Ladies and gentlemen, welcome to Anodola FS First Quarter 2026 Financial Results Conference Call and Webcast. I'm Aslı Demir. I'm together with our presenters today, our CEO, Mr. Unur Alçuk, and our CFO, Mr. Yasemin Ceyvezmas. The first part of today's call will be in listen-only mode. Afterwards, we will open the floor for a Q&A session. You may submit your questions at any time using the question box on your screen. However, we kindly encourage you to do so before the Q&A begins to ensure you have enough time to review and address them. Unless explicitly stated otherwise, all financial information disclosed in this presentation are presented in accordance with PAS 29. Just to remind you, This 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 leading the ground to the Honolulu FSEO.
Good afternoon, everyone, and welcome to Honolulu FSEO's first quarter 2026 operational and financial results conference call. We started the year in a challenging operating environment, which was further heightened by geopolitical tensions in the Middle East, elevated petroleum prices, and ongoing inflationary pressures. Against this backdrop, our first quarter performance reflected a mixed set of results across all our operations. Despite the challenges, we delivered a solid 5% volume growth, reaching 26 million hectolitres on a UFS consolidated basis. This performance was mainly driven by our soft drink and international beer operations. Again, on a consolidated basis, we delivered a solid top-line performance with the increase of 8%, which is higher than the volume growth. This performance was supported not only by solid volumes, but also by better revenue quality, driven by timely pricing actions, a more favorable portfolio mix, and disciplined discount management. This also supported our EBITDA BNRI margin, which was recorded at 13.6%, with a strong margin expansion of 433 BIPs. Alongside the improvements in gross profit, similar to the previous quarter, we maintained a disciplined approach by OPEX management, which continued to support our profitability. This was especially important in our beer operations, where strict cost discipline helped us to limit the impact of software top-line performance. Free cash flow was negative, as anticipated, mainly due to the seasonal build-up in working capital. However, we delivered a significant year-on-year improvement, where we benefited from improved working capital, lower interest payments, and some capex phasings. Importantly, this improvement was visible across both of our business lines. As a result, our consolidated net debt to EBITDA BNRI ratios stood at 1.3 times at the end of the quarter. I'm also very pleased to share that in April, we signed a toll-funding agreement in Uzbekistan, an initiative we have been working on for quite some time as a part of our broader growth agenda in Central Asia. Throughout this agreement, we are taking an important step in our localization strategy with the aim of improving product availability, expanding our reach and building scale over time. We see Uzbekistan as an attractive market with one of the fastest growing economies in Central Asia and relatively low beer consumption per cap, offering meaningful long-term potential. Now let me walk you through the key drivers behind the performance of the first quarter. Moving to our beer group performance, we had a slow start to the year than we expected in domestic market, which was partly compensated by the international beer operations. Consolidated beer volume was recorded at 2.1 million hectolitres in the first quarter of 26, corresponding to a 9.6% decline year-on-year. In Turkey, beer volumes were pressured by several factors in line with the beer market performance which contradicted by double digits. On the other hand, international beer volumes stood at 1.3 million hectolitres with a limited decline of 1.6 year-on-year. It is also important to note that excluding the impact of the restructuring of export business in Georgia, our international beer volume would have grown by 3.2% in the first quarter. So while the beer groups started the year on a softer note overall, the volume performance of our international operations was strong, particularly when we adjusted the restructuring impact in Georgia. Starting with Turkey, our volumes declined 20% in quarter 126. Beer market also declined in the period. The main driver behind the market decline was visible shift in consumer behavior towards savings as persistent inflationary pressures continue to weigh on discretionary spending. Moreover, unfavorable weather conditions and softer demand during Ramadan weigh on volumes. In fact, the number of rainy days, which is one of the key indicators we closely monitor, nearly doubled compared to the same period last year. In addition to these factors, we also saw the temporary pressures on our volumes as we intentionally reduced inventory levels in the fields ahead of the FS family uplift project. This was a deliberate action and short-term effects aimed at ensuring a healthier transition to the renewed FS family portfolio. I would also like to touch upon what the uplift project means for us and why we see it as an important step in strengthening our core brand proposition. FS has been at the heart of our journey since 1969. For more than five decades, we have continuously invested in the brand, listened to our consumers, and evolved the product in line with changing expectations while keeping the same excitement that brought FS to the shelves on day one. With the new FS family, we are now taking this journey into a new era. This is not only a packaging change, it's a bold and comprehensive transformation of the FS proposition. Developed through nearly one and a half years of dedicated work, the project brings a modernized packaging design with stronger shelf impact, a clear your portfolio architecture, enhanced service standards, and improved liquid quality following extensive testing and export input. The process was also validated through comprehensive consumer research, ensuring that the relaunch is fully aligned with the evolving consumer expectations. It is still very early, but the initial consumer response has been very positive, and this gives us strong confidence as we continue to strengthen FS for the future. Taking a closer look at our international beer operations, we had