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Solid Performance Despite Strong Headwinds
Consolidated Sales Volume
In FY19, consolidated sales volume increased by 0.1% to 1,316 million UC, exceeding our guidance of a slight decline. The core business recorded a growth of 0.6% in FY19 compared to the previous year (throughout this announcement, "core business" will relate to CCI's business excluding non-ready-to-drink (‘NRTD') Tea distribution). Yearly growth was led by Kazakhstan, Turkey and Azerbaijan operations despite the slowdown in Pakistan and continued production stoppage in Turkmenistan. Excluding Turkmenistan, consolidated core business sales volume was up by 1.4% in FY19. The Sparkling category (up 0.3%) and Stills (up 5.1%) were primary drivers of growth while Water and NRTD Tea categories contracted by 0.1% and 4.9%, respectively. Ice Tea recorded growth in all the markets where it is sold while sparkling grew in all markets except for Pakistan, Jordan and Turkmenistan. The share of Turkey operation within total sales volume was 50% in FY19 compared to 49% in FY18.
In 4Q19, consolidated sales volume rose by 0.8% to 230 million UC, led by Sparkling (up 4.9%) and Stills (up 14.5%) while Water and NRTD Tea categories declined by 13.0% and 9.2%, respectively. Growth in the core business was 2.4% in the period.
Turkey
In FY19, Turkey operations delivered 1.8% volume growth bringing full-year sales volume to 662 million UC. All categories posted growth except for NRTD Tea and juice. Core business volume growth was 3.2% in the period.
The Sparkling category grew by 3.8%, cycling 5.7% growth in 2018, recording the highest volume ever. The share of immediate consumption (‘IC') packages in the Sparkling category maintained its upward trend, reaching 25% in FY19 compared to 23% in FY18, while the number of transactions outpaced the volume growth with 9% increase. On-premise channel was the main contributor to volume growth throughout 2019, driven by new accounts. Cooler placements, continued media investments and successful market execution also supported volume growth. Low/No calorie segment grew by 5.9% while the share of Low/No calorie in the Sparkling volume continued to increase. The Stills category delivered 3.1% growth with Ice Tea being the main driver of volume with 11.5% growth, cycling 20.0% growth in 2018. The Water category volume increased by 1.6% in 2019, with a rising share of IC packages. NRTD Tea category volume declined by 5% in the period.
In 4Q19, volume was up by 4.9% to 126 million UC, fueled by favourable weather conditions. Core business volume grew by 9.7% in the quarter on year on year basis. The Sparkling category grew by 15.8% while Low/No calorie delivered 31.1% growth. The Stills category volume increased by 12.9% in the quarter with significant contribution coming from 49.9% growth in Ice Tea while Water and NRTD Tea categories decreased by 7.2% and 9.4%, respectively.
International
In FY19, our international operations' volume was down by 1.5% to 654 million UC, which was primarily attributable to the slowdown in Pakistan and continued production stoppage in Turkmenistan.
In Pakistan, volume declined by 7.8% in 2019, cycling 7.3% growth in FY18. Weak macroeconomic condition and tough competitive environment hurt volume performance throughout the year. The Sparkling category contracted by 7.4% in 2019, reflecting the overall industry decline. Trademark Coca-Cola outperformed its segment on the back of higher brand love score, while all our sparkling brands continued to decline.
Across the Middle East, volume declined by 1.7%. Iraq posted a 0.8% growth driven by the 3.7% growth in the Sparkling category while the Water category volume declined by 7.4%.
Central Asia registered 9.0% growth, with all markets except for Turkmenistan delivering double-digit growth. Kazakhstan posted 13.9% growth, along with share gains in all categories. Strong consumer activations, cooler placements and successful market execution supported growth throughout 2019. Azerbaijan, posted 20.5% growth, with trademark Coca-Cola registering 34% growth. Turkmenistan made a negligible volume contribution as production stopped in early 2019 due to continued issues about currency convertibility, causing interruptions in production. Excluding Turkmenistan, growth in Central Asia was 14.4% vs prior year.
In 4Q19, international operations registered 104 million UC volume with a 3.6% year-on-year contraction.
Pakistan volume was down by 15.2% in 4Q19, due to continued slowdown in the overall industry, price increases taken in the third quarter as well as destocking at distributors at year-end.
Across the Middle East, volume contracted by 3.3%. Sales volume in Iraq was down by 4.8%, reflecting the political unrest in the country, while sparkling category grew by 5.7%. Jordan registered 7.3% growth, supported by new cooler placements.
Central Asia registered 11.1% volume growth led by double-digit growth in Kazakhstan, Azerbaijan and Tajikistan markets. During the quarter, Kazakhstan posted 16.2% growth, cycling 6.7% growth in 4Q18. New year consumer promotions and successful consumer activities contributed to the growth in the region.
We hereby declare that our above statements are in conformity with the principles included in the Capital Markets Board's Communiqué on Material Events, that they fully reflect the information we have acquired, that the information complies with our books, records and documents, that we have made our best effort to fully and accurately obtain all information regarding the matter and that we are responsible for this disclosure made hereby.
This is an English translation of the original official public disclosure made by Coca-Cola İçecek in Turkish through the Public Disclosure Platform (www.kap.gov.tr), for information purposes only. In the event of any discrepancy between this translation and the original Turkish disclosure, the original Turkish disclosure shall prevail. Coca-Cola İçecek makes no warranties or representations about the accuracy or completeness of the English translation and assumes no liability for any errors, ommissions or inaccuracies that may arise from use of this translation.
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We proclaim that our above disclosure is in conformity with the principles set down in “Material Events Communiqué” of Capital Markets Board, and it fully reflects all information coming to our knowledge on the subject matter thereof, and it is in conformity with our books, records and documents, and all reasonable efforts have been shown by our Company in order to obtain all information fully and accurately about the subject matter thereof, and we’re personally liable for the disclosures.