INVESTOR PRESENTATION October 2018 PUBLIC Forward-Looking - - PowerPoint PPT Presentation

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INVESTOR PRESENTATION October 2018 PUBLIC Forward-Looking - - PowerPoint PPT Presentation

INVESTOR PRESENTATION October 2018 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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INVESTOR PRESENTATION

October 2018

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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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Overview of CCI Opportunities Strategy Region Highlights Financial Highlights

Agenda

4 12 18 26 30

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Highlights

✓ Proven track record of expansion & growth ✓ Robust performance across all key markets with solid topline growth ✓ Abundant potential in demographics ✓ Compelling NARTD* growth opportunity in our footprint ✓ Strategy, Execution and People to accelerate quality growth ✓ Disciplined financial management to deliver stakeholder value

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*Non-alcohol ready-to-drink

Overview of CCI

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We are the 6th Largest Bottler in the Coca-Cola System, Operating in 10 Countries

  • ~400 mn people
  • 26 (1) production plants with 124 (1) lines
  • 1.5 bn UC(2) annual production capacity
  • ~800 thousand sales points
  • 1.2 bn UC sales volume
  • $ 2.3 bn revenue & $ 379 mn EBITDA

Figures reflect FY 2017 numbers (1) As of 2018 (2) Unit case, 1 UC equals 5,678 liters (3) Sparkling market share

50% 25% 9% 9% 7% Turkey Pakistan Kazakhstan Iraq Others

Volume Breakdown

Market position (3)

#1 #2 #1 #2

Overview

KAZAKHSTAN KYRGYZSTAN TAJIKISTAN TURKMENISTAN AZERBAIJAN TURKEY IRAQ JORDAN SYRIA PAKISTAN

5 Overview of CCI

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We have a Successful Track Record of Growth

18%

EBITDA

CAGR 2005-2017 Single country in 2005… Expanding into Central Asia and North Iraq in 2006-2007… JV in Pakistan in 2008... A regional bottler today…

318 mn UC 1,237 mn UC

18%

REVENUE

CAGR 2005-2017

12%

VOLUME

CAGR 2005-2017

7x 4x 7x

South Iraq in 2012… 6 Overview of CCI

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9,1% 15,5% 33,9% 10,3% 16,2% 34,0% EBIT EBITDA GROSS PROFIT

FY16 FY17

Strong Performance in 2017…

GROWTH YOY MARGINS

3,2% 4,9% 3,9% 4,1% 20,9% 26,2% VOLUME NET REVENUE EBITDA

FY16 FY17

Fastest

growing bottler in the Coca-Cola System*

*Across top the Coca-Cola System Bottlers

729

million TL

Record high

FCF

Overview of CCI 7

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9,5% 23,4% 29,3%

Robust Performance in 2Q18 and 1H18

GROWTH YOY 14,5% 19,4% 35,9% 16,2% 20,3% 36,6%

EBIT EBITDA GROSS PROFIT

2Q17 2Q18

MARGIN

‘Quality growth’

continued for the fourth consecutive quarter

10,6% 22,1% 33,9%

VOLUME NET REVENUE EBITDA

1H18 2Q18

8 Overview of CCI

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176 181 196 2Q16 2Q17 2Q18

373 408 14

2Q17 Turkey ME & Pakistan Central Asia 2Q18

International Operations

21 million UC

Growth Across All Regions

…with35 mn UC incremental volume in 2Q18

64 mn UC incremental volume in 1H18

TURKEY

2Q18 Growth YoY

7.8%

INTERNATIONAL

11.0%

184 191 212 2Q16 2Q17 2Q18

Volume Contribution YoY

Million UC

Volume (mn UC)

10.3% 10.9%

2Q18 Growth YoY 1H18 Growth YoY 1H18 Growth YoY 9 Overview of CCI

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Contribution to Growth: Regions

VOLUME GROWTH, YOY

+3.3% +7.0% +4.0%

FY17

TURKEY CENTRAL ASIA MIDDLE EAST & PAKISTAN

Volume contribution of regions, 2017

13 % 37 % 50 %

Overview of CCI 10

+7.8% +9.0% +11.7%

2Q18 1H18

+10.3% +12.9% +10.2%

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Contribution to Growth: Categories

+3.3%

VOLUME GROWTH, YOY

+20.9% +8.5%

FY17

+12.0%

2Q18

  • 17.7%

+20.7%

SPARKLING NRTD TEA STILLS

Volume contribution of categories, 2017

WATER

  • 3.2%

+11.4%

9% 6% 71% 14%

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+11.8%

1H18

  • 1.1%

+20.9% +9.1%

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Our Geography has Abundant Opportunities

