Anadolu Efes Biracilik ve Malt Sanayii Anonim Sirketi (AEFES) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Anadolu Efes third quarter financial results conference call and webcast. My name is Asli Demirel, I'm the Head of Investor Relations of Anadolu Efes. Our presenters today, Mr. Can Çaka, the CEO; and Mr. Orhun Köstem, the CFO. [Operator Instructions] Just to remind you, this conference call is being recorded, and the link will be online available. 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. Can Çaka, Anadolu Efes' CEO. Sir?

Thank you, Asli. Hi, everybody. Good afternoon, and good morning to those in the U.S. Again, thank you. Thank you for all joining our third quarter earnings call, and I hope you and all of your families are healthy and safe. First of all, I would like to -- I'm pleased to report that for Anadolu Efes team and Anadolu Efes family, we are all safe and healthy as well, so that's a great achievement all through this period of time, and it continues to be a uniquely challenging year also. I'm glad to report another solid quarter. This is a result of the dedication of our colleagues when they worked so hard to [ grew join ] such an unprecedented times. And I'm inspired by the agility and adaptability of our teams where the circumstances are quite challenging throughout the year. This period performance and execution by offering the right choice of brands, while adapting to the realities of the growth led to such a set of results in the quarter. It has been another quarter where we were able to grow our EBITDA ahead of our revenues, and remain ahead of our volumes as we initially targeted. The volume growth was driven by both beer and soft drink, addressing to a sharp recovery compared to the first 2 quarters of the year. Increased mobility, reopening of the on-trade sales channel and the favorable weather conditions through the season, all assisted to volume growth in the period. At the same time, we maintained our savings in OpEx and CapEx in this quarter as well, while at the same time, we were carefully ensuring that we spent on everything required for the business continuity as well. And our disciplined focus on spending led to a margin improvement similar to the previous quarter. Working capital management has been one of the competitive advantage of our company, where we were able to improve it to a record low levels even under such challenging times. It is encouraging for me that we have generated TRY 1.9 billion free cash flow, where both business lines contributed to this strong free cash flow generation significantly. However, we remain cautious for the last quarter of the year as many uncertainties lie ahead, mainly driven by COVID-19 situation. For the Beer Group, our volumes were up by 4.4% in the third quarter, and our international beer volumes increased by 6.2%. Russia was the highest contributor to the growth in the Beer Group, as it continued its growth momentum in this quarter as well. For the rest of the CIS countries, volumes were also up despite ongoing challenges in respect to beer markets. Turkey beer volume showed a significant progress compared to the first half, which I'm going to go through in details in the following slides. All in all, our Beer Group sales volume in the third quarter was parallel to our initial pre-COVID expectations at the beginning of the year. On the soft drinks side, volumes increased by 1.8%, with the support of the sparkling category that had a robust performance in the third quarter, growing by 9% on a year-on-year basis. Still category showed an important progress compared to the second quarter, where the year-on-year decline was limited to 8.5%. Similarly, water category showed a recovery, yet it was deliberately the weakest performer as a result of our value-focused and small pack prioritization. Here, you see a fantastic chart. I mean I'd like you to focus on the specific quarter chart in the middle. These are very Beer Group numbers, all in growth mode, with a significant positive string versus last year, obviously, and also to the first half of the year. Not only we were able to improve our volumes, but also managed to translate this improvement in volumes into margin expansion and free cash flow generation. We managed to grow our group EBITDA for more than 25% and generated TRY 466 million of free cash flow in the quarter versus last year. Obviously, our top line was assisted by the price increases and positive FX translation, while our operational profitability was positively impacted by the savings in OpEx. Free cash flow generation was also supported by the improvement on the working capital that I mentioned earlier. A strong quarter helped us recover the gap in the first half that we have seen, and so we achieved positive growth for the year-to-date performances in all key metrics as well. Our international beer business continued to drive volume growth for the Beer Group. In Russia, Kazakhstan and Moldova posted volume growth in the third quarter compared to a year ago. Russian beer industry showed improvement during the period as the COVID-related restrictions were relatively eased in the summertime. And on the pricing side, competition was very high since the beginning of the year in Russia and further accelerated in third quarter, and such price promotions by the competition also contributed to volume growth in the market. Domestic consumption was higher than last year due to the relatively lower number of Russian tourists traveling abroad this year as a result of the pandemic, I would say. And our Russian operation continued its resilient growth, and grew by double digits despite the intense competition. Our aim to keep the balance in volume and value share is on track, and as shown on the graph, we have higher share in value versus the volume where the positive difference is expanding unlike the competition now. In Ukraine, our volumes were under pressure in the period due to the aggressive competition