Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Anadolu Efes Biracilik ve Malt Sanayi AS (IST:AEFES) achieved six consecutive quarters of growth, with a solid mid-single-digit expansion in Q3 2024.

• The company maintained a strong consolidated net debt to EBITDA ratio of 0.6 times, indicating a robust financial position.

• International beer volumes saw impressive growth of 7.5%, driven by strong performance in Russia, Georgia, and Moldova.

• The beer group's consolidated revenue increased by 27.4% year-over-year, with international beer operations growing by 40%.

• Effective revenue growth strategies helped offset cost increases, resulting in strong gross profitability despite volume contractions.

Negative Points

• Consolidated volumes declined due to weakened purchasing power and geopolitical uncertainties impacting overall demand.

• Operational expenses increased, leading to a slight dilution in the EBITDA margin.

• Soft drink operations faced challenges, with consolidated volumes declining by 9.2%, primarily in Turkey and Pakistan.

• The beer group's EBITDA margin contracted due to higher spending in trade marketing and weaker gross profitability.

• The company revised its guidance downward for soft drink operations due to macroeconomic challenges and geopolitical issues.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with IST:AEFES.

Q: Can you provide an update on your M&A transaction and when you expect to receive a dividend from the entity? A: The transaction involves Anadolu Efes acquiring AB InBev's non-controlling interests in the Russian business, while AB InBev acquires Anadolu Efes's interest in the Ukraine business. The ownership of the Russian entity will be transferred from the Netherlands to Turkey to facilitate dividend repatriation. The transaction is subject to regulatory approvals, and the timeline depends on these processes. Applications have been submitted, and we are awaiting approval.

Q: What percentage of cash is held in Russia, and what is the expectation for FY? A: Approximately 60% of our cash in Russia is held in hard currency, which is manageable. We are focused on the deal and subsequent dividend negotiations.

Q: Could you discuss the potential for share buybacks considering the decline in valuations of Anadolu Efes and Coca-Cola ?cecek? A: Currently, there is no consideration for share buybacks. We have not applied to the Russian Finance Ministry for approval to avoid conflicts with the deal process. Any application regarding repatriation will be postponed until the deal process is finalized.