in compliance and comfortable with all our financing arrangements throughout the period. As our capital allocation policy is unchanged, we continue to target net leverage below 2.5 times, and there will be no distributions to shareholders until that target is achieved.

Speaker #3: On the covenant side, as we explained in today's press release, under the new super senior revolving credit facility, our financial maintenance covenant is tested only if drawings exceed 40% of the facility.

Speaker #3: And the debt-to-threshold hasn't been exceeded, and we remain in compliance and comfortable with all our financing arrangements throughout the period. Our capital allocation policy is unchanged.

Speaker #3: We continue to target net leverage below 2.5 times, and there will be no distributions to shareholders until that target is achieved. From a liquidity perspective, we ended the first half in a robust position, with total cash of $222 million for the consolidated group.

Ahmet Tohma: From a liquidity perspective, we ended the H1 in a robust position with a total cash of $222 million for the consolidated group. Finally, an additional point to make you aware of. In June, Türkiye reduced the corporate income tax rate to 12.5% for certified industrial producers effective from next year. This has no impact on our 2026 guidance, but it should reduce our annual cash tax by approximately $15 million from 2027. Good news for future free cash flow. As the last page, our financing strategy is unchanged: to simplify our capital structure while maintaining strong financial liquidity. As you know, we took two important steps in the H1. In February, we issued a $250 million of 2031 senior notes via private placement, using the proceeds to partially repay the revolving credit facility in place at the time.

Speaker #3: Finally, an additional point to make you aware of: In June, Turkey reduced the corporate income tax rate to 12.5% for certified industrial producers, effective from next year.

Speaker #3: This has no impact on our 2026 guidance, but it should reduce our annual cash tax by approximately $15.15 million from 2027—good news for future free cash flow.

Speaker #3: And as the last page, our financing strategy is unchanged: to simplify our capital structure while maintaining strong financial liquidity. As you know, we took two important steps in the first half.

Speaker #3: In February, we issued $250 million of 2031 senior notes via private placements, using the proceeds to partially repay the revolving credit facility in place at the time.

Speaker #3: And in March, we completed a new $385 million revolving credit facility, maturing in 2031, fully replacing the previous facility. Together, these give us a stronger and longer debt maturity profile.

Ahmet Tohma: In March, we completed a new $385 million revolving credit facility maturing 2031, fully replacing the previous facility. Together, these give us a stronger and longer debt maturity profile. Also, it is pleasing that this progress has been recognized by our rating agencies and in this week, which affirmed our credit rating as B+ and revised its outlook from negative to stable. Looking forwards, as we guided before as well, when market conditions allow, we plan a further bond issues to refinance the Genesis Alkali US acquisition debt and partially refinance our existing bonds. This will also allow us to bring the US business into the restricted group and a further simplification of the capital structure.

Speaker #3: Also, it is pleasing that this progress has been recognized by our rating agencies, and this week they affirmed our credit rating at B+ and revised its outlook from negative to stable.

Speaker #3: Looking forward, as we guided before as well, when market conditions allow, we plan further bond issues to refinance the Alkan US acquisition debt, and partially refinance our existing bonds.

Speaker #3: This will also allow us to bring the US business into the restricted group, and a further simplification simplification of the capital structure. Finally, on capital discipline, in this market, we manage our spending very carefully, and still, we are delaying the Kazan expansion and salsa acquisition, and growth capex is limited, approximately 15 million dollars for this year.

Ahmet Tohma: Finally, on capital discipline in this market, we manage our spending very carefully and still we are delaying the Kazan expansion and Fasa acquisition, and growth CapEx is limited approximately $15 million for this year. The maintenance CapEx of approximately $150 million is focused only safety, asset integrity, and reliable production. This discipline underpins our free cash flow guidance. Thank you very much for your time, and I would now hand back to Alasdair for 2026 outlook and our guidance.

Speaker #3: And the maintenance capex of approximately $115 million is focused only on safety, asset integrity, and reliable production. This discipline underpins our free cash flow guidance.

Speaker #3: Thank you very much for your time, and I will now hand back to Alistair for the 2026 outlook and our guidance.

Speaker #2: Thanks, Ahmed. So, as I said at the beginning of the call, the current market conditions, and as they've evolved during 2026 so far, have remained pretty tough.

Alasdair Warren: Thanks, Ahmet. As I said at the beginning of the call, the current market conditions, as they have evolved during 2026 so far, have remained pretty tough. Frankly, we expect that to continue through this year and into next year. We all know the external environment we are operating in of slow global economic growth, particularly notable at a slower growth rate in China, which has a big impact on everything. Higher energy prices, geopolitical uncertainty, and continuing hostilities in the Middle East. All of that mean an uncertain market backdrop for our customers and for our customers' customers. Against that, we have got growing new supply being brought online, particularly in China, and that consequentially means that supply-demand balances are loose, a situation which we expect will remain through this year and into next.

Speaker #2: Frankly, we expect that to continue through this year and into next year. We all know the external environment we're operating in: slow global economic growth, particularly notable with a slower growth rate in China, which has a big impact on everything.

Speaker #2: Higher energy prices, geopolitical uncertainty, and continuing hostilities in the Middle East—all of that means an uncertain market backdrop for our customers, and for our customers' customers.

Speaker #2: Against that, we've got growing new supply being brought online, particularly in China. That consequently means that supply-demand balances are loose—a situation which we expect will remain through this year and into next.

Speaker #2: Self-help will, and does, mean well. Self-help will be a really key part of performance—not only this year, but in future years. And that is what we are focused on: making ourselves leaner and more efficient, whilst delivering for our customers in every market that we serve.

