Earnings Report /
Turkey

Coca Cola İçecek: In-line with expectations

  • CCOLA posted TL1,233mn net income in 2Q22, in-line with our est. and cons est..

  • The company recorded TL2,830mn EBITDA which was 2% lower than our expectation and 2% lower than consensus

  • CCOLA recorded 19.3% EBITDA margin, 117bps lower than our estimate of 20.4%.

Zeynep Erman
Zeynep Erman

Equity Research Analyst

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Cemal Demirtas
Cemal Demirtas

Head of Research

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ATA Invest
18 August 2022
Published byATA Invest

CCOLA posted TL1,233mn net income in 2Q22, in-line with our estimate of TL1,229mn and consensus estimate of TL1,211mn net income. TL44mn higher than expected PBT was offset by TL41mn higher than expected tax expenses.

The company recorded TL2,830mn EBITDA which was 2% lower than our expectation of TL2,876mn and 2% lower than consensus estimate of TL2,896mn. In 2Q22, CCOLA recorded 19.3% EBITDA margin, 117bps lower than our estimate of 20.4%.

Based on our estimates, CCOLA is currently trading at 2022E 5.3x EV/EBITDA and 10.2x P/E. 5yr avg EV/EBITDA and P/E multiples are 5.8x and 11.4x, respectively.

CCOLA posted TL14,694mn net sales in 2Q22, 4% higher than our estimate of TL14,078mn and 4% higher than consensus estimate of TL14,081mn. In 2Q22, domestic sales increased by 138% y/y to TL5,221mn whereas international sales increased by 162% to TL9,523mn during the same period. Acquisition of CCBU was completed on 29 September 2021. CCBU financial results were fully consolidated as of 1Q22.  On an organic basis, excluding Uzbekistan figures, net sales increased by 123% y/y in 2Q22.

CCOLA registered 25% y/y volume growth in 2Q22, reaching 492mn UC. Turkey operation recorded 20% y/y volume growth in 2Q22 mainly supported by new launches, marketing campaigns, increasing momentum in the on-premise channel and reviving tourism season. International operations registered 29% y/y volume growth in 2Q22 thanks to sustained momentum in the CIS region, successful integration in Uzbekistan, and higher penetration in Pakistan. Organic volume growth was 12.7% y/y 2Q22. Uzbekistan sales volume increased by 29.5% y/y in 2Q22. Pakistan sales volume increased by 18.2% y/y in 2Q22. Kazakhstan sales volume increased 14.1% y/y in 2Q22.

Consolidated gross margin decreased by 196bps y/y to 31.7% in 2Q22. Due to TL depreciation against hard currencies and higher raw material&energy cost, domestic gross margin declined to 34.2% in 2Q22 from 38.7% in 2Q21. In Turkey operations, the gross margin deterioration was partially mitigated by price increases in 2Q22. International gross margin declined to 30.2% in 2Q22 from 34.2% in 2Q21 due to higher raw material prices, currency depreciations, significantly higher energy cost and the dilutive impact of Uzbekhistan in 2Q22. Consolidated OPEX/Sales declined by 177bps y/y to 19.3% in 2Q22. Consolidated EBITDA margin declined by 363bps y/y to 19.3% in 2Q22.

CCOLA maintained its 2022E guidance. Management maintained its consolidated volume growth guidance at high single digit to low-teens (ATA Expectation: 14.9%). On a proforma basis (100% consolidation of CCBU for 2021 and 2022), management maintained its volume growth guidance at “mid-single-digit growth”. Management maintained its net sales growth guidance (FX-neutral) at low to mid 40%. Management maintained its EBITDA margin guidance at flat to -100bps contraction in EBITDA margin compared to 2021 (ATA Expectation: -179bps). The management maintained its NWC/Sales guidance at low single-digit (ATA Expectation: 2.4%). The management maintained its CAPEX/Sales guidance at 8-10% (ATA Expectation: 9.2%).

CCOLA’s net debt increased by 9% q/q to TL7,556bn in 2Q22. The company’s NWC need increased by TL1,227mn q/q in 2Q22. Receivable days declined by 4-days q/q, inventory days declined by 29-days q/q and payable days declined by 33-days q/q in 2Q22. Cash conversion cycle remained flat q/q at 13-days in 2Q22 CCOLA has TL1,656mn net short FX position in 2Q22, compared to TL2,975mn net short FX position in 1Q22.

The company will hold an analyst teleconference today (10 August, 2022) at 16:00PM Istanbul time.