Coca-Cola Içecek Anonim Sirketi (CCOLA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Coca-Cola Içecek Full Year 2020 Financial Results Conference Call and Webcast. I will now hand over to your host, Ms. Çiçek Özgünes, Investor Relations and Treasury Director. Please go ahead.

Good morning, and good afternoon, ladies and gentlemen. Welcome to our fourth quarter and full year 2020 results webcast. I'm here with Burak Basarir, our Chief Executive Officer; and Andriy Avramenko, our Chief Financial Officer. Following Mr. Basarir and Mr. Avramenko's presentation, we will turn the call over for your questions. Before we begin, please kindly be advised of our cautionary statements. The conference call may contain forward-looking management comments, including projections. These should be considered in conjunction with the cautionary language contained in our earnings release. A copy of our earnings release and financials are available on our website at www.cci.com.tr. Now let me turn the call over to Mr. Burak Basarir. Sir?

Well, thanks, Çiçek, and hello, everyone. Thank you for joining the call today to discuss our full year 2020 performance. As usual, Andriy and I will take you through our results. But first, I would like to thank our employees, partners and all stakeholders for their efforts and support in the unprecedented period we've left behind. I am particularly proud of our employees' relentless drive and commitment to ensure business continuity while taking care of our customers, suppliers and communities throughout the year. In 2020, our business manifested the following 5 critical qualities: strength of our portfolio and stakeholder relations, agility of our organization, effective optimization, commitment to strategy and responsible citizenship. Our portfolio includes some of the world's best-known brands, starting with the flagship Coca-Cola. We are part of an ecosystem that includes the Coca-Cola Company, our suppliers, customers, our loyal consumers and various other stakeholders. The center of our brands and relationships were on full display at the time of crisis as we seamlessly work together as an ecosystem, leveraging our brand portfolio to come out of this crisis fastest and stronger than ever before. Our organization's agility enabled us to quickly adapt and response to the new and challenging operating environment. Optimization was another word to be used a lot this year. We optimized our SKU portfolio, optimized our supply chain, marketing and work environment. With fewer SKUs in the portfolio, our product availability increased while we reduced our working capital. Notwithstanding the challenges of the pandemic environment, we remain committed to our quality growth algorithm. Through strict cost management, we achieved margin expansion and solid cash generation. Any action we have taken, we made sure it fits well within our purpose and our commitment to responsible citizenship. Now on to financial performance. With a strong recovery in the second half, full year consolidated sales volume decline was limited to 2%. Net sales revenue increased by 20%, driven by price adjustments, disciplined revenue growth management initiatives and a higher share of sparkling beverage in our portfolio. Reported EBITDA margin expanded by 282 basis points on the back of revenue growth and disciplined cost controls. This enabled us to reach an all-time high EBITDA margin of 21.8% in 2020. Moreover, we increased our earnings per share by 28%, thanks to prudent management of balance sheet and financial risks. Our continuous focus on cash generation delivered a free cash flow increase of 84% through disciplined CapEx spending and tight working capital management during the pandemic. Yesterday, we announced that our Board of Directors decided to propose a gross dividend amounting TRY 501 million, which is equal to the dividend per share of TRY 1.97 and a 40% payout. This reflects our cash flow generation capability and our commitment to return to the value we create to our shareholders. To the next slide, please. We started 2020 with good momentum, building on a solid performance in the previous year. Then the initial impact of the pandemic was quite severe. Immediate shutdown of on-premise channel almost in all key markets resulted in over 60% decline in this channel in the second quarter impacting total volume and profitability. The impact of COVID on sales volume has varied among operating markets in close correlation with the share of on-premise sales in each market. With a 25% share, Turkey had the highest hit. At the same time, Central Asian markets turned out to be very resilient, having only high single-digit share on on-premise in their sales. In the third quarter, our business started to normalize following the reopening of on-premise channels. Our rapid crisis response to optimize portfolio, focusing on core brands and multipacks for at-home channel resulted in quick recovery and volume grew 2% in the third quarter of the year. Fourth quarter showed a strong volume growth of 12% on a year-on-year basis with all countries positive contribution except Tajikistan. Along with the reopening of on-premise channel, the IC mix started recovering. On-premise channel has closed again in Turkey in the second half of the fourth quarter. However, its impact on IC share was not as severe as it was in the second quarter. This was a result of our initiatives to compensate for the loss of on-premise consumption with the integration of IC packs, more at-home consumption occasions through various initiatives. Let's go to the next slide, please. As you may recall from our previous webcast, we focus on quality growth as one of our top strategic priorities. We are particularly pleased that we managed to continue delivering our quality growth algorithm in this very challenging environment. Except for the number of transactions linked to the declining share of on-premise consumption, all of our metrics were in line with our algorithm that ensured sustainable profit generation. In the fourth quarter, our 12% volume growth was translated into 48% net sales revenue growth and 91% EBITDA growth. Similarly, in the full 12-month period, a 2% volume decline was offset by higher unit case prices, resulting in 20% revenue growth and 38% EBITDA growth. Let's move on to the next slide, please. Fourth quarter, Turkey was a solid despite shutdown of the on-premise channel from the mid-November onwards. Nevertheless, our Turkey operations recorded 7% growth on back of solid sparkling performance, led by the brand Coca-Cola, with an increase of 24%. It's a result of our value focus that included prioritizing small tax, water sales were down by 23% in the fourth quarter. This decline was more than offset by 1% growth in stills and remarkable 18% growth in sparkling. Activation in amount of tax for at-home occasions through strong collaboration played an important role in growth in volume. Our innovations in sparkling and still categories