Investor Presentation September 2019 PUBLIC PUBLIC - - PowerPoint PPT Presentation

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Investor Presentation September 2019 PUBLIC PUBLIC - - PowerPoint PPT Presentation

1 Investor Presentation September 2019 PUBLIC PUBLIC Forward-Looking Statements 2 This presentation includes forward-looking statements including, but not limited to, statements regarding Coca- Cola eceks (CCI) plans, objectives,


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Investor Presentation

September 2019

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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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Agenda

Overview of CCI 2019 YTD Highlights Strategic Priorities Financial Highlights Appendix 4 11 17 25 35

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Agenda

Overview of CCI

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Proven track record of expansion & growth in emerging markets Presence in large and growing markets, compelling NARTD* growth opportunity in our footprint Abundant potential in demographics Strategy, Execution and People to accelerate quality growth Disciplined financial management to deliver stakeholder value Strong System alignment and unique long-term relationship with TCCC

We have the capabilities for further growth

Overview

  • f CCI

*Non-alcohol ready-to-drink

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We are the 6th largest bottler in the Coca-Cola System

KAZAKHSTAN KYRGYZSTAN TAJIKISTAN TURKMENISTAN AZERBAIJAN TURKEY IRAQ JORDAN SYRIA PAKISTAN

  • 10 countries, ~400 mn people
  • 26 production plants with 124 lines (2018)
  • 1.5 bn UC(1) annual production capacity
  • ~920 thousand sales points
  • 1.3 bn UC sales volume
  • $ 2.3 bn revenue & $ 395 mn EBITDA

44% 23% 12% 21% Turkey Pakistan Kazakhstan Others

Revenue Breakdown (2)

36% 64% Turkey International

EBITDA Breakdown (2)

49% 26% 10% 8% 7% Turkey Pakistan Kazakhstan Iraq Others

Volume Breakdown (2)

Sparkling Market Position

#1 #2 #1 #2

Figures reflect FY 2018 numbers unless otherwise stated (1) Unit case, 1 UC equals 5,678 liters (2) As of FY2018

Overview

  • f CCI
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…with a successful track record of growth

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 1,315 mn UC

19%

EBITDA

CAGR 2005-2018

18%

REVENUE

CAGR 2005-2018

12%

VOLUME

CAGR 2005-2018

9x 4x 10x

South Iraq in 2012…

Overview

  • f CCI
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  • 642

729 730

Cumulative 2005-2015 2016 2017 2018

Rising performance…

Overview

  • f CCI

13% 4% 6% 18% 21% 27% 17% 26% 36%

CAGR (2005-16) 2017 2018*

Volume NSR EBITDA

Solid Free Cash Flow

Growth TL million 2018: Highest net revenue & EBITDA growth

  • f the past 6 years

2018: Highest free cash flow

Accelerating Quality Growth

*Includes TFRS 15 adjustments

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…with the right focus

Right Price Right Mix Right Portfolio

IC Portfolio Availability Optimum price/pack architecture

IC Share ↑ 5 pts

in Turkey in last 5 years Regional Strategies Effective discount and trade promotion management

NSR > PCE growth

Portfolio expansion Portfolio innovation Portfolio diversification

Right Channel

Channel prioritization Clear channel roles & objectives Segmented execution

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…and excellence in execution

Outlet Coverage (as of April’19) Strike Rate*** (as of June’19) Call Completion Rate** (as of June’19) Time in Field* (as of June’19)

75%

+4pts vs 2015

91%

+13pts vs 2015

69%

+7pts vs 2015

91%

+6pts vs 2015

Over 1 million coolers ~118K new placements in 4 years

(as of Apr’19)

Superior Execution: Be Available, Be Cold, Be Visible

*Time in Field: Percentage of time spent on the field vs. total working hours **Call Completion Rate: Percentage of realized visits vs. planned ***Strike Rate: Percentage of invoiced customers vs. planned

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Agenda

2019 Year-to-Date Highlights

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Delivering quality growth in 2Q19

2Q19 YoY Growth

1,8% 3,9% 24,7% 25,5%

Volume Transactions (excl. NRTD Tea) Net Sales EBITDA 3.7% yoy increase exlc. NRTD tea

0,4% 3,0% 23,6% 20,6%

Volume Transactions (excl. NRTD Tea) Net Sales EBITDA 2.5% yoy increase exlc. NRTD tea

