Anadolu Efes (AEFES) Q3 2024 earnings summary

Executive summary

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

• Consolidated volumes saw a single-digit decline due to soft drink challenges, but gross profitability remained strong through effective revenue strategies.

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

• 3Q2024 sales volume declined 5.1% to 35.8 mhl, but net sales revenue rose 2.5% to TL 62,195.2 million.

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

Financial highlights

• Beer group Q3 revenue was TL 25,062.8 million, up 27.4% year-over-year; nine-month beer group revenue rose 9.6% to TL 69.9 million.

• EBITDA (BNRI) in 3Q2024 was TL 13,126.6 million, down 4.4%; net income dropped 59.7% to TL 5,600.2 million.

• Free cash flow in 3Q2024 was TL 5,373.9 million, down 46.2% year-over-year.

• Gross profit in 3Q2024 increased 5.4% to TL 25,668.7 million; gross margin rose 113 bps 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 percent FX-neutral; beer group revenue to grow mid-thirties percent FX-neutral.

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

• Soft drinks EBIT margin to decline slightly or stay flat.

• Nominal EBITDA generation expected to exceed initial projections.