Anadolu Efes (AEFES) Q3 2024 earnings summary

Executive summary

• Beer group achieved six to sixteen consecutive quarters of volume growth, with strong performance in Russia, Georgia, and Moldova, while soft drink volumes declined and rising OPEX pressured margins.

• Net profit attributable to equity holders was TRL 13.6 billion, down from TRL 23.96 billion in the prior year period.

• Group operates in beer and soft drink segments with significant international exposure, including Russia, Ukraine, and Kazakhstan.

• New agreement signed with AB InBev for Russian and Ukrainian business interests, pending regulatory approval.

• Updated FY2024 guidance reflects a more cautious outlook, with volume and margin expectations revised downward.

Financial highlights

• Consolidated net income reached TRY 5.6 billion in Q3 2024, with free cash flow at TRY 5.4 billion, both lower year-over-year due to higher interest and CAPEX.

• Beer group Q3 revenue was TRY 25.1 billion, up 27.4% year-over-year; nine-month beer group revenue rose 9.6% to TRY 69.9 billion.

• EBITDA (BNRI) for 9M2024 was TRL 33.3 billion, down from TRL 35.3 billion year-over-year; net income margin at 7.6%.

• Gross profit margin for 9M2024 at 39.6% (+186 bps year-over-year); 3Q2024 gross margin rose to 41.3%.

• Net debt to EBITDA (BNRI) at 0.6x as of September 30, 2024; beer group at -0.3x, indicating a net cash position.

Outlook and guidance

• FY2024 consolidated sales volume expected to stay flat; beer group volume to grow high-single digit; soft drinks volume to decline low-to-mid single digit.

• Net sales revenue growth revised to mid-to-high twenties % FX-neutral; beer group revenue to grow mid-thirties % FX-neutral.

• EBITDA margin expected to decline around 150 bps; beer group margin to decline around 300 bps.

• Nominal EBITDA generation expected to exceed initial projections.

• Management notes seasonality in beverage consumption and ongoing monitoring of geopolitical risks, especially in Russia and Ukraine.