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Edited Transcript of CCOLA.IS earnings conference call or presentation 8-Aug-19 1:00pm GMT

Q2 2019 Coca-Cola Icecek AS Earnings Call

Ümraniye Ýstanbul Aug 16, 2019 (Thomson StreetEvents) -- Edited Transcript of Coca-Cola Icecek AS earnings conference call or presentation Thursday, August 8, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andriy Avramenko

Coca-Cola Içecek Anonim Sirketi - CFO

* Burak Basarir

Coca-Cola Içecek Anonim Sirketi - CEO

* Yesim Tohma

Coca-Cola Içecek Anonim Sirketi - Group IR Manager

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Conference Call Participants

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* Cemal Demirtas

Ata Invest Co., Research Division - Head of Research

* Donatas Uzkurelis

LGM (Bermuda) Limited

* Ece Mandaci Baysal

Unlu & Co., Research Division - Senior Manager of Research

* Hanzade Kilickiran

JP Morgan Chase & Co, Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to CCI Second Quarter 2019 Financial Results Conference Call and Webcast. I'll now hand over to your host, Ms. Yesim Tohma, Head of Investor Relations. Madam, please go ahead.

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Yesim Tohma, Coca-Cola Içecek Anonim Sirketi - Group IR Manager [2]

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Thank you. Good morning, and good afternoon, ladies and gentlemen. Welcome to our second quarter 2019 results webcast. Today, our CEO, Burak Basarir, will briefly talk about our operations. Then our CFO, Andriy Avramenko, will share with you the financial review. Following the closing remarks by our CEO, we will start the Q&A session.

Before we begin, please kindly be advised of our cautionary statement that this conference call may contain forward-looking management comments, including projections. And these should be considered in conjunction with the cautionary language contained in our earnings release. And a copy of the earnings release and financials are available on our website at www.cci.com.tr.

Now let me turn the call over to Mr. Basarir.

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [3]

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Well, thank you, Yesim. Good morning, and good afternoon, everyone, and thank you for joining our call today.

While the business environment continued to be challenging in most of our markets in the second quarter of the year, despite significant macroeconomic and political headwinds, we've recorded double-digit revenue and EBITDA growth on a consolidated basis and resumed our quality growth algorithm.

In Turkey, our core business delivered 4.2% volume growth despite weaker consumer sentiment. Pakistan showed an improving volume performance in the quarter while the macroeconomic backdrop continues to put pressure on our overall industry growth. Iraq operation was back on track, benefiting from better security conditions and improving route-to-market changes. And Central Asia maintained double-digit growth despite volume shortfall in Turkmenistan operations.

We've also delivered almost 25% net revenue growth and a solid EBITDA margin in the first half of the year. Following the first half results, we revisited our full year volume guidance, and I'll be sharing with you our revised guidance in the upcoming slides.

Let me move on to the next slide. And in the second quarter, consolidated sales volume was up by 1.8% or up by 3.7% excluding non-ready-to-drink tea. We delivered almost 25% net revenue growth, which was mostly driven by price adjustments in Turkey as well as positive FX conversion impact on our international operations. On an FX-neutral basis, consolidated sales revenue was up by 14% in the quarter. In the meantime, we also delivered EBITDA growth ahead of our revenue growth, resuming our quality growth algorithm. Looking at the first half performance, we again recorded double-digit revenue and EBITDA growth, while EBITDA growth reflected a lower contribution from international operations.

Now let me continue with a brief overview of our category performances. The Sparkling category delivered by -- a 4.1% growth, cycling 12% growth in the same period of last year. The growth was mainly driven by Turkey, Kazakhstan and Azerbaijan, while the category outperforms the market in Pakistan with a slight contraction. Brand Coca-Cola grew ahead of overall category on a consolidated basis.

Stills category was down by 1.7%, which was mainly attributable to lower volumes in Turkey. Iced tea volume declined by 8.4% in Turkey as the segment was cycling more than 50% growth in the quarter. Nevertheless, we continue to focus on enhancing profit and increasing our value share, both in iced tea and juice categories.

The Water category grew by 4.4%. Again, cycling very strong prior year figures. The category grew close to 50% in Kazakhstan and on-premise channel volume growth in -- with the higher IC share in Turkey also contributed to this strong growth. Finally, non-ready-to-drink tea volume was down by 21%, which was mainly attributable to our price increases during the year.

