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Investor Presentation
May 2019
Investor Presentation May 2019 PUBLIC PUBLIC Forward-Looking - - PowerPoint PPT Presentation
1 Investor Presentation May 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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May 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.
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Overview of CCI 1Q19 Highlights Strategic Priorities Financial Highlights Appendix 4 8 14 23 33
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Overview of CCI 1Q19 Highlights X
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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
Overview
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KAZAKHSTAN KYRGYZSTAN TAJIKISTAN TURKMENISTAN AZERBAIJAN TURKEY IRAQ JORDAN SYRIA PAKISTAN
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
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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
EBITDA
CAGR 2005-2018
REVENUE
CAGR 2005-2018
VOLUME
CAGR 2005-2018
9x 4x 10x
South Iraq in 2012…
Overview
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Overview of CCI X 1Q19 Highlights
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9 4.1% 20.8% 26.2% 6.3% 26.6% 35.7%
Volume Revenue EBITDA 2017 2018
Accelerating quality growth
10.4% 16.4% 11.8% 17.6%
EBIT Margin EBITDA Margin 2017 2018
642 729 730
2016 2017 2018
Accelerating quality growth Continued margin expansion Another year of solid FCF
Delivering on our guidance with strong financial performance
Highest net revenue & EBITDA growth
Revenue Growth Management & effective hedging Focus on working capital and capex efficiency GROWTH YOY MARGIN % TL MILLION 1Q 2019 Highlights
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8.2% 15.9% 31.7% 6.3% 14.4% 31.3% EBIT EBITDA Gross Profit 1Q18 1Q19
Solid revenue and EBITDA growth
1Q19 Grrowth YoY Margin 1Q 2019 Highlights
21.6% 9.9% Volume Net Revenue EBITDA
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11 1Q 2019 Highlights
SPARKLING STILLS WATER NRTD TEA
11.5%
21.4%
14.1%
6.0%
6.3%
21.4%
% in Total Mix (1Q19)*
TOTAL
12.4%
1Q18
1Q19
Unit Case Volume Growth (YoY)
67% 7% 15% 11%
* Totals may not foot due to rounding differences
6.8% 11.6% 6.0%
6.3% 2018
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1Q 2019 Highlights
* EBITDA excluding other operating income/expense
Sparkling growth YoY Stills growth YoY
4.1% 8.0% 20.8% 36.2%
Volume Volume (excl. NRTD Tea) Transactions (excl. NRTD Tea) Net Revenue EBITDA*
1Q19 GROWTH YOY
Cycling 14% in 1Q18
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1Q19 UC Volume Growth YoY 1Q 2019 Highlights
double-digit contracting market
Azerbaijan
increased competion in Iraq; macroeconomic slowdown in Jordan
Launched in Pakistan Kazakhstan growth YoY
7.1% 18.7% 8.2%
10.5%
Pakistan Central Asia Middle East
1Q18 1Q19 1Q18 1Q19 1Q18 1Q19 19% excl. Turkmenistan
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Overview of CCI X Strategic Priorities
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Strategic Priorities
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
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Strategic Priorities
Accelerate Growth Win at the Point of Sale Exercise Financial Discipline Win with People
Management (RGM)
improvements
“OnePeople”
ONE C E CCI CI
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Strategic Priorities
CCI Value Share Opportunity
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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1,428 1,176 1,0881,048 998 942 885 806 779 685 608 577 525 443 339 325 193 53 511 498 391 386 260 234 166 141 84
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
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Sparkling 71% Sparkling 85%
Water 14% NRTD Tea 9% Still 7% Other 15%
2006
2018
SHARE OF LOW/NO CALORIE IN SPARKLING VOLUME (2018) CATEGORY BREAKDOWN Increasing Household Penetration Double-digit growth in No Sugar
&
27% 16% 8% 6% 7% 6% 4% 3% 2% 2% 1% 0.3%
Strategic Priorities
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59% 50% 40% 35% 28% 24%
Asia Pacific North America World Average Europe, Middle East and Africa Latin America CCI
Share of Immediate Consumption (IC) Packages in Sparkling
Young Population in CCI countries
Teen Recruitment Opportunity!