1H19 YoY Growth

2019 YTD Highlights

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Continued strong momentum

SPARKLING STILLS WATER NRTD TEA

11.8%

1.9%

4.1%

20.9%

4.1%

  • 1.7%

9.1%

5.2%

4.4%

  • 1.1%
  • 19.9%
  • 21.5%

% in Total Mix (1H19)*

TOTAL

10.6%

0.4%

1.8%

1H18

1H19

(2Q19)

Unit Case Volume Growth (YoY)

72% 7% 14% 8%

* Totals may not foot due to rounding differences

6.8% 11.6% 6.0%

  • 1.2%

6.3% 2018

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14 0,1% 4,2% 5,0% 23,1% 62,7%

Volume Volume (excl. NRTD Tea) Transactions (excl. NRTD Tea) Net Revenue EBITDA*

Turkey: On track for quality growth algorithm

* Excluding other operating income/expense

Cycling 8% in 2Q18

2Q19 Growth yoy

Highest ever sparkling cases in 1H19 +5.7% yoy in 2Q19 in Sparkling category

  • +7.9% yoy in IC volume
  • +7.5% yoy in trademark Coca-Cola

New accounts and new SKU listings Continued cooler placements

RGM

How Turkey system turned crisis into

  • pportunity

Best all around the World

Emerging out of the clear air turbulence stronger

Discounter

A Paradigm Shift in Customer Management

Proud to be the Best

#1 in 3 categories in Global Customer & Commercial Leadership Awards

2Q 2019 Highlights

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Central Asia: Robust performance for 11th consecutive quarter

9,0% 10,5% 17,3% 2Q18 1Q19 2Q19

▪ 10th consecutive quarter of double-digit growth ▪ All categories grew over 30% in 2Q19 ▪ 11th consecutive quarter of volume growth ▪ Growth in all categories ▪ Strong consumer activations and cooler placements

32% 26% 37% 2Q18 1Q19 2Q19

Azerbaijan

UC Volume Growth yoy 13% 19% 17% 2Q18 1Q19 2Q19

Kazakhstan

UC Volume Growth yoy

excl Turkmenistan

19.6%

UC Volume Growth yoy

Central Asia

2Q 2019 Highlights

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16 12,0% 10,6%

  • 8,2%
  • 7,7%
  • 1,8%
  • 0,7%

▪ 3.1% volume growth in Iraq in 2Q19 driven by trademark Coca-Cola ▪ Increasing cooler placements and outlet coverage ▪ Continued focus on improving route-to-market in Jordan ▪ Challenging macro conditions pressuring top-line growth ▪ Increasing availability of top SKUs and outlet coverage ▪ Continued focus on improving route-to-market

Pakistan and Middle East: Improving performance in a challenging environment

Pakistan Middle East

2Q18 2Q19

Pakistan & Middle East

1Q19 2Q18 2Q19 1Q19 Pakistan Middle East UC Volume Growth yoy 2Q 2019 Highlights

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Agenda

Strategic Priorities

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Clear strategic framework

Strategic Priorities

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

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Strategic priorities to create value

Strategic Priorities

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 CCI

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NARTD value growth opportunity

Strategic Priorities

CCI Value Share Opportunity

+$4bn

9% CAGR

2018- 2021E

8% 9% 51% 29%

WATER STILLS SPARKLING NARTD

INDUSTRY VALUE GROWTH

TOTAL NARTD INDUSTRY IN CCI COUNTRIES: $13BN (2018)

Source: Nielsen, Canadean and internal estimates, data as of 2018

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Lower per caps in CCI countries

NARTD per cap*

CCI's Share

CCI average: 291 Strategic Priorities

Source: TCCC and Canadean Estimates * 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

1,428 1,176 1,0881,048 998 942 885 806 779 685 608 577 525 511 498 443 391 386 339 325 260 234 193 166 141 84 53

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More room to diversify product portfolio

27% 16% 8% 6% 7% 6% 4% 3% 2% 2% 1% 0,3% North America EMEA Latin America Asia Pacific Turkey Tajikistan Azerbaijan Jordan Kazakhstan Kyrgysztan Iraq Pakistan

Strategic Priorities

Sparkling 71%

Sparkling 85%

Water 14% NRTD Tea 9% Still 7%

Other 15% 2006

2018 Increasing Household Penetration Double-digit growth in No Sugar

&

Share of Low/No Calorie in Sparkling Volume (2018) Category Breakdown

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More room to grow…

59% 50% 40% 35% 28% 24%

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

Young Population in CCI countries

~60%

Teen Recruitment Opportunity!

