anadolu efes
TRANSCRIPT
ANADOLU EFES
MARCH 2021
INVESTOR
PRESENTATION
Anadolu Efes At a Glance
2
3
*The Barth Report 2019/2020 **FY2020
700 mn
Population
21
Breweries
26
Bottling Plants
54.3 mhl
Brewing
Capacity
1.7 bn u/c
Bottling
Capacity
Europe’s
5th*
World’s
10th*
Largest
Brewer
6th
Largest
Coca-Cola
Bottler
In FY2020;
103.5 mhl
Sales Volume
26.7 bn TL
Sales Revenue
5.1bn TL
EBITDA
3.0 bn TL
Free Cash Flow
A regional beverage company…
…through its diversified businesses…
4
-International Beer Operations (EBI)
Russia
Kazakhstan
Georgia
Ukraine
-Turkey Beer Operations
100% 50.3%
50%
50%
100%
96.9%
100%
BEER OPERATIONS SOFT DRINK OPERATIONS
Moldova
Public
43%
24%
50
.3%
1.9%
Public
…with a solid track record of profitable growth…
(1) 2017 Proforma figures include ABI Russia and ABI Ukraine effect starting from April 1st.
(2) 2018 Proforma figures assume realization of ABI Efes JV as of January 1st 2018 (instead of actual April 1st).
(3) 2019 Restatement represents classification of Doğadan business as discontinued operations and changes regarding the “Other Payables” account of Turkish Beer Operations as per TAS 8
86.1103.5
20202015
CAGR+3.7%
TOTAL VOLUMEmhl
REVENUETL bn
10.2
26.7
2015 2020
CAGR+21.2%
1,766
5,098
2015 2020
CAGR+23.6%
17.3%19.1%
EBITDA &
Margin %
638
3,012
2015 2020
CAGR+36.4%
2015
20202020 2020 2020
201558%
18%
24%
53%
10%
37%2015 2015
66%
15%
19%54%37%
9%
62%
31%
7%
71%
23%
6%
FREE CASH FLOWTL mn
76%
17%
8%
4%
65%
30%
Turkey Beer
Soft drinks
Russia, Ukraine & CIS Beer
5
and a solid investment theme…
6
Proven track record of expansion &
growth in emerging markets
Significant potential in demographics
Clear priorities to accelerate quality
growth
Expertise & Know-How in driving cost
efficiencies
Diversified business model
including beer and soft drinks
Strategic Partnerships with World’s
leading FMCG companies; AB InBev &
TCCC
Strong brand portfolio including some
of the world’s best known brands and
strong regional brands
Strong market positions across all
operations
…leading to strong financials
7
Volume Revenue EBITDA (BNRI)
FCF CWC / Revenue Net Debt / EBITDA (BNRI)
103.5 mhl
-1.2% vs PY
26.7 bn TL
+15.9% vs PY +25.5% vs PY
5.1 bn TL
3.0 bn TL 0.7x
-0.4x vs PY+29% vs PY
-5.3%
-2.7pp vs PY
Beer Operations
Beer Group in a Nutshell
*FY2019
6 countries
21 Breweries, 100+ brands
54.3 mhl brewing capacity, 70+ export countries
36.2 mhl beer volume
12.3 bn TL revenue* & 1.9 bn TL EBITDA*
Leadership in all operations
Volume Breakdown* Revenue Breakdown* EBITDA Breakdown*
TURKEY
MOLDOVA
UKRAINE
RUSSIA
KAZAKHSTAN
GEORGIA
13%
87%
19%
81%
19%
81%
*FY2020
Turkey
International
Turkey
International
Turkey
International
9
Strategic priorities in Beer Group to drive value
PEOPLE BRANDS
Nurturing our
talents by
establishing
required tools
& systems
and providing
great place to
work
Providing
choice, great
taste, quality
and
innovation
OPERATIONAL
EXCELLENCE
Building
competitive
advantage
through lean
and efficient
process and
organization
FINANCIAL
DISCIPLINE &
VALUE
CREATION
Achieve
profitable growth
and maximize
free cash flow to
generate above
average return
on our
investments
Enhancing
Customer
Dealer
engagement
through better
collaboration
and innovative
solutions
CUSTOMERS &
CONSUMERS
Building
relationships
and
credibility
with
stakeholders
STAKEHOLDERSEXPANSION &
GROWTH
Expanding our
business
through
enhancing
brand portfolio,
utilizing new
channels and
geographical
expansion
10
2020 Beer Group
Performance
