Beer Group President and Anadolu Efes CEO Can Çaka’s Comments

We are so happy to announce very strong results following a solid 1Q performance in such an extraordinary year amid heightening global tensions and persistently rising inflation. These results are the testimony of our ability to leverage uncertainties into opportunities. Our relentless efforts to drive quality growth; ensuring balance between volume and value share, have paid off. We managed to deliver low-teens volume growth in the quarter despite the fact that Ukraine operations were halted since February 24th. Such growth enabled us to have volumes back at 2019 levels again with the recovery of trade after pandemic. Supported with the volume growth, pricing initiatives, premiumization and discount management efforts revenue growth reached 136%. The topline was also supported by FX conversion as a result of our diverse geographic footprint. We were able to expand our EBITDA (BNRI) margin in such a tough environment while managing costs and expenses are challenging than ever.  On top of this, cash generation has reached historically high levels yet we expect some normalization going forward” commented Mr. Can Çaka, Beer Group President and Anadolu Efes CEO.

In our Russian operations, we have been taking price adjustment in order to cover the impacts of higher inflationary environment. Although until April consumer demand was quite strong, we have observed some softening in May and June in line with our initial expectations. Therefore, we are cautious for the rest of the year in terms of our volume outlook. Our strategy is sustained at finding the right balance between profitability and volume performance, and supported by revenue growth management initiatives as evidenced by our strong results in this quarter. In Türkiye, we significantly benefitted from on-trade recovery while consistent improvement in tourism activity has been supporting volumes. Also, I am more than happy with the promising performance of the most recent introduction to our portfolio “Bremen 1827” just one month after its initiation. I am sure this is just a beginning and looking forward to see accelerating results of our high quality lager.
  

In our announcement dated February 24th, we announced that we have suspended our operations at our three breweries in Ukraine; Chernihiv, Kharkiv and Mykolaiv. In light of the risk analysis and general evaluations which are still being conducted, we decided that the operations of our Chernihiv brewery could potentially be resumed. At the initial stage, necessary studies will be carried out so that our employees can return to work safely and our brewery will be technically ready. While we aim to start production in Chernihiv in 4th quarter depending on our safety & security assessment, sales and distribution will be supported by imported products until production starts.

We are cautious for the rest of the year as inflationary pressures are not expected to ease in a very near future. On the other hand, year-on-year lower commodity price points give us the opportunity to lock up most of our exposure for the rest of the year and even for 2023. Although second half of the year may be a bit more challenging than first half in terms of consumer demand, we are committed to sustain our solid momentum. With the strong results delivered in first half, we revisited our expectations for FY2022. According to our improved outlook for beer, we now expect beer group revenue to grow by high-teens on FX-neutral basis where EBITDA (BNRI) margin is foreseen to be flat or to expand by 100 bps.

I would like to congratulate every member of my team for their insistent hard-work and endless passion for navigating challenges and pushing beyond limits.