Anadolu Efes (AEFES) Q2 2025 earnings summary

Executive summary

• Achieved solid volume growth in both beer and soft drink operations in Q2 2025, with Beer Group up 5.3% and soft drinks up 4.7%, despite topline and margin declines due to affordability focus, increased discounts, and inflationary pressures.

• Exclusion of Russian beer operations from consolidation as of January 2025, now accounted for as a financial investment, impacting year-over-year comparability.

• Free cash flow generation was supported by peak season momentum but turned negative for 1H2025 due to working capital and higher interest expenses.

• Operational profitability and EBITDA margin declined due to affordability focus, increased discounts, and a high base from last year.

• The group operates in two main segments: Beer and Soft Drinks, with significant operations in Türkiye and international markets.

Financial highlights

• Consolidated net revenue for 1H2025 was TL111.4bn, down 3.1% year-over-year on a proforma basis, with net income at TL5.9bn and EBITDA (BNRI) at TL16.7bn.

• Gross profit margin fell to 35.5%, and EBITDA margin declined to 15.0% in 1H2025.

• Free cash flow for 1H2025 was -TL11.5bn, a 74.2% decrease year-over-year, with cash and cash equivalents at TL37.8bn.

• Total borrowings increased to TL99.0bn, and net debt to EBITDA (BNRI) improved to 1.9x as of June 30, 2025.

• Excluding TAS 29, 1H2025 net revenue rose 31.9% and EBITDA (BNRI) increased 9.2% year-over-year.

Outlook and guidance

• Management expects continued focus on affordability, cost discipline, and portfolio optimization amid challenging macroeconomic and geopolitical conditions.

• Free cash flow generation and deleveraging remain top priorities, with ongoing working capital optimization and expenditure management.

• CapEx-to-sales ratio in beer group is 7%-8%, higher in Türkiye due to capacity investments.

• Beer group free cash flow expected to remain negative for 2025, with a goal to turn positive by end of next year.

• Results for the first half may not be indicative of full-year performance due to seasonality in beverage consumption.