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. Forwardlooking 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. 2
Agenda Overview of CCI Opportunities Strategy Looking Forward Q3 & 9M 2017 Highlights 3
Highlights Overview of CCI Strong market positions in key markets with leading product portfolio and wide availability Proven track record of expansion & growth Robust performance in 9M 2017 across all key markets with solid topline growth (21%) Compelling NARTD* growth opportunity in our footprint Proven management and execution of strategic priorities Disciplined financial management *Non Alcoholic Ready to Drink 4
We are the 5th largest bottler in the Coca-Cola system, operating in 10 countries Overview of CCI Overview ~400 mn people 25 production plants with 120 lines 1.5 bn UC (1) annual production capacity Kazakhstan 780 thousand sales points 1.2 bn UC sales volume $ 2.3 bn revenue & $ 358 mn EBITDA Turkey Azerbaijan Turkmenistan Kyrgyzstan Tajikistan Volume Breakdown Turkey Pakistan Kazakhstan Iraq Others Market position (2) #1 #2 #1 #1 8% 8% 8% 25% 51% Syria Jordan Iraq Pakistan Pakistan Figures reflect FY 2016 numbers, except for population (1) Unit case, 1 UC equals 5,678 liters (2) Sparkling market share 5
We have a successful track record of growth Overview of CCI Volume Revenue EBITDA 4x 13% 6x 18% 6x 17% CAGR 2005-2016 CAGR 2005-2016 CAGR 2005-2016 Single country in 2005 Expanding into Central Asia and North Iraq in 2006-2007 JV in Pakistan in 2008... South Iraq in 2012 A regional bottler today 318 mn UC 1,189 mn UC 6
9M 2017: Accelerating our growth Overview of CCI VOLUME NET REVENUE EBITDA Million UC TRY million TRY million 6,865 1,010 5,450 5,675 1,209 965 954 996 939 9M15 9M16 9M17 Growth YoY 9M15 9M16 9M17 9M15 9M16 9M17 +0.6% +2.8% +4.7% +4.1% +21.0% +11.2% +7.1% +4.8% +21.3% 7
with improving profitability and higher FCF Overview of CCI EBIT MARGIN EBITDA MARGIN FCF TRY million 12.0% 12.1% 17.4% 17.6% 17.6% 672 11.7% 531 9M15 9M16 9M17 Growth YoY 9M15 9M16 9M17 86 9M15 9M16 9M17-1.1pp -0.3pp +0.4pp +0.2pp - -0.7pp -54.3% +517.4% +26.5% 8
Favorable macros and demographics in our territories Opportunities GDP Growth* (CAGR 2018-2021) Population Growth (CAGR 2018-2021) Pakistan 8.1% Iraq 2.7% CCI 6.0% Pakistan 1.8% By 2021... Turkey 5.7% CCI 1.7% +20 mn new consumers Kazakhstan Iraq 4.1% 5.5% Kazakhstan Turkey 1.0% 0.9% ~60% of the population to be below 30 years Source: IMF World Economic Outlook Database, October 2017 *Based on purchasing power parity; international dollars Source: United Nations Population Division 9
Compelling NARTD growth opportunity Opportunities Projected Industry Growth in CCI Territories (USD bn) (2018-2021) CAGR CCI Value Share 2017 NARTD market value to reach ~USD17 bn by 2021... Sparkling 1.6 8.2% >50% 16.9 Juice 0.8 7.7% ~8% 13.0 Water 0.7 10.0% ~8% Energy 0.3 12.3% ~5% Ice Tea 0.2 12.6% ~24% 2018 2021 We expect the industry to grow ~USD 4 bn by 2021 at a ~9% CAGR Source: Canadean, CCI estimates 10
Per cap opportunity in CCI countries Opportunities 889 751 NARTD per cap* Most of our markets are in early stages of growth 632 553 547 506 500 475 475 469 Developed average: 490 407 385 359 357 314 282 252 241 240 239 222 204 201 183 141 CCI average: 179 108 105 57 26 * NARTD excluding RTD coffee, dairy/soy, pack water and other * NARTD per cap per year in terms of number of 8 ounce servings, data as of 2016 11