again, slightly below the industry where the demand was negatively impacted by the restrictions and the pandemic. However, we were able to grow the license portfolio, especially ex Efes brands that we have introduced last year. So that continued to develop in the quarter and now the business. For the rest of the business for CIS countries where our volumes were up in the period, except Georgia. The [ route to market ] was impacted by lower tourism throughout the season. The volume pressure was mitigated again by savings in OpEx and CapEx, and also the price increases supported the profitability. So again, throughout the period, despite the ongoing challenges, we continued our successful brand launches, execution initiatives across the board. And that's energy -- that exercise was -- you would remember in our first [ quarter call ], we talked about our relaunch of Efes family in Turkey. So in Turkey also we are seeing the positive developments related with our brand launch. Despite of that, our volumes significantly recovered in Turkey compared to the first half, and declines merely 4.3% in the third quarter versus last year. Obviously, lack of tourism, low consumer confidence, eased but still ongoing restrictions and concerns on the pandemic impacted our volumes negatively through the period. Yet we were able to generate volume growth in July and August, with the half of the increased mobility after easing of the risk -- some of the restrictions and favorable weather conditions. Pressure on on-trade volumes continues as expected, however, the demand for open area events supported off-trade volumes in the period. On the other hand, the volumes showed slowdown in September, being impacted by the price increases following the excise tax increase, and accelerated number of COVID cases in the country like many countries facing now. Also, the macroeconomic environment was unfavorable. Therefore, we remain cautious -- we remain our cautious stance for the last quarter of the year, since COVID cases are increasing, there can be possible lockdowns going forward and also the recent changes in terms of restrictions. As I mentioned, our Pilsen launch of Efes family had wider coverage throughout the season in the country. We are getting very positive feedback from the market as proven by the increasing brand launch scores, as well as higher quality and taste reception by our consumers. We are witnessing an increasing market share in Efes Pilsen brand, yet it's too early to make a judgment rather than talking about this early positive indications. And our craftsmanship efforts and seasonal offerings continued in the period, including Efes Summer Blue, Varim Limon and Bomonti IPA launch, being supported to the -- to our volume performance through to the quarter. A few words on the soft drink side of the business as well. Consolidated sales volume was up by 1.8% in the third quarter, significantly improved compared to the prior period's quarter. Volumes seen in Turkey continued to recover gradually, benefiting from these restrictions as well, being only down by 1.9%. Favorable weather conditions, well-managed promotions in the case of soft drinks also contributed to the domestic volume performance. Sparkling category, as mentioned, was the most resilient part of the business, short growth on a year-on-year basis. That has been improved on and the share of immediate consumption packages compared to second quarter, although it’s still below last year's level. International operations volumes were strong in the period as a result of higher share of sparkling category in the international part of the business. Volumes grew by almost 7% on a year-on-year basis, but Kazakhstan and Azerbaijan were the only laggards. Pakistan was one of the best performers, and grew by almost 13%, where successful consumer activities and right execution on the field supported our volumes. Middle East volumes were also applied for -- from 0.8% with this period reforms in Jordan in sparkling category growth. And in Iraq was close to 11% with the contraction in water category. Finally, looking at Anadolu Efes consolidated results. Volumes grew by 2.5% in third quarter, driven by the growth in both business lines, as mentioned. Therefore, our robust performance in the quarter mostly offset the challenges in the first half. Consolidated net revenue grew more than 24% on a year-on-year basis in the quarter, and reached to TRY 8.7 billion. Top line performance was assisted by higher volume. Price increases as well as the revenue growth management initiatives to drive the value. Also there was a currency translation impact of around 11% in the period. We have delivered almost 48% EBITDA growth, and more importantly, more than 380 basis points margin expansion as a result of the tighter cost and expense management, as well as the top line performance support on the profitability. We have recorded a net profit of TRY 460 million in third quarter, contributed by the improvement in operational profitability, obviously. Despite high profitability, decline in the bottom line is due to lack of one of income impact incurred in the third quarter last year related to FX gains of more than TRY 210 million as a result of the repatriated cash from international operations to Turkey, it is also worth mentioning that Anadolu Efes net FX position turned into positive this quarter for the first time with the contribution from both business lines. Free cash flow in third quarter more than doubled similar to the prior year's quarter, and reached to TRY 1.9 billion. There was an increase in the free cash flow in both business lines, and this cash generation is the result of -- driven by this period performance is working capital management, prudent CapEx spending as well. As a result, our consolidated net debt-to-EBITDA margin has improved to 0.8x as of end of September. And Orhun is going to take -- going over the details in the coming slides for his financial review.

