Ladies and gentlemen, welcome to Coca-Cola İçecek Second Quarter 2022 Financial Results Conference C all and Webcast. I will now hand over to your host, Ms. Çiçek Uşaklıgil Özgüneş, Investor Relations and Treasury Director. Please, ma'am, go ahead. Good morning and good afternoon, ladies and gentlemen. Welcome to CCI second quarter 2022 results webcast. I'm here with Mr. Burak Başarır, our Chief Executive Officer, and Andriy Avramenko, our Chief Financial Officer. Following Mr. Başarır and Mr. Avramenko's presentations, we will turn the call over for your questions. Before we begin, please kindly be advised of our cautionary statement. The conference call may contain forward-looking management comments, including projections. These should be considered in conjunction with the cautionary language contained in our earnings release. A copy of our earnings release and financials are available on our website at www.cci.com.tr. Now, let me turn the call over to Mr. Burak Başarır. Sir? Well, thank you, Çiçek. Good morning and good afternoon, everyone, and thank you for joining us today to discuss CCI's second quarter 2022 results. Despite the continuing volatile environment, we are happy to deliver a successful set of results in the second quarter of the year. This performance was broad-based among our operations, thanks to our strong brands, great people, excellent executional capabilities and frugal mindset. On a consolidated basis, we registered 25% reported and 15% organic volume growth through double-digit performance in both international and Turkey. Higher mobility, continuing on-premise channels recovery, and resilience at home channel consumption led to this strong performance. Moreover, the number of transactions grew ahead of volume, and the more profitable IC pack share in the portfolio reached 25%, converging to pre-pandemic levels. In the second quarter, our reported net sales revenue increased by 152%, EBITDA by 119%, and net income reached TRY 1.2 billion. Despite higher raw material prices and fuel and transportation costs, we partially mitigated the margin pressures with timely price increases, hedging transactions and productivity savings in OpEx. We delivered an EBITDA margin of 20% in the second quarter of 2022, and dilution in the EBITDA margin can be attributed mainly to input cost pressures. However, high growth of the lower margin operations this year plays some role as well. Let's move to the next slide, please. The pandemic dramatically impacted every industry, which resulted in changing consumption patterns and occasions. At CCI, we successfully adapted to the rapid changes and created new opportunities during the extraordinary times, thanks to our agile business model. We've implemented successful omni-channel marketing strategies at home and on-premise channels, focusing on availability, affordability and premiumization. With increased mobility, our on-premise channel performance quickly recovered thanks to segmented and regional offerings. At the same time, home consumption continued to grow. Category-wise, all three categories registered double-digit growth in the second quarter of 2022. On top of a 17% growth in the same quarter last year, the sparkling category grew by 25% in the second quarter, mainly led by strong 26% growth in the brand Coca-Cola. Fanta also delivered an outstanding performance, growing 34% on a year-on-year, thanks to the innovative marketing campaigns and some flavor extensions. The stills category also delivered a strong 25% growth, led by strong iced tea and energy drink performance. Despite having a low base, the energy drink category increased its sales volume by almost twofold. The water category grew by 23%, supported by strong mineral water performance and sustained small pack focus. Let me move on to the next page. On top of 18% solid growth in the second quarter of 2021, Turkey's sales volume increased by 20% in the second quarter of 2022. The successful Ramadan period was one of the reasons for sound performance with new packages and flavors launched, such as three-liter Coke and new flavor Fanta flavors. Resilient consumption in the at-home channel with year-on-year 10% volume increase, 58% growth in the on-premise channel, recovery in tourism season, and increased availability in the e-commerce channel also supported Turkey's sales volume. During the pandemic, we saw a shift towards sparkling beverages, increasing its mix within the total portfolio. The category contribution is normalizing this year. Although we are seeing strong double-digit volume growth in all three categories, the stills and water categories grew ahead of the sparkling volume growth. The sparkling category grew by 15% on a year-on-year basis on the back of 16% growth in the brand Coca-Cola and double-digit growth in the Fanta and Sprite. Bringing the category mix to the pre-pandemic levels, the stills category grew by 27%, mainly driven by strong iced tea and the energy drink performance. Growth