News: Coca-Cola Icecek held an analyst day in Istanbul yesterday. Management reiterated medium-term growth guidance, highlighted key expansion drivers, and provided an update on the leverage restructuring.
Our View: Management reiterated its top line growth guidance in the mid-teens for the medium-term horizon. The company sees Pakistan and Iraq as the prime countries of focus as they have relatively better growth prospects. In the longer term, the company sees an equal revenue breakdown between Turkey and international segments from the current 72%/28% in favour of domestic operations. Both items of guidance are in line with our forecasts.
Management expects capital expenditures to represent 8-10% of sales in the medium term. The funds are to be primarily spent on current capacity additions and the increased availability of coolers. The company does not see any need to launch greenfield projects in order to support current expansion plans.
The share of debt financing could go up, as management does not see any threats from the net debt/EBITDA ratio rising from the current 1.5x to 2.5-3x. The employment of TRY debt is also relatively more favourable, as its cost contracted recently. Although 92% of total leverage is due in 2014, the company does not see any risks to the restructuring and prolonged repayment schedules.