Alasdair Warren: Self-help will be a really key part of performance, not only this year, but in future years, and that is what we are focused on, making ourselves leaner and more efficient whilst delivering for our customers in every market that we serve. As Ahmet said, our performance through the year to date has been improving quarter on quarter and month on month since the end of Q2. It is for that reason that we reiterate our USD 570 million of consolidated EBITDA guidance for the year. Importantly, we have removed the caveat that we had at Q1 of with risk to the downside because of our increasing confidence around the measures we are taking to deliver on that performance.

Speaker #2: As Ahmed said, our performance has been improving, quarter on quarter, and month on month since the end of the second quarter. And it's for that reason that we've reiterated our 570 million dollars of consolidated EBITDA guidance for the year.

Speaker #2: And importantly, we've removed the caveat that we had at the first quarter of with risk to the downside, because of our increasing confidence around the measures we're taking to deliver on that performance.

Speaker #2: What goes hand in hand with that is the $400 million free cash flow target. Again, being driven not only by this strong focus on performance and efficiency, but also on where and how we spend our money.

Alasdair Warren: What goes hand in hand with that is the USD 400 million free cash flow target, again, being driven not only by the strong focus on performance and efficiency, but also on where and how we spend our money. The Westvaco mine disruptions, we have already reported that those were behind us at the end of Q1. They continue to be the case, but also other important measures that we have taken to improve the resilience of our operations in the United States gives us ever-increasing confidence to deliver upon our 9.3 million metric tons of sales. That all feeds through to the leverage target, which Ahmet has already touched on, obviously above target levels today, but with that improving EBITDA performance falling into line with our guidance by year end. Ahmet has mentioned the outlook for tax.

Speaker #2: The West Vaco mine disruptions—we've already reported that those were behind us at the end of the first quarter. That continues to be the case, but also, other important measures that we've taken to improve the resilience of our operations in the United States give us ever-increasing confidence to deliver upon our 9.3 million metric tonnes of sales.

Speaker #2: And that all feeds through to the leverage target, which Ahmed has already touched on. Obviously, we're above target levels today, but with that improving EBITDA performance, we expect to fall in line with our guidance by year-end.

Speaker #2: Ahmed's mentioned the outlook for tax. That's obviously a positive for cash flow coming from Turkey, but for next year. But for now, the message is pretty straightforward.

Alasdair Warren: That is obviously a positive for cash flow coming from Türkiye, but for next year. For now, the message is pretty straightforward. We believe that we are doing relatively well against a pretty challenging external environment, and we are outperforming relative to our peers and delivering for our customers and our bondholders. With that, we will open up to questions.

Speaker #2: We believe that we are doing relatively well against a pretty challenging external environment, and we are outperforming relative to our peers and delivering for our customers and our bondholders.

Speaker #2: With that, we'll open up to questions.

Speaker #1: Thank you, dear participants. As a reminder, if you wish to ask a question, please press *11 on your telephone keypad and wait for your name to be announced.

Operator: Thank you, dear participants. As a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one and one again. Alternatively, you can submit your questions via the webcast. Now we are going to take our first question. The first question comes from the line of Evgenia Bistrova from Barclays. Your line is open. Please ask your question.

Speaker #1: To withdraw your question, please press star 1, and then 1 again. Alternatively, you can submit your questions via the webcast. And now, we’re going to take our first question.

Speaker #1: And the first question comes from the line of Yevgenia Bestrova from Barclays. Your line is open. Please ask your question.

Speaker #3: Hello. Good afternoon. Thank you for the presentation, and I definitely appreciated your new website. I have several questions. I'll start, I guess, with the working capital one.

Evgenia Bistrova: Hello, good afternoon. Thank you for the presentation, and definitely appreciated your new website. I have several questions. I will start, I guess, with the working capital one. There was a significant outflow on the payable side. So what was the driver of that, and what are you expecting in terms of your working capital for the rest of the year? Should we expect maybe an inflow in the H2 of the year? My second question is on the 2027 outlook. As you just mentioned, there were additional capacities commissioning in China this year. So looking into next year, why do you think there is still no capacity rationalization happening in the market? Is there an expectation for more capacities to come online? Where do you think the prices, especially in the export market, in the seaborne export market, can go to next year?

Evgeniya Bystrova: Hello, good afternoon. Thank you for the presentation, and definitely appreciated your new website. I have several questions. I will start, I guess, with the working capital one. There was a significant outflow on the payable side. So what was the driver of that, and what are you expecting in terms of your working capital for the rest of the year? Should we expect maybe an inflow in the H2 of the year? My second question is on the 2027 outlook. As you just mentioned, there were additional capacities commissioning in China this year. So looking into next year, why do you think there is still no capacity rationalization happening in the market? Is there an expectation for more capacities to come online? Where do you think the prices, especially in the export market, in the seaborne export market, can go to next year?

Speaker #3: There was a significant outflow on the payables side. So, what was the driver of that, and what are you expecting in terms of your working capital for the rest of the year?

Speaker #3: Should we expect maybe an inflow in the second half of the year? My second question is on the 2027 outlook. As you just mentioned, there were additional capacities commissioning in China this year.

Speaker #3: So, looking into next year, why do you think there is still no capacity rationalization happening in the market? And is there an expectation for more capacities to come online? Where do you think the prices—especially in the export market, I mean in the CBORN export market—can go next year?

Speaker #3: Are we seeing a floor now, or is there maybe potential for more downside there? And my final question is on the transportation costs. I'm just trying to digest your results.

Evgenia Bistrova: Are we seeing a floor now, or there is maybe potential for more downside there? My final question is on the transportation costs. I am just trying to digest your results. If I am looking at the transportation costs on a per ton basis, there is practically no difference to Q1. Maybe a slight increase, but not as huge as maybe expected. So if you could please help me maybe break it down. How much, in terms of USD per ton increase have you seen in Q2, and how much of that were you able to offset with the measures that you mentioned, like vessel utilization, et cetera? Thank you.