Our strategic model to tap growth opportunities Strategy CCI 180 NARTD per cap 160 140 Build Future Grow Leadership Grow Value Turkey Grow Value Drive sustainable profit growth Bolt on Acquisitions 120 100 80 60 40 20 0 ME & PK Central Asia Grow Scale BUBBLE SIZE: EBIT NARTD Value Leadership ratio vs nearest competitor 0 0.5 1 1.5 2 2.5 3 3.5 4 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 12
Our strategic priorities Strategy Accelerate Growth Win at the Point of Sale Emphasize Financial Discipline Expand into New Markets Full-beverage portfolio Revenue Growth Management (RGM) Expand Sparkling & Stills Increase frequency Increase outlet coverage Increase cooler penetration Right Execution Daily E-commerce Productivity savings Working capital improvements Healthy FCF Optimum leverage Selective and prudent approach to geographical expansion Further diversification of risks & returns Regional strategies Future-proof RTM Effective FX management Technology Transformation EBITDA REVENUE VOLUME 13
Accelerate Growth Being a consumer-centric full beverage company Strategy BRAND & FLAVOR EXPANSION PACKAGE INNOVATION Category Breakdown Other 15% 2006 Water 15% Still 6% Tea 8% 2016 Differentiated package segmentation across channels, customers & consumers Sparkling 85% Sparkling 71% Brands 17 34 Flavors 44 150 Sales 424 1,189 Volume (mn UC) 14
Accelerate Growth: Turkey Focusing on balanced growth EBITDA > NSR > Volume Strategy 2006 2010 2012 2016 2017 & beyond Volume-Driven Growth Balanced Growth Volume, Price and Mix Pricing-Driven Growth Balanced Growth Volume, Price and Mix CAGR Volume +9% +7% +1% + 4%* NSR +11% +14% +7% +10%* EBITDA +12% +13% +4% +22%* * YoY growth as of 9M 2017 15
Accelerate Growth: Turkey Balanced growth driven by focus on value vs. volume Strategy RE-STAGE SPARKLING GROWTH ACCELERATE STILLS Sparkling Growth IC Share in Sparkling Stills Growth Ice Tea Value Share -3.4% -0.9% 0.8% 19.0% 21.8% 23.1% 3.8% 1.6% 2.0% 19.2% 20.5% 22.9% 9M15 9M16 9M17 1Q17 2Q17 3Q17 9M15 9M16 9M17 1Q17 2Q17 3Q17 Healthy volume growth with highest 3Q Sparkling growth in the last 5 years IC share & transaction growth Enhanced RGM capability One Brand Strategy Enhanced profitability in Juice Value share gain in Ice Tea Sustainable Water business model Pulpy Fuse Tea Damla EBIT > Net Revenue > Transactions > Volume Sustainable Stills Portfolio 16
Accelerate Growth: Pakistan Focusing on sustainable and profitable volume growth Strategy SOLID TRACK RECORD FOCUS ON VALUE 16% CAGR in volume 300 mn UC 2009-2016 11 pp market share gain 37% Volume growth Revenue growth (local currency) 19.7% 8.2% 4.8% 93 mn UC 2009-2016 Volume was up by 3X Revenue was up by 3X EBITDA was up by 4X 26% FCF positive in 2016 & first dividend in 2017 ~2 points increase in brand love score in 5 years 9M15 9M16 9M17 Priorities Growing NARTD per caps while improving margins Capacity expansion Increasing availability and improving commercial capabilities Supply chain excellence Project Phoenix to drive distribution and commercial efficiency 17
