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

Ladies and gentlemen, welcome to Anadolu Efes' Second Quarter Financial Results Conference Call and Webcast. My name is Asli Demirel, I'm the Investor Relations Director of Anadolu Efes'. Our presenters today, Mr. Can Çaka, the CEO; and Mr. Gökçe Yanasmayan, the CFO. [Operator Instructions] Before we start, I would kindly be cautious 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. Good afternoon to all and good morning to those who may join from U.S. Welcome to our call for the second quarter result. Beforehand, I would like to warn you there would be a lot of references to strong and exceptional risk results throughout the presentation, so it might be a little bit emphasize on this, but again let's start with that. I'm quite pleased to report that we had one of the best performances in a quarter, with exceptional results in all metrics, so let's start with that. Obviously these results are -- despite all happening -- despite all the global headwinds, volatile operating environment needless to say, the political and macroeconomic challenges. And I would say what happened, we were able to beat our expectations in the quarter following a very strong performance in the first quarter also as a total of 2 quarters. Our first half results are as strong as you see. Obviously, benefited from -- benefited similar to the first quarter, throughout this quarter as well from the low base because last year the first 2 quarters were highly impacted with the pandemic and basically we are cycling a low base in that perspective. We benefited from the recovery of on trade especially and mobility of the people to some extent. Thus, the strong volume performance was also supported by the promising tourism numbers in that perspective, especially in Turkey, as well as our the solid momentum behind our innovation pipeline and recent launches. One -- on top of the solid volume performance, we had a strong top line growth as well. The top line growth is supported by foreign currency translations basically because of our, let's say, international parts of our business, our diverse geographical footprint is helping. The top line momentum was primarily driven by adequate prior pricing adjustments as we discussed in the prior quarters and before the year-end. It was obvious that we would have been, let's say, the inflationary environment, the commodity prices were going up when we were planning for the [Technical Difficulty] in every other operation we have taken pricing -- strong pricing decisions and that was big development in terms of the timely management disbursed throughout the first quarter and early second quarter, that's also followed by the efficient revenue growth management initiatives and the 2 also supported on top of the volume, the top line growth. We were also deliberately managing the cost and expenses, being very cautious with all what's happening in our region. So in that perspective, we were strictly ready for the inflationary ways and although this -- the events that we were witnessing throughout the quarter. So those were of help and one more credit to our finance team in terms of really very effective use of hedging, both in terms of currency hedging and also material and commodity hedging and those also helped us in that perspective, improving our profitability despite the very volatile cost environment. We were very well prepared for [ enrolling ] in that perspective and supply chain issues, then better [ funding ] in that perspective. We also had deliberate decisions in terms of increasing our inventories to benefit from lower prices at the end of last year. So, we benefited from the first quarter in first half to the usage of existing increased inventories. So better operational profitability, working capital improvement despite this inventories were high at the beginning. Again we had further savings in CapEx and favorable currency. We have led to our free cash flow generation to reach all-time high level once again. While we expected to be normalized to some extent in the second half of the year, partly because of this beginning inventory pay effect partly now we are seeing, let's say, the real impact of the, let's say, current prices. Therefore, we are cautiously optimistic for this year due to continuing inflation pressures. And to some extent, the pricing we have taken throughout the first half was by in step, so now we are seeing the full price impact and that is why we are expecting the demand then as little bit of softening on the demand side as well. However, we are committed to our strong execution in that perspective, so I'm very, let's say, confident that we will continue to deliver strongly in the second half as well and with this help of the first half results, we are improving our expectation for the Beer Group, improving our guidance and I'll at the end of the presentation, I'll go into details of that improvement. As noted earlier, our consolidated sales volume exceeded pre-COVID levels for the first time. Thanks to again -- I mean, here we have to give credit to the soft drink division, CCI, very strong results in terms of volume and that has helped us in terms of -- to improve volumes on a consolidated basis. Yet on the Beer side as well, I mean as really, you know, we stopped the operations in Ukraine since February 24th unfortunately. Excluding Ukraine, still the Beer segment volumes were flattish. So -- and the 13% growth achieved in the quarter was above our expectations and bring our first half volume growth to Turkey in 13%. And organic growth, excluding, I would say, Uzbekistan, on the soft drink side, the volume growth would have been 6% in the second quarter. Turkey reported another strong performance. You remember, we discussed the pandemic affected Turkey most as we had the highest on-trade proportion in Turkey. And you would need to remember also that we had certain days off what in -- off-trade and on trade last year due to the pandemic. So this helped both business segments with the volume recovery in Turkey. And on top of this low base effect, I would say our innovation pipeline helps further with our new launches and expansions. And excluding the JV, the rest of series had a very strong performance through the quarter as well coupled with Turkiye performance despite volumes were behind last year in Russia. Beer group volumes, excluding Russia was -- excluding Ukraine certainly, sorry, was flat, however, able to cover the volume lagging behind in Russia. Soft drinks both domestic Turkiye and international operations were resilient and continue to taste strong momentum with reported growth of 25% in the second quarters in CIS region -- in the second quarter, CIS region Uzbekistan and Pakistan had the highest contribution to the growth in the quarter. Coming back to the Beer Group. As discussed, our reported volume decline was low teens in the quarter when excluding Ukraine that was flat over the past year and was actually better than our expectations in that perspective. Specifically in Russia, following a strong quarter, we were expecting some softening with high prices, let's say, moving to or reflecting to the consumer, especially in the second quarter. Yet, we have seen the general market dynamics turning to slight decline starting from May and posting a low single-digit decline in the quarter. The market was impacted also -- the availability issues of some brands and beers and lower discounts and that's lower discount to some extent, they link to the available -- linked to the supply chain issues. Overall, I'm talking about the market conditions. So, and that's also linked to let's say the price adjustments taken by all players to the first quarter and early second quarter. So when we