NSR per case
~1.5x
higher Gross Margin vs. FC
Strategic Priorities
* Based on CCI analysis for Turkey operations
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Volume Breakdown Guiding principles for geographical expansion
Strategic Priorities
Turkey 49% Pakistan 26% Kazakhstan 10% Iraq 8% Others 7% Turkey 81% International 19% 2006
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Towards Vision 2025 Business Excellence
Fix Foundation for Real Value Creation Build New (CCI 3.0) Operating Model
Strategic Priorities
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Overview of CCI X Financial Highlights
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Consolidated (million TL) 2018 Change YoY 1Q19 Change YoY Net Sales 10,623 26.6% 2,229 21.6% Gross Profit 3,527 27.2% 698 20.0% EBIT 1,255 43.6% 141 (6.4%) EBITDA 1,871 35.7% 321 9.9% Profit / (Loss) Before Tax 556 32.0% 24 n.m. Net Income/(Loss) 327 37.5% (3) n.m. GP Margin 33.2% 0.2pp 31.3% (0.4pp) EBIT Margin 11.8% 1.4pp 6.3% (1.9pp) EBITDA Margin 17.6% 1.2pp 14.4% (1.5pp) EPS* 1.28 37.5% (0.01) n.m.
*EPS in TL per 100 shares
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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 2019(1)
100%(2) 73% 63%(3)
(1) As of March 2019 (2) For unregulated markets. Iraq, Turkmenistan and Jordan are non-regulated markets. Other countries are regulated market; no hedging through Ldn#5 opportunity. Turkmenistan sugar and resin contracts are excluded. (3) Financial hedging through treasury not possible; only contracting through suppliers.
100 200 300 400 1Q18 1Q19 500 1000 1500 2000 1Q18 1Q19 500 1000 1500 1Q18 1Q19
impact on input costs: Hard currency cash allocation for FX-denominated raw material purchases
raw material purchases is hedged at USD/TRY 3.95
gains due to designation of cash
Hedging FX exposure related to raw material...
Financial Highlights
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9.3 9.8 1Q18 1Q19
Financial Highlights
Accelerating quality growth Net Debt (USD mn) Net Debt / EBITDA Net Interest Coverage
Continued deleveraging Net Debt/EBITDA: ~1.67x Lower Net Interest Expense
618 564 1Q18 1Q19
Covenant < 3.25x
1.62 1.67 1Q18 1Q19
Covenant > 4x
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USD; 33% USD; 33% EUR; 21% EUR; 19% 41% 41% Local Currency; 5% Local Currency; 7%
2018 1Q19 13% 18% 2% 2% 5% 50% 2019 2020 2021 2022 2023 2024
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)
Cross-currency swap & Net Investment Hedging
Maturity Profile
USD 120 mn USPP USD 500 mn Eurobond USD 80 mn USPP
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7.4% 5.7% 4.5% 2016 2017 2018 5.7% 6.0% 1Q18 1Q19
Financial Highlights
4%
2017 15 Days Cash Conversion Cycle 2016 26 Days
26 Days 2018 47 Days 62 Days
DSO DSI DPO
Net Working Capital/NSR* 30 Days 2016 47 Days 51 Days 29 Days 2017 43 Days 57 Days
2018 12 Days
*Net Sales Revenue
Full Year Quarter (Annualized)
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7.3% 5.9% 8.1% 2016 2017 2018
Financial Highlights
7.1%
average
CapEx / NSR*
Full Year
*Net Sales Revenue
2.0% 1.6% 1Q18 1Q19
Quarter (Annualized)
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Financial Highlights
6% 6% 10%
EBITDA Growth
Prudent CapEx Working Capital Efficiency
Free Cash Flow and Yield*
10 46 642 729 730
0.1% 0.5% 7.6% 8.2% 9.4%
0% 2% 4% 6% 8% 10%
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 Mcap
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Financial Highlights
ORGANIC GROWTH Optimum CapEx Allocation
CapEx/Sales ~7%- 8%
(2019E)
INORGANIC GROWTH Selective M&A Strategy
Bolt-on acquisitions Geographical expansion
proximity
DELEVERAGING Debt Repayment
Optimum debt repayment
metrics
SHAREHOLDER RETURN Dividends
Sustainable dividend policy
ratio
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1 FX-Neutral: Using constant FX rates when converting country financial statements to TL.
Financial Highlights
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Overview of CCI X 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**
*Comparable ** Organic and FX-neutral
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Dividend per Share (TL per 100 shares)
General Assembly, will be paid starting from May 31,2019
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: 3.8%*
* Based on market capitalization as of 31st December
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Population (mn)(1) GDP per cap (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%
Source: (1,2) IMF World Economic Outlook (3) CCI and TCCC estimates (4) Nielsen, Canadean
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TR, KZ, PK, IQ 150,000 Youth
1,500 volunteers, 100,000 beneficiaries
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