Accelerate Growth: Kazakhstan and Iraq Accelerating in other key markets Strategy KAZAKHSTAN: BACK ON TRACK IRAQ: STRONG PERFORMANCE KZT/USD devalued >85% in 2015 Volume Growth (%) 14.3% 11.5% 16.6% 25.1% Fast recovery after devaluation Volume Growth (%) 10.0% in 10 years # Outlets X2.4 # Distributors X5.4 # Cooler Doors X8.2 2.8% 3.0% 3.1% 2.2% -2.3% -6.4% -6.6% -1.5% -9.1% -3.1% -12.4% -11.6% -14.7% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Accelerating NARTD value leadership Improvement in execution and continued investments Focusing on userbase Effective price adjustments and increasing IC mix Leveraging regional opportunities Improved security and higher oil prices to support economy Focusing on cost saving & productivity Increasing Brand Love Score in North Iraq (2.2 points rise in 5 years) 18
Win at the Point of Sale Superior execution Strategy AVAILABILITY RIGHT EXECUTION DAILY (RED) SALES FORCE EFFECTIVENESS 2014 2017 2014 2017 67% Outlet Coverage 35% 56% Time in Field 57% 80% Tracking in 8 out of 10 countries Strike Rate 55% 66% 67% numeric availability* within more than 1.2 mn outlets Preseller self audit via Photo Recognition in Turkey Call Completion 75% 90% Photo Recognition to enable 100% RED tracking across the board *Number of outlets where we are available divided by total outlets in our 10 countries 19
Emphasize Financial Discipline Healthy balance sheet with improving cash management Strategy CAPEX / SALES NWC / SALES FCF / SALES 9.8% 13.6% 12.3% 12.3% 13.0% 11.8% 11.3% 10.4% 9.3% 9.1% 9.4% 9.8% 7.3% 7.4% 6.0% 5.1% 4.6% 2.6% 0.2% 0.7% 2012 2013 2014 2015 2016 9M16 9M17 2012 2013 2014 2015 2016 9M16 9M17-0.8% 2012 2013 2014 2015 2016 9M16 9M17 Average CapEx/Sales was 10.9% in 2012-2016 period We expect to sustain improved NWC/Sales levels Continuing strong free cash flow in 2017 20
Emphasize Financial Discipline & improving leverage ratios Strategy NET DEBT (USD million) NET DEBT / EBITDA NET INTEREST COVERAGE RATIO 812 816 Covenant: < 3.25x 21.0 Covenant: > 4x 753 681 652 667 544 2X 1.7 1.8 2.0 2.3 2.1 1.8 1.5 15.0 7.4 5.7 6.6 9.0 8.2 2012 2013 2014 2015 2016 9M16 9M17 2012 2013 2014 2015 2016 9M16 9M17 2012 2013 2014 2015 2016 9M16 9M17 Continuing to de-leverage Net Debt/EBITDA to be below 2x at YE2017 Interest coverage relatively flat 21
Emphasize Financial Discipline Successful refinancing: longer term & lower cost Strategy Investment grade ratings Moody s: Long Term Issuer Rating, Baa3, Negative Outlook MATURITY (USD million) Fitch: Long Term Foreign Currency IDR, BBB Stable Outlook (highest rated company in Turkey) Refinancing of our Eurobond Successfully closed 7 year USD 500 mn Eurobond 20 bps inside Turkey sovereign spread USD 500m Eurobond + USD 100m USPP 4,215% all in cost (coupon rate = yield) c.70 bps interest cost improvement vs. our existing 5 year bond (USD 3.5m p.a) USD100 mn USPP - due in May 18 - to be repaid using excess cash 2017 2018 2019 2020 2021 2022 2023 2024 22
Emphasize Financial Discipline Managing FX risk Strategy FX BREAKDOWN NET INCOME Breakdown of COGS (Q317) Net Income FX gain/ (loss) Other 15% Raw material 85% ~30% of raw material procurement is subject to FX exposure No material impact of FX volatility on COGS due to effective hedging 332 386 241 154 (86) (147) (66) (53) Breakdown of financial debt (Q317) USD 83% EUR 16% Other 1% ~1/3 ~1/3 ~1/3 Sustainable levels for investments Naturally hedged with hard currency cash Evaluating to hedge some portion 9M16 9M17 3Q16 3Q17 USD/TRY Rates Average Period-end 3.77 3.77 3.52 3.55 3.80 3.51 3.64 3.02 FY16 Q317 Q417 FY17 23