Thank you, Can. Good morning, good afternoon, everyone. Again, I hope you and your loved ones are all healthy, everyone's well since we last spoke, and hope it continues that way as we go through these interesting times. Now I'm going to take you through the financial results. And I'm quite happy that we're reporting another strong quarter after the second quarter of the year. Here you see some of the key items, I'm going to talk about bottom to top. I'm going to start with the beer business outside of Turkey. As Can was saying, business in Russia, especially is driving much of the volume growth on the beer side. This is true for the third quarter, and obviously the 9 months resulted in a 4% growth outside of Turkey. And if you look at revenues and EBITDA, I'm also quite happy to say we're growing -- bringing in volume and EBITDA, let's say, ahead of the revenue in the third quarter of the year. In the 9 months, we more or less caught up with the last year. You will remember, especially in the first quarter of the year, there was margin contraction in our businesses in Russia and Ukraine, primarily in Russia, that was coming from the [ promo ] transition between 2 years, which have since the last 2 quarters more or less normalized as we look into a more balanced volume versus value growth. If you look at businesses, Outside of Turkey, Russia and Ukraine internationally, the volumes are softer but developing, but financials continue to be very strong, and therefore, you see these good set of results. If we come to Turkey, we already talked about volumes. But given the fact that the volume performance were comparatively better in this quarter of the year. Obviously, we're looking at a very good set of results in the third quarter, where the revenues were up by 12.3%. This is also assisted by the fact that now we're looking in -- by the fact that we're looking at price increases in the second quarter after July, which obviously helped the top line growth as well as if you look at the margin together with the cost savings, the expense management initiatives, we have been able to deliver 190 basis points margin expansion in Turkey. And all in all, we're only about 60 basis points behind last year's EBITDA margin at the end of 9 months at 15.9%. Now just to give you an indication, because that's something we've discussed in the last call as well. Page 13, we have a number of initiatives that's taking place. One of them, obviously, is a zero-based planning and spending programs, that more or less touches at about 40%, 45% of the overall OpEx base. And we separately, at the end of 2019, initiated what we call a crushing initiative that's primarily directed towards cost of goods sold and CapEx. We were not necessarily knowledgeable about the fact that any pandemic was going to hit, so it was just we were trying to find ways to make sure that we reduced our cost and expense base in doing so. But between these 2, I would have said, if you look at the first -- and if you look at 2020, let's say, we have been targeting about maybe 5 percentage of the net sales revenue in total savings, and we're on track to achieve that for full year. And probably about 100 basis points of net sales revenue is going to stay with us because the changes that we have been making on OpEx or cost of goods sold, these are permanent changes we made structured. And if you look at the Beer Group, therefore, in total, in the third quarter, volumes were up by 4.4% in the 9 months, 1.5% to growth. Obviously, revenues have been growing ahead of the, let's say, revenue volumes. And then in the third quarter, again, we're looking at 110 basis points margin expansion at 18.1%. And if you look at the first 9 months, with a 13.9% and only 50 basis points behind last year's margin base. Now I'm sure you would recognize there has been significant FX volatility, especially in the third quarter, which flows into our results as well. So if you just -- based on constant currencies, we would have looked at about maybe 2% growth, in terms of 9 months figures for revenues, and our EBITDA margin probably was about 13.8% or 10 basis points reduction if the rates were to remain similar. When we come to Anadolu Efes, actually, you must have seen and listened to the CCI set of results, which were quite strong as well in the period, which as you see in the third quarter, we still see volume growth despite the fact that volumes were relatively softer, but very strong financials that flows into Anadolu Efes' results, where we see mid-20s of revenue growth and then about 380 basis point margin expansion again in the third quarter. And for the 9 months, we're looking at 150 basis points margin expansion in EBITDA. That means revenue growth of 12.5%. So all in all, good results. I'm going to touch base, especially on the Beer Group side, free cash flow and EBITDA contribution in the next few slides. Now if you look at the -- on balance sheet, on the Beer Group side, we are at 1.3x net debt-to-EBITDA, and Anadolu Efes 0.8x. Obviously, we have been growing our cash flow. And just to remind you that these results are after the fact that we have actually paid some dividends. So that's from quarter-to-quarter may change the free cash flow position. But nevertheless, we're still looking at very healthy set of leverage, which we were planning against and doing quite well. And our average debt maturity now is 1.7 years. The biggest chunk of debt that remains to be the Eurobond that matures in November 2022. So as we discussed earlier, starting