3Q18 RESULTS 6 November 2018, Istanbul PUBLIC Forward-Looking - - PowerPoint PPT Presentation

3q18 results
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3Q18 RESULTS 6 November 2018, Istanbul PUBLIC Forward-Looking - - PowerPoint PPT Presentation

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 eceks (CCI) plans, objectives, expectations


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3Q18 RESULTS

6 November 2018, Istanbul

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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.

Forward-Looking Statements

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Operational Review

Burak Başarır, CEO

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Another quarter of quality growth in 3Q18

MARGIN

…fifth consecutive quarter of margin expansion

42,6% 27,3% 7,5%

9M18 3Q18

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54,2% 35,1% 2,9%

VOLUME NET REVENUE EBITDA VOLUME NET REVENUE EBITDA

Quality growth leading to…

GROWTH YOY

14,2% 18,8% 34,7% 16,4% 21,5% 35,0%

EBIT EBITDA GROSS PROFIT

3Q17 3Q18

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1,3% 3,7% 5,9% 9M16 9M17 9M18

Strong volume delivery in all major countries

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76 mn UC incremental

volume in 9M18

2,8% 4,7% 7,5% 9M16 9M17 9M18

TURKEY INTERNATIONAL CONSOLIDATED

30 mn UC incremental

volume in 9M18

46 mn UC incremental

volume in 9M18

4,4% 5,7% 9,1% 9M16 9M17 9M18 UNIT CASE VOLUME GROWTH YOY

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Volume growth led by Sparkling

SPARKLING STILLS WATER NRTD TEA

3Q18 Growth YoY 9M18 Growth YoY % in Total Mix

4.3% 8.7% 8.6% 15.7% 1.4% 5.8%

  • 15.9%
  • 5.1%

72% 7% 13% 8%

63 mn UC incremental Sparkling volume in 9M18

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Turkey: Quality growth continues

  • Highest-ever high season* volume
  • Favorable sales mix with a higher IC share
  • Effective pricing and value share gains
  • Highest-ever value share in Ice Tea
  • 6th consecutive quarter of YoY EBITDA

margin** expansion

8% growth in Sparkling in 9M18

*June-July-August **EBITDA margin excluding other operating income/expense

32+% Growth in Low/No Calorie in 9M18

Successful portfolio strategy to support profitability…

9% 15% 15%

1Q18 2Q18 3Q18

NSR/UC Growth y-o-y

22% 22% 23%

1Q18 2Q18 3Q18

IC Share in Sparkling

GROWTH YOY

3Q18 9M18

Volume (UC) (0.5%) 5.9% Volume (UC)

(excl.NRTD Tea)

1.5% 8.3% Net Sales Revenue 14.7% 20.3% EBITDA 117.3% 67.5%

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Launch of ‘Sprite Lemon Mint’

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Middle East & Pakistan highlights

YTD Market share gains across the region

Pakistan

  • Above-industry growth in Sparkling
  • High-single digit growth in Sprite
  • Expanding outlet base
  • Improving route-to-market

Iraq

  • Political unrest continues following the

elections in July

  • Focus on core Sparkling and more than 10%

growth in brand ‘Coca-Cola’

  • Contraction in Water category

UNIT CASE VOLUME GROWTH YOY

5%

  • 1%

8% 6%

Pakistan Iraq

3Q18 9M18 3Q18 9M18

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Central Asia highlights

Strong performance across the region

14% 25% 16% 30%

Kazakhstan Azerbaijan

3Q18 9M18 3Q18 9M18

  • Double-digit volume growth in key markets
  • Cooler investments & favorable weather
  • Kazakhstan:
  • Substantial share gains in all categories
  • High-single digit volume growth in Sparkling
  • Azerbaijan:
  • Strong market execution and

consumer promotions

  • c.30% growth in Sparkling

Azerbaijan: Among top 5 fastest growing countries in TCCC system in 9M18

UNIT CASE VOLUME GROWTH YOY 40+% Ice Tea growth in KZ Launch of ‘Sprite Cucumber’ in KZ

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Financial Review

Michael Coombs, CFO

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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%) GP Margin 34.7% 35.0% 30 EBIT Margin 14.2% 16.4% 220 EBITDA Margin 18.8% 21.5% 270 EPS* 0.95 0.15 (84.5%)

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Summary financials

*EPS in TL per 100 shares

EBITDA Net Revenue Volume growth 3Q17 3Q18 YoY Change

TL Million

bps bps bps

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1,0 1,2 3Q17 3Q18 2,4 2,6 3Q17 3Q18 6,8 7,3 3Q17 3Q18

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Sustained quality growth

Consolidated (TL), FX-Neutral

Net Sales Revenue per UC Gross Profit per UC EBIT per UC

  • Favorable sales mix in Turkey
  • Strong topline growth in Central Asia
  • Higher NSR/UC in Turkey
  • Effective cost management
  • Expanding gross margin in Turkey
  • Increasing efficiency in int’l operations

+8% +11% +26%

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Managing input costs and FX headwinds

World Sugar Prices (London#5 Average, USD/tonne) Resin Prices (Average, USD/tonne) LME Aluminium Prices (Average, USD/tonne) Hedged Position for 2018*

100%** 92% 97%

*As of October 2018 **For unregulated markets

  • Cash designation in place to manage FX

impact on input costs: Hard currency cash allocation for FX-denominated raw material purchases

  • c.92% of Turkey’s 2018 FX-denominated

raw material purchases is hedged at USD/TRY 3.55

  • c.90% of Turkey’s 2019 FX-denominated

raw material purchases is hedged at USD/TRY 3.95

  • Positive impact on COGS and lower FX

gains due to designation of cash

Hedging FX exposure related to raw material...

100 200 300 400 500 9M17 9M18 500 1000 1500 2000 9M17 9M18 500 1000 1500 9M17 9M18

Hedged Position for 2019*

85%** ~50%

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Net income supported by EBITDA growth

241 37 281 (45) (315) (44) (12) (10) (59)

3Q17 ∆ in EBITDA ∆ in D&A* ∆ in FX gain/ (loss) ∆ in other financial inc./ (exp.) ∆ in other inc./ (exp.) ∆ in minority ∆ in tax 3Q18

*Depreciation and amortization

TL million

Net Income 3Q18 vs. 3Q17

Net Investment Hedging provided TL 314 million positive impact on net income in 3Q18

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Continued focus on balance sheet FX exposure

  • 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

USD 75% EUR 23% Local Currency 2% USD 61% Hedged Portion 14% Local Currency 2% EUR 23%

DEC’17 JAN’18

USD 30% 29% 15% 4% EUR 22%

Local Currency

JUN’18 SEP’18 Hedging transaction for USD 150 million in Jan’18 Net Investment Hedging for USD 281 mn in Apr’18

Hedging through cross-currency swap Net Investment Hedging

USD 29% 30% 16%

Local Currency 3%

EUR 22%

Monitoring further opportunities…

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Lower net debt and higher FCF in 9M18

Net Debt / EBITDA* Net Debt (USD mn) Net Interest Coverage*

*Annualized

NWC / SALES* CapEx / SALES* FCF (TL mn)

1,48 1,52 1,60 9M17 2017 9M18 544 555 504 9M17 2017 9M18 8,2 9,7 8,9 9M17 2017 9M18 6,0% 5,9% 9M17 9M18 4,6% 5,9% 9M17 9M18 672 888 9M17 9M18

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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

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Q & A

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CCI Investor Relations Tel: +90 216 528 4000 | Fax: +90 216 5107010 | CCI-IR@cci.com.tr | www.cci.com.tr

THANK YOU!