3Q18 RESULTS 6 November 2018, Istanbul PUBLIC
Forward-Looking Statements This presentation includes forward-looking statements including, but not limited to, statements regarding Coca-Cola İçecek’s (“CCI”) plans, objectives, expectations and intentions and other statements that are not historical facts. Forward-looking statements can generally be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “target,” “believe” or other words of similar meaning. These forward-looking statements reflect the current views and assumptions of management and are inherently subject to significant business, economic and other risks and uncertainties. Although management believes the expectations reflected in the forward-looking statements are reasonable, at this time, you should not place undue reliance on such forward-looking statements. Important factors that could cause actual results to differ materially from CCI’s expectations include, without limitation: changes in CCI’s relationship with The Coca-Cola Company and its exercise of its rights under our bottler's agreements; CCI’s ability to maintain and improve its competitive position in its markets; CCI’s ability to obtain raw materials and packaging materials at reasonable prices; changes in CCI’s relationship with its significant shareholders; the level of demand for its products in its markets; fluctuations in the value of the Turkish Lira or the level of inflation in Turkey; other changes in the political or economic environment in Turkey or CCI’s other markets; adverse weather conditions during the summer months; changes in the level of tourism in Turkey; CCI’s ability to successfully implement its strategy; and other factors. Should any of these risks and uncertainties materialize, or should any of management’s underlying assumptions prove to be incorrect, CCI’s actual results from operations or financial conditions could differ materially from those described herein as anticipated, believed, estimated or expected. Forward-looking statements speak only as of this date and CCI has no obligation to update those statements to reflect changes that may occur after that date. 2 PUBLIC
Operational Review Burak Başarır, CEO PUBLIC
Another quarter of quality growth in 3Q18 …fifth consecutive quarter of Quality growth leading to… margin expansion GROWTH YOY MARGIN 3Q17 3Q18 2,9% VOLUME 35,0% 34,7% NET 3Q18 35,1% REVENUE EBITDA 54,2% 21,5% 7,5% 18,8% VOLUME 16,4% NET 14,2% 9M18 27,3% REVENUE 42,6% EBITDA EBIT EBITDA GROSS PROFIT 4 PUBLIC
Strong volume delivery in all major countries TURKEY INTERNATIONAL CONSOLIDATED 30 mn UC incremental 46 mn UC incremental 76 mn UC incremental volume in 9M18 volume in 9M18 volume in 9M18 UNIT CASE VOLUME GROWTH YOY 7,5% 9,1% 5,9% 4,7% 5,7% 3,7% 4,4% 2,8% 1,3% 9M16 9M17 9M18 9M16 9M17 9M18 9M16 9M17 9M18 5 PUBLIC
Volume growth led by Sparkling SPARKLING STILLS WATER NRTD TEA 4.3% 8.6% 1.4% -15.9% 3Q18 Growth YoY 8.7% 15.7% 5.8% -5.1% 9M18 Growth YoY 8% 72% 7% 13% % in Total Mix 63 mn UC incremental Sparkling volume in 9M18 6 PUBLIC
Turkey: Quality growth continues 32+% 8% growth Successful portfolio strategy to support profitability … Growth in in Low/No Sparkling Calorie in in 9M18 9M18 3Q18 9M18 GROWTH YOY NSR/UC Growth y-o-y 15% 15% Volume (UC) (0.5%) 5.9% 9% 1Q18 2Q18 3Q18 Volume (UC) 1.5% 8.3% • (excl.NRTD Tea) Highest-ever high season* volume • IC Share in Sparkling Favorable sales mix with a higher IC share Net Sales Revenue 14.7% 20.3% • Effective pricing and value share gains 23% • EBITDA 117.3% 67.5% 22% Highest-ever value share in Ice Tea 22% • 6th consecutive quarter of YoY EBITDA 1Q18 2Q18 3Q18 margin** expansion 7 *June-July-August PUBLIC **EBITDA margin excluding other operating income/expense
Middle East & Pakistan highlights YTD Market share gains across the region Pakistan Launch of • Above-industry growth in Sparkling ‘Sprite UNIT CASE VOLUME Lemon • GROWTH YOY High-single digit growth in Sprite Mint’ • Expanding outlet base • 8% Improving route-to-market Iraq 6% • 5% Political unrest continues following the elections in July • Focus on core Sparkling and more than 10% growth in brand ‘Coca - Cola’ 3Q18 9M18 3Q18 9M18 • Contraction in Water category -1% Pakistan Iraq 8 PUBLIC