Let's move on to Turkey. In terms of its performance, Turkey operation once again proved its resilience against macro headwinds and delivered solid results. Excluding non-ready-to-drink tea, volume was up by 4.2%, and we've achieved the highest-ever first half Sparkling volume in Turkey. Cycling almost 15% growth, the Sparkling category recorded a 5.7% growth on the back of successful market execution and contribution of new accounts in the on-premise channel.

IC volume in Sparkling category grew by close to 8% and continue to increase its share. Brand Coca-Cola outperformed overall category with 7.5% growth. Going forward, we remain focused on delivering high-quality growth in Turkey through smart price and cost efficiencies. As we leverage our full portfolio through increasing media investment and cold drink equipment placements, we continue to mitigate the challenges with our high execution capabilities in the marketplace.

Let me move on to Slide 8 and then talk about our Central Asia business. In the second quarter, the volume of international operations was up by 3.4%, cycling 11% growth. Let's start with Central Asia, which was the driver of our growth in the quarter. Central Asia operations continues to deliver double-digit growth despite our Turkmenistan operations. Excluding Turkmenistan, where the currency conversion continues to be a problem to prevent our production, in the region delivered 20% growth in the second quarter. This represents the 11th consecutive quarter of robust volume growth in Central Asia region.

Kazakhstan, our flagship market in Central Asia, recorded 11th consecutive quarter volume growth with 17%. All categories grew in Kazakhstan as we continue to increase our volume and value share through successful consumer activations. Accelerated cooler placements in the last 2 years also supported this strong growth in Kazakhstan.

Azerbaijan volume reached to record-high figures of 37% growth in the quarter. All categories grew over 30%, which makes Azerbaijan to be one of the fastest-growing countries within the Coca-Cola system.

Let me now go through our Pakistan and Middle East operations briefly. Both regions recorded an improved volume performance in the second quarter despite ongoing challenges. In Pakistan, volume was down by 1.8%, showing some improvement following a sharp decline in the first quarter. Nevertheless, we continue to focus on our execution capabilities through increasing number of outlets, higher penetration of top SKUs and successful Ramadan promotion and execution in the marketplace.

Despite the negative short-term outlook, we believe that fundamentals remain intact in Pakistan. During this economic cycle, we focused on enhancing our commercial capabilities and improving our aftermarket to secure sustainable profitable growth.

On Pakistan, let me also touch on some of the regulatory issues that we've talked before. As we discussed previously, there are discussions about the implementation of health tax on sugar beverages and water tax. Discussions around these taxes are still on the way, which may have an adverse impact on our business in Pakistan. Meanwhile, the federal excise tax on sparkling beverages increased by 1.5% to 13% in total, in the country.

Finally, let me briefly review our Middle East operations. Sales volume in the region was slightly down, which was attributable to lower volumes in Jordan due to ongoing macro challenges. On the other hand, Iraq operation was back to volume growth in the second quarter, delivering 3.1% growth.

Increasing our availability, along with route to markets, restructuring helped growth during this period, 2 new production lines in our Hilla plant also came onstream in the second quarter. As security conditions get better, we expect a higher contribution from our Iraq operations going forward.

And now let me turn the call over to Andriy for the financial review.

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Andriy Avramenko, Coca-Cola Içecek Anonim Sirketi - CFO [4]

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Thank you, Burak. Starting with our financial performance in the quarter, we recorded solid net revenue growth mainly fueled by Turkey and Kazakhstan operations as well as positive FX conversion input on our international segment.

Our consolidated net revenue was up by 24.7%, translating into a 14.1% increase on FX-neutral basis. EBITDA grew ahead of net revenue in the quarter, satisfying our quality growth algorithm. On the other hand, the gross margin declined slightly on a consolidated basis. While Turkey operations gross margin increased significantly, international operations margin was lower due to weaker top line growth in Pakistan and lack of Turkmenistan's contribution due to production stoppage. Lower gross margin coupled with some one-off items in operating expenses resulted in some contraction in international operations, EBIT and EBITDA margin.

In the second quarter, we recorded a net income of TRY 411 million driven by both higher operating profitability and lower FX losses. Looking at the first half performance, margins were adversely impacted by international operations, which were largely offset by Turkey's solid performance.