Expand into New Markets Diversifying our portfolio Strategy Guiding principles for geographical expansion Management control & full consolidation rights Reasonable proximity Similar market dynamics ROIC > WACC Volume Breakdown Turkey 81% Pakistan 25% Kazakhstan 8% Iraq 8% 2006 2016 Others 8% International 19% Turkey 51% 24
Technology to drive growth and productivity Strategy Data, process and system standardization & transformation with One CCI Customer & Consumer 360 o Connected Customer Operations Connected Coolers People Digitally Connnected Collaborative Workplace E-commerce Customer Portal New Generation Sales Force Automation Coca-Cola Dükkanı SMART: Plant mobility Employee Mobile Portal 25
2017 Guidance Looking Forward 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 Solid free cash flow 26
Q3 & 9M 2017 Highlights
Summary financials Q3 & 9M17 Highlights Consolidated (TRY million) 9M17 9M16 Change % 3Q17 3Q16 Change % Volume (million UC) 1,010 965 4.7% 405 383 5.6% Net Sales 6,865 5,675 21.0% 2,750 2,245 22.5% Gross Profit 2,355 1,979 19.0% 954 759 25.7% EBIT 831 664 25.2% 392 314 24.8% EBITDA 1,209 996 21.3% 518 419 23.7% Net Income/(Loss) 386 332 16.4% 241 154 56.2% Gross Profit Margin 34.3% 34.9% 34.7% 33.8% EBIT Margin 12.1% 11.7% 14.2% 14.0% EBITDA Margin 17.6% 17.6% 18.8% 18.7% Net Income / (Loss) Margin 5.6% 5.8% 8.8% 6.9% 28
9M17 Highlights Q3 & 9M17 Highlights Volume 1.010 mn uc +4.7% vs. 9M16 Net Revenue TL 6.865 bn +21.0% vs. 9M16 EBITDA TL 1.209 mn +21.3% vs. 9M16 OPEX Margin 22.3% -0.8pp vs. 9M16 Capex / Sales* 4.6% -0.5pp vs. 9M16 FCF TL 672 mn vs. TL 531 mn in 9M16 *Trailing 12 months 29
Volume growth in all categories in 3Q Q3 & 9M17 Highlights Sparkling Stills Water NRTD Tea 4.1% 18.9% 3.4% 19.4% 30
Turkey: Strong 3Q Performance Q3 & 9M17 Highlights Re-stage Sparkling Growth EBIT > Net Revenue > Transactions > Volume Highest 3Q Sparkling growth in the last 5 years 17% volume growth in Immediate Consumption (IC) IC share in Sparkling + 2.8 pp Number of transactions +12% Accelerate Stills Almost doubling profitability in the Juice category Highest ever value share in Ice Tea Continued focus on improving Water profitability Fuse Tea volume + 25% Cappy volume +9% Damla OWB volume + 50% Revenue Growth Management Successful mix and promotion management NSR per uc NSR per uc maintained its upward trend +11% 1.4% NSR per uc growth 10.8% 4.0% 1Q17 2Q17 3Q17 31
International: Growth across top three markets in 3Q Pakistan Pakistan Increasing outlet coverage Supportive macroeconomic environment Price increases decelerating market growth to some extent Launch of 750ml PET Pakistan volume +4% Q3 & 9M17 Highlights Volume +4% Kazakhstan Kazakhstan Continuing economic recovery Strong consumer programs Above 20% volume growth in almost all categories Kazakhstan volume + 25% Fuse Tea volume + 57% Volume + 17% Iraq Iraq Accelerated volume growth driven by Sparkling Improved market execution and increasing penetration Iraq volume +10% 32
Appendix
