PUBLIC
INVESTOR PRESENTATION
October 2018
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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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.
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Overview of CCI Opportunities Strategy Region Highlights Financial Highlights
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✓ 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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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
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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
REVENUE
CAGR 2005-2017
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
GROWTH YOY MARGINS
3,2% 4,9% 3,9% 4,1% 20,9% 26,2% VOLUME NET REVENUE EBITDA
FY16 FY17
growing bottler in the Coca-Cola System*
*Across top the Coca-Cola System Bottlers
million TL
Record high
FCF
Overview of CCI 7
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9,5% 23,4% 29,3%
GROWTH YOY 14,5% 19,4% 35,9% 16,2% 20,3% 36,6%
EBIT EBITDA GROSS PROFIT
2Q17 2Q18
MARGIN
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
…with35 mn UC incremental volume in 2Q18
TURKEY
2Q18 Growth YoY
INTERNATIONAL
184 191 212 2Q16 2Q17 2Q18
Volume Contribution YoY
Million UC
Volume (mn UC)
2Q18 Growth YoY 1H18 Growth YoY 1H18 Growth YoY 9 Overview of CCI
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VOLUME GROWTH, YOY
FY17
TURKEY CENTRAL ASIA MIDDLE EAST & PAKISTAN
Volume contribution of regions, 2017
13 % 37 % 50 %
Overview of CCI 10
2Q18 1H18
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VOLUME GROWTH, YOY
FY17
2Q18
SPARKLING NRTD TEA STILLS
Volume contribution of categories, 2017
WATER
9% 6% 71% 14%
Overview of CCI 11
1H18
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Source: UN | 2017-2020
NARTD servings
urban % 2017
below age 30
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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
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
8% CAGR
2017- 2020E
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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Outlet Penetration*
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
COOLERS
73% 73%
COVERAGE
HOUSEHOLD PENETRATION
~50 ~50%
OCCASIONAL USERS
GENERATING
18 18% % OF
VOLUME**
Monthly**
Opportunities 15
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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
lation in in CCI I countries
Teen Recruitment Opportunit ity!
* Based on CCI analysis for Turkey operations
NSR per case
~1.5x
higher Gross Margin vs. FC
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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
Community
Being a good corporate citizen
People
Great place to work
CREATE VALUE
Be the Best FMCG Company Across
Strategy 18
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Accelerate Growth Win at the Point of Sale Exercise Financial Discipline Win with People
Management (RGM)
improvements
“OnePeople”
ONE C E CCI CI
Strategy 19
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Towards Vision 2025 Business Excellence
Fix Foundation for Real Value Creation Build New (CCI 3.0) Operating Model
Strategy 20
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ORGANIC GROWTH INORGANIC GROWTH DELEVERAGING SHAREHOLDER RETURN
CapEx/Sales ~7% - 8% (2018E)
Bolt-on acquisitions Geographical expansion
Optimum debt repayment
metrics Sustainable dividend policy
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
Grow Scale
Grow Leadership
Build Future
Grow Leadership
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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Strategy
Turkey 50% Pakistan 25% Kazakhstan 9% Iraq 9% Others 7% Turkey 81% International 19% 2006
2017
Volume Breakdown Guiding principles for geographical expansion
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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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*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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✓ 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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Focus on profitable growth continues
three-brand strategy
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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Double-digit growth in key markets
2Q18 Unit Case Volume Growth YoY
13,4% 31,6%
Kazakhstan Azerbaijan
consumer promotions
Region 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%)
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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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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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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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%
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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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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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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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
% of consolidated debt, as of end 2Q18
successfully refinanced in Sep’17
currency
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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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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Dividend per Share (TL per 100 shares)
years
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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Coke 38% Impacted Categories* 26% Water, NRTD Tea & other 36%
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
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TURKEY VOLUME BREAKDOWN (2017) OUR ACTION PLAN TO MITIGATE TAX IMPACT
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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
Azerbaijan 17,400 10 49% 26 75% 3% Jordan 12,500 10 64% 49
Turkmenistan 18,700 6 58% 51 61% 1% Kyrgyzstan 3,700 6 59% 35 68% 1% Tajikistan 3,100 9 65% 16
Syria n.a. 18 65% n.a.
% of pop. below 30 years (5) Per cap consumption
CCI’s market share in sparkling (4) Share in CCI’s Volume Country GDP per cap. (USD)
(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
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TR, KZ, PK, IQ 150,000 Youth
880 volunteers, 100,000 beneficiaries
24 plans, 750,000 beneficiaries
BIST 50 Sustainability Index
Included in Leading Sustainability Indices
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CCI Investor Relations Tel : +90 216 528 4000 Fax: +90 216 510 7010 CCI-IR@cci.com.tr www.cci.com.tr
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