Increasing urbanization Young population Faster population growth

Source: UN | 2017-2020

Low per caps

273

NARTD servings

52%

urban % 2017

~60%

below age 30

20MN

Opportunities 12

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PUBLIC 1.415 1.335 1.172 1.082 1.027 881 762 686 686 681 624 621 546 510 476 468 452 436 416 404 326 320 212 204 195 194 139 76 50

Lower per caps in CCI Countries

CCI weighted average: 273

* NARTD includes sparkling soft drinks, ready-to-drink tea, energy drinks, juices, packaged water * NARTD per cap per year in terms of number of 8 ounce servings, data as of 2017

NARTD per cap*

CCI’s share 13 Opportunities

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CCI Value Share Opportunity

+$3bn

8% CAGR

2017- 2020E

NARTD Value Growth Opportunity

8% 9% 51% 28%

WATER STILLS SPARKLING NARTD

INDUSTRY VALUE GROWTH

Source: Nielsen, Canadean and internal estimates, data as of 2017

TOTAL NARTD INDUSTRY IN CCI COUNTRIES: $12BN (2017)

Opportunities 14

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61 61%

Outlet Penetration*

More Room to Grow…

800K OUTLETS

*Number of outlets where we are available divided by total outlets in our 10 countries ** Source: Ipsos as of 2018 YTD, B3/BGS as of 2017 data for Turkey

1mn

COOLERS

73% 73%

COVERAGE

HOUSEHOLD PENETRATION

~50 ~50%

OCCASIONAL USERS

GENERATING

18 18% % OF

VOLUME**

44 44%

Monthly**

Opportunities 15

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More Room to Grow…

58% 50% 40% 35% 28% 25%

Asia Pacific North America World Average Europe, Middle East and Africa Latin America CCI

Share of Immediate Consumption (IC) Packages in Sparkling

You

  • ung Pop
  • pula

lation in in CCI I countries

~60% ~60%

Teen Recruitment Opportunit ity!

* Based on CCI analysis for Turkey operations

~2x higher

NSR per case

~1.5x

higher Gross Margin vs. FC

Opportunities 16

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More Room to Diversify Product Portfolio

Sparkling 71% Sparkling 85%

Water 14% NRTD Tea 9% Still 6% Other 15%

2006

2017

Brands Flavors 33 154 17 44 2006 2017

Opportunities

26% 23% 8% 6% 3% 2% 1% 1% 1% 1% 1% 0,2%

North America Europe Latin America Turkey Azerbaijan Jordan Iraq Tajikistan Kyrgyzstan Turkmenistan Kazakhstan Pakistan

SHARE OF LOW/NO CALORIE IN SPARKLING VOLUME (2017) CATEGORY BREAKDOWN Increasing Household Penetration Double-digit growth in No Sugar

&

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Customer & Consumer

Being the preferred partner of our customers, offering our consumers a wide choice of products fit for every lifestyle and

  • ccasion

Community

Being a good corporate citizen

People

Great place to work

CREATE VALUE

Vision

Be the Best FMCG Company Across

  • ur Markets

Values

Clear Strategic Framework

Strategy 18

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Strategic Priorities to Create Value

Accelerate Growth Win at the Point of Sale Exercise Financial Discipline Win with People

  • Full-beverage portfolio
  • Revenue Growth

Management (RGM)

  • Expand Sparkling & Stills
  • Increase frequency
  • Regional strategies
  • Increase outlet coverage
  • Increase cooler penetration
  • Right Execution Daily
  • E-commerce
  • Future-proof RTM
  • Productivity savings
  • Working capital

improvements

  • Healthy FCF
  • Optimum leverage
  • Effective FX management
  • Integrated Talent Strategy
  • Leadership Development
  • High Performing Team
  • Transformation to

“OnePeople”

ONE C E CCI CI

Strategy 19

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ONE CCI to Drive Business Excellence to Achieve Vision 2025

Towards Vision 2025 Business Excellence

  • Operating Model Governance
  • Prescriptive Analytics & Insights
  • Business Services Delivery
  • Centers of Expertise (CoEs)

Fix Foundation for Real Value Creation Build New (CCI 3.0) Operating Model

Strategy 20

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Disciplined Capital Allocation

ORGANIC GROWTH INORGANIC GROWTH DELEVERAGING SHAREHOLDER RETURN

CapEx/Sales ~7% - 8% (2018E)