International beer operations maintained its growth momentum in 2020…
RUSSIA MARKET SHARE *
International Beer Operations
*Source: AC Nielsen YTD December 2020; Urban + Rural
27.1%
28.0%
+0.1 pp
+1.3 pp
Volume Share
2019 2020
7.3 7.1
4Q2019 4Q2020
30.8 31.6
FY2019 FY2020
INTERNATIONAL BEER SALES VOLUME
mh
l
29.2%
27.3%
AB InBev Efes 2nd Player Other
27.8%
27.7%
-1.1 pp
+1.8 pp
Value Share
2019 2020
29.6%
26.6%
12
Russia volume grew mid-single digit in FY2020, maintaining leadership
4Q volumes under pressure,
Cycling a high base of high-single growth in 4Q2019
Increased restrictions & intense competition
Premium segment focus, expansion in the core segment and non-
alcoholic segment
Ukraine volume slightly down in FY2020
4Q volumes up high-single digit, despite industry negatively
impacted by increasing number of COVID cases
CIS volume down low-to-mid single digit in FY2020
Consumer shift to economy segment
…driven by our winning brand portfolio in Russia and Ukraine…
13
Focus on Global Brands Growth
Super Premium & Premium Growth
Increasing share in Non-Alcohol Beer
RU
SS
IAU
KR
AIN
E
Growth in Global Brands Expanding Non-Alcohol Beer
Portfolio
Development of Non-Beer Segment
…and value generating initiatives in CIS Countries…
14
Sustaining Market Leadership
Strengthening Core & Premium Brands
GrowingNon-Alcohol Beer
New Packs & Multipacks Digitalization Launch of New Flavored beer
…while Turkey volumes under pressure due to tight COVID restrictions
TURKEY BEER SALES VOLUME
Turkey Beer Operations
1.31.1
4Q2019 4Q2020
5.44.6
FY2019 FY2020
mh
l
15
First half of 4Q more resilient volumes
Sales limitations & weekend lockdowns put pressure on the second half of 4Q
Multipack offerings supported home consumption yielding a better performance than 1Q & 2Q
Better export volumes supported performance
Accelerated market activations & spending related to +1 relaunch
Soft Drink Operations
Coca-Cola Icecek in a Nutshell
• 10 countries, ~400 mn people
• 26 production plants with 126 lines
• 1.7 bn UC(1) annual production capacity
• ~780 thousand sales points
• 1.2 bn UC sales volume
• 14.4 bn TL revenue & 3.1 bn TL EBITDA
• Higher contribution from international operations
Figures reflect FY2020 numbers unless otherwise stated
(1) Unit case, 1 UC equals 5,678 liters 17
TURKEY TURKMENISTAN
PAKISTAN
KAZAKHSTAN
SYRIA
IRAQ
JORDAN
AZERBAIJAN
KYRGYZSTAN
TAJIKISTAN
TURKEY
KAZAKHSTAN
SPARKLING
MARKET
POSITION
#1
#1
PAKISTAN
IRAQ
OTHERS
#1
#2
VOLUME
9%
9%
27%
43%
12%
TURKEY
INTERNATIONAL
EBITDA
37%
63%
TURKEY
KAZAKHSTAN
PAKISTAN
OTHERS
23% 43%
19%
15%
REVENUE
Strategic Priorities In Soft Drink Operations to Create Value…
18
Accelerate Growth
• Full-beverage portfolio
• Revenue Growth Management
(RGM)
• Expand Sparkling & Stills
• Increase frequency
• Regional strategies
Win at the Point of Sale
• Increase outlet coverage
• Increase cooler penetration
• Right Execution Daily
• E-commerce
• Future-proof RTM
Exercise Financial Discipline
• Productivity savings
• Working capital improvements
• Healthy FCF
• Optimum leverage
• Effective FX management
Win with People
• Integrated Talent Strategy
• Leadership Development
• High Performing Team
• Transformation to
“OnePeople”
2020 Soft Drink
Performance
Solid growth achieved in soft drinks in international markets…
SOFT DRINKS SALES VOLUME
Turkey Operations International Operations
Volume decline of 7.5% in FY2020
improvement in 4Q with volumes up 7.3%
Sparkling grew 18.1%
Increased consumer communication, promotion, and in-store
activations.