a more positive picture overall with different dynamics across our markets. Starting with Kazakhstan, volumes grew by low single digits in first quarter of 2006, marking the fourth consecutive quarter of growth. This is important because despite the Ramadan pressure on volumes and pricing adjustments made, we achieved to sustain growing momentum. The key drivers of the growth was pyramization and our continued focus on the keg segment similar to the previous quarters. So despite some seasonal pressure, Kazakhstan delivered another quarter of growth. In Georgia, total beer volumes were down by mid-teens in the first quarter of 26. However, excluding the impact of the export business restructuring in Russia, volumes were actually up by low 20s. This was mainly supported by the expansion of our presence in the modern trade channel, following the addition of new modern trade customers to our FS brand network, as well the continued strong momentum in the CST business. In other words, while restructuring continued to weigh unreported volumes, the core business remained healthy. In Moldova, volumes increased by low to mid-single digits in the first quarter of 26. The key driver of growth was our well-balanced brand portfolio, supported by successful launches in 2025, which enhanced our coverage across consumer segments and price tires. Overall, Moldova continued to deliver steady and balanced growth despite cycling a strong base from first quarter of 2025, which makes the performance even more encouraging. Let's move to the soft rink operations performance. We had a positive start to the year with consolidated volumes increase in first quarter of 2026 and positive contributions across both domestic and international operations. The strongest growth came from Central Asia, while Turkey and Pakistan also delivered resilient performances. So overall, volume performance was supported by different markets at the same time. In Turkey, volumes increased by 1.4%, cycling a very strong base of 8.4% growth from last year. This performance came despite our delivered a choice to optimize sales in the water category as we continue to shift our focus toward higher value categories and improve the overall value mix of the business. On the international side, volume sustained its growth momentum with nearly 10% growth, mainly supported by Central Asia. Kazakhstan and Uzbekistan delivered growth of 11% and 41% respectively, while Iraq declined of 1.8%, impacted by severe political and economic stress. On the other hand, Pakistan grew slightly by 0.2%, showing resilient performance following a high base of 17% growth in the same period last year. Now let me hand over to Yasemin for her in-depth comments for financials.
Your Honor, good morning and good afternoon, everyone. As Anur covered, as usual, the consolidated results of Anlola PES. Let me now walk you through the beer group's financial result for the first quarter, and then walk you through the cash flow, the impact of high ventilation in accounting, and finally our balance sheet and risk management dynamics. Beer group sales revenue declined by 8.4 percent to 9.4 billion TR on a reported case. The second decline is resulted mainly due to the volume decline in Turkey. Even if our local revenues and international operations grew above inflation. At gross profit level, it declined by 80.4 percent to 3.4 billion UPL, corresponding to gross margin of 35.9 percent with a 400 points margin contraction. This margin pressure was mainly driven by unfavorable operating leverage in in Turkey, and high input costs, particularly Malte and Gras in Kazakhstan. At the bottom line, the beer group recorded at a net loss of 327 million TL compared to net income in the same period of prior year. The year-on-year swing is largely explained by non-recurring income from domestic activities recorded in first quarter of 2025, following the change in the scope of the consolidation validation of Russian operations. Excluding these effects and 3S29, the underlying net result is broadly in line with operational performance as it's shown at page 15 as well. Coming to EBITDA. Coming to EBITDA, EBITDA came in at negative 761 million TL, corresponding to an EBITDA margin of minus 8.1, with a 190 basis points margin contraction year-on-year. While declining gross property was reflected to EBITDA, EBITDA margin contraction remained more than the gross margin decline with the impact of split operations and improving of excess sales ratio across vehicle. On the cash flow side, vehicle-free cash flow improved meaningfully by 26.5% year-on-year. Despite the earnings pressure, this improvement was driven by mainly tighter working capital management and also capex discipline and lower interest payments. The first quarter represents the weakest cash generation period for the business, and we expect progressive normalization as volume recover through the rest of the year. Improving free cash flow generation remains our top priority for 2026 and going forward. I would like to briefly share the impact of TS29. I'm in hyperinflation account on our financial results. For analysis purpose, if you look at the numbers excluding TS29 tracks, underlying operational performance is materially stronger at consolidated levels, as also shown in the previous slide. On TS29 excluded basis at Birle group level, revenue would have been 9.7 billion TL with 22% increase year-on-year compared to 9.4 billion TL with 8% decline year-on-year under TS29. EBITDA remained positive on a non-TAS29 basis. Accordingly, EBITDA would have been 251 million TL compared to negative 761 million TL as reported. In terms of the cash and debt management, As of end of March 2026, consolidated net debt to EBITDA stood at 1.3. At the beer group level, net debt to EBITDA was reported at 4.6, while excluding TS29, it was 3.6. From the banishment perspective, gross debt at beer group level stands at approximately 1 billion USD, with average measure of 1.60, while 64% of our gross debt is in hard currency. Our cash position is $0.2 billion, with 56% held in hard currency and 39% in eurozone currency. On the risk management side, for 2026, we have already hedged 72% of our aluminum exposure for Turkey and CAS. In Turkey, 86% of our FX exposure has been hedged. That's basically the end of my presentation. Now I will hand it back for the Q&A. Thank you.