in energy drinks was 67%, mainly on the back of an almost threefold increase in Monster energy drink. We launched the Predator energy drink in Turkey in the second quarter of this year, contributing to the strong growth momentum in the energy drink category. The water category was up by 42%, supported by sparkling water performance and recovery in the on-premise channel with the IC packs. IC share has recovered almost to the pre-pandemic levels of 31% in the second quarter of this year, helping to sustain profitable growth. Turkey operations registered 138% NSR growth in the second quarter, mainly driven by different revenue growth initiatives, including timely pricing, better channel and package mix. NSR per case was also up by almost 100%, to be exact, 99%. Let me move on to the next slide, please. Our international operations sustained its strong momentum and registered another strong quarter with 29% volume growth in the second quarter of 2022. Organic growth was 13% in the quarters, despite cycling a high growth of 21% last year. Share of international business in the total sales volume increased to 63% from 61% compared to the same quarter a year ago with the strong operational momentum and the contribution of course, our Uzbekistan acquisition. Category-wise, both sparkling and still beverages delivered double-digit growth. Sparkling grew by 31%, led by 32% growth of the brand Coca-Cola and strong momentum in Fanta and Sprite brands. Despite cycling 55% growth in the second quarter of 2021, the stills category continued to grow by 21%, mainly driven by solid iced tea performance. The water sales decreased by 7% in the second quarter of this year, in line with our value focus. Our international NSR was up by 162% on a reported basis and 127% on a pro forma basis on the back of strong volume growth, efficient discount management and timely price increases since the start of the year. Besides supporting international business revenue conversion to TL, the international business delivered 42% growth on an FX-neutral basis. On the next page, let me talk about Pakistan and then our Kazakhstan operations. Pakistan maintained its strong performance in the second quarter of this year, leveraging its improved fundamentals and execution capabilities. Total sales volume increased by 18%, while the number of transactions grew by 19% ahead of volume growth. This long-standing successful performance is sustained by accelerated output acquisition and incremental cooler placement-focused marketing campaigns. The sparkling category grew by 19% on the back of an 18% increase in the brand Coca-Cola and momentum in the Fanta and Sprite brands. Channel-wise, strong volume performance was also supported by an 18% volume growth in the on-premise channel. As you remember, we launched Roar as a new brand in affordable super soda category in this first quarter, and its volume has reached a sizable amount so far. We expect it to grow faster than our stills portfolio in the coming periods and support the stills category. Shortly in Kazakhstan, sales volume grew by 14% versus previous year. Sparkling beverages mainly drove the growth with 16% increase. Still grew by 12%, mainly driven by iced tea category and also IC share continued to increase in the second quarter of the year. Kazakhstan is still performing perfectly and then still being the rising star in our operations. Let me move on to the next page to talk about Iraq and Uzbekistan. Iraq, there's a challenging price competition obviously, which we deliberately choose not to enter as per our value proposition. Nevertheless, our sparkling volume grew by 2%, led by 5% growth in the brand Coca-Cola and 4% in Sprite. This was achieved despite cycling a strong 13% growth a year ago. Sales volume was flat on the still side. The water category declined double digits in line with our value focus, as I said before, bringing the total sales volume decline to 5%. Lastly, in Uzbekistan, the integration process continues at full speed. The operation is almost 100% integrated with our overall business. In the second quarter, the route to market integration gained pace with the setup of the distributors network, cooler placements, increased warehouse capacity and a larger sales team. We did not only increase the number of sales staff on the ground, but also provided training to our employees for upskilling and reskilling purposes. Combining its huge potential with CCI's execution expertise, the Uzbekistan operation registered 30% growth in the second quarter of this year on a pro forma basis and reached 38 million unit cases volume. On the other hand, we are accelerating on the digitization side, continuously investing in the infrastructure. We are investing in the digital workspace and the core business systems to manage sales, supply chain and the back-office capabilities in line with our strategy of digitizing our business. We are happy with Uzbekistan operations performance and strongly