Anadolu Efes Birack Ord

the first part of today's call will be in listen-only mode afterwards we will open the floor for a Q&A session unless explicitly stated otherwise all information financial information disclosed in this presentation are presented in accordance with TAS 29. Just to remind you, this conference call is being recorded and the link will be available online. Before we start, I would kindly request you to refer to our notes in our presentation regarding forward-looking statements. Now, I'm leaving the ground to Mr. Onur Altok, Anadolu Efes CEO.

Also, thank you. Good morning and good afternoon, everyone, and welcome to Onur's first half 26 results conference call. As we anticipated at the beginning of the year, the operating environment remained highly volatile throughout the second quarter, particularly in the domestic markets. Political developments in the Middle East, higher oil prices and persistent inflationary pressures continue to pressurize consumer sentiment across many of our markets. Despite the challenges, we once again showed the strength of our diversified business model. Our wide geographic footprint together with the solid contribution from both our beer and soft drinks businesses enabled us to deliver another resilient and consolidated performance in second quarter. On a consolidated basis, volumes increased by more than 7%, mainly supported by the healthy momentum across our soft drink business. Revenue growth of 2.8% reflected not only volume growth but also our continued pricing discipline, yet revenue productivity was challenged by affordability issues. We also continue to benefit from improving gross profitability in soft drink business while maintaining a disciplined approach to operating expenses despite persistent inflationary pressures and higher distribution expenses driven by elevated fuel prices. As a result, we delivered another quarter of EBITDA margin expansion on a consolidated basis. Another encouraging development during the quarter was our cash generation. Both businesses delivered positive free cash flow, allowing us to further strengthen our balance sheet with consolidated net debt to EBITDA improving 1.2 times. Having said that, the first half also confirmed that the recovery in Türkiye beer has been slower than we originally anticipated. While demand trends improved during June and we have seen encouraging signs entering the summer season, the overall consumer environment remains more challenging than we expected at the beginning of the year. Reflecting this more cautious outlook, we have updated our full year 26 beer group guidance. We will get into details in the following slides. Now, let me walk you through the performance of our beer group in much more detail. As we discussed earlier, domestic beer continued to operate in a difficult consumer environment, while our international operations once again demonstrated their resilience and continued to contribute the beer group volumes positively. During the second quarter, our beer group volumes reached 3.8 million hectolitres While this represents an 8% decline year-on-year, it is important to highlight that the overall performance was largely driven by the softness in Turkey. Looking at our international operations, volume declined by 4.1% on a reported basis, but however, excluding the impact of the export business restructuring in Georgia, our international beer business actually returned to growth, increasing by 1.2% in the second quarter of 26, with our CIS markets continuing to deliver resilient operational performance. Apart from the operational performance, we also made meaningful progress in executing our long-term international expansion strategy. As a follow-up to our year-to-date achievements, we officially started license production in Azerbaijan and also signed the Toll-Filling Agreements in both Uzbekistan and China. These partnerships represent important milestones in our asset-light expansion strategy Enabling us to enter attractive markets with limited capital investment while increasing the availability of our brands to local consumers. Also in the UK, our cooperation with Sunrise continues successfully, further expanding the reach of our international portfolio. While these initiatives will not materially change our financial performance in the very near future, they represent important building blocks for the future and further diversify our international volume base. Let me now turn to our Türkiye Bir operations where the operating environment remains highly challenging throughout the most of second quarter. As we discussed at the beginning of the year, affordability has been under pressure. for some time due to sticky inflation in the country. Unfortunately, these pressures had impacted volumes much higher than we had initially anticipated in the beginning of the year, resulting in a slower recovery in demand during the first half. The weaker consumer environment was further amplified by unfavorable weather conditions, particularly during April and May, which continued to weigh on horeca channel consumption and the overall market volumes, of course. As a result, our beer volumes in Turkey declined by 12.5% during the quarter. Having said that, I would like to highlight one important thing. We started to see some improvement in demand during June and July. While these two months' performance do not mean a trend change, it gives us some confidence that consumer activity is gradually normalizing as we move into the key summer months. During the quarter, we also successfully completed the acquisition of the majority stake in Tarış Üzüm. The transaction is another important milestone in our strategy of building a broader and more diversified alcoholic beverages portfolio in Türkiye. We also successfully completed the relaunch of Efes Family. This is far more than a packaging change. It's a comprehensive renovation of our core brands with improved tastes, a modern look, and an enhanced execution standards across all consumer touchpoints. Drill launch is the result of extensive consumer research and nearly two years of preparation. While it's still early days, the initial consumer and customer feedbacks has been encouraging for us. Rather than relying on a single growth engine, we also continue to build a balanced portfolio that allows us to participate across different consumer occasions and price points where we address each of the segments with variety of brands. Let me now provide some additional color on the performance of our international bureau operations, which once again showed resilience. Starting with Kazakhstan, we delivered another quarter of healthy growth, outperforming the market and marking our fourth consecutive quarter of volume expansion. This performance reflects the strength of our commercial execution, continued premiumization efforts, and are able to adopt quickly to changing consumer preferences. Recent product launches together with our focus on premium brands and the CAC channel continue to support both volume and value growth in Kazakhstan. In Georgia, reported volumes remained affected by the export business restructuring that we discussed in previous quarters. However, excluding this temporary impact, the underlying business continued to perform very well supported by healthy domestic demand and disciplined execution. Moldova also delivered another solid quarter despite a relatively strong comparison base. Our well-balanced portfolio and successful innovations introduced over the past years continue to support steady growth across different consumer segments. Let me finally touch upon the performance of our soft drink business, which continued to show solid momentum in this quarter as well. During the first half, CCI once again delivered healthy volume growth, supported by the continued strength of its international footprint. During the second quarter, consolidated volumes increased by 9.3%, reaching 519 million unit cases. This strong performance was primarily driven by Pakistan and Central Asia, once again highlighting the strength of CCI's international footprint. In Turkey, volumes declined by 1.1% to 159 million unit case, while the sparkling beverage category remained under pressure. We were pleased to see the steels category continue to sustain its positive momentum. Our international operations continue to perform strongly, with volumes increasing by 15.4%, building on an already strong comparison base from last year. Pakistan once again delivered an outstanding performance with 17% volume growth, while Uzbekistan remained one of our fastest growing markets, expanding by 21.1% during the quarter. Kazakhstan also maintained its strong momentum, delivering 12.7% volume growth, supported by continued consumer demand and disciplined commercial execution. In Iraq, despite the ongoing geopolitical uncertainties in the region, we still managed to deliver 1.1% volume growth. Overall, we are very pleased with the performance of our soft drink business. With that, let me now hand over to Yasemin, who will take you through our financial performance in more detail.