look at our own volumes, we are -- volumes were more or less in line with the market and that's in line with our expectations, mainly our local brands Stary Melnik Iz Bochonka, Essa, Gold Mine Beer show the highest contribution in the period. We have seen some softening in the performance of our non-alcoholic brands. However, the extensions that we have discussed in prior calls, the cider category also increased and added to reach our volumes. We continued on our efforts to pursue our portfolio diversification strategy in that perspective. We launched extensions especially Lowenbrau Ungefiltert, on the Ungefiltert segment, we launched new line extension for Essa brands and different flavors to continue to provide the leadership on the flavored beer segment. So those were the parts of the innovation pipelines and those helped to our performance in Russia. As for Ukraine we are all, we are -- we have decided to resume operation, so in that perspective, we are looking to details. We have 3 breweries, we expect to have one the Chernihiv brewery being operational in the coming periods -- in before the brewery becomes the operational, we will -- starting the sales and distribution that will be supported by imports business until the production starts. For the rest of the CIS, we continued our solid momentum, grew by mid-single digits in the second quarter. Obviously, you will remember, we were discussing in various calls and then there is inquiries, while focus was to strengthen our national brand, national champion brands, premiumization was on our agenda together with the exception. So both all in all countries in Kazakhstan, Moldova, Georgia that was mainly the primary focus and it worked well. And in Kazakhstan, we continue to grow, thanks to again here the premiumization helped us together with the extension on to different segments. Similarly Moldova shows high single-digit growth again driven by premiumization and crafting in to some extent and backed by non-alcoholic beverage growth then beer growth and low teens in Georgia growth level that is also supported by the soft drinks, soft drinks segment of Georgia had impacted more from the pandemic, so the recovery is also more positive, but again the premiumization helps in Georgia. And again few words on the domestic Turkiye performance, we recorded a solid growth after the first quarter. Again, as I mentioned, supported by the recovery from the pandemic, from our base, recovery of the tourism or strong start to the tourism season also supporting together with the recovery on the on-trade and the more it and let's say dining out trends that we are seeing in Turkey. But I'm also proud to share that our latest launch, we have launched a new beer, an affordable beer in Turkey Bremen 1827 showed a strong performance despite it was just a month of right on the -- and June was included in the first half result. So I hope to see better results with this new brand in the market. As usual, a few words on our soft drinks division performance as well as CCI's consolidated sales volume registered another strong performance with the reported growth of 25%, excluding Uzbekistan, organic growth was also strong at 15% and the solid volume performance was across the board including Turkiye, Turkey and international operations. From the category perspective, sparkling category maintained its momentum and increased by 25%, while the growth of Coca-Cola brand was even higher 26%, the Still category recorded a similar growth rates -- with the overall growth with strong ice tea and energy drink platforms as well or to category growth was led by -- backed by solid mineral water category platforms in that perspective. Again, domestic operations, a solid growth similar to beer, that's also soft drinks had the advantage of cycling low base due to the pandemic again. Volumes were supported by that -- the good momentum achieved during the month of Ramadan with also the better tourism also supporting the category, together with the recovery in on-trade in Turkey. Cycling a strong 20% growth a year ago, international operations again continuing to deliver an outstanding performance reporting a 29% growth and 13% organic growth in the second quarter. Pakistan, Kazakhstan, Uzbekistan were the main contributors to the growth of international operations. The highest growth was registered in Uzbekistan, so we are happy with the immediate reflection of the proper -- a very good geographic expansion on CCI side, especially with strong momentum in the sparkling category. Coming back to beer again, like to mention once again that the -- we had extraordinary successful quarter with strong results, both in terms of revenue and profitability management. In the second quarter we -- our revenues grew by more than 135% with and on an FX-neutral basis, the growth was around 60%, again growth was partly discussed on top of the volume growth, pricing proactive revenue growth management initiatives, which also included were very efficient discount management helped the growth in that perspective. As I noted at the beginning, we had very, let's say, total planning for the year. We have decided to ensure that we will deliver the cost increases into the pricing. So we have throughout the first quarter especially and early second quarter pricing initiatives across the board and that's reflected into the short profitability. So in that perspective, we were able to expand our gross profit margin and strongly benefited also from the FX in that perspective and commodity hedges and the impact of inflationary or the cost increases or cost pressures coming from the commodity prices were properly reflected and offsetted in that perspective. And we -- on top of that, we were very, very careful, strict on our expense management as usual and kept our discipline in that perspective. Therefore, in the Beer group, we expanded our EBITDA BNRI margin by 460 basis points with 29 basis points expansion at Anadolu Efes level on a consolidated basis. Net profitability increased more than 3x compared to a year ago and reached to TRY 1.4 billion TL in the quarter. Obviously, significantly higher EBIT was the primary reason on the back of increased bottom line, while we also benefited from FX translation in that perspective, the contribution of the international operations, I would say. Financial expenses were significantly higher versus the last year with increased cost of borrowing throughout the period and higher TL equivalent of hard currency interest expenses due to TL appreciation in the period. Yet we were able to improve our bottom line. And together with that bottom line also, we were -- our free cash flow generation also was significantly ahead of last year, reaching all-time high level of TRY 5.4 billion TL, lowering our leverage despite the increased, let's say, indebtedness in terms of TL, we were able to lower our leverage to 1.1x only. There was an outstanding performance in the first quarter in terms of cash generation. Again, this to some extent, this is attributable to extended payables despite the increase of inventories, FX conversion impact from the working capital also helped. But again, we are cautiously reminding that we expect some normalization in the second quarter also. We may do some pre-buys also for the year to come in order to ensure the supply chain and overcome the potential, but next and again to improve the visibility in terms of supply. Therefore, the first quarter performance is not fully -- is not fully expected to be reflected to the full year, but again we have improved our guidance for the year. And I'll mention to, let's say, outlook improvement in the coming minutes. But before then I would like to leave the ground to Gokce go into further details of the financials.