Going to the next page, let's now review per-unit case metrics briefly. Our consolidated net sales revenue per unit case increased by 12% on FX-neutral basis. Turkey and Central Asia were the main drivers of growth on the back of positive pricing input. Our gross profit per unit case grew by 13%, reflecting solid growth in Turkey, which was supported by strong net revenue per case growth and cash designation mechanism.

On the other hand, international operations gross profitability was adversely impacted by weaker top line growth in Pakistan. EBIT per unit case, excluding the other income expense, increased by 29.4%. Strong NSR per unit case growth and lower OpEx to sales in Turkey were the main drivers of growth.

Now let's have a closer look at the bottom line performance. We recorded TRY 411 million net income against TRY 185 million in the same period in 2018. The bottom line figure was positively impacted by higher EBITDA, lower FX losses and change in minority interest. Net investment hedging provided TRY 28 million positive impact on net income in the second quarter.

I would like to wrap up with some key financial metrics for the first half. Our net debt was USD 577 million. This translates into a net debt to EBITDA ratio of 1.6x. Please note that the ratio also reflect the impact of operating leases, which started to be recorded on the balance sheet within the context of IFRS 16, effective from January 2019.

Net working capital to sales was realized at 6.4% in the first half. This also reflects some favorable impact from extended payment terms in Turkey raw material procurement for 2019 period.

Finally, CapEx to sales was slightly lower on an annualized basis. In the first half of the year, 36% of the total capital expenditure was related to Turkey operation, while 64% was related to international operations.

Now let me turn the call back over to Burak for guidance and closing remarks.

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [5]

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Well, thanks, Andriy. We completed the first half of the year with double-digit revenue and EBITDA growth. Going forward, we remain focused on our strategic growth algorithm.

On the other hand, market conditions in some of our international markets remain difficult, particularly trading environment in Pakistan is not supportive given the decline in private consumption and deteriorating in some of the key macro indicators. In Turkmenistan, the currency conversion still remains to be a issue for us in terms of our production capabilities.

Considering the outlook in these markets, we revised down our full year consolidated volume guidance. We now expect international operations to deliver 2% to 4% volume growth versus our previous expectation of 6% to 8%. Accordingly, our consolidated volume growth expectation moves to 1% to 3% band with potentially slightly positive performance in our Turkey operations.

Despite the downward revision in our volume guidance, we maintain our net revenue growth on EBITDA margin guidance on the back of positive price impact and strong growth in the Sparkling category in Turkey as well as on our ongoing focus on cost-saving initiatives. We also maintain our guidance for CapEx to sales and net debt to EBITDA ratios.

I would like to highlight our priorities going forward. Despite some cyclical challenges, our markets continue to offer great opportunities, and we are well positioned to capture all these opportunities in our geography. Having tailored strategies for each of our markets, our ultimate goal is to deliver our strategic growth algorithm to create value for our shareholders.

Within this context, we continue to excel our market execution and improve our route-to-market practices. Our focus on value through price increases and portfolio optimization is another pillar of our quality growth focus. Last but not least, we maintain our disciplined approach for OpEx efficiency and net working capital management to deliver solid free cash flow throughout the year.

Now I think we can open up the floor for Q&A, and thank you, and operator, please.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Ece Mandaci from Unlu & Co.

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Ece Mandaci Baysal, Unlu & Co., Research Division - Senior Manager of Research [2]

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I have a couple of questions, if I may. The first one is about the demand environment in Pakistan. You mentioned that the volume contraction was at a lower amount in the second quarter on a year-over-year basis, but on a monthly basis, how do you see the demand environment? And what should we expect for the rest of the year? Could there be a slight recovery in volumes given the weakness observed in the first half?

The second question is about the cash designation mechanism in Turkey. Could you please provide an update? Have you fixed for 2020 purchases procurement of raw materials? And third question will be about the launch of Costa businesses by your peers in other markets, but probably in 2020. Do you have such plans? Or could you please provide your view on that, new business opportunities?

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [3]

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Thank you for your questions. I'll take the first and the last one, and I'll leave the cash designation question for Andriy. On Pakistan volume demand, I mean unfortunately, the whole market is contracting right now. The whole market has been contracted and still continues to contract. And we're expecting the contraction to continue throughout the year. So our stretch targets within ourselves, is to maintain and keep our full year's volume target that we have achieved in 2018. And we're not seeing a significant recovery in the rest of the year in terms of Pakistan volume. That's why we wanted to revise down our volume guidance for the consolidated.