  • Capacity Expansion
  • Cold drink equipment
  • Maintenance

Bolt-on acquisitions Geographical expansion

  • Strategic fit
  • Value creation
  • Reasonable proximity

Optimum debt repayment

  • Solid balance sheet
  • Improving leverage

metrics Sustainable dividend policy

  • Increasing payout ratio
  • Higher dividend yield

Optimum CapEx Allocation Debt Repayment Dividends Selective M&A Strategy

Strategy 21

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Grow Value Grow Scale Build Future

CCI NARTD per cap (L)

BUBBLE SIZE: EBIT

NARTD Value Leadership ratio vs nearest competitor

Grow Value

  • Drive sustainable profit growth
  • Bolt on Acquisitions

Grow Scale

  • Grow NATRD per caps portfolio
  • Maintain & improve margins

Grow Leadership

  • Enhance NARTD Value Leadership
  • Build per caps

Build Future

  • Exponentially grow NARTD per caps
  • Improve margins

Grow Leadership

Our Strategic Model to Tap Growth Opportunities

Strategy

ME & PK Central Asia Turkey

20 40 60 80 100 120 140 160 180 0,5 1 1,5 2 2,5 3 3,5 4 22

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  • Management control & full consolidation rights
  • Reasonable proximity
  • Similar market dynamics
  • ROIC > WACC

Strategy

Turkey 50% Pakistan 25% Kazakhstan 9% Iraq 9% Others 7% Turkey 81% International 19% 2006

2017

Volume Breakdown Guiding principles for geographical expansion

Prudent Approach to Geographical Expansion

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2018 Guidance

2017 2018 Guidance

Volume growth (total) 4.1% 4% - 6% Turkey 3.3% 2% - 4% International 4.9% 8% - 10% Net Revenue growth (FX neutral) 9.8% 10% - 12% Turkey 11.7% 8% - 10% International (FX neutral) 7.8% 12% - 14% EBITDA Margin 16.2% Slight improvement Turkey 17.6% Flat International 18.9% Slight improvement Capex / Sales 5.9% 7%-8%* Net Debt / EBITDA 1.5x < 1.5x**

*Comparable ** Organic and FX-neutral

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Medium-term Outlook

*Comparable ** Organic and FX-neutral

2017 Medium-Term 2018-2020 Volume growth 4.1% 4% - 6% (CAGR) Net Revenue growth (FX neutral) 9.8% 10% - 12% (CAGR) EBITDA Margin 16.2% Slight improvement Capex / Sales 5.9% 7% - 8%* Net Debt / EBITDA 1.5x < 1.5x**

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Region Highlights

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Turkey Maintains Positive Momentum

✓ Highest quarterly Sparkling growth since 2011 ✓ Higher share of IC packs in sales mix and share

gains in Sparkling

✓ Continued focus on ‘Coca-Cola No Sugar’ ✓ 56% volume growth and value share gains in Ice

Tea

Delivering on our strategic growth algorithm

GROWTH YOY, 2Q18 vs. 2Q17

8% 15% 24% 35% 51%

Volume Transactions* Net Revenue EBITDA EBIT

15%

Growth in Sparkling

Launch of ‘Coca-Cola Coffee’ and ‘Fanta Lemonade’

40+%

Growth Low/No Calorie

14%

Excluding NRTD Tea

*Transactions exclude non-ready-to-drink (NRTD) tea and coffee

Region Highlights

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Middle East & Pakistan Highlights

Focus on profitable growth continues

✓12% volume growth in Pakistan

  • Improving route-to-market efficiency
  • More than 10% growth in Fanta and Sprite, in line with

three-brand strategy

  • Launch of Dasani Water

✓12% volume growth in Iraq

  • Increasing number of coolers and outlet penetration
  • More than 60% growth in brand ‘Coca-Cola’

2Q18 Unit Case Volume Growth YoY

12,0% 11,8% 4,3%

Pakistan Iraq Jordan

Region Highlights

GLOBAL BRAND LOVE SCORE 1

#

GLOBAL TEEN RECRUITMENT 1

#

Pakistan

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Central Asia Highlights

Double-digit growth in key markets

2Q18 Unit Case Volume Growth YoY

13,4% 31,6%

Kazakhstan Azerbaijan

✓Double-digit growth across all major markets ✓~60% increase in EBIT ✓Accelerated cooler injection ✓Kazakhstan:

  • Significant volume & value share gains in Sparkling
  • Fanta Citrus launch
  • 30% growth and value leadership in Fuse Tea

