Coca-cola Icecek A.s. · BIST:CCOLA
Coca-cola Icecek A.s — HSBC's 15th Annual EEMEA & LATAM Conference 2015
32 slides from Coca-cola Icecek A.s's conference presentation, Sep 10, 2015
Slide 1: HSBC's 15th Annual EEMEA & LATAM Conference
HSBC's 15th Annual EEMEA & LATAM Conference 7-10 September, 2015, London
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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
Slide 3: Agenda
1 CCI at a glance 2 Opportunities & Near Term Strategic Priorities 3 Recent performance 34 Long term Prospects
Slide 4: A regional power house...
A regional power house... 5th largest bottler 10 Kazakhstan 1.1 billion UC sales volume countries Turkey AZ Turkmenistan Kyrgyzstan Tajikistan Syria Iraq 24 billion annual servings to 26 plants* Jordan Pakistan 380 million people 10 thousand employees 2 billion of investment 6 billion annual revenue
Slide 5: …continues its successful expansion…
…continues its successful expansion… 2004 2006 2007 2008 2014 Expanding our footprint since 2004 Operating in promising markets 275 mn uc 424 mn uc 480 mn uc 553 mn uc 1.13 mn uc • Favorable demographics • Low per cap consumption • Higher GDP growth prospects Existing country New country Reaching ca
Slide 6: …as one of the largest and fastest growing bottlers…
…as one of the largest and fastest growing bottlers… Coca-Cola HBC Volume: 2.0 bn uc Revenue: USD 8.7 mn Coca-Cola Enterprises* Volume: n.a. Revenue: USD 8.2 bn Coca-Cola Icecek KO Volume Growth Volume: 1.1 bn uc Average (2010-2014) Revenue: USD 2.7 mn 9% 5% 4% 0% -1% Coca-Cola Femsa Volume: 3.4 bn
Slide 7: …and a key component of TCCC bottling system…
…and a key component of TCCC bottling system… Partners in growth… Bottling and production 2nd largest shareholder Sales and distribution Brand ownership Bottler’s and Distribution Concentrate supply Agreements Customer marketing Brand development Channel development Consumer marketing In-outlet exec
Slide 8: …with a successful financial track record
…with a successful financial track record Volume Net Revenues EBITDA (milion uc) (TRL million) Delivering value in the past 10 years… (TRL milion) 5.985 • Volume growth 4x 2.924 • Revenue growth 6x 1.131 962 553 • EBITDA growth 7x 549 275 1.032 3.061 Increasing contribution of 578 142 413 internatio
Slide 9: Opportunities ahead with a superior growth profile…
Opportunities ahead with a superior growth profile… A promising geography with Remarkably lower per capita consumption levels Higher GDP growth prospects and increasing disposable income 60% of population base below 30 years 9
Slide 10: …reflecting favorable demographics & higher GDP growth prospects
…reflecting favorable demographics & higher GDP growth prospects 70 MILLION 380 MILLION NEW CONSUMERS BY 2025 CONSUMERS 48 million new urban population More than 56% will be below 30 2015-2025 Population GDP 18% 6.1% Average CCI Growth World Growth 11% 3.7% Source: UN Population Division, IMF 10
Slide 11: Near term strategic priorities to achieve operational excellence
Near term strategic priorities to achieve operational excellence 11
Slide 12: Continuously improving our execution…
Continuously improving our execution… Cold availability Occasion 70% Brand +5 pp vs. PY Package Price Channel IC mix in SFE portfolio Time in outlet Focus on IC si 30% +28 pp vs. PY transactions si +7pp in +157% 2010-2014 Strike rate in 2010-2014 +23 pp vs. PY Call completion +19 pp vs. PY 12
Slide 13: …while leveraging technology for better OpEx Management…
…while leveraging technology for better OpEx Management… Route to Market Optimization My Cooler CCI Voyage Up to 20% saving (km) Tracing location of 800k coolers Real time volume tracking at 1100 distributors, 700k points of sale 13
Slide 14: …and building a sustainable business with a leading performance
…and building a sustainable business with a leading performance Leader in the System Leader in Transparency Among top bottlers in water and energy savings The 1st & only company in Turkey and in the Coca-Cola system listed under UNGC 100 Index Best Country Bottling Operation Award Winner: Turkey 200
Slide 15: Headwinds in 2015…
Headwinds in 2015… Some negatives in our markets…. Devaluations and weak consumer spending in Central Asia Political instability and deteriorating consumer sentiment in Turkey Upheaval and supply disruptions in North Iraq Intensifying competition in Pakistan A weaker performance in the first half of
Slide 16: …weighing on financial performance…
…weighing on financial performance… Volume (mn UC) Net Revenue (mn TL) EBITDA (mn TL) 2978 +97 +171 3246 517 +65 -52 530 568 -12 +6 562 17.3%* 16.3%* 1H14 TR Int'l 1H15 1H14 TR Int'l 1H15 1H14 TR Int'l 1H15 *EBITDA margin 16
Slide 17: …and resulting in guidance revision
…and resulting in guidance revision Guidance revision Consolidated – Mid-single digit volume growth Turkey – Low single digit volume growth (maintained) International – Mid single digit volume growth Net revenue growth > volume growth Flat to slight contraction in consolidated EBITDA margin, compare