from next year, obviously, we will be reviewing our liability management alternatives for that debt. But in the meantime, a few things that you can expect us to continue doing, and again, as we discussed, we will further reduce the FX debt exposure in our balance sheet. I said in this forum, at the end of 2020, we're expecting the Eurobond to be the only remaining FX debt exposure in our balance sheet, and it is going to be that way basically. Secondly, we will continue to hold a majority of our cash in hard currencies. As you know, our entity, Efes Group International, outside of Turkey, receives dividends from outside operations really healthily. And as we said that we maintain a certain amount of cash outside of Turkey, and from time to time, repatriate it in Turkey, if we find that we need to pay higher interest rates for working capital reasons from time to time. And that happened, by the way, between 2019 and 2020. So the [ new group ] had quarterly differences. In 2019, there was a big chunk coming from EBI in the third quarter in 2020, also that was in the first half. So that makes a difference in terms of numbers because we -- let's say, we record a positive FX income from those exercises. As I said, we recorded a record low level of working capital. Our core working capital to net sales revenue at the end of 9 months was minus 16.9%. And if you -- on the Beer Group, if you exclude the Russian and Ukrainian businesses, which traditionally delivers negative working capital, we reached 0% on -- across all other operations on average. So we're doing quite well, which we expect to stay with us and are going to touch base on that a little bit in the following pages. And from a hedging point of view, we more or less see this year anyway, so it's there. Again, as we discussed, we started hedging obviously, for next year, but we also starting hedges for the longer term, especially the commodities in this period, given that from time to time, the demand was low, we have found it very opportunistic to hedge our positions in aluminum, for example, we're hedged about over 60% for 2021. We're hedged about over 10% for 2022. We started hedging plastics, we hedged about ¼ of our position for 2020. And for FX, also, we're looking at something close to 60% in Turkey. We managed to hedge that positions already And these positions as coming out of cost of goods sold, or taxes and interest basis. So this is, at the end of the day, how we manage a relatively healthy, let's say, balance sheet. If you look at the EBITDA very quickly, as you see in the third quarter, obviously, partly from the volume growth mostly from the pricing, again, the price increase, especially in Turkey was a contributor to that. We have positive revenue, obviously, difference. That offsets most of the cost of sales in the period, basically. As you see, our SG&A marketing expenses, OpEx in general was close to being flat. And the other number you see, that TRY 52 million, is mostly the FX or the currency conversion difference for the period, and therefore, we have been able to deliver 25.5% EBITDA growth with margin expansion on the Beer Group. If you look at on the next page, the breakdown of the free cash flow. Now obviously, we talked about positive EBITDA difference. But the majority of the difference is coming from working capital, as I said, we were at minus 16.9% at the end of 9 months compared to minus 10.5% at the end of 9 months in 2019. We're constantly reducing that, especially, as I said, in Turkey, we have had very significant headway and all across the operations, our receivable management was stellar. We were not that far in most of the operations, we were better in terms of receivable days compared to last year's periods. Our inventory levels were at par, sometimes a little bit higher, because we've made that conscious choice in the second quarter that we were going to make sure that we have managed it through certain buffers in order to make sure that there were no business interruptions had we go into times of, let's say, COVID expansion or second wave or what have you basically. So that's a [ safe, effective ] on the inventories and payables, in general, we're managing quite successfully so that we end up with very good working capital management. Now we will obviously continue doing so and we're being very, very careful in working capital management, especially if next year, things were to go better than this year. Hopefully, they do. Obviously, we will have some pockets of opportunity in -- especially in the inventory levels, but we will continue, as I said, managing that quite carefully for us now. Again, if you look at the CapEx numbers, that's the other important contributor to the cash flow generation, basically, which is about TRY 5 million in the third quarter. Obviously, that's a small number. And this year, in general, we can say compared to last year, CapEx will be in check. So far, I mean, even though we may think of -- and this is what we are doing currently, looking at our options to start spending some CapEx so that we would be ready for next year. We shouldn't expect any hikes in CapEx to net revenue for Anadolu Efes, for Beer Group in general, for the full year in 2020, as we suggested in our guidance, basically. And then you see in the third quarter then we had a shift -- a positive swing from minus 22.8% in the third quarter of 2019 to close to 450 in the third quarter of 2020. Now with this, I will give the word back to Can for his closing remarks at the moment. Thank you.

