To read Ülker only through the biscuit on the grocery shelf is to miss the company’s real weight. In this ledger there is cocoa liquor in Topkapı, hazelnut in Giresun, flour in Ankara and Karaman, and production outside Turkey in Egypt, Saudi Arabia, and Kazakhstan. The annual report says cocoa beans are sourced from the coasts of Ghana and Ivory Coast, and that the cocoa, hazelnut, and flour products used by group companies in Turkey are supplied by Ülker. This is not a nostalgic brand; it is an industrial machine that processes inputs, feeds the shelf, and manages debt.
The number sitting under the machine is 36.03 billion TL of net financial debt. In the same quarter, profit attributable to the parent was 1.59 billion TL, while operating cash flow was -4.53 billion TL. The question is not whether Ülker is a beloved brand. The question is whether this indebted production chain, once margin pressure and the related-party receivables cycle are taken into account, is as weak as the market’s punishment implies.
The first quarter was a bad margin quarter. Net sales fell 3.9% year over year to 33.91 billion TL. As cost of sales rose, gross profit declined from 11.80 billion TL to 9.45 billion TL. Gross margin fell from 33.4% to 27.9%, and EBITDA margin from 20.3% to 15.1%. To wave this away as merely a “tough sector” would be lazy. The Turkish snacking market may have contracted 1.9% by volume; but Ülker’s problem is sharper than volume decline. It is a cost and channel problem.
The quality of profit is not bright either. Financial expense was 3.94 billion TL. The net monetary position gain from TMS 29 was 1.10 billion TL. Profit attributable to the parent was 1.59 billion TL, but working capital swallowed 11.84 billion TL of cash; within that, trade receivables rose 5.28 billion TL and inventories rose 4.02 billion TL. At quarter-end, the income statement is still breathing, but the cash flow statement issues a hard warning.
| Item | Q1 2026 | Read-through |
|---|---|---|
| Related-party sales | TRY 23.82bn | About 70% of total revenue |
| Related-party trade receivables | TRY 23.02bn | About 66% of trade receivables |
| Working-capital movement | TRY -11.84bn | Dragged down Q1 operating cash |
| Operating cash flow | TRY -4.53bn | Did not confirm TRY 1.84bn period profit |
The company-specific name of that warning is the related-party cycle. Ülker’s domestic distribution is carried out largely through Yıldız Holding companies Horizon and Pasifik. The financial notes show Q1 related-party sales of 23.82 billion TL. That is roughly 70% of total revenue of 33.91 billion TL. Trade receivables from related parties stood at 23.02 billion TL, about 66% of total trade receivables. This does not automatically imply bad faith. But for a minority investor, the speed at which cash returns from customer to company becomes more important than the speed of the product on the shelf.
The debt side is spread over a longer maturity profile, which is positive. In 2024, the company issued 550 million US dollars of nominal bonds; the fixed annual coupon is 7.88%, and maturity extends to July 2031. In 2025, syndication, EBRD, and IFC loans were moved to five-year maturities. The notes give two anchors for bank loan agreements: net debt/EBITDA must not exceed 3:1, and interest coverage must not fall below 2:1; the company says it is compliant in the current period. This reduces the near-term “wall” risk. But the foreign-currency ledger does not disappear: as of March 31, 2026, a 10% appreciation of USD and EUR against TL would create a net 1.80 billion TL negative pre-tax profit sensitivity.
That is why the valuation is interesting. Using May 18, 2026 market data, Ülker’s market value is 44.28 billion TL. Add net financial debt of 36.03 billion TL, and enterprise value reaches 80.30 billion TL. Annualizing Q1 EBITDA gives 20.52 billion TL. The market is paying roughly 3.9x EV/EBITDA for this indebted, but still scaled and branded, production machine. Equity attributable to the parent is 49.02 billion TL; market value is about 0.90 times that.
| Step | Amount / multiple | Comment |
|---|---|---|
| Market capitalization | TRY 44.28bn | Market data as of 18 May 2026 |
| Net financial debt | TRY 36.03bn | Activity report balance-sheet summary |
| Enterprise value | TRY 80.30bn | Market cap plus net financial debt |
| Annualized Q1 EBITDA | TRY 20.52bn | TRY 5.13bn Q1 EBITDA x 4 |
| Current EV/EBITDA | 3.9x | A punished market multiple |
| 4.5x scenario equity value | TRY 56.3bn | About 27% above current market cap |
| 5.0x scenario equity value | TRY 66.6bn | About 50% above current market cap |
| Parent equity / market cap | TRY 49.02bn / 0.90x | Market below book value |
This multiple matters not because Ülker is a good company, but because even after a bad quarter it looks overly punished. A 4.0x annualized Q1 EBITDA multiple almost gives today’s price. A 4.5x multiple goes to roughly 56 billion TL of equity value, and a 5.0x multiple to roughly 67 billion TL. These are not optimistic growth fables; they are mechanical bridges built on the annualized form of current Q1 EBITDA, after deducting net debt. Ülker’s margin does not even have to return to the 2025 Q1 level. A recovery from 28% to 29-30% gross margin, and cash being released from receivables, would be enough.
The anti-thesis is strong and must be taken seriously. If cocoa, sugar, oil, and foreign-currency debt tighten at the same time, brand power cannot carry the full cost to the shelf. If related-party receivables grow faster than sales, the discount is justified. If the TMS 29 gain and investment income soften headline profit while operating cash stays negative for several more quarters, the stock is not “cheap”; it is merely a value trap pricing balance sheet risk.
My judgment is nevertheless clear: Ülker is cheap. The cheapness does not come from the company being risk-free. On the contrary, it comes from the fact that the risks are visible enough for the market’s punishment to become measurable. 36 billion TL of net debt, nearly 70% related-party sales concentration, and falling margins cannot be hidden. But when this risk set takes a company with 13 facilities, an international production base, and 5.13 billion TL of EBITDA even in Q1 down to 3.9x annualized EV/EBITDA, the penalty looks excessive.
This is not the stock for the impatient dividend buyer or for anyone hiding behind the lazy line that “food is defensive.” Ülker is the stock of the investor who watches cash conversion, puts related-party receivables on the table every quarter, and can read the debt/EBITDA line together with gross margin. The next two data points are simple: does gross margin stay above 28% and recover, and does operating cash turn positive? If the answer is yes, the market multiple will have been stingy. If the answer is no, the 36 billion beneath the cocoa will collapse onto the shareholder.
To own it is not to own the brand; it is to own the closing of the distance between the shelf and the debt ledger.