Thank you, Yasemin. There is one question already on the floor. So let me summarize. Do you see any improvements in April trends after the rebranded products reached shelves?
Thank you for the question. Let's rephrase the question. The rebranded products, let me clear the air around our new products. Over the years, FS has gone through many packaging changes and liquid improvements. Most often were evolutionary steps, but this is because of the reason we just put our consumers in the heart of our business. And now, today, our consumers expect a more comprehensive transformation from FS, both inside and outside the bottle, while also expecting the brand to stay through its spirit. This is exactly what we are aiming to do with FSFamily. We have upgraded the liquid. We have modernized the packaging, strengthening shelf visibility. We have improved the serving standards. And we have simplified the portfolio architecture while preserving the emotional bonds, heritage, and authenticity. Launch was in the 22nd of April. So it's very fresh and it's very new. our distribution is still limited our expectations are so high the early indicators are very positive and on the blind consumer tests before the launch we observed and we were rated as the best luggers all around so yes we have we have very positive indicators early indicators but it is still too early to talk about the full scope I think summer period and summer season will give you be a good idea about the new product's performance.
Thank you very much. Another question comes from Eran Erciş. Thanks for the presentation. Given the 20% year-on-year volume decline in Turkey a year in first quarter, what's your visibility on the second quarter recovery? Does the weak start create any downside risk to the full-year guidance? Also, pricing appears so. Are there any pricing action being considered in the near term?
Yeah, thank you again for the question. Despite the headwinds and Ramadan impact, I think the business remained resilient in terms of OPEX management. We were able to protect our profitability through disciplined OPEX management and mainly supported by savings in sales and marketing expenses. As a result, we are able to achieve a BTA margin almost flat. Looking ahead, we are taking a more cautious view for the reminder of the year, as performance in the first four months has become below our initial expectations. We did not want to make any changes to our guidance yet. Given the seasonality of our business, we believe we need to see at least the second quarter performance before having a clearer view of the full year. The first quarter is typically our lowest volume quarter and therefore does not necessarily set the tone for the rest of the year. Moreover, we expect the FS family launch to support our performance in the upcoming period. For now, we are maintaining our guidance of slight volume growth for two cooperations while recognizing that this guidance currently reflects a more optimistic view and we will be following up quite closely.
Thank you. Another question comes from an anonymous user. One of the organized retails that sells alcohol, Carpursa, was sold to a group that does not sell alcohol. Are these kind of changes that you closely monitor?
Can these losses be compensated through the sales in traditional channels? thank you for the question actually we have been working on this project quite some time so we have a proximity analysis of every car for point of sales in traditional trades and the total carper coverage was as a single digit so we just have the proximity analysis and in every car for point of sales in the same street so we have 200 meters 500 meters kind of proximity analysis and we also we already compensated and we have the plans to for compensation our loss that will be coming from the car for point of sales both with the other modern trade customers and traditional trade customers.
Thank you. Have you already seen any cost increases on the packaging side, for example, in glass or aluminium? As far as we all know.
As we all know, we are hedged in aluminium.
Actually, compared to the previous year, we are mechanism based on the hedging mechanism in terms of the aluminium. And accordingly, of course, there is an increase in the aluminium price in the market, but we are using the hedging mechanism. In terms of the glasses, So we made our purchasing in Turkey. We already made most of the year. For the rest of the year, we didn't see any price increase yet.
Thank you. Do you have a year-end net debt to EBITDA target for Turkey beer operations based on IAS 29 numbers? We don't disclose net debt to EBITDA target for Turkey, but we rather disclose, I mean, we rather give the number for a beer group. It was around 2.8 times when we closed the year 2025. And Yasema, maybe you would like to give a colour for 2026, which will be staying flat versus even we expect some improvement.
Yes, there could be some improvements, but currently it's too early to share about the any battery number. So within that content, we are still keep on our target for 2026.
So with IIS-29, of course, it will be higher than 3.5 times, however, without IIS-29 numbers, uh the numbers uh in any case in any even worst case scenario it will not be uh reaching even three times so it will be below a 2.8 times which was last year i don't see any more questions on on the floor. If you have any questions, we would like you to write down your questions on the question box.
Operator
There seems no more questions.
Thank you all for participating.