Evgeniya Bystrova: Are we seeing a floor now, or there is maybe potential for more downside there? My final question is on the transportation costs. I am just trying to digest your results. If I am looking at the transportation costs on a per ton basis, there is practically no difference to Q1. Maybe a slight increase, but not as huge as maybe expected. So if you could please help me maybe break it down. How much, in terms of USD per ton increase have you seen in Q2, and how much of that were you able to offset with the measures that you mentioned, like vessel utilization, et cetera? Thank you.

Speaker #3: And if I'm looking at the transportation costs on a per ton basis, there is practically no difference to Q1—maybe a slight increase, but not as huge as maybe expected.

Speaker #3: So if you could please help me maybe break it down—how much, in terms of dollars per ton increase, have you seen in Q2, and how much of that were you able to offset with the measures that you mentioned, like vessel utilization, et cetera?

Speaker #3: Thank you.

Speaker #2: Okay, great. Thanks, Yevgenia, and thank you for the feedback on the website—appreciated. I will make some comments about 2027 outlook, capacity rationalization, and the rest, and some general comments on transportation costs. Then I’ll leave it to Ahmed to give you the detailed response with respect to working capital and to the breakdown of transportation costs.

Alasdair Warren: Okay, great. Thanks, Evgenia, and thank you for the feedback on the website. Appreciated. I will make some comments about 2027 outlook capacity rationalization and the rest, and some general comments on transportation costs, and then leave it to Ahmet to give you the detailed response with respect to working capital. With respect to the breakdown of transportation costs, we do not provide specific guidance, but to the extent Ahmet wants to add any additional color to my comments, I am sure he will do so. Look, in terms of 2027 outlook, I cannot comment really on why there has not been capacity rationalization yet in China. Clearly, the way in which industry is managed there is something which is different to other markets.

Speaker #2: We don't provide specific guidance, but to the extent Ahmed wants to add any additional color to my comments, I'm sure he will do so.

Speaker #2: So look, in terms of '27 outlook, I can't comment really on why there hasn't been capacity rationalization yet in China. Clearly, the way in which industry is managed there is something which is different to other markets.

Speaker #2: And logically, one would expect, with the significant additions not only that have already come on stream, particularly from Barun, but which are planned in other natural soda ash projects, you would logically conclude that, over time, the higher-cost, smaller, less efficient Chinese synthetic plants will rationalize.

Alasdair Warren: Logically, one would expect with the significant additions, not only that have already come on stream and from particularly Boron, but which are planned in other natural soda ash projects. You would logically conclude that over time, the higher cost, smaller, less efficient Chinese synthetic plants will rationalize, but we haven't yet seen signals of that. That will be, of course, a very important signal in terms of what it will mean for Chinese exports of product, which today are channeled principally into the Southeast Asian and broader Asian markets, the Middle East and parts of Africa, but less so into other markets which we serve and which represent about 75% of the volumes which we sell.

Speaker #2: But we haven't yet seen signals of that. That will be, of course, a very important signal. In terms of what it will mean for Chinese exports of product, which today are channeled principally into the Southeast Asian and broader Asian markets, the Middle East, and parts of Africa.

Speaker #2: But less so into other markets, which we serve and which represent about 75% of the volumes that we sell. That being said, for our own planning purposes, we anticipate that exports from China in 2027 will be higher than what we have seen so far in 2026.

Alasdair Warren: That being said, for our own planning purposes, we anticipate that exports from China in 2027 will be more than we have seen so far in 2026 and what we expect in 2026. So we see China as having an excess of capacity being a realistic part of the future until such time as particularly housing starts and construction spend in China pick up, and that could be some time away. But those are both clearly very important leading indicators of supply-demand balances globally. Now, with respect to the floor on prices, and you make a specific question as it relates to the seaborne market. But of course, the seaborne market is not a single market. As you know, of our 9.3 million metric tons, more than 7 million tons go on the sea. So we serve the markets of Europe by sea from Türkiye.

Speaker #2: And what we expect in 2026. So, we see China as having an excess of capacity being a realistic part of the future—until such time as, particularly, housing starts and construction spend in China pick up, and that could be some time away.

Speaker #2: But those are both clearly very important leading indicators of supply-demand balances globally. Now, with respect to the floor on prices—and you make a specific question as it relates to the CBORN market—but of course, the CBORN market is not a single market.

Speaker #2: As you know, of our 9.3 million metric tons, more than 7 million tons go by sea. And so, we serve the markets of Europe by sea from Turkey.

Speaker #2: We serve the markets of Africa and South America by sea. But I think you're principally talking about the Southeast Asian markets, and there, we've seen a degree of fluctuation.

Alasdair Warren: We serve the markets of Africa, South America by sea. But I think you're principally talking about the Southeast Asian markets. There, we've seen a degree of fluctuation. I wouldn't call it volatility, but certain fluctuation. But we have actually seen quite a degree of price discipline on the part of the Chinese producers. Ironically, they haven't been the problem, quote unquote. It's actually been lack of pricing discipline and commercial discipline on the part of some of our other competitors, particularly producing in North America, that has proven to be a greater challenge. So I think it's too early to say what will happen to prices in Southeast Asia. What I will tell you is that we've been focused less on what those prices might be, but rather what strategies we can pursue to either be able to deliver at lower cost, i.e.

Speaker #2: I wouldn't call it volatility, but rather certain fluctuations. However, we have actually seen quite a degree of price discipline on the part of the Chinese producers.

Speaker #2: Ironically, they haven't been the problem, quote-unquote. It's actually been lack of pricing discipline and commercial discipline on the part of some of our other competitors—particularly those producing in North America—that has proven to be a greater challenge.

Speaker #2: And so I think it's too early to say what will happen to prices in Southeast Asia. What I will tell you is that we've been focused less on what those prices might be, but rather on what strategies we can pursue to either be able to deliver at lower cost—that is, maintain margin that way—or to target those markets which are less impacted by those Chinese export pressures and where there are more robust pricing mechanisms and market discipline.