believe in its future potential. The sparkling category accounts for almost 95% of the total portfolio right now. The diversification will be another critical improvement area and additional source of growth in the coming years. On the next page, let me start talking about a little bit about our digital strategy. As our vision is to be the best FMCG company, to be the best requires us to be an outstanding digital enterprise. Our goal is to achieve meaningful efficiency for our core operations and innovative new capabilities for our customers, consumers, employees, and obviously for our community. With this vision, our digital strategy has three main pillars. Customer and consumer experience is one, asset optimization is the second pillar, and obviously, the last one is the people experience. On the customer and consumer experience, we're positioning our legacy platform, CCI Next, as the digital channel for our customers to self-service and create a hybrid online and offline interaction. This commercial transformation will give back time to our front line to improve interaction quality and upselling and customer development, obviously, in the marketplace. While our customers can give their orders and make payments digitally, we are also leveraging CCI Next as a digital channel for personalized engagement and communication with our customers. As we are digitizing our customers' journey, we are also bringing new capabilities to augment the decision of our sales teams. We have built a suggestive order platform with a robust AI engine that prescribes the products and the quantities to sell during each visit. We observe that AI suggestions give around TRY 9 million upsell every month in Turkey operations alone. On the consumer engagement side, we leverage Daha Daha platform of The Coca-Cola Company, which allows our consumers to follow all physical and digital campaigns from one place. As the second pillars on the asset optimization, we are digitizing end-to-end process from planning to delivery for faster decision-making, driving supply chain convergence, and improving our environmental footprint positively. With our integrated supply chain planning platform enriched with AI forecasting, we aim to decrease out of stock and increase efficiency throughout our operations. Sustainability lies at the heart of everything we do, obviously, in our company. With our digital twin platform based on Industry 4.0 technologies, we aim to decrease water and energy usage in our plants and improve line efficiency, among other efficiencies and improvements. This is also in line with our recently announced 2030 pledges to transform our way of doing business into more sustainable way. Last but not least, the third pillar, people experience on our digital strategy. As we strive to be the great place to work for our employees, we are decreasing the non-value added work with automation to give time back for our upskilling and reskilling, and prioritize personal development for our people. We have an internal reskilling program, Data Academy, for non-technical employees to acquire data competencies and reskill as that data analyst. While executing these three pillar strategy, we depend on a data quality, the latest foundational technology, and resilient security posture as we are putting measures to protect and monitor cyberspace. We are establishing risk-centric information security culture across all of our geographies. I will now leave the floor to Andriy to review the financial results. Andriy, please. Thank you. Thank you, Burak. We recorded solid net revenue growth fueled by continued momentum in international markets, accelerated sales in Türkiye, dynamic RGM initiatives, timely price increases, and favorable mix evolution. FX conversion impact of our international segment also contributed to NSR growth. Our consolidated net revenue was up by 152%, translating into a 78% increase on an FX neutral basis, with FX neutral NSR per unit case growing 42%. Despite strong NSR per unit case growth and corrective hedging initiatives, gross margin contracted by 415 basis points to 31.7% in the second quarter due to significantly higher raw material costs, higher energy prices, and weaker local currencies. Margin contraction at the EBITDA level was partially offset by disciplined spending, such as sales and marketing expenses, as well as G&A. Consolidated OpEx as a percentage of NSR improved by over 200 basis points in the second quarter this year. As a result, EBITDA grew by 119% to TRY 3 billion, with a 308 basis points lower margin of 20.2%. As Burak explained, EBITDA margin dilution is mainly attributable to raw material and energy prices. However, the country mix also plays a part. In addition, the growth in non-cash items is lagging behind the significant top-line growth, and therefore EBITDA margin decrease is higher than that of EBIT margin. In the second quarter of 2022, we registered TRY 1.2 billion net income driven by higher operating