Lila Kağıt (LILAK) Under the Spotlight: 5 Surprising Facts Behind the Numbers
One of the most basic rules in business is that when a company’s sales drop, its profits are expected to follow the same path. However, Lila Kağıt’s (LILAK) recent financial results turn this rule almost upside down. After a deep review of the company’s quarterly reports and activities, I encountered a series of surprising findings that at first glance seem contradictory, yet reveal just how solidly the company is built. Here are the 5 key facts behind the numbers that showcase Lila Kağıt’s strength.
1. How Can Profit Rise While Sales Fall? A Lesson in Operational Efficiency
In the first nine months of 2025, Lila Kağıt’s net sales dropped 18.15% year-on-year to 10.1 billion TL. Several factors contributed to this decline: the reduction in raw material (cellulose) costs reflected in product prices, a general slowdown in export markets, and currency fluctuations rising below inflation during the period.
The surprising part comes next: despite the significant drop in sales, the company’s net profit increased by 7.93% to 1.41 billion TL. This rare scenario in financial statements highlights the company’s management quality.
The main reason lies beyond generic “efficiency” claims. Cellulose, the largest cost item, fell 13% in USD per ton compared to the previous year. By managing this cost advantage effectively, Lila Kağıt increased its gross profit margin from 28.4% to 30.8% and, more importantly, its net profit margin from 10.6% to 14.0%. This demonstrates that even in a shrinking market, the company earns more profit per TL of sales and operates very efficiently.
2. A Giant in Net Cash Position: Cash Strength Exceeding Debt
One of the most impressive aspects of Lila Kağıt is its financial structure. As of September 30, 2025, the company had a net cash position of 3.3 billion TL, meaning it holds 3.3 billion TL in cash even after paying off all financial debt.
The Net Financial Debt / EBITDA ratio, commonly used in financial analysis, clarifies this further. At a negative -1.27, it indicates that the company not only has no financial debt but operates with a cash surplus far exceeding its obligations.
This solid structure is reinforced by the equity-to-total-assets ratio of 85%, reflecting a “rock-solid” balance sheet. This provides strategic flexibility in economic fluctuations and substantial firepower to reward investors and finance growth investments.
3. Rewarding Investors: A Massive Dividend Move
With this unshakable balance sheet, Lila Kağıt did not forget its investors. On July 1, 2025, the company distributed a total cash dividend of 885,004,000 TL, amounting to 1.5000 TL per share.
To grasp the magnitude, consider the comparison with the previous year: in 2024, the dividend totaled 180,250,000 TL. This nearly fivefold increase demonstrates the company’s financial strength and commitment to its investors.
This generous dividend shows that the company is not only profitable but also willing to share its profits with shareholders, reflecting strong financial confidence for the future.
4. Investing in the Future: The Erzurum Initiative
Thanks to its strong financial structure, while many companies adopt defensive strategies in uncertain global markets, Lila Kağıt is taking a bold step forward. The company is establishing a major factory in Erzurum with an investment exceeding 3 billion TL.
The strategic importance is significant. This facility will be the first heavy industrial tissue paper plant in Eastern Anatolia and the Black Sea region, representing both regional development and a bold step reshaping the company’s growth map.
The project will be executed in two phases: the first phase begins with converting (finished product) production in the last quarter of 2025, and the second, a new 70,000-ton-per-year paper production line, is planned for 2027. Once completed, Lila Kağıt’s annual gross production capacity will rise from 271,000 tons to 341,000 tons. This move demonstrates a proactive strategy to secure future growth while entering high-potential export markets like Azerbaijan and Georgia.
5. Armored Against Currency Fluctuations: A Natural Hedge Mechanism
For many companies operating in Turkey, currency fluctuations are a major risk. However, Lila Kağıt has a natural hedge against this risk due to its business model.
The secret lies in the currency composition of its revenues and costs. 68% of the company’s sales come from USD and Euro-based exports, which naturally balances the foreign exchange costs of imported cellulose, the main raw material.
The numbers confirm this balance: an export-to-import coverage ratio of 1.62 positions the company as a net exporter. As of September 30, 2025, its net foreign currency assets of 3.5 billion TL further reinforce this structure. This natural hedge makes the company highly resilient to the erosive effects of currency risk.
Conclusion
Lila Kağıt’s financial statements provide a vivid example of how operational efficiency, a rock-solid financial structure, bold growth vision, and investor-friendly policies can make a difference even in tough market conditions. The company is not just defending its current position; it turns its strong balance sheet and operational capabilities into an “offensive” strategy, as seen with the Erzurum investment.
What will Lila Kağıt’s next move be with this massive Erzurum project and unshakable balance sheet? The numbers tell us this much for now; time will reveal the rest.