Download London Roadshow, 6-7 March 2017

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Investor Presentation
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 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 successfuly 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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Agenda
Introduction & Strategy
2016 Volume Performance
2016 Financials
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A regional powerhouse...
TL 7 bn annual
revenue
24 plants
1.4 bn uc annual
production capacity
TL 1.1 bn annual
EBITDA
5th largest bottler
1.2 bn UC sales
volume
26 bn annual servings
380 million people
10 countries
4
...expanding with a diversifying portfolio
Category Breakdown
Geographical Breakdown
Geographical Breakdown
Tea 8%
Other
15%
Turkey
81%
Water
15%
Pakistan
25%
Kazakhstan
8%
Iraq 8%
Others 8%
2006
Still 6%
2016
Sparkling 85%
Sparkling 71%
2006
2016
International 19%
Turkey
51%
17 brands
44 flavors
34 brands
150 flavors
424 mn uc
Sales volume
1189 mn uc
Sales volume
5
CCI is the fifth largest bottler today...
Coca-Cola European Partners*
Revenue: USD 11.4 bn
Coca-Cola HBC
Volume: 2.0 bn uc
Revenue: USD 6.9 bn
Coca-Cola Icecek
Volume: 1.2 bn uc
Revenue: USD 2.3 bn
Coca-Cola Femsa
Volume: 3.3 bn uc
Revenue: USD 9.5 bn
Coca-Cola Arca
Volume: 1.7 bn uc
Revenue: USD 5.0 bn
Coca-Cola Andina
Volume: 779 mn uc
Revenue: USD 2.9 bn
Coca-Cola Beverages
Africa**
Volume: 0.7 bn uc
Revenue: USD 2.9 bn
*CCEP revenue is based on Bloomberg FY16 estimates.
**CCBA data reflects 2014 numbers
Source: Bloomberg, Company websites, TCCC, 2016 Revenue and volume figures
Coca-Cola Amatil
Volume: 618 mn uc
Revenue: USD 3.9 bn
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...as opportunites are ahead with low per cap consumption...
180
Per Cap Consumption (lt) (2015)
160
USA
Mexico
140
Relatively low per
capita consumption
across our territories
Argentina
120
Germany
100
South Africa
Spain
80
UK
Bulgaria
60
40
Kyrgyzstan
20
Jordan
Turkey
Iraq
Turkmenistan
Egypt
Pakistan
Tajikistan
Afghanistan
0
0
10,000
Azerbaijan
20,000
#4 Saudi Arabia
Hungary
Poland
Kazakhstan
Greece
Oman
Sparkling beverage
consumption to
increase with GDP per
capita
Italy
Russia
30,000
40,000
50,000
60,000
GDP per capita ($)
7
... and favorable demographics
70 MILLION
NEW CONSUMERS BY 2025
380 MILLION
CONSUMERS
2016-2025
Population
Average Growth in CCI
Territory
16%
World Growth
10%
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We win in the marketplace...
Selectively Expand Stills
Grow Sparkling
Availability
Affordability
Acceptability
Win,
build,
participate
Activation
Prioritize Value Management
Commercial
Success
Win at the Point of Sales
SFE
Data Standardization
RTM
RED
Opportunity Mapping
CDE Management
OBPPC
Pricing, Terms, Conditions
Promo Spend
Revenue
Growth
Management
Leverage Technology
E-Commerce
SFA
Develop &
Improve
Commercial
Capabilities
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and create shareholder value
CAGR 2009-2016
Optimum
capital
structure
Net Debt /EBITDA
1.9 x
Average 2009-2016
2016
2015
2014
2013
2012
2011
2010
25% in 2016 vs.