Alasdair Warren: maintain margin that way, or to target those markets which are less impacted by those Chinese export pressures, and where there are more robust pricing mechanisms and market discipline, and we can take advantage of that. So it's really a geographic mix question for us and how we work with our customers to ensure we get the volumes that we believe we deserve in those markets. On transportation cost, look, this is something that we are very focused on. As I've mentioned before, when you put more than 7 million tons on the sea, it doesn't take a genius to work out that for every USD 1 per ton you can save, that's USD 7 million that feed to the bottom line.

Speaker #2: And we can take advantage of that. So, it's really a geographic mix question for us and how we work with our customers to ensure we get the volumes that we believe we deserve in those markets.

Speaker #2: On transportation costs, look, this is something that we are very focused on. As I've mentioned before, when you put more than 7 million tons on the sea, it doesn't take a genius to work out that for every dollar per ton you can save, that's $7 million that feeds to the bottom line.

Speaker #2: And when you look at our overall transportation costs—not only the seaborne freight piece, but also the inland shipping, both as an export part from our production and as the last mile from our import ports to our customers—there's a lot to go for here.

Alasdair Warren: When you look at our overall transportation cost, not only the seaborne freight piece, but the inland shipping both as an export part from our production and also the last mile from our import ports to our customers, there's a lot to go for here. We've been spending time really seeking to drive greater efficiency across those seaborne routes, in particular, ways in which we can use a smaller number of larger vessels with more scheduling discipline, so we reduce demurrage. We can have larger vessels serving larger ports. How we can optimize our inland transportation. There's lots of small moving pieces which all add up to something quite significant.

Speaker #2: And we've been spending time really seeking to drive greater efficiency across those CBORN routes in particular—ways in which we can use a smaller number of larger vessels with more scheduling discipline, so we reduce demurrage.

Speaker #2: We can have larger vessels serving larger ports. How can we optimize our inland transportation? There are lots of small moving pieces, which all add up to something quite significant.

Speaker #2: And whilst it takes a while to put those in place, those are the very things that are being put in place that drive our confidence with respect to our outlook for performance next year.

Alasdair Warren: Whilst it takes a while to put those in place, those are the very thing that are being put in place that drives our confidence with respect to our outlook to performance for next year, irrespective of the external market environment. Of course pricing will have an impact, but there's lots of things that we can also do to preserve margins. I'm not going to comment, and please don't ask me on what my outlook for 2027 is yet. That will come later in the year. But that's broadly some of the strategies that we're pursuing to seek to preserve margin and underpin our performance, irrespective of the external market environment. I'll hand over to Ahmet to comment on working capital and anything else you might like to say on transportation costs.

Speaker #2: Irrespective of the external market environment, of course, pricing will have an impact, but there are lots of things that we can also do to preserve margins.

Speaker #2: I'm not going to comment. And please don't ask me what my outlook for 2027 is yet. That will come later in the year.

Speaker #2: But that's broadly some of the strategies that we're pursuing to seek to preserve margin and underpin our performance, irrespective of the external market environment.

Speaker #2: I'll hand over to Armit to comment on working capital, and anything else you might like to say on transportation costs.

Speaker #3: Yeah, thank you. And regarding working capital, Evgenia, your expectation is correct. In the second half of this year, the working capital will be balanced.

Ahmet Tohma: Yeah. Thank you, Alasdair. Regarding working capital, Evgenia, your expectation is right. In the H2 of this year, the working capital will be balanced. Like the previous years, generally in the H1 and slightly in the Q3, we have higher payables, but it is balanced mainly in the last quarter of each year. Within the years, we generally balance these working capital requirements with the receivable financing program. So that's why you can assume that, as we guided at the beginning of this year, we don't expect any material working capital change. Regarding the transportation cost, as Alasdair highlighted, we cannot share any figures, but only give a type of reference. In some regions, we have already experienced 15, one five dollars per metric ton freight increases.

Speaker #3: And like in previous years, generally in the first half and slightly into the third quarter, we have higher payables. But these are balanced mainly in the last quarter of each year.

Speaker #3: And within the years, we generally balance these working capital requirements with the receivable financing program. So that's why you can assume that, as we guided at the beginning of this year, we don't expect any material working capital change.

Speaker #3: And regarding the transportation costs, as Alistair highlighted, we cannot share any figures, but can only give a type of reference in some regions. We have already experienced $15 to $1.50 per metric ton freight increases.

Speaker #3: But also, as Alistair mentioned, we are serving from two continents with a sizable tonnage. And as I mentioned in my presentation, what we did, especially in the second quarter, was optimize our CBORN volumes with rerouting and optimizing our vessel tonnage.

Ahmet Tohma: Also as Alasdair mentioned, we are serving from two continents with a sizable tons, and as I mentioned in my presentation, what we did, especially in the Q2, we optimized our seaborne volumes with rerouting and optimizing our vessel tons. Also, since we are still flexible regarding our safe Incoterms, whether to change it from CIF to FOB or from FOB to CIF, it affected seaborne freight management. So that's why our freight cost or the transportation cost increase would be limited with this portfolio optimization.

Speaker #3: Also, since we at Philips are flexible regarding our sales Incoterms, whether to change from CIF to FOB or from FOB to CIF, with effective CBORN freight management.

Speaker #3: So that's why our freight cost, or the transportation cost increase, would be limited with these portfolio optimizations.

Speaker #1: Okay, thank you. Maybe a quick follow-up on the transportation costs. Looking into Q3 and Q4, and given that you mentioned you are expecting or have already implemented negotiations with customers to pass through those costs, should we expect an increase in chemical price per ton as well as transportation costs?