Slide 18: Our long term prospects remain intact
Our long term prospects remain intact Well-equipped to ensure profitable growth…. Successful track record to navigate highly volatile markets Continuous improvement on market execution Focus on OBPPC and efficiency Capability development and local touch in operations ….in our promising markets Remar
Slide 19: Appendix
Appendix • Highlights in the first half - Turkey - Pakistan & Middle East - Central Asia • Top Line Performance • Profitability • Financial Expenses • Financial Debt Profile • Free Cash Flow • Corporate Structure • Country Data • Brands & positions in key markets 19
Slide 20: Highlights in the first half
Highlights in the first half 2Q15 Improved Turkey profitability, supported by strong pricing Weak trading environment and continued pressure on local currencies in Central Asia Higher discounts in Pakistan, depressing net revenue per unit case 1H15 Volume decline by 1%, cycling 10% growth in 1H14 Sp
Slide 21: Turkey profitability improves
Turkey profitability improves Double digit growth in revenue per unit case 1.2 pp improvement in EBITDA margin in 1H15 Successful commercials and campaigns Sparkling transactions outpacing volume figures Strong growth of Coca-Cola Zero and Sprite with 9% and 35% 7% growth of stills, supported juice
Slide 22: Pakistan & Middle East delivers 3% volume growth
Pakistan & Middle East delivers 3% volume growth 6% growth in Pakistan volume in 1H15 5% decline in Iraq volume in 1H15, cycling 11% growth in 1H14 Lower profitability due to intense competition Better than expected volume in North Focus on revenue growth management Slightly declined water volume in
Slide 23: Central Asia volume is flat in 1H15
Central Asia volume is flat in 1H15 Consumer environment continues to be weak in Central Asia Double digits volume contraction in Azerbaijan in 2Q15 Volume growth both in Tajikistan and Turkmenistan Production started in Tajikistan with Dushanbe plant 3% growth in Kazakhstan in 2Q15 following the co
Slide 24: Top Line Performance
Top Line Performance Consolidated 1H15 1H14 Δ% 2Q15 2Q14 Δ% Volume (m/uc) 562 568 (1.1%) 343 344 (0.3%) Net Revenue (TL mn) 3,246 2,978 9.0% 2,043 1,830 11.6% Net Revenue per UC (TL) 5.78 5.24 10.2% 5.95 5.31 12.0% Turkey Volume (m/uc) 285 297 (4.2%) 170 173 (1.4%) Net Revenue (TL mn) 1,639 1,542 6.
Slide 25: Profitability
Profitability* Consolidated 1H15 1H14 Δ% 2Q15 2Q14 Δ% EBIT 348 352 1,0% 272 283 (3,9%) EBIT Margin 10,7% 11,8% 13,3% 15,5% EBITDA 523 512 2,2% 363 363 0,0% EBITDA Margin 16,1% 17,2% 17,8% 19,8% Turkey EBIT 176 148 18.5% 118 100 17.5% EBIT Margin 10,7% 9,6% 11,6% 10,8% EBITDA 244 212 15.3% 152 131 16
Slide 26: Financial Expenses
Financial Expenses (TL million) 1H15 1H14 Interest income 18 22 Interest expense (-) (87) (74) Foreign exchange gain / (loss), net 120 (6) Unrealized FX gain / (loss) - Borrowings (316) 20 Gain / (loss) on derivative transactions (1) 0 Financial Income / (Expense) Net (267) (39) 26
Slide 27: Financial Debt Profile
Financial Debt Profile Financial debt (US$ million) Maturity (US$ million) 1.140 1.164 1% 636 5% 13% 2% 11% EUR TL & JD PKR 86% 82% USD 168 104 120 86 34 15 2014 1H15 2015 2016 2017 2018 2019 2020 2023 Net Debt (US$ million) Net Debt / EBITDA* 2,71x 1H15 2014 Change 1,96x Total Financial Debt 1.164
Slide 28: Free Cash Flow
Free Cash Flow Net Operating Cash Inc. Working Capital (TL Capex (TL mn) Free Cash Flow (TL mn) mn) 286 138 10 1H14 1H15 1H14 1H15 1H14 1H15 -276 -387 -525 28
Slide 29: Corporate Structure
Corporate Structure Coca-Cola İçecek A.Ş. 100.00% Tonus Turkish-Kazakh Joint 100.00% Venture L.L.P, CCI International Holland B.V. Coca-Cola Satış ve Dağıtım The Netherlands 99.97% Kazakhstan A.Ş., Turkey J.V. Coca-Cola Almaty Bottlers 51.23% L.L.P., Kazakhstan 48.77% Mahmudiye Kaynak Suyu 100.00%*
Slide 30: Country Data
Country Data % of pop. GDP per Per cap cons CCI’s Pop. in CCI’s 2014 below 30 cap. in of spark. m.share in Country 2014 Vol. years 2014 bev. in 2014 spark. bev. (mln) (2) Breakdown (2) ($) (3) (L) (4) in 2014 (5) Turkey 77.7 (1) 49% (1) 19,556 41 66% 51.1% Pakistan 185.1 63% 4,746 19 35% 21.2% Kazak
Slide 31: Brands & positions in key markets
Brands & positions in key markets Sparkling 66%, #1 Juice 27%, #1 Water 6%, #2 Sparkling 35%, #2 Juice 2%, #8 Water 8%, #3 Sparkling 29%, #2 Energy Water Sparkling 49%, #1 Juice 8%, #5 Water 9%, #4 31
Slide 32: Ratings & Glossary
Ratings & Glossary Credit Rating Glossary Long Term Issuer Rating, ‘Baa3’, Stable Outlook AFB: Alcohol Free Beverages CAGR: Compound Annual Growth Rate (Moody’s rating, Apr 15, 2014) CMB: Capital Markets Board of Turkey HOD: Home and Office delivery water Foreign Currency Senior Unsecured rating and
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