INVESTOR PRESENTATION July 2018 PUBLIC Forward-Looking Statements - - PowerPoint PPT Presentation

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INVESTOR PRESENTATION July 2018 PUBLIC Forward-Looking Statements - - PowerPoint PPT Presentation

INVESTOR PRESENTATION July 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 and


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INVESTOR PRESENTATION

July 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 11 17 25 29

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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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4.5% 12.4% 30.9% 7.9% 15.1% 32.9% EBIT EBITDA GROSS PROFIT

1Q17 1Q18

Followed by a Solid Start to 2018

12.4% 19.9% 45.7% VOLUME NET REVENUE EBITDA

Q118 GROWTH YOY MARGINS

Overview of CCI 8

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With the Contribution of all Regions +3.3%

VOLUME GROWTH, YOY

+7.0% +4.0%

FY17

+14.0%

1Q18

+18.7% +7.5%

TURKEY CENTRAL ASIA MIDDLE EAST & PAKISTAN

Volume contribution of regions, 2017

13 % 37 % 50 %

Overview of CCI 9

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With the Contribution of all Major Categories +3.3%

VOLUME GROWTH, YOY

+20.9% +8.5%

FY17

+11.5%

1Q18

+21.4% +21.4%

SPARKLING NRTD TEA STILLS

Volume contribution of categories, 2017

WATER

  • 3.2%

+6.0%

9 % 6 % 71 % 14 %

Overview of CCI 10

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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 11

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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 12 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 13

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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 14

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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 15

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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 17

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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 18

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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 19

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Disciplined Capital Allocation

ORGANIC GROWTH INORGANIC GROWTH DELEVERAGING SHAREHOLDER RETURN

CapEx/Sales ~7% - 8%*

  • 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 20

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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 21

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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 continues to deliver healthy growth

14% 20% 24% 44% 53%

Volume Transactions Net Revenue EBITDA EBIT

30%

growth in Sparkling IC packages

✓ Accelerating volume growth led by Sparkling ✓ ~3 pp y-o-y increase in share of IC packs in Sparkling ✓ Successful launch of ‘Coca-Cola No Sugar’ and ‘Fanta C’ ✓ Growth in Stills driven by 58% growth in Ice Tea

51%

growth in Low/No Calorie

13%

growth in Fanta

✓ Smart pricing ✓ Promotion

  • ptimization

Delivering on our strategic growth algorithm

1Q18 GROWTH YOY

26 Region Highlights

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Positive momentum in Middle East & Pakistan

7.1% 9.2% 2.8%

Pakistan Iraq Jordan

Region Highlights

✓7.5% volume growth ✓~80% rise in EBITDA through efficient trade

discount management

✓84 mn UC capacity increase with Faisalabad

plant in Pakistan

UNIT CASE VOLUME GROWTH 1Q18 YOY

9.4% y-o-y growth in 1Q17 3.1% y-o-y growth in 1Q17 7.6% y-o-y growth in 1Q17 27

GLOBAL BRAND LOVE SCORE

1

#

2

#

GLOBAL TEEN RECRUITMENT 1

#

Pakistan

Region Highlights

Focus on profitable volume growth

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Cycling strong growth in Central Asia

23.3% 42.4%

  • 0.5%

Kazakhstan Azerbaijan Others

Region Highlights

✓Double-digit growth in all categories ✓More than doubling operating profit ✓Accelerated cooler injection ✓Kazakhstan:

  • Highest ever volume & value share in the

Sparkling category

  • Gaining value leadership in Fuse Tea

✓Azerbaijan recorded highest ever first quarter

volume

  • Volume decline due to

currency convertibility issue in Turkmenistan

  • 23% growth in

Kyrgyzstan and Tajikistan 11.5% y-o-y growth in 1Q17 37.0% y-o-y growth in 1Q17 13.0% y-o-y decline in 1Q17

Double-digit growth in key markets

UNIT CASE VOLUME GROWTH 1Q18 YOY

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Financial Highlights

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Net Sales Revenue 7,050 8,521 20.9% 1,556 1,866 19.9% Gross Profit 2,392 2,901 21.3% 481 614 27.5% EBIT 641 874 36.4% 69 148 114.0% EBITDA 1,093 1,379 26.2% 194 282 45.7% Net Income / (Loss) (28) 238 n.m. (86) (46) 46.5% GP Margin 33.9% 34.0% 10 bps 30.9% 32.9% 200 bps EBIT Margin 9.1% 10.3% 120 bps 4.5% 7.9% 350 bps EBITDA Margin 15.5% 16.2% 70 bps 12.4% 15.1% 270 bps EPS* (0.11) 0.93 n.m. (0.34) (0.18) 46.5%