Thank you, Orhun. Obviously, there are still challenges and uncertainties ahead of us cost -- especially considering the -- we are all facing, experiencing accelerated number of COVID cases across our operations globally. So -- and moreover, obviously, the pandemic period created a lot of pressures on the economy. So we are all facing the volatile macroeconomic environment in our countries. So that is the -- this is creating a lot of challenges on national uncertainties going forward. Despite having strong results in the third quarter and fourth quarter, it's being a relatively small quarter, we reiterate our year-end Beer Group outlook, assuming the restrictions in on-trade are going to be tightened. We have seen the one example in Turkey recently with possible lockdowns can come as we are seeing in Europe. So those developments, those changes in the environment, making us cautious. Therefore, we keep our Beer Group volume expectation of mid-single-digit decline unchanged. Discussed during this call and previous calls, cost mitigating measures is taken as well, and the CapEx and OpEx savings are in place, and will continue. There is a significant support in our profitability, especially in the second and third quarter this year. However, as we make our plans for the coming year, we will procure certain raw materials early to ensure lower price volatility and make some shifts in OpEx and CapEx spendings. Therefore, these may impact our working capital in the last quarter as well. And on the other hand, we still expect to generate a positive free cash flow in the Beer Group in 2020 and yet lower than its record level that we reached last year. That concludes our presentation. Now we are ready to take the questions. Actually, there are already 2 questions published. Asli, are you going to read the questions?

