COCA-COLA Report

Broadly in line with expectations

In 3Q13, CCI posted TRY146m net income, broadly in line with our (TRY144m) and consensus estimates (TRY155m). Operating performance was also in line with expectations (posted EBITDA was TRY348m vs consensus TRY353m). However, international operations performed much more strongly than expected, while Turkish operations were much weaker than our expectation.

International growth was higher while Turkish slump was worse
Turkish unit sales declined 6% (vs our 3% estimate) while international volumes grew 34% (vs our 31% estimate). Overall profit margins were solid both in international and Turkish operations as we expected.

We maintain our 2013 & 2014 EBITDA and net income estimates
While we cut our 2013 and 2014 unit sales growth estimates from 2% and 5% to -1% and 3% for Turkish operations, we raise growth estimates from 31% and 15% to 34% and 18% for international operations. Our EBITDA and earnings estimates are unchanged.

Raising TP yet downgrading to HOLD on strong performance
Time value and peer multiple expansion lead to a 4% increase in our TP. Our major concern is the potential slowdown in international markets, the likelihood of which has increased significantly due to rising long-term interest rates. Higher interest rates could hurt consumption growth in emerging markets.