Investor Presentation May 2019 PUBLIC PUBLIC Forward-Looking - - PowerPoint PPT Presentation

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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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Investor Presentation

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.

Forward-Looking Statements

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Agenda

Overview of CCI 1Q19 Highlights Strategic Priorities Financial Highlights Appendix 4 8 14 23 33

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Agenda

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

Highlights

Overview

  • f CCI
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The 6th Largest Bottler in the Coca- Cola System, Operating in 10 Countries

KAZAKHSTAN KYRGYZSTAN TAJIKISTAN TURKMENISTAN AZERBAIJAN TURKEY IRAQ JORDAN SYRIA PAKISTAN

  • ~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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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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Agenda

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

2018 Highlights

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

  • f the past 6 years

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

1Q19 Highlights

Solid revenue and EBITDA growth

1Q19 Grrowth YoY Margin 1Q 2019 Highlights

  • 1.8%

21.6% 9.9% Volume Net Revenue EBITDA

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11 1Q 2019 Highlights

Strong Momentum in Stills

SPARKLING STILLS WATER NRTD TEA

11.5%

  • 1.8%

21.4%

14.1%

6.0%

6.3%

21.4%

  • 18.5%

% in Total Mix (1Q19)*

TOTAL

12.4%

  • 1.8%

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%

  • 1.2%

6.3% 2018

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Turkey: Focus on quality growth algorithm

1Q 2019 Highlights

  • Smart pricing with a focus on affordability
  • New on-premise account
  • Higher portfolio availability in growing channels

* EBITDA excluding other operating income/expense

+2.8% +12.4%

Sparkling growth YoY Stills growth YoY

  • 1.5%

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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International: Challenging market conditions

1Q19 UC Volume Growth YoY 1Q 2019 Highlights

  • Pakistan: Continued market share gains in a

double-digit contracting market

  • Central Asia: 19% growth in Kazakhstan; 26% in

Azerbaijan

  • The Middle East: Unfavorable weather and

increased competion in Iraq; macroeconomic slowdown in Jordan

Roar +19%

Launched in Pakistan Kazakhstan growth YoY

7.1% 18.7% 8.2%

  • 8.2%

10.5%

  • 7.7%

Pakistan Central Asia Middle East

1Q18 1Q19 1Q18 1Q19 1Q18 1Q19 19% excl. Turkmenistan

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Agenda

Overview of CCI X 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 C E CCI CI

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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

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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More Room to Diversify Product Portfolio

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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More Room to Grow…

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

~60% ~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

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Prudent Approach to Geographical Expansion

  • Management control & full consolidation rights
  • Reasonable proximity
  • Similar 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

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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

Strategic Priorities

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Agenda

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.

Summary financials

*EPS in TL per 100 shares

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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) 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

  • 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

Hedging FX exposure related to raw material...

Financial Highlights

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9.3 9.8 1Q18 1Q19

Disciplined Financial Management

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

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)

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

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

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

FCF - Prudent Capital Expenditure

Financial Highlights

7.1%

  • n

average

CapEx / NSR*

Full Year

  • TL 858 million CapEx in 2018
  • 62% related to International operations
  • 38% related to Turkey Operation

*Net Sales Revenue

2.0% 1.6% 1Q18 1Q19

Quarter (Annualized)

  • TL 179 million CapEx in 1Q19
  • 65% related to International operations
  • 35% related to Turkey Operation
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Solid Free Cash Flow Generation

Financial Highlights

6% 6% 10%

EBITDA Growth

Prudent CapEx Working Capital Efficiency

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 Mcap

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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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1 FX-Neutral: Using constant FX rates when converting country financial statements to TL.

2019 Guidance

  • Sales Volume:
  • 3%-5% growth on a consolidated basis
  • Flat volume in Turkey
  • 6%-8% growth in international operations
  • Net revenue growth:
  • 16%-18% on a consolidated basis (FX-neutral1)
  • EBITDA Margin:
  • Slight improvement on a consolidated basis
  • Capex/Sales: 7%-8% (on a comparable basis)
  • Net debt/ EBITDA: Lower than 1.5x (on an FX-neutral1 and organic basis)

Financial Highlights

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Agenda

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**

Medium-Term Outlook

*Comparable ** Organic and FX-neutral

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Dividends

Dividend per Share (TL per 100 shares)

  • Record high dividends in 2018
  • A total of TL 280 million in dividends in the last 3 years
  • 2018 dividend - TL 300 million - was approved by

General Assembly, will be paid starting from May 31,2019

  • 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: 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%

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