profitability despite increased financial expenses in the quarter. Next slide, please. On the unit case metrics, we managed to register a solid 42% increase in NSR per unit case on an FX neutral basis with dynamic pricing action against rising inflation in most of our countries. As Burak also mentioned before, we prioritize value generation by taking necessary price increases over just volume growth through fierce price competition. Favorable channel and package mix were also positive contributors to this healthy NSR per unit case growth. We partially mitigated the year-on-year inflationary pressure on COGS level with proactive procurement action and hedging initiatives. Despite that, our FX neutral COGS per unit case increased by 51% above FX neutral NSR per unit case growth of 42%. FX neutral EBITDA per unit case growth was 17% in the second quarter. We remain committed to continue generating real EBITDA growth for value creation for the rest of the year. Next slide, please. EBIT expanded by 128% in the second quarter compared to the same quarter a year ago and reached TRY 2.4 billion. Pricing and mix were the biggest contributors to EBIT on the back of the continued volume momentum, while persistent commodity cost pressure on COGS was the main drag. However, we managed to mitigate inflationary pressures with dynamic pricing, hedging initiatives, tight OpEx management, delivering absolute EBIT growth of 128% year-on-year. Next slide, please. Financial markets continue to be under pressure with high inflation globally, tighter monetary policy, strong U.S. dollar and recession fears. Under these circumstances, we are committed to our efficient capital allocation and disciplined financial management policy. Thanks to the sustainable EBITDA generation, our liquidity continues to be at healthy levels on top of a tight balance sheet and prudent CapEx management. We are happy to have proactively concluded our refinancing needs for a foreseeable future by the issuance of our $500 million 2029 Eurobonds earlier in the year. This gives us comfort in managing our liquidity and financial planning for the next six years. As of the end of June, our net debt was $453 million, and our net leverage is at a comfortable level of 1x consolidated EBITDA, which is significantly below the covenant that we have under our financial debt obligations. On the hard currency open position, our net short position improved to $81 million after financial hedges and net investment hedge. This conservative management helps to decrease P&L volatility and increase visibility in these hard times where emerging market currencies stay relatively weaker against hard currency. On the next slide, please. As you know, supply chain has been one of the most challenging aspects in any industry for the last two years. Increased geopolitical tensions fueled the supply chain disruptions, which were already devastated by post-COVID imbalances. However, thanks to the proactive mindset of our procurement team, we managed to navigate supply chain bottlenecks and raw material price volatility well with a large amount of early pre-buys and hedging initiatives. This provided us price visibility and ensured continuity of key raw material supply. Although increased raw material prices continue to weigh on our financials, thanks to these dynamic procurement actions, we don't expect any supply disruption that would cause production delays in our geographies. We have almost completed the raw material procurements and hedges for 2022 and have already started building 2023 procurement initiatives through financial hedges. In most of our markets, we procure sugar locally. We hedge close to 90% of our sugar needs for 2022 and almost 20% for 2023. As for aluminum and resin, we hedged around 80% and 90% of our 2022 exposure, while the hedging rates for these materials are 50% and 7% for 2023 respectively. Although commodity prices have recently retreated from their peak levels with the global economic slowdown, the virus, the ongoing geopolitical tensions keep the upside risks alive. Therefore, we expect commodity price volatility to continue through the year-end. Given this backdrop, we remain cautious and constantly monitor the market, looking for opportunities to lock the rest of our raw material needs at favorable price levels. Now, I hand over to Burak for his closing remarks. Burak, please. Well, thank you. Thank you, Andriy, for the review of financials. As a closing remark, we've successfully managed the first half of the year, delivering sound results operationally and financially. Despite the headwinds ahead, we reiterate our full-year 2022 guidance. As we navigate the second half of 2022, we keep building on our key strengths and deliver sustainable value creation in everything we do. We have a clear strategic mindset leveraging our excellent brand portfolio with the vast growth potential across all of our geographies. We feel confident in all of our capabilities to effectively