Thank you, Can. Good morning, good afternoon, everyone. Welcome to our conference call for first half results of 2022. Actually you just listened to Can speaking about Anadolu Efes' exceptional results for second quarter and first half. So I would like to give a bit more flavor for the Beer Group. You have heard already many times, but let me repeat, in second quarter volume declined by 12%. But here important to underline that Ukraine has not been operational since February 24. So if you were to exclude Ukraine, you would be seeing a flat performance for the quarter, in an environment where we've been pushing an need to pricing action stability in order to mitigate our cost pressure, so that's important to underline. And Beer group sales, the group has significantly outperformed volume performance and reached TRY 9.8 billion in second quarter. Again, here, I would like to remind my note from previous call, in all P&L lines, we have so far seen and we might like to see for the rest of the year, conversion impact coming from international operational results, [ STI ] continues to have a weak performance. This currently reflects positively to our results, thanks to our diverse geography footprint. Having said so, FX natural basis growth in sales revenue was also very strong at 32%. This was -- thanks to price increases effective discount management and favorable product mix. In the first half of the year, Beer Group sales revenue increased by 114% year-on-year and reached almost TRY 15 million. On the cost side, nothing new or at least no positive views yet, unfortunately, mostly linked to global concept context. We still face strong headwinds and volatility. There has been significant inflationary pressure in the packaging materials, as well as energy prices. Nevertheless, timely price adjustments, coupled with effective use of commodity and currency hedging helped us offset the impact of cost inflation and even improve the margins. I'll give you an update of outages in the coming slides. Beer Group gross profit increased by 128% to TRY 4.2 billion in second quarter. And this resulted to a growth of 143% for the first half, with a margin improvement of 475 bps in gross profit. Strong and positive numbers continue with EBITDA as well. In second quarter, EBITDA was up by 179% to BRL2 billion and as a result, first half EBITDA increased by 267% to TRY 2.4 billion, again with a margin improvement of 681 bps. Reminder, again, here, we are talking about EBITDA before nonrecurring items for 2022 and it means that it does not include impairment losses in our Ukraine operation or any other one-offs. And speaking of impairment losses, we had booked an impairment of TRY 908 million in first quarter late Ukraine operation. And this impairment is being constantly reviewed and the final amount for first half is slightly less than first quarter number at TRY 963 million and net income impact is TRY 390 million again. As a result of strong EBITDA, despite increasing financial expenses and impairment losses, our net income almost doubled in first half of the year. Another good news is a record level of free cash flow in the second quarter and it reached to TRY 5.1 billion. And in first half, Beer group generated a free cash flow of TRY 5 billion TL versus TRY 1.1 billion of last year. So let me show you again free cash flow bridges and give a bit more details in the following slide. So similar to the first quarter, actually we have repeated strong operational results and a very good growth algorithm, meaning that revenue is growing more than cost of goods sold and operating expenses. And this is exactly what we see in the EBITDA bridge for second quarter and first half. Besides time and price adjustments, our disciplined cost and expense management and zero-based budgeting approach enabled us to keep a lower cost base and support bottom line. And we can also see in the bridge, the positive commercial impact that I have mentioned earlier, especially in second quarter with strengthened ruble and weakening Turkish lira versus last year. Overall, a very strong EBITDA performance for second quarter and first half despite all challenges. In third and fourth quarter though, we may expect that the increase in cost base will be similar to increase in revenues. Therefore, the gross margin momentum achieved in first half may soften in second half of the year. When it comes to free cash flow, free cash flow driven both by better profitability and working capital. The record level of free cash flow as I noted earlier. However, I also have to note that each acquisition of ruble also led to a currency translation impact, supporting very strongly positive working capital result we have. So we may expect this impact to normalize in the rest of the year, depending on currency movements. Moreover, in order to overcome possible supply constraints, we may increase our stock levels than more usual, which may also have a potential negative impact on our free cash flow. Consequently, free cash flow generation might be comparable to its level last year. However, it will be stronger than our initial expectations. On the balance sheet side in the following slide, we continue our prudent approach and all the majority of our cash in hard currencies. By the end of first half, more than 60% of cash we hold was hard currency-denominated both in Beer Group and Anadolu Efes consolidated. As we have seen a significant EBITDA growth, our net debt-to-EBITDA has also seen an significant improvement. As of first half of 2022, net debt-to-EBITDA declined versus last year-end from 2.5x to 1.2x in Beer group from 1.6x to 1.1x for Anadolu Efes consolidated. So to remind and update some key figures on Beer group hedges, from the commodities we can hedge, hedged already 87% of aluminum, 100% of PET and 89% of barley exposure for 2022. And in the meantime, additionally, we have also hedged around 40% of 2022 aluminum exposure of Turkey and CIS countries. And on the FX side, actually no important update. We are pretty well covered for P&L exposure. So this will conclude my presentation. I'm giving word back to Can. Thank you.