28% in 2009
2009
2016
2014
2013
2012
2011
2010
10%
Average 2009-2016
CAGR 2009-2016
OPEX/Sales
CapEx/Sales
2009
Cost
efficient
expansion
EBITDA
17%
CAGR 2009-2016
2015
Profitable
growth
Revenue
17%
Volume
11%
Investment
grade credit
ratings
M&A
opportunites
10
Volume growth in another challenging year
• Weak consumer sentiment &
tourism activity in Turkey
Turkey Volume
• Strong volume growth in Pakistan
Consolidated Volume
+ 3.2%
• Gradual recovery in Central Asia
• Difficult macroeconomic
conditions and ongoing security
issues in Iraq
International Volume
+ 1.4%
593
+ 5.2%
601
1152
1189
588
559
2015
2016
2015
2016
2015
2016
Consolidated volume up by 5.0% to 224 mn uc
4Q16
Consolidated volume up by 5% to 224 mn uc
Turkey volume up by 1.8% to 118 mn uc
Int’l volume up by 8.7% to 106 mn uc
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Successful campaigns & promotions to support volumes in Turkey
Volume
+1%
in
FY16
Volume
+2%
in 4Q16
Sparkling
- 2% in
FY16
•
Lower consumer confidence and weaker tourism activity
•
Sparkling transactions lagging behind volume due to higher FC growth
•
Stills: low single digit contraction in juice, double digit growth in ice tea,
Stills
+ 7%
in FY16
IC share in
sparkling
20% in
FY16
double digit growth in water
12
Pakistan delivers double digit volume growth
Strong
Brand
Coke
growth
37% market
share in
Pakistan
Pakistan
volume
+ 19% in
FY16
•
In Pakistan, successful campaigns brought incremental 47 mn uc volume in 2016
•
Effective discount management and revenue growth initiatives in Pakistan
•
Challenging macroeconomic environment and security issues in Iraq
Total Iraq
volume
- 2% in
FY16
Jordan
volume
+ 8% in
FY16
13
Central Asia turns positive in 4Q
Central Asia
volume +8%
in 4Q16
Turkmenistan
volume +4% in
FY16
Kazakhstan
volume +14%
in 4Q16
•
•
Central Asia volumes contracted by 10% in FY16
Kazakhstan volume contracted by 7% in FY16, while recovery in oil prices has
stabilized volumes in 4Q16
•
Kyrgyzstan
volume +5% in
FY16
Double digit
volume
contraction
in Azerbaijan
Gradual price increases to mitigate the adverse impacts of devaluations
14
Financial metrics on track
Volume
Net Revenue
EBITDA
1.189 mn uc
+3.2% vs. 2015
TL 7.050 bn
+4.9% vs. 2015
TL 1.093 mn
+3.9% vs. 2015
OPEX
Capex / Sales
FCF
Margin 25.0%
+0.2pp vs. 2015
7.3%
-5.0pp vs. 2015
TL 642 mn vs.
TL 46 mn in 2015
15
Consolidated net revenue per uc up by 2%
2015
2016
Δ%
Volume (mn uc)
593
601
1%
Net revenue per uc (TL)
5.68
5.99
6%
Volume (mn uc)
559
588
5%
Net revenue per uc (USD)
2.21
1.94
-12%
Volume (mn uc)
1152
1189
3%
Net revenue per uc (TL)
5.84
5.93
2%
Net revenue per uc up by 6% in Turkey
•
8.5% consumer inflation in 2016
•
Price increases on selective FC packages in early 2016
•
Some dilutive impact due to higher share of FC
Net revenue per uc down by 12% in int’l operations
•
Higher share of FC packages in Pakistan
•
Lower average pricing in Central Asia
•
Higher trade discounts in Iraq
Turkey
International
Consolidated
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FX headwinds and one-off impact on gross margin
Gross margin contracted in Turkey:
•
Adverse impact of FX rate on packaging materials
•
One-off costs related to the collective bargaining agreement
•
Benign cost environment to offset lower revenue per uc
Raw material & FX Hedging 2017:
2016
Δ%
3.45
3.75
9%
Turkey
Cost per uc (TL)
Gross margin remained flat in international operations:
2015
Gross Margin (%) 39.2%
37.4% (180 bps)
International
Cost per uc (USD)
1.54
Gross Margin (%) 30.2%
1.35
-12%
30.3%
10 bps
3.92
3%
Consolidated
•
87% of sugar, 43% of resin and 48% of aluminum are fixed
•
92% of the FX exposure on Turkey raw material is hedged
Cost per uc (TL)
3.81
Gross Margin (%) 34.7%
33.9% (80 bps)
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Successful cost management initiatives
Turkey:
•
•
Lower operating expenses / net sales revenue
2016
Δ%
1.72
1.80
5%
Turkey
Opex per uc (TL)
EBITDA margin contraction due to lower gross margin
2015
EBITDA Margin (%) 15.6%
14.3% (130 bps)