navigate this volatile macroeconomic environment and persistent issues as we have proven ourselves in the challenging emerging markets landscape throughout the years. The solid financial position and healthy liquidity generated by our profitable operating model and proactive strategies led to a way to invest and create value in attractive growth opportunities ahead of us. Moreover, in line with our FMCG industry leadership ambition, we prioritize digital transformation, as I briefly mentioned above, and aim to build an ecosystem of solutions and infrastructure strengthening our digital capabilities daily. As one of the key bottlers in the Coca-Cola system, our alignment with the Coca-Cola Company keeps growing, increasing our motivation to strive harder to keep supporting our business growth continuously. While doing all of the above, we keep on investing in our dedicated people and our communities, and we track our progress on sustainability closely. We stay committed to our 2030 sustainability pledges announced at the beginning of the year. We see this journey as an infinite game that we act on and excel continuously. We dream of being the best FMCG player in our geographies. I would like to thank you for your interest in our company and for your time attending this call. Now I think we can open the floor for the questions, and thank you for your interest and attention. Thank you very much. Thank you. Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press zero one on your telephone keypad. Thank you for holding until we have our first question. The first question comes from Hanzade Kilickiran from J.P. Morgan. Please go ahead. Burak, thank you very much for the presentation. I have three questions. The first one is, I don't know if you can provide, but you already mentioned that you agreed for your raw material contracts for next year and also for the remainder of the year. I wonder about your cost inflation for the second half versus first half. And if it's also possible to comment on a FX neutral cost inflation for next year. The second question is about your July performance. I mean, have you already observed the continuation of strong volume performance in all countries, maybe excluding Iraq? And the third question is about your average tax rate for the full year. It already goes quite high levels. Is it reasonable to assume around 40% for the full year as well? Thank you very much. Hi, Hanzade. Thank you very much for the questions. I'll take your second question, and I'll leave Andriy to answer your first and the third question, if I may. You know, when we look at the second half of the year, you know, how we started the year. Actually we started the year in line with our expectations. That's why we didn't see any reason to change our guidance for the full year. Our expectations, you know, during the calls and everything, you know, we were expecting a much stronger start to the year in the first half and a little, you know, relatively slower second half compared to the last year's. Which is, you know, almost in line with what we have expected, what we have planned for, to be honest with you. Obviously, I'm not gonna be very able to give you further details. The only thing we didn't plan for was the, you know, the high level of inflation, especially in Türkiye. You know, as I said, you know, we have taken all of the precautions, and we have taken all of the proactive pricing decisions already. So as you can see from our revenue growth figures from Turkey. We will see, you know, what's gonna happen, you know, how the consumer reaction will be in the second half of the year. The things so far are progressing in line with, you know, what we have planned at the beginning of the year. I'll let Andriy to answer first and the third question. Thank you. Thank you, Burak, and thank you for the question. I think the other question was about raw material prices and the inflation for the remainder of the year and for 2023 visibility. As you may recall from our previous conversations, our H1 this year was hedged and sort of secured at quite preferential prices. In H2 we will have some further inflationary pressures. As we look ahead, it's probably too early to make predictions, but there will be some extra dollar pressure on raw material procurement if we take average this year and average next year, I would say. Per unit of raw material, there will be probably a single-digit pressure in terms of U.S. dollar price or U.S. dollar cost to acquire the same raw materials. That's as close as we can predict right now. The volatility in commodity markets continues to be very high. We are constantly monitoring, and I think it will be much better to discuss this probably at the end of the year rather than today. Andriy, before- Yes. Sorry, before you continue. Yeah, go ahead. I want to make it clear. You mentioned that there could be some extra single digit pressure in the second half. We already observed cost per unit case increased