Yes. Yes, Can. And the first question comes from VTB Capital. I have a couple of questions. First one is, what are your sales in October 2020 in Russia and in Turkey? Are the trends better than third quarter? What's your CapEx guidance for 2021?

Obviously, when we had the -- revised our guidance for the -- for 2020, actually, at the beginning of the summer period, we are still cautious on the pandemic developments and so forth. So basically, our guidance as of today incorporates that cautious approach. And frankly speaking, given the third quarter performance, we were thinking and hoping that there could be a little bit more upside to that. Having said that, what we have tried to explain in the outlook portion of the conversation, as we are experiencing in Russia, as we're experiencing in Turkey, every other country, we are seeing the COVID cased increasing, that's creating a lot of tension, concerns among consumers, first of all, and among governments, and they are acting to take additional restrictions. So basically, that is creating, let's say, concerns that there is -- that concerns among consumers are also reflected to the trend, I would say. Early summer, I mean June, July, August, especially after the lockdowns, when our consumers were able to go out, and the weather conditions were good. So they were happily going out, spending some time outdoor and consuming more of our beers that was contributing to the growth, to the numbers that we are sharing with you today. But as the fourth quarter, I would say our cautiousness are linked to the increased number of cases. Weather conditions becoming cool again. So in that perspective, we see again less mobility, less going out. So that's why I wouldn't be able to say we expected that go in the same manner. With respect to the CapEx guidance, I mean, obviously, this year, when we hit by the happenings with the pandemic, we cut a lot of CapEx, we have kept our -- and we have, let's say, had a very prudent approach and frozen almost all and then release whatever necessary to ensure the sustainable [ of our ] business going forward. Planning as of today for 2021, obviously, there are certain needs, there are certain opportunities as we see. So we expect to have a higher CapEx compared to what we had to do this year I would say, very, very minimal. However, again, we will be very prudent. We will see the developments. We will have certain parts frozen, and we will be releasing those as quarters go by as we see the progress, as we see how the pandemic progress will impact our markets, how the economy with macroeconomic conditions will evolved and everything. But our initial expectation and our, let's say, planning is higher -- would be higher, obviously, compared to this year.

But just maybe to add to that. If you take what we spend as CapEx as a percent of revenue over the course of the past few years, will get to a bandwidth between, let's say, 8% to 10%, and still we expect at this point in time, we will stay within the bandwidth. But year-on-year, we will need to discuss this in our next call in detail.

Asli, the other question?

Sure. The next question comes from Selim Kunter of Deniz Investment. Congratulations on your successful results at such a challenging environment. I must admit that it was quite surprising to see domestic volumes remaining so resilient despite the absence of tourism activity, at least from outside of Turkey. Among these adversities, how do you explain this performance? Would it be fair to say there was a change in consumer behavior like trade-down impact, et cetera? In Russia, you seem to have benefited from COVID restrictions, how sustainable is this performance? In short, in light of underlying market conditions, how do you see the demand outlook in Turkey and outside of Turkey?