International:
International
•
Effective cost management
•
Significant margin expansion in Pakistan and Middle East
Consolidated EBITDA margin in line with our guidance
Opex per uc (USD)
0.45
EBITDA Margin (%) 17.4%
0.40
-10%
18.8%
140 bps
1.48
3%
15.5%
10 bps
Consolidated
Opex per uc (TL)
1.45
EBITDA Margin (%) 15.6%
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Strong cash delivery with working capital efficiency
CapEx / Sales
NWC / Sales
•
12.3%
11.3%
12.3%
•
10.4%
7.4%
2014
2015
2016
Substantial free cash flow generation
FCF / Net Sales increased to 9% from
1% a year ago
7.3%
2014
2015
2016
FCF (TL mn)
•
Declining trend in net working capital / sales continues
•
Lower CapEx / Sales in 2016
10
46
2014
2015
642
2016
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No major financing needs in 2017
Financial debt (US$ million)
1.160
1.071
7%
4%
16%
17%
Net FX Loss (TL mn)
2015
Maturity (US$ million)
705
2016
USD 500m
Eurobond
+
USD 100m USPP
(293)
77%
2015
USD
EUR
79%
(368)
2017
2016
TL & JD & KT & PKR
Working on loan portfolio currency
diversification
104
Net USD/TL exposure of USD 456 mn as of
end 2016
108
120
2020
2023
35
2018
2019
Working on refinancing options for 2018
(USD100 mn in May 18,
USD500 mn in October 18)
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Financial leverage ratios continue improving
Net Debt (USD million)
Net Debt / EBITDA
Net Interest Coverage Ratio
7.4
812
6.6
816
2.26
1.96
5.8
2.10
652
2014
2015
Continuing to deleverage
2016
2014
2015
2016
Net Debt/EBITDA to be below 2x in 2017
2014
2015
2016
Recovery in interest coverage
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2017 Guidance
Sales Volume:
•
Consolidated: mid-single digit growth
•
Turkey: low-single digit growth
•
International: high-single digit growth
Financials:
•
Net Revenue growth expected to exceed volume growth
•
Flat to slight improvement in EBITDA margin, compared to 2016
•
Capex to Sales ratio of ca. 8%
•
Net Debt/EBITDA below 2x
•
Positive free cash flow
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Appendix23
We are building a sustainable business
First and only company in Turkey and
within the Coca-Cola system to be
included in the UN Global Compact
100 Index
Succesfull
cost & opex
Included in Borsa Istanbul
management
Sustainability
Index
Positive FCF
Recognized as one of Turkey’s top carbon
performance leaders by Carbon
Disclosure Project (CDP) between 20122014
First company in Turkey which was
invited to respond to Global CDP Water
Program
Included FTSE4Good
Emerging Index
Healhty
balance sheet
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Country Data - 2016
Population (2016)
(mn)
Percentage of
people below the
age of 30 (2015)
GDP per Capita
(PPP)(2016 est) (1)
Per Capita
Consumption of
Sparkling
Beverages (L)
CCI's Market Share
in Sparkling
Beverages (2)
CCC's Ranking in
Sparkling
Beverages
Turkey
79.0
48%
$21,100
39
64.1
1
Pakistan
193.7
63%
$5,100
22
36.7
2
Kazakhstan
17.8
50%
$25,700
40
48.6
1
Azerbaijan
9.7
48%
$17,700
16
60.6
1
Iraq
33.6
69%
$16,500
35
-
2
Jordan
9.8
62%
$11,100
38
-
2
Turkmenistan
5.6
57%
$17,300
42
63.3
1
Kyrgyzstan
5.9
59%
$3,500
23
69.0
1
Tajikistan
8.5
66%
$3,000
9
-
-
Syria
17.8
62%
$2,900
-
-
-
(1)Source: CIA World Factbook Estimates
(2)Soruce: Nielsen & Ipsos
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Ratings
Credit Ratings
Long Term Issuer Rating, ‘Baa3’, Stable Outlook
(Moody’s rating, September 27, 2016)
Long Term Foreign Currency IDR, ‘BBB-’ Stable Outlook
(Fitch Rating, February 1, 2017)
Corporate Governance Rating
9.45 out of 10
(Saha Rating, July 1, 2016)
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CCI Investor Relations
Tel: +90 216 528 4000
Fax: +90 216 365 8457
[email protected]
www.cci.com.tr
-----------------------------------Deniz Can Yücel
Head of Investor Relations
Tel: +90 216 528 3386
[email protected]
Borsa Istanbul: CCOLA.IS - Bloomberg: CCOLA TI - Reuters: CCOLA.IS
ADR-OTC: COLAY - Eurobond - Irish Stock Exchange: CCOLAT
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