Thank you, Onur. Good morning and good afternoon, everyone. As Onur covered all of these financials, I will briefly give you more insight to the beer group performance for the second quarter and the first half. In the second quarter, the beer group Sezer Ölüm declined by 6% to almost 20 billion. TL revenue performance was primarily impacted by the weaker volume trends in our 2K beer operations, although this was partially offset by the resilience of our international operations. So 2K beer operations recorded 11 billion TL revenue in the second quarter, which represents 11% decrease mainly due to 12.5% volume decline in the period. While we observe a modest improvement in the discount levels in the domestic market, this benefit was offset by an unfavorable product mix as affordability pressures continue to shoot consumer demand toward lower-priced value segment offerings. Turning to international operations, sales revenue increased by almost 2% year-on-year to 8.3 billion TL. Within the international portfolio, Kazakhstan was the strongest contributor, supported by timely pricing actions and continued colonization. As a result, revenue per hectolitre in Kazakhstan expanded by a robust 14% year-on-year. Consequently, billboard revenue for the first half reached almost 30 billion TL, representing almost 7% year-on-year decline. Group Gross Profit declined by almost 10% to 9 billion TL in the second quarter, with a margin contraction of 200 basis points. While Turkey operations were mainly impacted by softer volumes, which resulted in a higher fixed cost burden per hectolitre, we also saw some pressure due to higher labour and the packaging cost. Moreover, Kazakistan Gross Profit was also under pressure, mainly due to the very favourable cost base in the last year. Coming to EBITDA, we recorded 3.1 billion TL EBITDA, where we had almost 16% EBITDA margin in the second quarter, which indicated 475 basis point contraction. Approximately half of this decline was attributable to gross margin erosion, as discussed earlier. As shown in the bridge analysis, The primary pressure point remained net revenue generation, largely driven by weaker volume in domestically. In Turkey, the softer top-line performance negatively impacted gross profitability. At the same time, we saw the anticipated increase in selling and marketing expenses related to the Efes relaunch. These investments were deliberate and aimed at strengthening visibility and supporting the communication behind the relaunch. On the other hand, our international operations continue to benefit from the cost management, selling and marketing expenses, as well as general and administrative expenses declined as a result of net sales primarily in Kazakhstan and Moldova. As a result, our CS operations once again deliver strong profitability in the quarter with EBITDA margins remaining about 30% across each of these markets. This solid performance had partially offset the margin pressure experienced in Turkey. Consequently, Bir Group EBITDA in the first half was 2.3 billion TL with an EBITDA margin of 7.7%. Coming to free cash flow in the second quarter of 2026, Bir Group generated free cash flow of 3.8 billion TL The year-on-year decline in the free cash flow was primarily driven by lower operational profitability and reduced contribution from worker capital. This impact was partially offset by prudent capital expenditure management, as well as lower tax and interest payments during the quarter. Despite the current challenging operating environment, our commitment to cash flow generation remained unchanged. All of these result in a net debt to EBITDA ratio at 4.7 as of June 30, which would be at 3.3 in excluding TS29 figures. Let me briefly touch on our financial performance excluding the effect of TS29. The beer group generated 30 billion TL in revenue in the first half, representing a growth of 24% year-on-year. As I highlighted earlier, this growth was primarily driven by our international operations. In addition, the appreciation of Kazak Tange against Turkish Lira in the second quarter of 2026 compared to the same period of last year provides further support, making revenue growth more visible in non-TS29 figures. On the same basis, EBITDA increased by 2% year-on-year to 4.5 billion TL, corresponding to an EBITDA margin of 15%. Turning to cash and debt management, as of June 30, gross debt at beer group level stood at approximately 1 billion TL, 1 billion US dollars, with more than 60% of total debt dominated in hard currency. At the consolidated Andolu Efes level, grossed at amount of approximately 2.3 billion US dollar. Almost 60% was in the hard currency. On the liquidity side, 36% of Birger cash balance and 32% of consolidated Andolu Efes cash balance were held in hard currency. As a result, our net debt-debit ratio stood at 4.7 for the Bir Group and 1.3 for Andolu Efes on a consolidated basis. Turning to risk management, we further strengthened our commodity hedge position. For Turkey and CES operations, our aluminum hedge coverage increased 88% for 2026. at an average price of $3,100 per ton. For 2027, we have already secured 27% coverage at an average price of $3,070 per ton. On the effects side, we close our effects exposure at an average rate of almost 49. With that, let me hand over to Onur to walk you through our updated guidance.