and good weathers were other positive factors. We leverage our strong route to market model to address changes in the consumers' behavior, preference during this past year's significant volatility. Discounters benefited the most from the consumer shopping quickly in the neighborhoods. The on-premise channel was challenged with volume down by 37%, which explains the 8% total volume decline in the full year 2020. The growing share of the sparkling category price adjustments and proactive revenue growth management initiatives consistently delivered per unit case growth throughout the year. Accordingly, net sales revenue grew by 12% in the full year 2020. EBITDA growth was 5%. If we exclude the cash designation impact, the growth in EBITDA was 40%. Andriy will give more details on the termination of cash designation, [indiscernible]. And let me move on to our international markets. The solid recovery in the third quarter continued in the last quarter of our international markets as well. Consolidated sales volume of international operations increased by 16% on a year-on-year basis in the fourth quarter. With all countries contributing to growth, except Tajikistan, as I said earlier. Like Turkey, on-premise was the only channel that declined in 2020, but its overall impact was more limited. Sparkling category showed that remarkable performance in the fourth quarter, growing 22%. This led to a 6% growth of sparkling in the year. Brand Coca-Cola grew 25% in the fourth quarter and 11% in the year. We increased reported net sales revenue by 61% in the fourth quarter of the year and then by 22% on an FX-neutral basis by committing to our revenue growth initiatives. EBITDA margin expanded by almost 700 basis points in the fourth quarter as a result of our strict cost management applications. Let's move on to the next slide, please. Pakistan has had a remarkable turnaround by third quarter, followed by the continuation of strong performance in the last quarter of the year. Fourth quarter sales volume was up by 32%, assisted primarily by 33% growth in sparkling and in particular, 38% growth in the brand Coca-Cola. We continue our focus on at-home consumption by successfully executing consumer promotions and focused regional plans. We consistently improved our execution in the marketplace as well. As a result, CCI became the market leader in the sparkling category on a full year basis for the first time in Pakistan. Our market share increased by almost 300 basis points compared to the previous year. Being the market leader in colas already, CCI became the leader in overall sparkling categories, thanks to our strong and talented team, dedication and commitment to excellence. In Kazakhstan, fourth quarter sales volume grew by 2%, cycling 16% growth of 2019 fourth quarter. As we discussed before, the third quarter in Kazakhstan was challenging due to increased number of COVID cases. The business turned to recovery by the fourth quarter and the total 12-month sales volume grew by 0.4% over 2019. Brand Coca-Cola was, again, the leaders of growth. Schweppes made a positive contribution as well. In Iraq, total sales volume grew by 2% on a year-on-year basis in the last quarter of 2020, supported by the sparkling category's double-digit growth. Brand Coca-Cola continued to be most resilient, increasing by 7% in the fourth quarter and 5% in the full year 2020. Despite growth of 7% in sparkling growth, in full year, 37% contraction in the water category resulted in a 4% volume decline. As you know, we focus on 5 main priorities to realize our strategic -- strategy effectively. CCI continues leveraging our market's vast potential for volume growth and profitability capturing the value growth out of these opportunities. Therefore, we are pleased to report another year in line with our quality growth, as I explained earlier. I will also talk about what we did in 2020 in light of the remaining 4 pillars of our strategic practice in the next slide. We're trying to be the best FMCG company in execution with our people, limit our stakeholders and also the digital leadership in our industry. Let's move on to the next slide, please. Being the best FMCG company across our markets requires us to stand out of the FMCG universe in the market execution and agile business models. We aim to achieve this by putting customer service at the center of our focus and excellence. Aggressive digitization for our industry leadership is also closely integrated with this. Therefore, we continue to optimize our business with digital acceleration. We have embraced the opportunity digital represents for our customers and the consumers. In B2B space, we've launched our digital product, CCINEXT, to enable customers' self-service activities. In parallel, The Coca-Cola Company launched a digital promotions to Daha Daha, which primarily digitizes the under-the-cap promos in the marketplace. This initiative became extremely successful in this period when hygiene and convenience gained utmost importance. As an initial response to the pandemic, we immediately optimized our SKU portfolio leading to the supply chain effectiveness. From now on, we initiated -- we intend to be keen and as lean in SKU portfolio as possible. Naturally, as volumes start to grow, the number of SKUs increasing from the COVID levels, but maintaining a disciplined approach to manage our SKU base will be the norm going forward. On the way to achieving the vision of being the best FMCG company across our geographies, people is the common denominator of our strategic framework pillars as they are the utmost precious assets of our company. Our employees' health and safety and well-being have been our core priority from the day 1 of the pandemic. We introduced tight measures, working closely with local authorities. We've enabled remote working immediately by the mid-March, utilizing the digital workplace tools across our markets. We kept investing in our people through virtual learning tools and continued investing in the young workforce with virtual CCINEXT development programs. Most importantly, we kept the communication channel alive, frequently meeting with our employees as senior management. We made sure that all employees and the stakeholders understand that we are together, and we will come out united stronger out of this crisis. Last but not least, we continue to support our communities to the best of our capability. Together with The Coca-Cola Company, we provided financial aid to our communities to fight the pandemic. We've modified our plans to produce disinfectants. In our Iraq plants, we also produce oxygen that we entirely donated. We continue to provide free products through our -- the doctors, frontline responders for adequate hydration, and we wanted to make sure that we supported small businesses in these challenging times via various support programs for our non on-premise channel customers. On this note, let me hand over to Andriy to discuss our financial results in more detail. Andriy?

