Coca-Cola Icecek AS (CCOLA), the bottler of Coke drinks in 10 countries including Turkey and central Asia, predicted sales volumes will climb more than 10 percent this year. The stock rose as much as 3.6 percent in Istanbul trading.
Sales volumes will increase “at high single digits in Turkey and in the mid-to-high teens” in other countries this year, Chief Executive Officer Michael O’Neill said in an e- mailed response to Bloomberg questions yesterday. “Thus we expect to deliver low-teen growth on a consolidated basis.”
Coca-Cola Icecek, in which Coca-Cola Co. (KO) holds a 20.1 percent stake, is the fifth-largest bottler of Coca-Cola Co. in the world, according to an investor presentation on its website. The Istanbul-based company’s Turkish sales totaled 74 percent of the 665.4 million unit cases sold in 2010. Total Sales advanced 14 percent to 2.75 billion liras ($1.7 billion) in 2010.
Per capita consumption of sparkling beverages is 44 liters a year in Turkey and this is “still way below that of neighboring countries and the European Union average,” O’Neill said. Bulgaria’s consumption is 89 liters per person a year, he said. “Our long-term guidance for Turkey operations is high single-digit growth and mid-to-high-teens growth in international markets,” O’Neill said.
Coca-Cola Icecek rose as much as 80 kurus to 22.85 liras and traded 2 percent higher at 22.50 liras as of 12:29 p.m.
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The company sells products in Azerbaijan, Kazakhstan, Turkmenistan, Kyrgyzstan, Pakistan, Syria, Iraq, Jordan and Turkey, with bottling plants in 20 locations, including eight in Turkey.
Coca-Cola Icecek expects “the pace of growth to decelerate in the second half of 2011,” after the “high growth” in volumes of 17 percent in the second half of 2010, O’Neill said. “We expect the growth momentum to normalize throughout the year. We also expect net revenue growth to normalize in the second half in line with volume growth.”
About 62 percent of people in Coca-Cola Icecek’s market of 363 million are aged below 29 and this presents “tremendous growth opportunities for companies operating in the region,” O’Neill said. “You will see more countries becoming a part of CCI in the future,” he said.
“As we look at the next 10 years, we see a more positive demographic picture,” O’Neill said. “There is no reason” why Turkey can’t match the Bulgarian per capita consumption and no reason Pakistan can’t reach the Turkey per capita figure “over time,” he said.
Central Asia, Iraq
The company expects central Asian operations to lead growth this year as consumer spending in these markets is rising, O’Neill said. Central Asian sales volume grew 25 percent in the first quarter, he said.
“Iraq operations will be an important growth driver for CCI,” O’Neill said. Iraq operations delivered over 30 percent sales growth for the fifth consecutive quarter, he said. Coca- Cola Icecek bought a 70 percent stake in the Iraqi bottler CC Beverage Ltd. for $36.9 million in March, raising its stake to 100 percent.
Pakistan, which has a population of 185 million and accounts for Coca Cola Icecek’s biggest volume sales outside Turkey, is expected to improve growth this year after floods in 2010, he said. The company’s sales in the country rose 8.3 percent in 2010 and are expected to grow “in the mid-teens” this year, he said. The company will invest $300 million in Pakistan in the next three years, he said.
Coca-Cola Icecek’s total capital expenditure will be about 12 percent of net revenue this year, compared with 5 percent in the past two years, O’Neill said.
To contact the reporter on this story: Ercan Ersoy in Istanbul eersoy@bloomberg.net.
To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.
via Coca-Cola Icecek CEO Says 2011 Sales Growth Will Exceed 10% – Bloomberg.
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