On the Costa business, it's still pretty new for the Coca-Cola system, so we're currently working on the ready-to-drink coffee piece right now, and we'll see. So we don't have any concrete plans to go into Costa coffee shops, if that is the question. We're now more interested in the ready-to-drink coffee and the coffee bean business in our geographies for the time being, but let's see what happens. Thank you.

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Andriy Avramenko, Coca-Cola Içecek Anonim Sirketi - CFO [4]

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And in terms of the cash designation, we believe that cash designation played a significant role last year and continues to play a significant role for us this year in supporting our operators first and foremost in their confidence, how they continue to invest and drive business in the market in Turkey. However, going forward we are considering that cash designation played its role, and we should move away from this in the future.

While we don't have a final decision on this yet, this is our current thinking. Obviously, as we all understand that this is impacting margins at the kind of a EBIT level and GP level, however, on the net income levels, there should be minimal or no impact. Therefore, if we decide not to continue designation, we will make some type of comparative disclosures so that everybody can understand apple-to-apple with and without cash designation Turkey performance.

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Operator [5]

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Our next question comes from Cemal Demirtas, Ata Invest.

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Cemal Demirtas, Ata Invest Co., Research Division - Head of Research [6]

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My question is again about Pakistan. Could you update us on the regulatory environment in Pakistan? Are there any headwinds such as tax on water or sugar? That's my first question.

And the second question is about your OpEx management. I see that you have the improvements in your OpEx in second quarter. Did you do anything specific to have better OpEx figures in terms of any action you took? I'm trying to understand, do you think it's sustainable for the rest of the year? And maybe you could give us some -- at least some indication about the trends in the summertime, the high season in July and August, how do you see the trends? Any particular region, do we see any improvements?

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [7]

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Well, thank you, Cemal. Again, I'll take the first and the last question. I'll give the second one to Andriy, the OpEx management.

So on Pakistan, the regulatory environment in some of the regions, we've got the first water tax bills, but they're not significant. And so it doesn't disrupt our bottom line significantly. On the sugar front, as far as we know, the government will not take or impose any further taxes in the 2019 around the sugar tax. On the water front, obviously we -- whatever we take out from the ground, we basically give it back to the consumers, right? We just don't waste the water. So we're trying to convince the regulatory environment that it's not only the beverage industry but also the textile, the farming. So it has to be with a larger base rather than focusing on only the beverage producers.

So in terms of the trends, how the summer is progressing? I mean we don't have any complaints. I cannot indicate obviously anything specific, but as you also would follow from the media, the number of tourists right now is at the peak. So -- and we have no complaints in terms of how we're performing in the quarter.

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Andriy Avramenko, Coca-Cola Içecek Anonim Sirketi - CFO [8]

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Let me talk about office management. I think I'm surprised that you are surprised that we're doing well on OpEx. I think CCI has a record of being diligent in this area. We are continuously focused on OpEx control, reduction and so on.

However, I want to make sure that we are clear here that we're not doing anything special for the short term. We're in a business for the long term, particularly with our kind of markets. Therefore, where we see opportunities to reduce OpEx, particularly in the sales expenses and some type of marketing expenses without impact for the long-term business, we do it on a regular basis. But there is nothing special that we did in a quarter to make sure that the OpEx drops -- if -- there is no special program other than a continuous focus on OpEx every quarter, basically every day in CCI.

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Cemal Demirtas, Ata Invest Co., Research Division - Head of Research [9]

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And about the FX sides, how do you just see the outlook for -- we don't speculate on the currency, but at least at the current levels just means something for you. As a CFO, what's your perspective, if the other TL remains at around these levels for the rest of the year? What could be the benefits and negatives for you, just from your perspective? Do you have some idea about that from your perspective?

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Andriy Avramenko, Coca-Cola Içecek Anonim Sirketi - CFO [10]

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On the currencies, I think if we had a clear view, this would be great. I think there is a volatility. We believe that the volatility may continue on both sides. We do scenario planning with significant ranges, if we're talking about Turkish lira. So that we see as absolutely necessary within the environment that the factors, I think, impact in the Turkish lira beyond just the underlying economy and so on.

If we're talking about other currencies, we primarily, I guess, the question will be about Pakistani currency rupee, we see the potential for, over some period of time of further slight devaluation. But again, it's very difficult to make a call when those devaluations will happen. That's how I would address 2 major currencies that we are working with, Turkish lira and Pakistani rupee.