Share of immediate consumption packages down to 25% from 33%
International operations volume up 2.8%
Up 15.8% in 4Q
Pakistan volume up by 6.2% in FY2020
Focus on at-home consumption, consumer promotions and
regional focus
Middle East volumes down -1.8%, Central Asia up 1.8%
m u
/c
554 512
654 672
1,184
FY2019 FY2020
1,207
104 121
99106
4Q2019 4Q2020
203227
Turkey International
*FY2020
20
Volume Breakdown By Country*
Pakistan
43% Turkey
27%
12%
9%
Kazakhstan
Iraq 4%4%
Azerbaijan Others
*Breakdown on combined basis
Higher net sales revenue and tight cost management leading to strong financial performance…
21
7%
34%
47%
-8%
12%6%
Volume NSR EBITDA
4Q20 2020
3% 1%
22%
-37%
On-premiseDiscounterModern Retail
Home
34%
24%
33% in 2019
25% in 2020
4Q19 4Q20
4Q20 Financial Performance YoY Channel Performance IC Share (%)
Categories
SPARKLING
4Q20: +18.1%2020: Flat
STILLS
4Q20: +1,4%2020: -13.3%
WATER
4Q20: -22.8%2020: -28.3%
Turkey
Higher volume, revenue growth initiatives and tight cost management leading to strong results…
SPARKLING
4Q20: +21.6%2020: +6.5%
STILLS
4Q20: -11.6%2020: -5.4%
WATER
4Q20: -20.5%2020: -25.8%
4Q20 Financial Performance YoY Channel Performance IC Share (%)
16%
61%
126%
3%
26%
58%
Volume NSR EBITDA
4Q20 2020
5% 8%
35%
-26%
9%
On-premiseDiscounterModern
RetailHome Other
33% in 2019
25% in 2020
4Q19 4Q20
Categories
International
22
2020Consolidated
FinancialOverview
Strong performance in 2020 with significant margin expansion…
NET INCOME
*FY2020
TL3,012 mn
+15.9%
+25.5%
19.1%(+146 bps)
TL815 mn(-21.2%)
Higher sales prices
Revenue growth management initiatives
Positive currency translation
Significant expansion in operational profitability however, bottomline declined;
y-o-y lower contribution from idle asset sales
non-cash spare parts amortization adjustment and Iraq put option revaluation expense recorded by CCI
EBITDA margin up by 146 bps year-over-year to 19.1%, highest level since 2012
Prudent cost and expense management
(+TL 677 mn)
Record-high Free Cash Flow of TL 3.0 billion in FY2020
Capex savings and sale of idle assets helped cash generation
Consolidated Net Debt to EBITDA (BNRI) 0.7x
24
REVENUE
EBITDA MARGIN
NET INCOME
FREE CASH FLOW
NET REVENUE
EBITDA BNRI
EBITDA BNRI%
FREE CASH FLOW
NET INCOME
…as a result of prudent OPEX and working capital management…A
NA
DO
LU
EF
ES
BE
ER
GR
OU
PT
UR
KE
Y
BE
ER
EB
I
VOLUMENET
REVENUE
4Q
21.1 mhl+4.9% vs. PY
FY
103.5 mhl-1.2% vs. PY
FY
36.2 mhl+0.2% vs. PY
4Q
8.2 mhl-4.1% vs. PY
FY
4.6 mhl-13.6% vs. PY
4Q
1.1 mhl-13.4% vs. PY
FY
31.6 mhl+2.6% vs. PY
4Q
7.1 mhl-2.4% vs. PY
FY
26,743 mTL+15.9% vs. PY
4Q
6,419 mTL+28.1% vs. PY
FY
12,352 mTL+11.6% vs. PY
FY
2,307 mTL+2.3% vs. PY
FY
9,995 mTL+14.0% vs. PY
4Q
3,235 mTL+13.0% vs. PY
4Q
627 mTL+5.6% vs. PY
4Q
2,596 mTL+14.9% vs. PY
EBITDA BNRI EBITDA BNRI%
mT
Lm
TL
mT
Lm
TL
879 1,214
4Q19 4Q20
+38.1%
4,063 5,098
FY19 FY20
+25.5%
609 697
4Q204Q19
+14.5%
1,784 1,961
FY19 FY20
+9.9%
407 381
FY19 FY20
-6.4%
1,433 1,635
FY19 FY20
+14.1%
134 114
4Q19 4Q20
-14.9%
510 603
4Q19 4Q20
+18.4%
FREE CASH
FLOW
FY
793 mTL-500m vs. PY
4Q
117 mTL-784m vs. PY
FY
3,012 mTL+677m vs. PY
4Q
106 mTL-546m vs. PY
FY
165 mTL-289m vs. PY
4Q
4 mTL-766m vs. PY
FY
629 mTL-210m vs. PY
4Q
102 mTL+220m vs. PY
FY
19.1%+1.5pp vs. PY
FY
15.9%-0.2pp vs. PY
FY
16.5%-1.5pp vs. PY
FY
16.4%0.0pp vs. PY
4Q
18.9%+1.4pp vs. PY
4Q
21.6%+0.3pp vs. PY
4Q
18.2%-4.4pp vs. PY
4Q
23.2%+0.7pp vs. PY