Thank you, Gokce. So as discussed throughout the call, we had a strong first half performance above our expectations, that was mainly driven by the pricing planning and adequate pricing and actions and revenue, growth initiatives and effective use of hygiene tools together with the very cautious expense and OpEx control in that perspective. So with that in light, we expect to have -- we are improving our outlook, but again for the second half, we are -- our expectations are cautious, that's obviously given the current environment, I mean, it's still the rest of the year as we see today is as challenging as before, if not more. And yes, I mean, we see at least the increase on commodity cost is slower in certain commodities. We are seeing price levels below the top levels that we have seen through the first half. But still, the current levels need to be addressed. As discussed, we have taken the pricing actions in steps and to the first quarter and early second quarter. So the consumers face the final current pricing recently, so that one would -- normally would expect currency impact on the consumer demand and the potential impact on the strong consumer demand that we have seen till now. That's why we are bearing in mind all these challenges we may face through the second half, but we are improving our Beer group outlook as a result of the first half performance with all these challenges in mind and with cautiousness. The improvement in the beer group outlook was also reflected at -- on a consolidated basis under Anadolu Efes outlook, while the soft drink guidance was reiterated as announced in January. Accordingly, we improved our beer revenue growth expectation from mid-teens to high teens on an FX-neutral basis. On consolidated basis, we now expect our revenue to grow by mid-30s on FX-neutral basis, which was low 30s previously at the beginning of the year. We no longer expect to have our Beer group EBITDA margin to decline with strong profitability achieved and the margin expansion achieved to the first half, our NIM outlook for the margins is to be flattish in that perspective versus last year. Finally, our EBITDA margin is expected to stay flat on a consolidated basis as well, which was at the beginning of the year was a small decline around 100 basis points. So one final reminder because you might remember, as again, regarding Ukraine, on February 24, we have halted the operations in Ukraine, unfortunately with all these happenings. And recently, we have conducted the risk analysis, so our teams are on the ground and a lot of businesses are resuming operations in Ukraine. And in that perspective, we are making relations in terms of opening our [indiscernible] beverages 6 kilometers to the north of here as a result of our analysis. And basically upon and that we expect the brewing operations to be resumed by the early fourth quarter. And in that perspective, till then, we will support the operations with importation to the country. So that's overall. Now we are ready for your questions. Thank you for listening to us.