Evgenia Bistrova: Okay, thank you. Looking into Sorry, maybe a quick follow-up on the transportation cost. Looking into Q3, Q4, and given that you mentioned that you are expecting or you have already implemented negotiations with customers to pass through those costs, should we expect maybe increase in chemical price per ton as well as transportation costs? Should those kind of move together or not? I am just struggling with that part.

Evgeniya Bystrova: Okay, thank you. Looking into Sorry, maybe a quick follow-up on the transportation cost. Looking into Q3, Q4, and given that you mentioned that you are expecting or you have already implemented negotiations with customers to pass through those costs, should we expect maybe increase in chemical price per ton as well as transportation costs? Should those kind of move together or not? I am just struggling with that part.

Speaker #1: Should those kind of move together or not? I'm just struggling with that.

Speaker #3: You're talking in terms of, you're talking in terms of other raw materials on the production side.

Alasdair Warren: You are talking in terms of other raw materials on the production side?

Speaker #1: No, no. I'm talking about chemicals revenue per ton and transportation costs per ton.

Evgenia Bistrova: No, I am talking about chemicals revenue per ton, and transportation cost per ton.

Evgeniya Bystrova: No, I am talking about chemicals revenue per ton, and transportation cost per ton.

Speaker #3: Sorry, I don't understand chemicals revenue per ton. What are you talking about?

Alasdair Warren: Sorry, I do not understand chemicals revenue per ton. What are you talking about?

Speaker #1: Just like if I take your revenue from chemical sales and divide it by ton of soda ash, that's like your average realized price of soda ash.

Evgenia Bistrova: Just like if I take your revenue from chemical sales and divide it by ton of soda ash, that's your average realized price of soda ash.

Evgeniya Bystrova: Just like if I take your revenue from chemical sales and divide it by ton of soda ash, that's your average realized price of soda ash.

Alasdair Warren: Do you mean specialty products or? We don't report chemicals. That's why I'm asking the question. I'm sorry for being a bit slow on this one.

Speaker #3: Did you mean products, or that we don't report chemicals? That's why I'm asking the question. I'm sorry for being a bit slow on this one.

Speaker #1: Well, it's a combined revenue that you disclose for chemicals like Soda Ash and specialty products together. I can follow up later after the call.

Evgenia Bistrova: Well, it's a combined revenue that you disclose for chemicals like soda ash and specialty products together. I can follow up later after the call just to take it away from others.

Evgeniya Bystrova: Well, it's a combined revenue that you disclose for chemicals like soda ash and specialty products together. I can follow up later after the call just to take it away from others.

Speaker #3: Okay. All right. Well, we just won't follow up.

Speaker #1: Others.

Speaker #3: Yeah, we don't follow up. So, why don't you follow up, and we'll happily answer whatever questions you've got. Yeah.

Alasdair Warren: We don't call it that. But so why don't you follow up and we'll happily answer whatever questions you've got. Yeah.

Speaker #1: Okay. Thank you.

Evgenia Bistrova: Okay. Thank you.

Evgeniya Bystrova: Okay. Thank you.

Speaker #4: Thank you. Now we're going to take our next question. The question comes from Alid Halumal with Bank of America. Your line is open.

Operator: Thank you. Now we are going to take our next question. The question comes line of Ali Alomari from Bank of America. Your line is open. Please ask your question.

Speaker #4: Please ask your question.

Ali Alomari: Hi. Good afternoon. Thank you for the call. I have two questions. The first one is really about your guidance that you are affirming. If you can elaborate on the drivers that are behind this decision, because this implies that H2 EBITDA will be down just in single digits after declining by 32% in H1. I get the sense that you mentioned some optimization in the mix, also in logistic cost, but just wanted to get more color about the momentum that you have seen in these last two months that you mentioned, some contract renegotiation. Maybe you can give us more color about the pricing and really the drivers of this EBITDA guidance being reaffirmed. The second question is really about the timing of the potential, let's say, refinancing and consent solicitation.

Speaker #5: Hi, good afternoon. Thank you for the call. I have two questions. The first one is really about your guidance that you are affirming.

Speaker #5: If you can elaborate on the drivers behind this decision, because, I mean, this implies that second half EBITDA will be down just in single digits after declining by 32% in the first half.

Speaker #5: I mean, I get the sense that—I mean, you mentioned some optimization in the mix and also in logistical cost. But I just wanted to get, I mean, more color about the momentum that you have seen in these last two months that you mentioned.

Speaker #5: Some contract renegotiation—maybe you can give us more color about the pricing, and really the drivers of this EBITDA guidance being reaffirmed. And the second question is really about the timing of the potential, let's say, refinancing and consent solicitation.

Speaker #5: I mean, if I understand it well, you wanted initially to have it after, I mean, refinancing your RCF. Now it's done. So what should we expect on that?

Ali Alomari: If I understand it well, you wanted initially to have it after refinancing your RCF. Now it is done. So what should we expect on that, and what has prevented you so far to do it? Thank you.

Speaker #5: And what has prevented you, I mean, has prevented you so far from doing it? Thank you.

Speaker #3: Okay, yeah, no problem. I'll tackle both of those. Look, I didn't fully understand your first question, but let me just give you my perspectives.

Alasdair Warren: Okay. Yeah, no problem. I will tackle both of those. Look, I did not fully understand your first question, but let me just give you my perspective. As you know, for the H1, we reported adjusted EBITDA of USD 245 million. Our full-year guidance is USD 570 million, so the H2 of the year is going to be well ahead of the H1. You will also note that our production volumes in the H1 were 4.4 against a full year target of 9.3. So again, volumes on the sale of soda ash up in the H2 of the year. And you correctly pointed out that we have said that the indications from July and August are consistent with achieving that, which indeed they are.

Speaker #3: So, as you know, for the first half we reported just EBITDA of $245 million. Our full-year guidance is $570 million, so the second half of the year is going to be well ahead of the first half.