Thank you, Burak. Burak has already talked about our top line performance. I briefly mentioned the highlights before digging into the drivers of our profitability. In the fourth quarter, our net sales revenue grew by 48%, driven by strong volume growth in all major markets, higher share of sparkling and timely implementation of price adjustments. For the full year, net sales revenue was up 20%. Before talking about our operating profitability, I want to make a couple of remarks on comparability of the numbers. First, as you may remember from our previous discussions, we have terminated cash designation methodology as of January 1, 2020. Cash designation methodology was an accounting treatment, allowing us to account foreign exchange gain losses from purchase of certain raw materials and the cost of sales rather than under FX gains and losses below EBIT. The method had no difference at the net income level. In 2019, cost of sales was positively impacted by application of this methodology. It had positive impact on reported gross profit, EBIT and EBITDA lines in 2019 as well. Therefore, in order to make a like-for-like comparison, we are also sharing with you the profitability figures without cash designation. Second, in the fourth quarter of 2020, we made a change of accounting policy, reducing the useful life of manufacturing spare parts from 20 years to 10 years. The cumulative impact of this change on CCI financial statements was TRY 121.5 million. The full cumulative impact of this accounting policy change was included in the fourth quarter of 2020 financial statements. The change is noncash, therefore, it has no impact on EBITDA. It impacts gross profit, EBIT and net income. Accordingly, the reported gross margin was down by 273 basis points to 32.8% in the fourth quarter. However, excluding the impact of the cash designations and the spare parts accounting policy change, the gross profit margin on a comparable basis was up by 331 basis points to 36.6%. For the full year, the gross margin on comparable basis was up by 335 basis points. Higher per unit case revenue, limited price increases in certain raw materials and cost efficiencies enabled this increase despite the unfavorable package mix due to lower activity in on-premise channel, successful revenue growth management initiatives and disciplined cost-cutting initiatives, on the back of lower marketing, travel and meeting expenses, resulting in a sizable expansion in EBIT and EBITDA margins. Excluding the impact of cash designation, EBITDA margin extension was 588 basis points in the fourth quarter and 489 basis points in the full year. Net income also grew by 28% in full year on the back of strong operational profitability and prudent financial risk management. The net loss in the fourth quarter is attributable to non cash spare parts depreciation impact and non cash Iraq put option revaluation expense of TRY 127 million. Moving to the next slide, please. Regular inflationary price increases and price/mix improvements with revenue growth management are integral parts of our strategy to realize sustainable growth in per unit case metrics and ensure delivery of our quality growth algorithm. When we look at the fourth quarter on an FX-neutral basis, our net revenue per unit case grew 14.1%, mainly due to the growing share of the sparkling category and timely price adjustments. In the full year, net revenue per unit case grew by 12.5%, with our continued focus on revenue growth and management initiatives. Gross profit per unit case growth stood at 6%, mainly due to unfavorable package mix and effect of change in spare parts amortization period. Excluding cash designation, profit per unit case on FX-neutral basis, grew 13% in the fourth quarter. Gross profit per unit case grew by 14.7% on a full year basis. Finally, EBIT per unit case grew by 3% in the fourth quarter with the unfavorable impact of depreciation from spare parts accounting policy change and discontinuation of cash designation methodology. Excluding cash designation, EBIT per unit case on FX-neutral basis grew 129%. Driven by our lean SKU portfolio utilization and disciplined cost management, EBIT per unit case increased by 32.1% in 2020. Moving to the next slide, please. As a result of our strong operational performance, we registered an all-time high EBITDA margin of 21.8% with 282 basis points expansion in 2020. Looking at the sources of EBITDA generation. The major contribution came from healthy revenue per case growth, weakness in the commodity prices and disciplined cost savings initiatives, specifically on the OpEx. As we ensured all operating expenses were limited to what was essential to navigate in this difficult environment, the ratio of operating expenses to net sales revenue decreased by 183 basis points. These OpEx statements were achieved mainly through lower direct marketing expenses, transportation expenses, meeting and travel expenses. 