Thank you, Can. Thank you, Gokce. There are a few questions that I've seen on the screen. Let me start with the first one from AJ, [ New ] Securities. Congratulations on the strong results. Could you please comment on the competitive environment and pressure on a segment basis? Have you observed stronger growth in premium category than other players and what is the main reason for the favorable mix effect in second quarter? Additionally, in your beer segment guidance, what level of you see ruble, do you take into account in a scenario of ruble depreciation, how would your EBITDA margin be affected, could there be additional price increases? Thank you.

AJ, thank you, thank you for your strong statements. Basically, I mentioned about the growing brand in Russia mainly through Stary Melnik, Lowenbrau. So to some extent, our permits demand lower mainstream -- sorry, upper mainstream and lower premium brands were growing total in that perspective. But obviously, it was the improvement in the margins and improvement in the profitability most mainly driven by the pricing initiatives that we have taken in that perspective. And I'm not going to go into details of the, let's say, FX rate assumptions, I would say, you like to, you can. But again, I mean, if we are -- we are very straightforward in that perspective from the very beginning, if we see a new pressure on the cost base, we'll have pricing to cover that cost and make sure that the profitability is maintained. Currently, I don't see a major reason for any pricing decision. But again, if necessary, we will all be able to take the necessary decision in that perspective is all I can say.

One addition I can maybe have for this year specifically from FX point of view, we have covered with hedges. So that will be an impact on the EBITDA margin even if the FX wouldn't...

Thank you. Let's skip to the second question. Thank you for the call and congratulations on a strong future results. Two questions, can you give more color on the raw material cost development in second half? Can you walk through each raw material item? How much is hedged? What is the cap rate and how those that compare in the first half of 2022? How much is hedging into 2023? And can you discuss, what mechanisms are in place to repatriate cash from Russia. I understand at the moment, this is not a concern because of the low cash generation, right? But for the future, it would be helpful to know what option is there.

Thank you again, I mean Gokce would be able to give much more color than me. But again, I mean, when you look at raw material, commodity cost, they started to increase in the second half of last year. By the end of first quarter, we have seen the highest peak levels, I would say. But again, I mean, we were hedged and basically our -- I mean we were hedged more than 70% at the beginning of the year and even higher right now. So in that perspective, our cost base wasn't fully reflecting these historical levels per se. And we have started to hedge for next year as well, 2023 for various different commodities, but they're mainly for aluminum, 40% purchase reminding me. But again, this hedging level is more or less in line with what we have last year levels despite the volatility in the prices. But today, when we look at the price levels, we see the -- most of the commodities as we are following as we do are below their peak levels but still higher than the averages what we had to do in the last year in that perspective. So we will have certain cost pressures going through the second half because we had lower opening inventories at the beginning of the year. And also the current levels would have higher or similar cost levels for -- going forward for 2023.

Actually, there's not much to add, I can only maybe add a bigger flavor of the hedge cost of the aluminum. As you said, we have 40% of next year's exposure, currently is slightly lower than this year's average cost. So that's what I can add.

One more question. What -- can you provide an update on discussions to acquire a large share in the JV in Russia, I believe certain names were on the discussions. Can you give some color?