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Operator [11]

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(Operator Instructions) Our next question comes from Hanzade Kilickiran, JPMorgan.

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Hanzade Kilickiran, JP Morgan Chase & Co, Research Division - Analyst [12]

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I have 3 questions. The first one is about the cash designation impact on the margins. What is the quantified impact of this hedging on margins in the first half in Turkey? And is it reasonable to assume that amount? I mean it's possible to assume that margins will come down back to March in 2020 if business continue as it is?

And the second question is about Pakistan. Thank you for the information, but how much tax is the government is planning to implement on water usage? And is there any risk of a certain increase in sugar taxes in 2020? And did you do a sort of work on an impact on the margins?

And the third question is, again, overall consolidated volume and constraint to continue in treatment in Pakistan. Do you think that it will be reasonable to assume your consolidated volume growth to be as low to mid-single digit in next year, rather than usual terms of mid- to high single digit.

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [13]

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Thank you, Hanzade. Let me take your second and third question. I'll give the cash designation, the famous question, to Andre to answer.

So the water tax, the proposal was to charge PKR 1 per liter. Right now, the implementation is like 25% of that. So basically, PKR 0.25 per liter is being implemented. And as for the time being, we've not seen -- we can manage that through pricing, so no issues on that.

In terms of Pakistan's current performance, what would be our volume guidance for next year. Unfortunately, I cannot comment on that. Let's see it how the half the year progresses, and we will be able to comment that, as you know, probably early next year. So I'll hand over to Andriy on the cash designation.

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Andriy Avramenko, Coca-Cola Içecek Anonim Sirketi - CFO [14]

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Okay. On the cash designation, I think we are preparing to supply information for you to later. But on a rough estimate that we are making right now, I will talk about consolidated basis. We believe that the consolidated basis at the EBITDA margin will be in integral of somewhere between 1.5% to 2% reduction. Again, I want to make sure that I emphasize the fact that this is a reclassification, and there should not be any impact on net income of the business. So but again, as we go in -- when we make a decision, if we don't designate, we share the pro forma with and without cash designation. And I think it will be very clear through performance. But again, I -- we estimate roughly that it's 1.5% to 2% EBITDA difference margin on consolidated basis.

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Hanzade Kilickiran, JP Morgan Chase & Co, Research Division - Analyst [15]

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Andriy, when you say that there is no impact at the bottom line, do you mean that this cash designation income is also coming like a fixed loss at -- after EBIT level at the moment? Or you mean there's no impact on the cash flow?

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Andriy Avramenko, Coca-Cola Içecek Anonim Sirketi - CFO [16]

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No, I'm talking about net income. And if we look at the standards, the majority of it is below the line and pretty much -- the vast majority of it is below the line, and it impacts the ForEx, basically goes back as the ForEx loss.

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Hanzade Kilickiran, JP Morgan Chase & Co, Research Division - Analyst [17]

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All right. Okay. And can I please just -- I couldn't understand the sugar tax part in Pakistan, Burak. Did you say 25%, I mean I think I missed it.

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [18]

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No, no, it's not the sugar tax. It's the water tax. I mean you asked about the water tax. So...

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Hanzade Kilickiran, JP Morgan Chase & Co, Research Division - Analyst [19]

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And sugar tax?

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [20]

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There is no implementation of -- I mean there's a potential threat. There is -- the government announced they're not planning to impose any health levy, which is the sugar tax, within the 2019. And we're also trying to manage that -- it's off the table. Yes. So I mean I don't see any potential risk because, otherwise, we cannot unfortunately manage 3 taxes at the same time on our business. So the government knows that pretty clearly -- loud and clearly.

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Hanzade Kilickiran, JP Morgan Chase & Co, Research Division - Analyst [21]

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So there are 2 taxes. 1 of them is the excise tax, which has been already implemented and easy to manage, I understand. And the second one is the water tax, where some part is implemented, but there is no full implementation yet.

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [22]

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Exactly. It's partially implemented. Only the 25% of the PKR 1 per liter is implemented. So it's PKR 0.25 per liter is implemented rather than PKR 1 per liter.

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Hanzade Kilickiran, JP Morgan Chase & Co, Research Division - Analyst [23]

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So does it mean that, since the consumption trends in Pakistan is already low because of security and the macro environment, if they will implement the rest of the 75%, it will be difficult to reflect it to the price, so temporarily, it's mainly some margin decline in the international operations side, not the permanent one.