Summary financials

Financial Highlights

*EPS in TL per 100 shares

EBITDA Net Revenue Volume growth 1Q17 1Q18 YoY Change

TL Million

2016 2017 YoY Change

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Expanding EBITDA margin

EBITDA MARGIN 1Q18 VS. 1Q17

12.4% 15.1% 3.5% 4.0% (4.9%)

1Q17 Volume Leverage Revenue Leverage FX & input costs 1Q18 Financial Highlights 31

15.5% 16.2% 1.4% 3.7% (4.4%)

FY16 Volume Leverage Revenue Leverage FX & input costs FY17

EBITDA MARGIN FY17 VS. FY16

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Effective Cost Management - Input Costs

Sugar Prices* Resin Prices** Aluminium Prices**

2015 2016 2017 2015 2016 2017 2015 2016 2017 *Sugar price in Turkey, TL/tonne **World reference prices, USD/tonne

~ 30% Packaging ~ 30% Sugar & Sweetener ~ 30% Concentrate

Raw material 85% Other 15%

  • Aluminum
  • PET Resin
  • Effective hedging on key raw materials
  • Cash Designation mechanism in place to

manage raw material related FX exposure

Financial Highlights 32

Breakdown of COGS

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Net income supported by EBITDA growth

(86) (46) 88 (4) (40) (13) (4) (0.5) 13

1Q17 ∆ in EBITDA ∆ in D&A* ∆ in FX gain/ (loss) ∆ in

  • ther

financial inc./ (exp.) ∆ in

  • ther

inc./ (exp.) ∆ in minority ∆ in tax 1Q18

TL million

Financial Highlights 33

NET INCOME 1Q18 VS. 1Q17 NET INCOME FY17 VS. FY16

  • 28

238 286 (73) 43 8 86 7 (91)

FY16 ∆ in EBITDA ∆ in D&A* ∆ in FX gain/ (loss) ∆ in

  • ther

financial inc./ (exp.) ∆ in

  • ther

inc./ (exp.) ∆ in minority ∆ in tax FY17 impairment TL 54m in FY16

*Depreciation & amortization

TL million

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Solid Free Cash Flow Generation

6% 6% 10%

EBITDA Growth

Prudent CapEx Working Capital Efficiency

(TL mn) 2015 2016 2017

EBIT EBITDA 1,051 051 1,093 093 1,379 379 Ca Cap/Ex p/Ex 829 829 517 517 499 499 Chang Change in N e in NWC 13 13 201 201 3

46 642 729

2015 2016 2017 2018E

Free Cash Flow (TL mn)

Financial Highlights 34

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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 35

1.6% 2.0%

1Q17 1Q18

CapEx / NSR* CapEx Breakdown (2017)

FULL YEAR QUARTER**

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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 8.9% 5.6% 1Q17 1Q18 FULL YEAR QUARTER**

Financial Highlights

**Annualized

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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

691 576

1Q17 1Q18

2.22 1.55

1Q17 1Q18

6.7 9.3 1Q17 1Q18

Financial Highlights 37

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Financial Strength – Balance Sheet Hedging

USD 63% EUR 20% Local Currency 3% Local Currency (Hedged portion

  • f USD debt)

14%

  • Participating cross-currency swap
  • Fixed semi-annual interest payments @ 3,80 USD/TRY until 2024
  • Principal payment:
  • Total TRY interest cost is ~12% for 7 years
  • Monitoring for further hedging opportunities

@3,80 If USD/TRY... @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)

Breakdown of Financial Debt (1Q18) Hedging Transaction for USD 150 mn

Financial Highlights 38

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Improving Return Metrics

ROIC ROE ROA

ROIC

10.2% 9.1% 12.0% 2015 2016 2017 2018E 3.5%

  • 0.7%

8.3% 2015 2016 2017 2018E 1.5%

  • 0.3%

2.2% 2015 2016 2017 2018E

ROIC

Significant increase in 2017 Sole metric in management long term incentive plan 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 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

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