Well, I mean, the discussions are continuing in that perspective, we couldn't come to a conclusion. And it's -- I mean -- so it is, it would be very premature to say anything in that perspective. And as in our initial announcements, yes, there were certain brands, [ BI ] as a brand owner requested to terminate the production, that's a part of the discussion. So only after we come to a solid position, I would be able to mention -- give more details. As of today, we unfortunately, we cannot provide any color on this, but it's ongoing process for the time being.

And a question from [indiscernible]. Congratulations on the great results. I have a question on raw materials prices outlook for 2023 and how much you hedged? Actually, we already answered the question, but let me read the rest of it. In the last couple of meetings, you had mentioned about uncertainty on raw materials for 2023 as prices were sort to more -- any more comments? Okay. The next question is, could you please share the contribution of each Russia and Ukraine to the beer group EBITDA in the first half? Can you please give us more color on the status with negotiations? Again, the same question. And what is your cash position at the holding level [ EBI ]?

I can go ahead here maybe because the second question, I think Can already answered. The first question about the share of Russia and Ukraine EBITDA-wise, it's around 60% of our total EBITDA in the first half. And about the cash we holding Efes Breweries International is around $300 million in the first half and it's supposed to decrease to $150 million levels as we're going to distributing our debt on Europe.

What is the current market and consumer environment in Russia in the recent months? What kind of positive and negative surprises you are facing in the new era, changes in consumer terms. Question from Melis.

Thank you, Melis, not much of a surprise I would say. I think our evaluation at the beginning of the year both in terms of the inflationary environment reflection into pricing and everything, it worked very well. So in that perspective from the consumer point of view what we are seeing following in the market is in line with our expectations. We are not that much surprised and our execution is working in that perspective. And the only person we have taken the necessary pricing to cover the cost increase and to improve the profitability as that was our, let's say, we had, let's say, ambition to balance the volume and value growth in the country and that's also achieved to some extent through this period of time. And the -- yes, the current price levels, we were expecting to put certain pressure on to the consumer across the board globally and in specifically in Russia, we are seeing that now the prices fully pass to consumer, we are seeing softening consumer demand and for the quarter, a decline in terms of volume in the market. But again, the good news is, we are gaining both volume and value share and that's all I can say at the moment.

Can you manage to maintain second quarter Beer margins for the upcoming quarters and next year? Or is there any chance to further build up your margins on top of quarter 2 levels in the upcoming quarters in 2022?

For the second half of the year, as we have mentioned, we are expecting a softening in the margins as the cost escalation will be catching up, the price increases that we have done earlier than the cost escalation. However, you also heard about our guidance change actually. We were expecting our EBITDA margin to be flat to minus 100 bps, but we have revised positively on the positive side to flat to 100 bps positive this time around. So we are having a better expectation for the remaining part of the year, though it is going to be challenging. For the next year to come, I can say that all as Can also mentioned, our first intention is to be able to affect the prices to -- as we face cost pressures.

Thank you. Another question from Melis, when you resume production in Ukraine, is there a possibility that impairment might be partially reverse?

For Ukraine, as I try to explain, we need a couple of months to start to ramp up the operations, brewing operations. So that would be end of third quarter, early fourth quarter. And in that perspective, yes, I guess, some part of the write-down -- write-offs, impairments would be reversed back.

Obviously, we are -- as I said, I mean, constantly reviewing it, depending on the commercial landscape of the country and what we can resume, what will be the forecasted sales and volumes and free cash flow, we will look into that.

Okay. What is the medium to long-term Beer segment EBITDA margin guidance?

Well, I mean, our ambition is to improve margins going forward. So grow revenues, grow profitability over the revenue, so that's certainly the algorithm that we will like to stick to. So in that perspective, every other year, we are obviously excluding the extraordinary happenings. Our ambition is to improve margins together with the volume and revenue development.

A question from [indiscernible], how we see the outlook in third quarter so far both in Turkey and international operations?

I guess that's included in our guidance, so that's all we can cover in. Again, we have benefited such low base of last year in the first half. We have benefited beginning with the low cost base beginning inventories. So there would be further headwinds in the second half, but all these are reflected into the guidance so and we are confident to deliver what we are revising as a guidance for the time being.

And I mean, another question about the transaction, I'm skipping it.

Sorry for not being able to talk about it. But again, it's an ongoing process. So we don't need -- we don't want to mislead anyone, but that's ongoing and we'll see how it goes. Once there is a solid development, we will let everyone know about it.

Can you comment on extracting cash from Russian operations? Also, how is your hard financial cash generation in light of increased capital controls from the Turkish government?