✓Azerbaijan: Strong market execution and

consumer promotions

Region Highlights

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Financial Highlights

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Net Sales 8,521 20.9% 3,158 23.4% 5,024 22.1% Gross Profit 2,901 21.3% 1,157 25.8% 1,771 26.4% EBIT 874 36.4% 513 38.6% 661 50.5% EBITDA 1,379 26.2% 642 29.3% 924 33.9% Net Income / (Loss) 238 n.m. 187 (19.0%) 141 (2.8%) GP Margin 34.0% 10 bps 36.6% 70 bps 35.3% 130 bps EBIT Margin 10.3% 120 bps 16.2% 170 bps 13.2% 250 bps EBITDA Margin 16.2% 70 bps 20.3% 90 bps 18.4% 160 bps EPS* 0.93 n.m. 0.74 (19.0%) 0.56 (2.8%)

Summary Financials

Financial Highlights

*EPS in TL per 100 shares representing 1 TL nominal value

EBITDA Net Revenue Volume growth

TL Million 31

FY17 YoY Change 2Q18 YoY Change 1H18 YoY Change

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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*

98%** 74% 71%

*As of July 2018, percentage of 2018 contracted volume **For unregulated markets

200 400 600 800

1H17 1H18

500 1000 1500

1H17 1H18

1000 2000

1H17 1H18

✓ 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

✓ No impact on net income

Hedging FX exposure related to raw material...

Financial Highlights

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Solid Free Cash Flow Generation

6% 6% 10%

EBITDA Growth

Prudent CapEx Working Capital Efficiency

(TL mn) 2015 2016 2017

EBI EBITD TDA 1,051 051 1,093 093 1,379 379 Ca Cap/Ex p/Ex 829 829 517 517 499 499 Change in NW Change in NWC 13 13 201 201 3

46 642 729

2015 2016 2017 2018E

Free Cash Flow (TL mn)

Financial Highlights 33

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FCF - Prudent Capital Expenditure

34% 31% 5% 12% 18%

Production Capacity Cold Drink Equipment IT Bottles & Cases Other 12,3% 7,3% 5,9%

2015 2016 2017

8.5%

  • n

average

*Net Sales Revenue ** Annualized

Financial Highlights 34

CapEx / NSR* CapEx Breakdown (2017)

FULL YEAR 1H18**

3,3% 4,7%

1H17 1H18

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FCF - Improving Working Capital Efficiency

  • 2%
  • 2%

4%

2017 15 Days Cash Conversion Cycle 2016 26 Days 2015 39 Days

33 Days 30 Days 29 Days 2015 2016 2017 55 Days 47 Days 43 Days 49 Days 51 Days 57 Days

DSO DSI DPO

*Net Sales Revenue

Net Working Capital/NSR*

10,4% 7,4% 5,7% 2015 2016 2017 FULL YEAR 1H18**

Financial Highlights

**Annualized

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8,8% 10,0%

1H17 1H18

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Financial Strength - Deleveraging

Concentrate Sugar & Sweetener Strong Balance Sheet Capacity for Bolt-on Acquisitions Improving Leverage Metrics Net Debt (USD mn) Net Debt/ EBITDA Net Interest Coverage Concentrate Sugar & Sweetener 2,3 2,1 1,5

2015 2016 2017 2018E

Covenant < 3.25x

816 652 555

2015 2016 2017 2018E

5,7 6,6 9,7 2015 2016 2017 2018E

Covenant > 4x

USD 150 million hedged in 1Q18

Financial Highlights 36

1,94 1,85

1H17 1H18

6,9 8,8

1H17 1H18

666 653

1H17 1H18

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Managing Balance Sheet FX exposure

Hedging transaction for USD 150 million... Net Investment Hedging of USD 281 million...

✓ Participating cross-currency swap for 7 years with TRY interest cost of ~12% ✓ Fixed semi-annual interest payments @ 3,80 USD/TRY until 2024 ✓ Principal payment: ✓ FX risk related to hard currency debt is hedged through foreign currency

investments*

✓ USD 281 million of USD 500m Eurobond is designated for hedging at a

USD/TRY rate of 3.95

✓ FX gains/(losses) related to hedged amount to be recorded under Equity,

thus any FX rate higher than 3.95 to have a favorable impact on net income

✓ No impact on FCF, Net Working Capital and ROIC

*Two subsidiaries of CCI that are domiciled abroad, CCI International Holland B.V. and Waha Beverages B.V., to be utilized as hedging instruments

Breakdown of Financial Debt** (1H18)

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

Local Currency

Hedging through cross- currency swap Net Investment Hedging Net debt is USD 653 million while majority of cash is held in USD @3,80 @8,50 ...is below 3,80; CCI buys $150mn @ spot price ...is between 3,80 & 8,50 CCI buys $150mn @ 3,80 ...exceeds 8,50 CCI buys $150mn @ spot-4,70 (8,50-3,80) If USD/TRY...