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [24]

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Well, the Minister of Finance also knows that, right? So we are continuously communicating with them that, if they decide to enforce further taxes, which will have a negative impact on our business, which will also have a negative impact on our tax income.

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Operator [25]

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(Operator Instructions) Our next question comes from Donatas from LGM Investment.

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Donatas Uzkurelis, LGM (Bermuda) Limited [26]

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Congratulations on fantastic results. A couple of questions from my side. On the same Pakistan topic. Can you talk a little bit about competition? And also where do you spend in terms of CapEx in Pakistan considering the environment? Are you scaling back? Or are you ramping up?

Also anything you can share on Turkmenistan. When would it be possible to expect for some improvement? I understand it's a difficult question, but anything you can share on that will be much appreciated. And also on Kazakhstan. Kazakhstan has performed extremely well. So can you share the reasons behind this superior performance? Is it because you make any changes to your route to market? Or it's just consumers balancing back cyclically? Anything you can share.

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [27]

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Well, thank you for the comments and the questions. Let me start with the Pakistan. The competition in Pakistan is pushing a little bit because, as you know, the Lahore Pakistani bottler was acquired by the Lotte, the Korean bottler. And the -- as far as we know, the rest of the other 5 bottlers, Pakistan and local bottlers, were also planning to sell their businesses. So there's a pricing challenge going on between -- in the market. So the Pepsi bottlers are a little aggressive on the pricing side. But their volume also is declining more than our volume, when you look at the overall trends.

So on the CapEx front, because of the volumes are kind of flattish and they're declining, so we've scaled back significantly on our investment in Pakistan because we have an ample capacity right now in order to sell in the marketplace. The only CapEx we would think about for next year, not this year, would be the cold drink equipment injection into the marketplace and the basically glass and shelves. So that will be the -- because I don't think we're going to need any capacity -- incremental capacity need for Pakistan for 2020. We already have enough capacity.

On Turkmenistan piece, I mean it's a difficult question. We don't know. I think it's all related with the Turkmen economy. So as soon as the country has enough ample cash, the hard currency, I think we're going to have capacity and capability to convert our local currency into dollars and then start importing raw materials so we can be back to our business. So let's see. Now in terms of timing, I unfortunately don't have any indication as to when the things might turn to normal levels.

On Kazakhstan, I mean Kazakhstan is -- shouldn't be a surprise because we've been investing, and we've been doing the right things in Kazakhstan for some time. Our Kazakh operation, in terms of execution, for example, when you look at the presentation, you'll see that the Kazakh operation has won an execution award within the Coca-Cola system in our EMEA group. So in terms of execution -- market execution strategy, execution, we've been doing all the right things in the marketplace, and we're tapping into all of the right opportunities. So our most important data is partner business is growing significantly, and then -- which is what we've been trying to do for some time. So it's all of the above. Route to market, we have the right people, and we have the right strategy, and then we can execute it well. I think that's the recipe for success in Kazakhstan.

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Donatas Uzkurelis, LGM (Bermuda) Limited [28]

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And if I may ask about Turkey. Do you see cost pressures ramping up recently or across the table for now?

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [29]

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I mean when you look at the exchange rate, exchange rate is pretty stable for the last couple of weeks, I've just had a news that the gas and oil prices have declined a little bit. So when the exchange rate is kind of stable, I don't foresee any cost pressures in the rest of the year. The inflation seems to be quite reasonable. So I'm not expecting any significant cost pressure in Turkey in 2019.

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Operator [30]

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(Operator Instructions) We have no further questions. Mr. Basarir, back to you for the conclusion.

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Burak Basarir, Coca-Cola Içecek Anonim Sirketi - CEO [31]

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Well, thank you, everybody. Thank you for joining our call, and thank you supporting our company. As I said in my final slides, we're going to keep focusing on delivering our strategic growth algorithm, so we will focus on growing our EBITDA ahead of our revenue and our revenue ahead of our volume growth. If you're above -- the only thing you can do is to execute well and have a great strategy and have great people. So I think we have all of the 3, so which will obviously then get strong and then better results going forward. So again -- once again, thank you for joining our call. Have a nice and lovely day. Thank you very much. Bye-bye.

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Operator [32]

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This concludes today's conference call. Thank you all for your participation. You may now disconnect.