40% of the improvement in OpEx margin came from reduction in direct marketing expense. We expect some of these cost items, including direct marketing expense to go back to the normal trends with reopening of the economies and business environment normalization. But some learnings from pandemic will continue such as savings attributable to our lean SKU base. Our frugal mindset on OpEx management will also remain the norm going forward. Moving to the next slide, please. Our net income grew by 28% in 2020, reflecting our strong operational profitability, commitment to delivery on our quality growth algorithm, lean operating model, disciplined cost savings and prudent financial risk management. The EBITDA generation was the main driver of the net income growth, more than offsetting the negative effects of one-off noncash impact from spare parts accounting policy change and the noncash impact from Iraq put option revaluation that was triggered by the revaluation of the underlying business in the partial normalization period. In 2020, while Turkish lira depreciated against U.S. dollar around 23% on average, our successful utilization of hedging tools and favorable currency movements in international operations helped limiting the negative effects of Turkish lira depreciation on our net income. In fourth quarter, due to our average $100 million loan position, we incurred FX loss as Turkish lira depreciated against U.S. dollar by 6%. In addition, we incurred FX losses from hard currency borrowings due to 10% and 20% respective devaluations of local currency against U.S. dollar in Tajikistan and Iraq in fourth quarter. The increase in financial expenses mainly resulted from the higher share of local currency borrowings in the fourth quarter. Strong performance in Pakistan resulted in higher minority interest. Net profit was TRY 1.2 billion in full year 2020, 28% higher than in full year 2019. Let's move to the next slide. We continue focusing on healthy free cash flow generation as it is core to the value creation by any business. In 2020, our free cash flow increased by 84% to TRY 2 billion, and our free cash flow margin increased to 14% in 2020 from 9% a year ago. In addition to successful EBITDA generation, CapEx was very disciplined. As we discussed before, with the heat of the pandemic, we froze all uncommitted capital expenditures with exceptions on digital technology and health and safety. Also the release of excess working capital based on lean SKU management and tight management of supplier payments contributed to the strong free cash flow performance. As a percentage of net sales revenue, net working capital, was negative at 0.3% in full year 2020. This was driven mainly by a solid improvement in Turkey and Pakistan. The net working capital was also positively impacted by Iraq classification of put option as short-term liability against long-term liability in previous years. However, if we exclude the impact of reclassification of the put option liability, the net working capital to NSR ratio was still at historical low level of 1.9% in full year 2020, compared to 4.1% in full year 2019 with strong free cash flow generation increased our balance sheet liquidity and flexibility, which I'll briefly mention on the next slide. Moving to the next slide, please. So this brings us to the balance sheet. As you know, when the pandemic started, our balance sheet was already quite strong. With continued free cash flow generation and disciplined financial management in 2020, we brought net debt-to-EBITDA ratio to only 0.47x, the lowest level achieved since IPO of CCI in 2006. Our consolidated cash flow equivalent of USD 638 million, while the consolidated gross debt has improved from $924 million to $839 million. As you can see in the pie chart below, we have a balanced profile of long-term debt maturities and limited exposure to FX. If you take into account our hedges and hard currency cash, we have $250 million FX short positioned, which is less than our international EBITDA. On top of it, we use net investment hedge accounting mechanism. If you include that as well, we actually have a loan FX position of $67 million. So we have strong liquidity, providing us with financial flexibility in the continued uncertain environment. Our headroom and the financial covenants is quite sufficient as well. Let's move to the next page. Finally, just a few remarks on our commodity hedge funds. Proactively managing our exposure, we started hedging for 2021 and even for 2022 at the peak of the pandemic, when the commodity prices was -- were at the lower levels. Currently, we have 77% hedged in sugar, 65% in aluminum and 55% in resin for 2021 requirements. This concludes financial review. And now over to you, Burak.