*Restatement represents i) classification of Doğadan business in Soft Drinks Operations as discontinued operations ii) as per Turkish Accounting Standards 8, our Company has made changes regarding the
“Other Payables” account of Turkish Beer Operations which is related to deposit liability of the returnable bottles and applied this change retrospectively in order to present its financial status and performance in
the financial statements in a more appropriate way. The impact of the aforementioned change in "Other Income From Operating Activities" for 4Q2019 and FY2019 is amounting TL 16.2 million.25
26
mTL
1,293.2
793.4
184.5
35.0
-291.1
-356.2
-71.9
EBITDA Changes in WC
Taxes & Others
Capex,net
Net Fin Inc/Exp and FX gain/loss
Fre
e C
ash
Flo
w
Bri
dg
e
FY2020 FY2019
Beer Group
…together with significant cash generation…
Anadolu Efesm
TL
Fre
e C
ash
Flo
w
Bri
dg
e
2,335.4
3,012.21,042.9
23.4-309.9
-47.5 -32.1
EBITDA Changes in WC
Taxes & Others
Capex,net
Net Fin Inc/Exp and FX gain/loss
FY2020 FY2019
…leading to low leverage ratios…
27
1.0 1.1
215
579
166
33152
524
2021 2022 20242023
Beer Group CCI
1.1
0.7
(mn
US
D)
1Trailing 12 month EBITDAs include ABI Russia and ABI Ukraine effect for the whole 12 month period.
2 Figures represent principal amounts
Net Debt / EBITDA (BNRI)1
- 63% of cash is hold as hard
currency
- 67% of debt is in hard currency
- 67% of cash is hold as
hard currency
- 63% of debt is in hard currency
- 93% of debt is fixed
- 100% of debt is fixed
Weighted average maturity of debt for
- Beer Group is 1.4 years and
- Anadolu Efes is 2.1 years
Maturity Schedule2
FY2019 FY2020
FY2019 FY2020
Anadolu Efes
Beer Group
…by sustainable improvement in free cash flow…
28
Anadolu EfesBeer Group
638
1,0301,315
1,054
2,335
3,012
2015 2016 2018 2019 20202017
CAGR+36.4%
551
376
539443
1,293
793
2018201720162015 2019 2020
mTL
mTL
…with commitment to financial discipline
Healthy leverage ratio
Beer Group: 1.1x (2019: 1.0x)
Anadolu Efes: 0.7x (2019: 1.1x)
Idle asset sales program supporting cash generation
Moscow land sale
Lüleburgaz land sale
29
Record low working capital
Lowest ever working capital in Turkey Beer
Effective risk management
Reduced FX-debt exposure
Net Investment Hedge
Commodity and currency hedges in P&L
Effective use of Zero Based Spending Program
Expanded categories and footprint
Average debt maturity below 2 years
Eurobond maturing in 2022
Going Forward and 2021 Outlook
Maximizing value of our business…
31
Maximizing
organic growth
Invest in brands,
market and capacity
Maintaining a
healthy balance
sheet
Net Debt/EBITDA:
1.0x - 2.0x
Maximizing
shareholder
value
Dividend pay-out
ratio of min. 40%
Investing in
inorganic growth
Leverage
acquisition
opportunities
Capital Allocation Priorities
…driven by commitment to sustain profitable leadership
Profitability
Drivers
Market Investments
• Cooler investments
• Distribution effectiveness
• Digitalization
Revenue / hl Drivers
• Price increases
• Premiumization
• Discount management
• Right portfolio mix & channel mix
Brand Investments
• Investments on existing brands
• New launches
• Expansion to new categories
Cost and Expense Management
• Zero Based Spending
New categories
New geographies
Market Share
Drivers
32
2021 Outlook
33
VOLUMEcontinuing impact of pandemic
SALES REVENUEFX-Neutral basis
CAPEX & FREE CASH FLOWEBITDA MARGIN
Normalized CAPEX to
Sales ratio of high single
digits
Continue to deliver
strong
Free Cash Flow
Consolidated:Mid-teens