~2x higher

NSR per case

~1.5x

higher Gross Margin vs. FC

Strategic Priorities

* Based on CCI analysis for Turkey operations

Share of Immediate Consumption (IC) Packages in Sparkling

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Prudent approach to geographical expansion

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

Volume Breakdown Guiding principles for geographical expansion

Strategic Priorities

Turkey 49% Pakistan 26% Kazakhstan 10% Iraq 8% Others 7% Turkey 81% International 19%

2006 2018

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Agenda

Financial Highlights

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Summary financials

Numbers include TFRS 15 and IFRS 16 adjustments *EPS in TL per 100 shares

Consolidated (million TL) 2018 Change 1H19 Change 2Q19 Change Net Sales 10,623 26.6% 6,117 23.6% 3,888 24.7% Gross Profit 3,527 27.2% 2,078 22.4% 1,380 23.6% EBIT 1,269 43.8% 751 12.7% 610 18.3% EBITDA 1,919 35.5% 1,141 20.6% 820 25.5% Profit / (Loss) Before Tax 546 31.4% 473 88.7% 449 57.6% Net Income/(Loss) 321 36.1% 409 200.5% 411 122.1% GP Margin 33.2% 0.2pp 34.0% (0.3pp) 35.5% (0.3pp) EBIT Margin 11.9% 1.4pp 12.3% (1.2pp) 15.7% (0.9pp) EBITDA Margin 18.1% 1.2pp 18.7% (0.5pp) 21.1% 0.1pp EPS* 1.26 36.1% 1.61 200.5% 1.62 122.1%

Financial Highlights

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Hedging status

World Sugar Prices

(London#5 Average, USD/tonne)

Resin Prices

(Average, USD/tonne)

LME Aluminium Prices

(Average, USD/tonne) Hedged Position for 2019(1)

100%(2) 85% 82%(3)

(1) As of July 2019 (2) For non-regulated markets. Iraq, Turkmenistan and Jordan are non-regulated markets. As sugar market is regulated in other countries there is no hedging

  • pportunity through Ldn#5. Turkmenistan sugar contracts are excluded.

(3) Hedging through contracting with suppliers.

100 200 300 400 1H18 1H19 500 1000 1500 2000 1H18 1H19 500 1000 1500 1H18 1H19

✓ Cash designation in place to manage FX

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

✓ 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

Managing FX exposure related to raw materials...

Financial Highlights

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8,8 10,2 1H18 1H19

Disciplined financial management

Financial Highlights

Accelerating quality growth Net Debt (USD mn) Net Debt / EBITDA Net Interest Coverage

Continued deleveraging FX-Neutral Net Debt/EBITDA: ~1.59x Increasing EBIT

Covenant < 3.25x

1,91 1,61 1H18 1H19

Covenant > 4x

691 577 1H18 1H19

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29 USD; 75% USD; 33% 34% EUR; 23% EUR; 21% EUR; 20% 41% 43%

2017 2018 1H19 8% 18% 2% 2% 16% 53% 2019 2020 2021 2022 2023 2024

Continued focus on balance sheet FX exposure

Financial Highlights

Breakdown of Consolidated Debt

Participating cross-currency swap transaction for USD 150 mn Net investment hedging for USD 281 mn Repayment of USD 100 mn USPP (May 2018) Repayment of USD 500 mn Eurobond (October 2018) Participating cross-currency swap & Net Investment Hedging

Maturity Profile

USD 120 mn USPP USD 500 mn Eurobond USD 80 mn USPP Local Currency;

2%

Local Currency;

5%

Local Currency;

3%

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7,4% 5,7% 4,5% 2016 2017 2018 10,2% 6,4% 1H18 1H19

FCF - Improving working capital efficiency

Financial Highlights

4%

2017 15 Days Cash Conversion Cycle 2016 26 Days

26 Days 2018 47 Days 62 Days

DSO DSI DPO

30 Days 2016 47 Days 51 Days 29 Days 2017 43 Days 57 Days

2018 12 Days

*Net Sales Revenue

Full Year Half-Year (Annualized)