by around 50% in the second quarter in FX neutral. Does it mean that something around 60% maximum seems to be reasonable for the second half? No, I mentioned first of all, I was talking about next year compared to this year. Okay. I want to clarify. Sorry. Yeah. Understood. Second, I was talking about dollar per unit of raw material, not in FX neutral. I think there is a significant difference in those definitions. I'm glad you asked for clarification because I think we would otherwise misunderstand each other. In terms of tax rate, yes, there are, as you know, in our structure in Turkey as many other companies, there is a sort of a trading company or a distribution company and manufacturing company. The regulations. It's a heavily regulated area. We are following the regulations. The settlements of that relationship and the settlements between these companies affected the tax rate. Yes, it was around 40%, and this is basically due to higher profitability of the business overall in the H1. Thank you very much, Andriy. Thank you. The next question comes from Pedro Nunes from Banco Finantia. Please go ahead. Yeah, hello. Sort of a follow-up question on your costs for this year and the next. Wanted to ask whether you have an EBITDA margin that you are targeting for 2022 and 2023. Right now it's around 20%, so I guess you expect it to drop slightly, but do you have any targets that you could share? Yeah. I think again, with the commodities inflation and the pricing adjustments that we are taking, I think we guided at the beginning of the year that it's around 0%-1% EBITDA margin contraction on the full year basis, right? What we see, as I do believe that we mentioned in our press release, in earnings release, is that what we will see is that there may be relative sort of high-end performance or some outperformance on the top line, while there may be on EBITDA margin itself, leaving alone the absolute numbers, we may be at the lower end of this guidance or slightly around that number at the bottom of the guidance. That's what we can communicate for this year at this moment. As Burak just mentioned, reiteration of the guidance during his closing remarks, that's as much as we can say on this. For the next year, it's a little premature, but overall, sort of controlling, protecting and expanding the margins is something that we as management are focused on. As you can see, we take active steps this year to mitigate to the extent possible, in terms of margin contraction impact of the commodity prices with the price increases and other actions. On a sort of a three-year basis, we normally target to fully cycle out any of those pressures and continue to improve our business and focus on the margin improvements. It's not a one-year exercise in the current environment, but it's more of a three-year exercise from our perspective. Okay. Thank you. If I could also ask you in regards to your debt and cash, you've issued $500 million new debt and repurchased roughly $200 million. Any plans on going to the market and repurchasing again the outstanding 2024 debt, or will you wait until the maturity? If you will wait, what will you do with the cash reserves that have increased substantially with the new issuance? Do you have any plans for M&A or additional CapEx for the cash? Yeah. In terms of further repurchasing, there is no commitment or any decision at this time. We are obviously looking at this option as many other options. It comes down to the optimal resource allocation. We are comfortable with our current position. There were few reasons why we did this, right. The timing was good, and so we're happy we did this. Also there was a specific amount that we targeted in terms of repurchasing, because as we see the future, essentially until unless we make a very substantial investment, until 2029, we should not be going for very large financing again to the market because 2022, 2023, 2024, we see we can serve from more or less from our operations. Therefore we are comfortable to have extra security during such volatile times, both economically and politically. Yes, we do look at multiple ideas and how to improve resource allocation and how to invest. If something comes up, we will be ready to execute that. Thank you. Ladies and gentlemen, just a reminder, in order to ask a question, please press zero one on your telephone keypad. Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. Thank you. There are no other further questions. Dear speakers, back to you. Well, thank you very much. As I said, the first half of the year was a very successful year, and we see a bit of challenges ahead of us. We're all prepared and we have all of the plans in place. Once again, I would like to thank you, each and every one of you for your time and efforts joining our call and then belief in CCI. I wish you a great day. Thank you very much for joining the call. Thank you very much. Bye-bye. Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect your.