**Excluding the refinanced Eurobond (USD 500 m)

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38% 9% 7% 1% 1% 10% 34% 2018 2019 2020 2021 2022 2023 2024

Financial Strength – Debt Maturity Profile

% of consolidated debt, as of end 2Q18

  • USD 500m Eurobond due in Oct’18

successfully refinanced in Sep’17

  • Eurobond proceeds held in hard

currency

  • Average duration of consolidated debt

portfolio 3.05 years (4.47 years excluding 2018 USD 500 m Eurobond)

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USD 500m Eurobond refinanced early

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Improving Return Metrics

ROIC ROE ROA

ROIC ROIC

Significant increase in 2017 Sole metric in management long term incentive plan Focus on continuous improvement going forward

Driving long term stakeholder value

Financial Highlights 39

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Dividends - Enhancing Shareholder Return

Dividend per Share (TL per 100 shares)

  • Record high dividends in 2017
  • A total of TL 280 million in dividends over last 3

years

  • Dividend amount based on:
  • Net distributable income
  • Free cash flow generation
  • CapEx and other funding needs for growth
  • Prevailing macroeconomic conditions

0,12 0,20 0,79

2015 2016 2017

* Based on market capitalization as of 18th May

Dividend Yield: 0.3% Dividend Yield: 0.5% Dividend Yield: 2.1%

Financial Highlights 40

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Appendix

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Coke 38% Impacted Categories* 26% Water, NRTD Tea & other 36%

Impact of new 10% SCT in Turkey

2018 OUTLOOK

New 10% SCT effective January 1, 2018 Existing 25% SCT for many years

*Flavored & plain sparkling, nectars, juice drinks and other flavored soft drinks (lemonade, energy drinks, iced tea and sports drinks).

Volume Revenue EBITDA Margin

  • Revenue Growth Management (RGM) initiatives
  • Smart pricing
  • Portfolio strategy
  • Optimum price/pack architecture
  • Promotion management
  • Efficiency
  • Discipline in market execution
  • Reformulation
  • Increasing system efficiency

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TURKEY VOLUME BREAKDOWN (2017) OUR ACTION PLAN TO MITIGATE TAX IMPACT

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Country data - 2017

Turkey 26,500 81 50% 57 64% 50% Pakistan 5,400 208 64% 26 37% 25% Kazakhstan 26,100 18 51% 71 49% 9% Iraq 17,000 38 68% 47

  • 9%

Azerbaijan 17,400 10 49% 26 75% 3% Jordan 12,500 10 64% 49

  • 2%

Turkmenistan 18,700 6 58% 51 61% 1% Kyrgyzstan 3,700 6 59% 35 68% 1% Tajikistan 3,100 9 65% 16

  • 0%

Syria n.a. 18 65% n.a.

  • 0%

% of pop. below 30 years (5) Per cap consumption

  • f NARTD (L) (3)

CCI’s market share in sparkling (4) Share in CCI’s Volume Country GDP per cap. (USD)

  • Pop. (mln) (1)

(1) UN 2017 Estimates except for Pakistan which is based on local census (2) CIA World Factbook Estimates (3) CCI & TCCC Estimates (4) Nielsen & Ipsos (5) UN 2015 Data 43

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#1 position in Sparkling; 63% #1 position in Juice; 25% #3 position in Water; 4% #3 position in Ice tea; 19% #2 position in Sparkling; 37% #3 position in Water; 5% #1 position in Sparkling; 49% #3 position in Juice; 13% #4 position in Water; 11% #2 position in Ice tea; 30% #2 position in Sparkling; 42% #8 position in Juice; 1%

Source: Nielsen, Canadean

Kaza azakh khstan stan Iraq Iraq Pak Pakis istan tan Turk Turkey ey

Market shares

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Being a Good Corporate Citizen

3.2.1 MOVE!

TR, KZ, PK, IQ 150,000 Youth

CCI VOLUNTEERS

880 volunteers, 100,000 beneficiaries

PAANI

24 plans, 750,000 beneficiaries

BIST 50 Sustainability Index

Included in Leading Sustainability Indices

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Thank you!

CCI Investor Relations Tel : +90 216 528 4000 Fax: +90 216 510 7010 CCI-IR@cci.com.tr www.cci.com.tr

Borsa Istanbul: CCOLA.IS - Bloomberg: CCOLA TI - Reuters: CCOLA.IS ADR-OTC: COLAY

  • Eurobond - Irish Stock Exchange: CCOLAT