Speaker #3: You'll also note that our production volumes in the first half were 4.4, against a full-year target of 9.3. So again, volumes on the sale of Saudash are expected to be up in the second half of the year.

Speaker #3: And you correctly pointed out that we've said the indications from July and August are consistent with achieving that, which indeed they are. What's driving it is a strong commercial focus on ensuring that, where we can, we have been able to contractually or otherwise pass on increased energy costs and transportation costs to our customers.

Alasdair Warren: What is driving it is a strong focus commercially on ensuring that where we can, we have been able to contractually or otherwise pass on increased energy costs and transportation costs to our customers. That is not available in every market, and it is not available under every contract, but where we can, we have done that. We focused very carefully on our transportation costs and our cost to serve. I have already expanded on some of the strategies that we have been pursuing there. And on the manufacturing side, we have been focused on taking what is already a very low cost of manufacturing and driving it lower by just operating smarter and more efficiently, removing bottlenecks and improving resilience and efficiency wherever we can. And all of those things combined lead us to underpin our USD 570 million guidance with confidence. With respect to the refinancing timing, you correctly note that the RCF refinancing is behind us.

Speaker #3: That's not available in every market, and it's not available under every contract. But where we can, we've done that. We've focused very carefully on our transportation costs and our cost to serve.

Speaker #3: I've already expanded on some of the strategies that we've been pursuing there. On the manufacturing side, we've been focused on taking what is already a very low cost of manufacturing and driving it lower by simply operating smarter and more efficiently.

Speaker #3: Removing bottlenecks and improving resilience and efficiency wherever we can. All of those things combined lead us to underpin our $570 million guidance with confidence.

Speaker #2: With respect to the refinancing timing,

Speaker #3: You correctly note that the RCF refinancing is behind us. We're not under any specific timing pressure, but it is nonetheless a logical observation that when you look at our '28s, and think of the number of available windows we realistically have before those bonds become current, that's a relatively small number of windows.

Alasdair Warren: We are not under any specific timing pressure, but it is nonetheless a logical observation that when you look at our 2028 and think of the number of available windows we realistically have before those bonds become current, that is a relatively small number of windows. If you look at our own US acquisition facility, the USD 400 million facility, there is a logic to refinancing that at some point over the next six months or so. And so, as Ahmet has said, we will look at accessing the market when market conditions allow. We recognize that the 2028 is a significant quantum of bonds, probably too significant to do in a single step, particularly if we are also seeking to refinance our US acquisition debt.

Speaker #3: If you look at our own US acquisition facility, the $400 million facility, there's a logic to refinancing that at some point over the next six months or so.

Speaker #3: And so, as Ahmed has said, we will look at accessing the market when market conditions allow. We recognize that the 28 is a significant quantum of bonds—probably too significant to do in a single step, particularly if we're also seeking to refinance our US acquisition debt.

Speaker #3: And so we're going to be pragmatic and access the market as and when we can, recognizing that we all live in an uncertain world. You cannot bank on any given window being open at any given time, given the external events that can potentially close that window.

Alasdair Warren: We are going to be pragmatic and access the market as and when we can, recognizing that we all live in an uncertain world, and you cannot bank on any given window being open at any given time, given the external events that can potentially close that window. So we are actively looking at when we can do that, but I am not going to give you a specific commitment as to time other than it is an active consideration.

Speaker #3: So we're actively looking at when we can do that, but I'm not going to give you a specific commitment as to timing, other than it's an active consideration.

Speaker #2: Understood. Thank you.

Ali Alomari: Understood. Thank you.

Speaker #4: Thank you. Now we're going to take our next question. The question comes from Gustavo Campos from Jefferies. Your line is open. Please ask your question.

Operator: Thank you. Now we are going to take our next question. The question comes line of Gustavo Campos from Jefferies. Your line is open. Please ask your question.

Speaker #5: Hi. Thank you very much, and congratulations on the expected operational improvements that you materialized over this quarter. I wanted to follow up here on your expectations for working capital. So, I think year to date, your working capital outflow is something around negative $44 million.

Gustavo Campos: Hi. Thank you very much, and congratulations on all the expected operational improvements that you materialized over this quarter. Follow up here on your expectations of working capital. I think year to date, your working capital outflow is something around negative $44 million, and that was in part driven by payables. Do you expect an inflow for the H2 of the year? Any clarification on that would be helpful to understand the cash flow dynamic there.

Speaker #5: And that was in part driven by payables. Do you expect an inflow for the second half of the year? Any clarification on that would be helpful to understand the cash flow dynamic there.

Speaker #3: Hey, Ahmed. Babe, why don't you pick up on that one?

Alasdair Warren: Hey, Ahmet Bey, why don't you pick up on that one?

Ahmet Tohma: Yes. In Q3, it may be additional outflow, but in the last quarter, like we experienced in the previous years with the receivable financing and other items, it will be balanced. That is why for the full year, you do not expect any material working capital change.

Speaker #5: Yes. And in the third quarter, it may be...

Speaker #6: An additional outflow. But in the last quarter, like we experienced in previous years with the receivable financing and the other items, it will be balanced.

Speaker #6: So that's why, for the full year, you do not expect any material working capital change.

Gustavo Campos: Understood. If I am looking at the rest of your year, I think like EBITDA guidance implies roughly $325 million of EBITDA, then I think like CapEx another $60 million, and then you count in maybe more tax payments and interest expenses. I am getting something around $100 million of positive free cash flow for H2 2026. Is that in line with your expectations or am I missing something here potentially? That is it from me. Oh, and also there is the working capital reversal that you were saying, right? If it was negative $45 million in H1, it would. Yeah. Sorry.

Speaker #5: Understood. So, if I'm looking at the rest of your year, I think EBITDA guidance implies roughly $325 million of EBITDA. Then, I think capex is another $60 million.