Net Working Capital/NSR*

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7,3% 5,9% 8,1% 2016 2017 2018

FCF - Prudent capital expenditure

Financial Highlights

7.1%

  • n

average

Full Year

  • TL 858 million CapEx in 2018

✓ 62% related to International operations ✓ 38% related to Turkey Operation

*Net Sales Revenue

4,7% 3,9% 1H18 1H19

Half-Year (Annualized)

  • TL 460 million CapEx in 1H19

✓ 64% related to International operations ✓ 36% related to Turkey Operation

CapEx / NSR*

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EBITDA Growth

Prudent CapEx Working Capital Efficiency

Solid free cash flow generation

Financial Highlights

6% 6% 10%

Free Cash Flow and Yield*

  • 44

10 46 642 729 730

  • 0,3%

0,1% 0,5% 7,6% 8,2% 9,4%

  • 2%

0% 2% 4% 6% 8% 10%

  • 100

100 200 300 400 500 600 700 800

2013 2014 2015 2016 2017 2018

FCF (TLmn) FCF Yield *Free cash flow yield based on year-end market capitalization

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Disciplined capital allocation

Financial Highlights

Organic Growth Optimum CapEx Allocation

CapEx/Sales ~7%- 8%

(2019E)

  • Capacity Expansion
  • Cold drink equipment
  • Maintenance

Inorganic Growth Selective M&A Strategy

Bolt-on acquisitions Geographical expansion

  • Strategic fit
  • Value creation
  • Reasonable

proximity

Deleveraging Debt Repayment

Optimum debt repayment

  • Solid balance sheet
  • Improving leverage

metrics

Shareholder Return Dividends

Sustainable dividend policy

  • Increasing payout

ratio

  • Higher dividend yield
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2019 Guidance

2019 Guidance- Old 2019 Guidance- New Sales Volume 3%-5% growth on a consolidated basis 1%-3% growth on a consolidated basis Flat volume in Turkey Flat to slightly positive in Turkey 6%-8% growth in international operations 2%-4% growth in international operations Net Revenue 16%-18% on a consolidated basis (FX-neutral1) maintained EBITDA Slight improvement on a consolidated basis maintained Capex/Sales 7%-8% (on a comparable basis) maintained Net Debt/EBITDA Lower than 1.5x (on an FX-neutral1 and organic basis) maintained

Financial Highlights

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Agenda

Appendix

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

Medium-Term Outlook

*Comparable ** Organic and FX-neutral

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Dividends

  • Record high dividends in 2018
  • A total of TL 280 million in dividends in the last 3 years
  • TL 300 million paid in 2018
  • Dividend amount based on:

✓ Net distributable income ✓ Free cash flow generation ✓ CapEx and other funding needs for growth ✓ Prevailing macroeconomic conditions

0,12 0,2 0,79 1,18

2015 2016 2017 2018

Dividend Yield: 0.3% Dividend Yield: 0.5% Dividend Yield: 2.1% Dividend Yield: 4.3%

Dividend per Share

(TL per 100 shares)

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Population (mn)(1) GDP per cap, PPP (USD 000)

(2)

Per capita NARTD consumption (3) CCI's Market Share in Sparkling (4) CCI's Market Position in Sparkling Capacity (mn UC) Capacity Utilization Rate Turkey 82 28,3 58 65% 1 684 78% Pakistan 201,0 5,7 27 42% 2 408 79% Kazakhstan 18,5 27,5 79 51% 1 162 78% Iraq 39,8 16,9 51 43% 2 147 75% Azerbaijan 9,9 18 37 74% 1 59 68% Jordan 9,9 9,4 45 24% 2 35 47% Turkmenistan 5,8 19,5 28 n.a. n.a. 23 43% Kyrgyzstan 6,4 3,8 37 69% 1 16 109% Tajikistan 9,1 3,4 16 n.a. n.a. 18 25%

Country data - 2018

Source: (1,2) IMF World Economic Outlook (3) CCI and TCCC estimates (4) Nielsen, Canadean

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Sustainability

3.2.1 MOVE!

TR, KZ, PK, IQ 150,000 Youth

CCI VOLUNTEERS

1,500 volunteers, 100,000 beneficiaries

PAANI

28 plants, 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