growth
Beer Group:Low-single digit
growth
Soft Drinks:Range of
4% to 6%
growth
Consolidated:Low-to-mid-
single digit
growth
Beer Group:Low-teens
growth
Soft Drinks:High-teens
growth
Beer Group:Ca. 200 bps
decline
Soft Drinks:Flattish
Consolidated:Slight
decline
APPENDIX
International makes up more than 80% of beer group…
35
RUSSIA
- 11 Breweries
- 33.5 mhl Brewing
Capacity
- Beer Market Size:
73 mhl
- Per Capita Beer
Consumption: 51
Liters
- 29% Market Share
- Market Leader
UKRAINE
- 3 Breweries
- 7.7 mhl Brewing
Capacity
- Beer Market Size:
16.4 mhl
- Per Capita Beer
Consumption: 41
Liters
- 32% Market Share
- Market Leader
KAZAKHSTAN
- 2 Breweries
- 2.6 mhl Brewing
Capacity
- Beer Market Size:
5.3 mhl
- Per Capita Beer
Consumption: 28
Liters
- 47% Market Share
- Market Leader
MOLDOVA
- 1 Brewery
- 1.5 mhl Brewing
Capacity
- Beer Market Size:
1.0 mhl
- Per Capita Beer
Consumption: 28
Liters
- 61% Market Share
- Market Leader
GEORGIA
- 1 Brewery
- 2.0 mhl Brewing
Capacity
- Beer Market Size:
1.1 mhl
- Per Capita Beer
Consumption: 30
Liters
- 32% Market Share
- Market Leader
TURKEY
- 3 Breweries
- 7.0 mhl Brewing
Capacity
- Beer Market Size:
8.7 mhl
- Per Capita Beer
Consumption: 11
Liters
- 55% Market Share
- Market Leader
1 GlobalData 2020
2 Nielsen, 2020
Share in Beer Group Volume
World’s 5th* largest beer market with 73 mhl market size;
Russian beer market grew by low single** digit in 2020 & our volumes grew by mid-single digit01
Sustained both volume and value leadership & clear market
leader in Super Premium & Premium segments 02
03
* GlobalData **Volume share FY2018, Nielsen **Nielsen
Russian Beer Operations
Focus on premium brands while keeping pricing
strategy for all segments
04Strong portfolio of growing brands in all price segments,
that allows us to meet consumer needs in different
channels and occasions
*Global Data 2020
**Rosstat, 2020 36
Turkey’s largest brewer
* Internal estimation
** Volume share, Nielsen 2020
Low per capita consumption of 11 liters*
offering a growth potential
Growing population with 1.2% CAGR in
2015-2020
Leading brewer with 55%** market share
3 Breweries with 7.0 mhl capacity
2 Malteries & 1 Hops Processing Facility
enabling vertical integration for key raw
materials
100% brand awareness for “Efes Pilsen”
Rich portfolio of local, imported & licensed
brands covering all segments
#1 in consumer spending in Food & Beverage
category
99% penetration in alcohol selling stores in
Turkey**
37
Effective management of Commodity & FX exposures…
38
*As of February 2021
** Excluding Russia & Ukraine
*** Including Moldova & Georgia
60%**
• Cash flow hedge via designation &
derivatives
Hedged positions for
2022*12%**
Hedged positions for
2021*
78%*
100%29%***
FX exposure in COGS&OPEX&Interest
hedged in Turkey for 2021
Hedged in Russia & Ukraine
Derivative contracts to hedge
commodities
Increasing dividend yields
39
Gross Dividend per Share (TL per 100 shares)
2014 2015
TL 0.46
20192016 2017 2018 2020
TL 0.25 TL 0.25
TL 0.42TL 0.51
TL 1.77
TL 1.93**
Dividend
yield:
2.0%
Dividend
yield:
1.3%
Dividend
yield:
1.4%
Dividend
yield:
1.8%
Dividend
yield:
2.4%
Dividend
yield:
7.7%
Dividend
yield:
8.3%*
(*) Anadolu Efes Dividend Yield = Gross Dividend / Anadolu Efes Year-end Market Capitalization
Anadolu Efes Market Capitalization as at 31st of December, 2020
(**) The distribution is subject to the approval of AGM
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