Speaker #5: And then you count in maybe more tax payments and interest expenses. I am getting something around $100 million of positive free cash flow for the second half of 2026.

Speaker #5: Is that in line with your expectations, or am I missing something here, potentially? That's it for me. Oh, and also, there's the working capital reversal that you were mentioning, right?

Speaker #5: So, if it was negative $45 million in the first half, it would—yeah. Sorry.

Ahmet Tohma: Yes. On top of this, there will be minority dividend payment to Eti Maden. As you know, to abstain cash from Eti Soda to We Soda, we have to pay as the previous years, the minority dividend. We have not finalized the exact amount, but it will be minimum $25 to $30 million level.

Ahmet Tohma: Yes. On top of this, there will be minority dividend payment to Eti Maden. As you know, to abstain cash from Eti Soda to WE Soda, we have to pay as the previous years, the minority dividend. We have not finalized the exact amount, but it will be minimum $25 to $30 million level.

Speaker #6: Yes. On top of this, there will be minority dividend payments, so it's MADA. As you know, to upstream cash from its Soda to Resoda, we have to pay, as in previous years.

Speaker #6: The minority dividend—so we haven't finalized the exact amount, but it will be a minimum at the $25 to $30 million level.

Gustavo Campos: Understood. If I account for the non-controlling dividends and for the working capital inflow, you would still have roughly $100 million of positive free cash flow for H2 2026. Is that-

Speaker #5: Understood. So if I account for the non-controlling dividends, and for the working capital inflow, you would still have roughly $100 million of positive free cash flow for the second half of 2026.

Speaker #5: Is that?

Ahmet Tohma: These are, yeah, these are rough estimates as well.

Speaker #6: Yes, these are rough estimates as well.

Gustavo Campos: Okay. Understood. Thank you. Thank you very much. I was also wondering about a follow-up on these global supply and demand dynamics. I am trying to understand a little bit more on what is happening on the European market because we understand that there is some capacity rationalization happening in Europe. So, are not you expecting maybe some potential improvement in 2027 on the back of maybe lower supply in Europe? Or do you think these excess supplies that you alluded to coming from China will broadly counterbalance in Europe? I know that China does not usually export to Europe, but because of these excess capacities, is it the expectation that that may start happening and then we are not going to see any improvement overall? Some thoughts on that would be very helpful. Thank you.

Speaker #5: Okay, understood. Thank you very much. I was also wondering if I could follow up on these global supply and demand dynamics. I'm trying to understand a little bit more about what's happening in the European market because we understand that there's some capacity rationalization happening in Europe.

Speaker #5: So, aren't you expecting maybe some potential improvement in 2027 on the back of possibly lower supply in Europe? Or do you think these excess supplies that you alluded to coming from China will broadly counterbalance conditions in Europe?

Speaker #5: I know that China doesn't usually export to Europe, but because of this excess capacity, is it the expectation that that may start happening, and then we're not going to see any improvement overall?

Speaker #5: Some thoughts on that would be very helpful. Thank you.

Alasdair Warren: Sure. The first point is that I do not think you should expect that Chinese product will come to Europe for a number of reasons. The more important dynamic to address specifically your question is you have already seen our largest competitor cut back in two steps capacity from their Spanish plant, which they have announced with their last set of results.

Speaker #3: Sure. The first point is that I don't think you should expect that Chinese product will come to Europe for a number of reasons. But the more important dynamic, to address specifically your question, is you've already seen our largest competitor cut back, in two steps, capacity from their Spanish plant, which they've announced with their last set of results.

Speaker #3: It's also self-evident from the numbers—particularly that some of our competitors in Europe have reported in the first quarter more than the second quarter—that there's a significant effective subsidy they're using to support their performance from the sale of carbon credits.

Alasdair Warren: It is also self-evident from the numbers, particularly that some of our competitors in Europe have reported in Q1, more than Q2, that there is a significant effective subsidy that they are using to support their performance from the sale of carbon credits. So that masks, to some degree, the underlying performance, which I believe is quite challenged at a number of the synthetic plants of all of our competitors across Europe. Do I expect that that pressure will mean that there could be further capacity reductions? I do not anticipate full closures, but certainly the potential for reductions in Europe, yes. The question is equally relevant in North America, where you have already seen announced the SVM, Searles Valley Minerals closure in April of this year.

Speaker #3: So that masks, to some degree, the underlying performance, which I believe is quite challenged at a number of the synthetic plants of all of our competitors across Europe.

Speaker #3: Do I expect that pressure will mean that there could be further capacity reductions? I don't anticipate full closures, but certainly the potential for reductions in Europe, yes.

Speaker #3: The question is equally relevant in North America, where you've already seen announced the SVM (Silver Valley Minerals) closure in April of this year. And frankly, if you study the performance as disclosed over the course of the last month of all of our competitors in North America, they're all struggling from a financial performance standpoint.

Alasdair Warren: And frankly, if you study the performance as disclosed over the course of the last month of all of our competitors in North America, they are all struggling from a financial performance standpoint. I think the industry is not only in China, where more than half the capacity is operating at sub-economic levels. Certainly for export tons from North America, that is also challenging, and it is also challenging for many of the smaller, higher cost and lower efficiency plants in Europe. So logically, you would expect there to be some further capacity reductions. However, what I would say broadly is that that does not mean you are going to get Chinese imports. What it will mean is that some of the plants that are capable of exporting seaborne trade, of which there is only one or two in Europe, or rather in the European time zone, synthetic.

Speaker #3: And so, I think the industry is not only in China, where more than half the capacity is operating at sub-economic levels. Certainly, for export volumes from North America, that's also challenging.

Speaker #3: And it's also challenging for many of the smaller, higher-cost, and lower-efficiency plants in Europe. So, logically, you would expect there to be some further capacity reductions.