Thank you, Andriy. I want to say a few words to conclude the 2020 conversation, and then I will talk through our 2021 guidance. Our business is still built on strong data, strong fundamentals. Our diverse and strong brand portfolio closely align with The Coca-Cola Company, long-standing good relations with our stakeholders, the ecosystem of digital and physical capabilities that we have and highly motivated talented people if -- form the backbone of our business. In addition to that, we have our learnings from the pandemic, both financially and operationally. We are looking at the prospects of our company beyond COVID-19. We continue to adapt our business to the new market realities, different consumer preferences and evolving channel and occasions. We continue on our way to emerge as a strong partners in the Coca-Cola system, and we are moving full speed towards our vision of becoming the best FMCG company across all of our markets. Moving to the next slide, please. We started the year well and continue delivering in line with our expectations. Considering that the pandemic is not yet over and a great deal of uncertainty is still ahead of us, we remain cautious about our business outlook. We expect to deliver a consolidated volume growth between 4% to 6%, highlighting a low single-digit growth in Turkey and high single-digit growth in our international markets. Relying on our revenue growth initiatives, we expect high-teens growth in net sales revenue on FX-neutral basis. Despite a significant expansion in EBITDA margin in 2020 with significant savings in OpEx, we still expect to deliver a flattish EBITDA margin. This will be possible by higher net revenue per unit case and a frugal mindset at cost management. Last year, we cut all uncommitted CapEx and kept digital investments in revenue growth management initiatives and health and safety. In 2021, we expect capital expenditures to return to its average pace, staying at 6% to 8% of consolidated net sales revenue. Although we expect some normalization of net working capital from its record low basis in 2020, we foresee net working capital as a percentage of revenue ratio staying at low single digits. We're now ready to take your questions. So let me turn to operator to organize the questions. Thank you very much.