Central Asia highlights Strong performance across the region • Double-digit volume growth in key markets UNIT CASE VOLUME • Azerbaijan: Cooler investments & favorable weather GROWTH YOY Among top 5 fastest growing countries in • TCCC system in 9M18 Kazakhstan: • Substantial share gains in all categories 30% • High-single digit volume growth in Sparkling 25% • Azerbaijan: 16% • Strong market execution and 14% consumer promotions 3Q18 9M18 3Q18 9M18 • c.30% growth in Sparkling Kazakhstan Azerbaijan 40+% Launch of Ice Tea ‘Sprite growth in Cucumber’ KZ in KZ 9 PUBLIC
Financial Review Michael Coombs, CFO PUBLIC
Summary financials YoY Change 3Q17 3Q18 TL Million Net Sales 2,750 3,715 35.1% Gross Profit 954 1,299 36.2% EBIT 392 611 56.0% EBITDA 518 799 54.2% Net Income / (Loss) 241 37 (84.5%) bps GP Margin 34.7% 35.0% 30 bps EBIT Margin 14.2% 16.4% 220 bps EBITDA Margin 18.8% 21.5% 270 EPS* 0.95 0.15 (84.5%) EBITDA Net Revenue Volume growth 11 *EPS in TL per 100 shares PUBLIC
Sustained quality growth Consolidated (TL), FX-Neutral EBIT per UC Net Sales Revenue per UC Gross Profit per UC +8% 7,3 +11% +26% 6,8 2,6 2,4 1,2 1,0 3Q17 3Q18 3Q17 3Q18 3Q17 3Q18 • Favorable sales mix in Turkey • Higher NSR/UC in Turkey • Expanding gross margin in Turkey • Strong topline growth in Central Asia • Effective cost management • Increasing efficiency in int’l operations 12 PUBLIC
Managing input costs and FX headwinds Hedging FX exposure related to raw material... • Cash designation in place to manage FX impact on input costs: Hard currency cash allocation for FX-denominated raw 92% 97% 100%** material purchases Hedged Position for 2018* • c.92% of Turkey’s 2018 FX -denominated raw material purchases is hedged at Hedged Position - 85%** ~50% USD/TRY 3.55 for 2019* • c.90% of Turkey’s 2019 FX -denominated World Sugar Prices LME Aluminium Prices Resin Prices raw material purchases is hedged at (London#5 Average, USD/tonne) (Average, USD/tonne) (Average, USD/tonne) USD/TRY 3.95 500 1500 • Positive impact on COGS and lower FX 2000 400 gains due to designation of cash 1500 1000 300 1000 200 500 500 100 0 0 0 9M17 9M18 9M17 9M18 9M17 9M18 *As of October 2018 13 **For unregulated markets PUBLIC
Net income supported by EBITDA growth Net Income 3Q18 vs. 3Q17 TL million Net Investment Hedging provided TL 314 million positive impact on net income in 3Q18 (45) 281 (315) (12) (44) (10) 241 (59) 37 ∆ in EBITDA ∆ in D&A* ∆ in FX gain/ ∆ in other ∆ in other inc./ ∆ in minority ∆ in tax 3Q17 3Q18 (loss) financial inc./ (exp.) (exp.) *Depreciation and amortization 14 PUBLIC
Continued focus on balance sheet FX exposure DEC’17 JAN’18 JUN’18 SEP’18 USD 61% USD 75% Hedged Net 30% Portion Investment USD 29% 14% USD 30% Hedging 29% Local Local Currency Currency 2% 2% 15% 16% EUR 23% EUR 23% EUR EUR 22% 22% 4% Hedging through cross-currency Local Currency Local Currency 3% swap Hedging transaction for Monitoring further opportunities… Net Investment Hedging USD 150 million in Jan’18 for USD 281 mn in Apr’18 • Significantly lower USD exposure compared to year-end 2017 • Lower net debt position compared to 9M17 • Repayment of USD 500 mn Eurobond on October 1st • Majority of cash is held in USD 15 PUBLIC
Lower net debt and higher FCF in 9M18 Net Debt (USD mn) Net Debt / EBITDA* Net Interest Coverage* 555 9,7 544 8,9 8,2 504 1,60 1,52 1,48 9M17 2017 9M18 9M17 2017 9M18 9M17 2017 9M18 NWC / SALES* CapEx / SALES* FCF (TL mn) 5,9% 888 6,0% 5,9% 4,6% 672 9M17 9M18 9M17 9M18 9M17 9M18 *Annualized 16 PUBLIC
Key takeaways ✓ Quality growth continued for the fifth consecutive quarter ✓ Continued Sparkling and IC growth in Turkey ✓ Double-digit growth in all major markets in Central Asia ✓ Continued focus on reducing FX exposure ✓ 2018 guidance maintained 17 PUBLIC
Q & A PUBLIC
THANK YOU! CCI Investor Relations Tel: +90 216 528 4000 | Fax: +90 216 5107010 | CCI-IR@cci.com.tr | www.cci.com.tr PUBLIC
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