Speaker #3: However, what I would say broadly is that that doesn't mean you're going to get Chinese imports. What it will mean is that some of the plants that are capable of exporting seaborne trade of which there's only one or two in Europe, or rather in the European time zone synthetic, those plants will redirect their volumes towards the higher margin European markets as opposed to the lower margin Asian markets.

Alasdair Warren: Those plants will redirect their volumes towards the higher margin European markets as opposed to the lower margined Asian markets. So the balance of trade between regions changes. It does not result in Chinese product coming in. Now, could that result over time? Yes, but I do not think this is a short-term phenomenon. By that, I mean, I do not think it is something that will manifest itself in the next several years. But there is a long way to play out in this industry. One thing is for sure, that the people that will ultimately survive are going to be the largest, lowest cost producers, and we are fortunate that we sit and tick multiple boxes in both of those categories.

Speaker #3: So the balance of trade between regions changes. It doesn't result in Chinese product coming in. Now, could that result over time? Yes, but I don't think this is a short-term phenomenon.

Speaker #3: And by that, I mean I don't think it's something that will manifest itself in the next several years, but there's a long way to play out in this industry.

Speaker #3: And one thing is for sure: the people that will ultimately survive are going to be the largest, lowest-cost producers. And we're fortunate that we tick multiple boxes in both of those categories.

Speaker #5: Yes, understood. That is very clear. Thank you for the call. My last question is also a follow-up on your refinancing plans for the bond. Unfortunately, yields are a little bit wide.

Gustavo Campos: Yes, understood. That is very clear. Thank you for the color. My last question, also follow up on your refinancing plans of the bond. Unfortunately, yields are a little bit wide. They are like in, the 31s are in double digit territory, more or less. As far as the pricing of the bonds, if yields stay this wide, would you consider maybe some other alternatives as far as refinancing options? Do you have any contingent plans? Are you happy to stay with this term loan? I am just trying to understand what are some other options you are considering here as far as timing and refinancing alternatives. That is all from me. Thank you.

Speaker #5: They're in the 31s, so they're in double-digit territory, more or less. As far as the pricing of the bonds, if yields stay this wide, would you consider maybe some other alternatives as far as refinancing options?

Speaker #5: Do you have any contingent plans? Are you happy to stay with this term loan? I'm just trying to understand what some other options are that you're considering here.

Speaker #5: As far as timing and refinancing alternatives, that's all from me. Thank you.

Alasdair Warren: Hey, Gustavo Campos. Look, I think on the last point, it is not appropriate to talk about specific strategies, but it is appropriate to say that your observation is well noted, and obviously, we monitor that carefully. We are open-minded to all forms of alternatives. But what we are ultimately seeking is a stable balance sheet and capital structure in the long term, and obviously we seek to do that at the lowest cost. That varies from instrument to instrument and from time to time. But we will seek to balance that. But what we are not in the business of is taking undue refinancing risk. So when we are able to refinance capital, we will, and we will be pragmatic about it.

Speaker #2: Hey, Gustavo. Look, I think on the last point, it's not appropriate to talk about specific strategies, but it is appropriate to say that your observation is well noted.

Speaker #2: And obviously, we monitor that carefully. We are open-minded to all forms of alternatives, but what we're ultimately seeking is a stable balance sheet and capital structure in the long term.

Speaker #2: And obviously, we seek to do that at the lowest cost. That varies from instrument to instrument and from time to time, but we'll seek to balance that.

Speaker #2: But what we're not in the business of is taking undue refinancing risk. So, when we are able to refinance capital, we will, and we'll be pragmatic about it.

Speaker #2: And if, from time to time, that means that we've got to take a little bit more in terms of the coupon or the yield that we pay, but we can offset that by mitigating refinancing risk, that's something that we'll evaluate.

Alasdair Warren: And if from time to time that means that we have got to take a little bit more in terms of the coupon or the yield that we pay, but we can offset that by mitigating refinancing risk, that is something that we will evaluate. And we, I think, have got a good track record of demonstrating pragmatism there, and we will continue to do that.

Speaker #2: And I think I've got a good track record of demonstrating pragmatism there, and we will continue to do that.

Speaker #5: Yes, thank you very much for the call. Yeah, crystal clear. Thanks a lot.

Gustavo Campos: Yes. Thank you very much for the color. Crystal clear. Thanks so much.

Speaker #3: Thank you. Thank you to everyone for your questions. We have no more questions on the conference call, and the webcast questions have been answered during the conference call.

Chris Perry: Thank you. Thank you to everyone for your questions. We have no more questions on the conference call, and the webcast questions have been answered on the conference call. With that, if anyone has further questions, feel free to email me directly, but I will just pass on to Alasdair for his closing remark.

Speaker #3: So with that, if anyone has further questions, feel free to email me directly. I'll now pass on to Alistair for his closing remarks.

Speaker #2: Yes, thanks, Chris. Look, as you can tell, we've been working hard through this year to date. There's not much, frankly, we can do about the external environment, but there's a lot we can do about internal self-help and our commercial strategies.

Alasdair Warren: Yeah. Thanks, Chris. Look, as you can tell, we have been working hard through this year to date. There is not much, frankly, we can do about the external environment, but there is a lot we can do about internal self-help and our commercial strategies. That is what we are going to continue to focus on, and with the objective of, as I say, delivering on exactly what we have promised. With that, we look forward to speaking to you at the next set of results. As Chris said, come back to us with any further questions. Enjoy the new website and what remains of the summer, and we will speak to you soon. Take care.

Speaker #2: And that's what we're going to continue to focus on, with the objective of, as I say, delivering on exactly what we've promised. So with that, we look forward to speaking to you at the next set of results. As Chris said, come back to us with any further questions.

Speaker #2: Enjoy the new website, and what remains of the summer. We'll speak to you soon. Take care.

Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

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Q2 2026 We Soda Ltd Earnings Call

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