[Operator Instructions] The first question comes from Alexander Gnusarev from VTB Capital.

Congratulations on your very impressive results. I have a quick couple of questions. The first one, I suppose, will be more of a clarification question. You mentioned that your EBITDA margin is going to be flat in 2021, given that you already had a record high EBITDA margin in 2020. As I heard, you are expecting to achieve this by having a higher revenue per unit case and proper management of your operating expenses. But perhaps you could provide more details here.

I think the fact that we already had the historically high EBITDA margin make us cautious. But in terms of what is -- in terms of the substance of how we will get to the margin this year, we talked for the last few years of the fact that we are very focused on revenue growth management. And on a basics of it, which is just taken timely very well-timed price adjustments to keep up with the inflation in all our markets. If you take this into account, plus the specific revenue growth management initiatives, to increase immediate consumption packages in non -- outside of on-premise accounts because we cannot fully guarantee or understand at this point if all the accounts will be open or not due to continued COVID, and some other gross revenue initiatives, such as continued focus on zero sugar and some other more premium propositions in our portfolio, I think this is how we have the confidence that we will be able to deliver the revenue growth. In terms of costs, obviously, we are coming back to more normalized environment, and it means that marketing expenses will matter. And they matter for immediate sales and for the longer-term health and growth of the brands and the business. Therefore, we will start investing. We already started investing more in marketing, more in terms of -- more in line with the previous norms. And as I mentioned earlier today, in terms of the improvement of kind of OpEx to NSR ratio, 40% of that improvement came from cut of marketing expenses last year. So a significant part of these marketing expenses will come back this year to drive growth. And this is how the expenses will react. Plus, as you know, there is a significant inflationary movements, both in commodities as well as in transportation expenses. So we are planning to make sure that we are not over optimistic on those items for this year.

Perhaps I sounded a little bit strange here. I understood your point, but I have to remind that if you're going to return these marketing expenses, they will be mainly offset by your proper price adjustments and adjustments to our product mix in favor of more premium products. Do you think that's right?

Yes. That's, of course, we invest in marketing to make sure we drive top line growth, including the price realization. That's absolutely correct.

Okay. And another question from my side. There were talks about you acquiring a local Uzbekistan bottler. Maybe you could elaborate some more details or it's -- you're going to provide the proper lease when all the metrics are settled?

Yes. I think we can talk of things that are in the public domain and published by Uzbek government. It's a company -- it's a franchise operator of cola business. In Uzbekistan, which is majority owned by the government of Uzbekistan, 57% of that business owned by the government is put up for prioritization auction. And as per public reports, we are invited and participating in this process, which is at the early stages.

I see. That's clear. And the last question from my side, maybe you may not provide the exact numbers, but provide the overall range by some countries. I see that still many on-premise channels are under pressure. What is the total amount of this on-premise share by core countries hearing in Turkey, Pakistan and perhaps some other countries?

Yes. On-premise channel ranges from the highest of 20%, 25% in Turkey. 25% is more of an IC mix and on-premise will be around 20% out of it. And the lowest will be of IC is about 10% in Central Asia, and the on-premise will be the high-single digits in some of the other markets. And I want to make sure that everybody understands that immediate consumption is the size of the pack on-premise is a specific channel where majority of the packs that are sold are immediate consumption packs, but it's not a one-to-one comparison.

The next question comes from Selim Kunter from Ak Investment.

Congratulations on the results. I have a quick question. You had a remarkable fourth quarter. And the volume growth was very strong during the last quarter of the year, particularly when you consider the lockdowns started in mid-quarter in Turkey. And you have a guidance of around 4% to 6% growth in consolidated total sales. Maybe it might be too early to comment on it, but how do you see the progression evolution of the demand or sales performance stockpiled? Do you see upside potential for your expectations for the year?

I think it's too early to talk about upside potential with all the uncertainties in the market. But I want to make sure -- and I want to make it clear that the fourth quarter is the second in a row in terms of volume growth in our business. We came and confidently said that the worst is over, and we are back to growth, right? And after that, we came forward. It's one of very few companies and very few bottlers who actually gave first volume guidance in January, right? And right now, we're reaffirming the volume guidance and even the financial guidance. So we are fairly confident in that. So we are right now 2/3 through the first quarter, and we are coming out with this guidance. So I think you can see our confidence.