Historical trends Volume (mn uc) 2% 3% 7% 13% 23% 1189 1152 1131 15% 1058 10% 13% 936 762 46% 49% 49% 49% 665 39% 587 534 28% 26% 21% 25% 61% 54% 51% 72% 51% 51% 79% 75% 74% Increasing share of international operations Revenue (TL mn) 12% 15% 17% 6724 31% 5985 5186 14% 24% 7% 4449 44% 49% 50% 3409 38% 2753 2408 27% 2258 18% 22% 23% 77% 73% 56% 51% 50% 62% 82% 78% 5% 7050 51% 49% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Turkey International CAGR 2008-2016 2008 2009 2010 2011 2012 2013 2014 2015 2016 Turkey International EBITDA & EBITDA Margin (TL mn) 16.6% 15.3% 15.8% 16.6% 17.2% 16.1% 74% 14.3% 15.6% 15.5% 1051 1093 892 962 730 53% 50% 46% 57% 487 375 369 435 40% 21% 26% 14% 20% 50% 54% 47% 86% 80% 79% 74% 60% 43% Volume: 11% Revenue: 15% EBITDA: 14% Falling OpEx/Sales ratio 29.1% 27.5% 27.2% 27.6% 40% 40% 63% 60% Opex / Sales 64% 26.3% 77% 25.8% 58% 25.0% 36% 56% 42% 23% 82% 24.8% 25.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Turkey International 2008 2009 2010 2011 2012 2013 2014 2015 2016 34
Country data Country GDP Growth (1) GDP per cap. (PPP) (2016 est) (2) Inflation (1) Pop. (mln) (1) % of pop. below 30 years (5) Per cap consumption of sparkling beverages (L) (3) CCI s market share in sparkling (4) Share in CCI s Volume Turkey 4.3% 21,100 10.3% 81 48% 39 64% 51% Pakistan 5.7% 5,100 4.2% 208 63% 22 37% 25% Kazakhstan 3.0% 25,700 7.4% 18 50% 40 49% 8% Iraq 1.2% 16,500 0.5% 38 69% 35-8% Azerbaijan -1.0% 17,700 12.6% 10 48% 16 61% (6) 2% Jordan 2.5% 11,100 3.5% 10 62% 38-2% Turkmenistan 1.5% 17,300 16.0% 6 57% 42 63% 2% Kyrgyzstan 2.5% 3,500 7.6% 6 59% 23 69% 1% Tajikistan 4.5% 3,000 7.3% 9 66% 9-0% Syria n/a n.a. n/a 18 n.a. n.a. - 0% (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) 2015 Data (6) Azerbaijan shares are YTD August 2016 35
Market shares Turkey Pakistan Kazakhstan Iraq #1 position in Sparkling; 64% #2 position in Sparkling; 37% #1 position in Sparkling; 49% #1 position in Sparkling in North Iraq; 54% #1 position in Juice; 25% #8 position in Juice; 2% #3 position in Juice; 12% #2 position in Sparkling in South Iraq; 36% #3 position in Water; 6% #3 position in Water; 8% #4 position in Water; 10% #3 position in Ice tea; 18% #2 position in Ice tea; 25% 36 Source: Nielsen, Canadean
Energy Usage (MJ/L) Water Usage (L/L) Sustainability In Everything We Do ENVIRONMENTAL FOOTPRINT SOCIAL INVESTMENTS 0.72 2.56 0.67 2.1 0.49 0.42 0.41 0.37 0.26 0.27 2006 2015 2.1 2.03 1.85 1.74 1.47 1.44 2006 2015 Mobilized 115k youth in TR, PK, KZ & IQ and encouraged them to get moving We provide safe drinking water to 750k people in underprivileged communities in PK Igniting the power of local volunteerism programs ACCOUNTABILITY & TRANSPARENCY Only Company from TR, MENA, CEE in UN Global Compact Sustainability 100 Index Included in new FTSE4Good Emerging Markets Index for the first time AA Rating & 4 th rank among global beverage companies in MSCI Global Sustainability Index Listed in BIST 50 Sustainability Index since 2015 Among the CDP Turkey Climate Leaders since 2013 37
Thank you! CCI Investor Relations Tel: +90 216 528 4000 Fax: +90 216 5107010 CCI-IR@cci.com.tr www.cci.com.tr Borsa Istanbul: CCOLA.IS - Bloomberg: CCOLA TI - Reuters: CCOLA.IS ADR-OTC: COLAY - Eurobond - Irish Stock Exchange: CCOLAT