Thank you, Asli. Selim, thank you for the congratulations as well. Let's -- obviously, as I tried to explain, through the summer, we have seen consumers going out and spending some time outdoors and with the weather conditions, and we are also consumers, we all need to pamper ourselves, so that was a good occasion, that was a good opportunity. So we -- throughout the season we have seen the support, especially in Turkey, in that perspective despite the rightly stated [ flow-through ] of some activity impacted our volumes. Still, on-trade was -- the consumers were, let's say, concerned to go out and drink, eat outside. On the on-trade, our on-trade volumes were still below last year numbers. But at least on sitting outside or on open terrace or on the pavement was possible throughout the season. So that covered to some extent also the impact was less compared to the prior -- or second quarter, I would say. And that is specifically for Turkey. And obviously, our rebranding the Efes family helped us through the season. Outside of Turkey, I would say that there is the couple of, let's say, probably Russia was benefiting from less number of Russians going out for the country through the season. So they stay at home and they -- then they, let's say, we benefited from the volume. Let's also note that, last year in 2019, July was quite -- unusually cold, unusual cool. So basically, that was a low comparable on the month of July, specific for Russia again. So we benefited from a low comparable in July. The final remark I would like to make, again, that's culturally and constructurally difference of our international markets versus Turkey, that's the alcohol consumption behavior, habits, so on and so forth. So what I'm going to try to explain is very difficult to put into numbers, fluid numbers. But I was especially -- let me give you the example from Georgia. Georgia is that there's a wine culture, the celebration, family gathering, family festivities, this is celebrated by the wine, basically, it's locally produced wine. It's a nice wine. Let me have some advertisement as well. And I was asking -- and as we see the beer market, I mean initially, I think I explained this in the second quarter call as well. Initially, as I was expecting less beer consumption, maybe staying at home, I was expecting the lot of Georgians to drink more wine. And I was discussing that wasn’t true, so beer consumption turned out to be resilient. And I was discussing with my colleagues that they were saying that staying at home alone, you don't have the gathering, you don't have the festive. So basically that’s is not a wine consumers, but they -- and they don't want to take alcohol. So that's -- and beer consumption is not taking -- considered as a higher alcohol consumption. So basically, this behavior change was kind of, let's say, supportive for beer in the region. And similarly, we see that in Russia, probably in the region, instead of drinking vodka, probably we have seen some of the consumers trading to beer being lower alcohol content basis. So that's one thing. Partly one question -- within the question was about trade down. Basically, I would say at the beginning of the April, May, we have seen some trade down. But throughout the season, as I said, there are people spending some time after basically, we have seen the consumer behavior getting back almost to the normal, so there wasn't trading down throughout the season. So we benefited from that in our markets as well. Asli?

The next question comes from JPMorgan, Hanzade. I have 2 questions. Can you please provide further color on Russian operations, such as what's your current market share? Do you continue to develop margins here albeit stiff competition? And which segment do you face higher competition -- higher price competition? The second question is, would you repeat the FX hedging on raw material cost side? I may misunderstood this, sorry, if that's the case, and provide the details of what level of FX did you hedge the cost?

All right. Maybe, Orhun, if you don't mind, why don't you start with the hedging, and I will go back to the first question.

Sure. Thank you, Hanzade. Now yes, the answer to the second question is yes. We continue hedging both the, let's say, both the commodity price and also the FX component. So therefore, we do that, especially for Turkey, we do that for cost OpEx as well as the interest payments that we have. And if you look from today, if you -- I mean on the cost and OpEx side, we are hedged about 60%, 61%, 62%, something like this. And we are, I think, our average should be if you convert everything to dollars, our leverage should be just over 7, 7.1, it should be something like that. So quite beneficial, we do that. That's the continuous process. It's not like -- it's not like we're taking decision and then we take a decision against. It’s a continuous process. On a trailing, let's say, 12-month basis, let’s put it this way. So at any given time, you should find ourselves hedging for CapEx.

Thank you, Orhun. Thank you, Hanzade for the question. Again, I mean, In Russia, on a year-to-date basis, we had a higher market share, more than 2 percentage points higher market share compared to last year period. So in that perspective, I mean, the gains that we had last year, last -- at the end of last year and earlier this year was reflected in this one. And basically, the more important thing, we are balancing our market share development and revenue development as well. And given the pricing environment, being talked in terms of competition point of view, we were very much looking to balance this, and we have, let's say, a clear prioritization on the value share toward that, we are very happy that our value share gain is higher than our volume share gain, which is great. So that's a good balance of volume development. And that value share is also reflected into revenue growth despite the pricing environment. And what we have seen every other quarter, our margins improved versus the prior quarter, that is very important for us. That is, I mean, basically a very good balance with respect to the top line growth and the bottom line growth. So that is our strategy. That is how we are going to act in the market. So this is what we are trying to do. Obviously, we have seen -- I would say, the price competition is obviously in every other segment, but usually, In Russia, the main -- the biggest, let's say, competition is at the core, is at the lower premium segments, which makes the significant part of the beer market. So that continues. That becomes -- continues to be tough. So this is how it is progressing for the time being. Thank you.