The next question comes from Ece Mandaci from Unlu Securities.

Congratulations on strong operational results in the fourth quarter in 2020. My question is about the competition environment in Pakistan. You have already mentioned about the market share gains in that market, and you have reached the market leader position there. So going forward, could there be more room for any market share gains? Or how should we think about the progression of the market structure competition environment? Could you please comment a bit of that?

Very good question. Pakistan is an important market, and we are very focused on continued growth there, both in terms of expanding the market and also growing share. Yes, we are very pleased with the market share gain, but let's be very clear. Our gain and leadership is in sparkling beverages, right? The overall NARTD market presents a much bigger opportunity. And we, so far, are primarily focused on NARTD. Now on sparkling in Pakistan. Also, I want to say that our competitor is very strong. And our main competitor is very strong and very respectful and reputable, and they're doing a good job on their side. So we see -- we see continue -- our efforts over the long-term should continue to pay off. And if you ask me what is our goal, our goal in Pakistan is in any other market. Eventually, we would like to have a quality leadership in the market in every category and every kind of segment that we operate. And quality leadership is defined as 2.5x as the next competitor. So that's the destination. Now how long it will take us to get there? It's obviously a very long journey. As I said, the competition is capable in strong in Pakistan. And so while we are happy with the fact that we earned the leadership in sparkling in Pakistan this year, which is a historical achievement for us, a lot more work to be done, and we are focused on execution, first and foremost there.

The next question comes from [ Evos Pitao ] from [ Tamco ].

Congratulations. I have 3 questions. First one on OpEx, Turkey OpEx. I mean you were very successful and when I look into your OpEx in the last couple of quarters, I mean, starting from the last year, it was a very good control, and it was around 350 per quarter. But this quarter, it was around 480. So were there any one-off? And what -- or is this a delayed OpEx coming from the previous quarters? And that's my first question. The second question is related with swap interest expenses. I mean, so far, we could have seen in your footnotes, but this quarter, I couldn't see the swap interest expense in your footnotes. So were there any accounting treatment change? If yes, where are we going to see this swap interest expense going forward? And final question on Al Waha. What is the probable to exercise this option? Are there going to be any delay? Or if this is going to happen, is it in your cash flow budget for this year? And congratulations again.

Thank you for the questions. So I will start with Al Waha because it's a simple option -- it's a simple question. I mean it's a put option, right? So it's not up to us to exercise it. It's up to The Coca-Cola Company. So they will make a decision if they want to exercise or they want to continue in the business. We're obviously prepared to meet that liability. That's, I think, all I can say on Al Waha. Other than that, again, it's a question more to The Coca-Cola Company and what they will decide on their participation in Al Waha. Second question, in terms of the swap interest expenses, the cash hedge accounting is under OCI, other comprehensive income. So when the expenses are paid, then it will go through the P&L. So as these are structured as sort of periodic interest-type payments, so whenever we actually pay them, we take them into our actual P&L. So -- and the third question was on Turkey OpEx. There was a normalization of [ DME ] plus there were some seasonal impacts. But that's -- these are the 2 main reasons why there was a fluctuation in OpEx in the fourth quarter.

I have a follow-up on Al Waha first. Is there -- what is the time, the deadline? When do you think we can hear for this put option? I mean is that in the earlier part of the year or late 2021?

Again, I really -- in terms of the contractual obligations, I do believe that the put option expires at the end of this year. And this is what disclosed in our financial statements, but it's really not our decision. It's really a decision of The Coca-Cola Company. We are very comfortable to have them as a shareholder. In Al Waha, we are very aligned system, and we work very well. So from our perspective, it's not an issue at all. We calculate very well in all the markets within the guidelines of the law. And in terms of -- if they decide to exercise the put option, we will be happy to respond. As I said, we are always ready to meet this known liability. So -- but other than that, I cannot really guide you on a specific time because, again, it's not a decision that CCI would make.