Kofola CeskoSlovensko a.s. (KOFOL) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Kofola's 2022 Results Conference Call. You will now hear a recorded presentation of Group CFO, Martin Discord and Business Insights from Czechoslovakia and the Adriatic presented by country CEO, Daniel Burys and Marian Sefcovic.

Dear investors, Martin Pisklak speaking. [indiscernible] we published our annual report of 2022 as it was very difficult, especially because of average prices and higher inflation rates and the increased 3x our sales prices were still then starting behind the inflation season, while our EBITDA margin decreased from 17 to 41 percentage points. Initially, we at CZK 1.1 billion is a decrease by CZK 8 million. Uslar is better than we expected approximately by CZK 30 million. The reason is the decrease in energy prices during the last quarter of 2022. Even in 2023, we start with enormous increase of sugar prices, which was a reflect growth in our new price list. So far, we are satisfied that the level in the first quarter of 2023. I'll start with. I wonder what loss [indiscernible] expected I note that our target remains unchanged in between CZK 1.1 billion to CZK 1.250 billion. Thank you for your attention investors [indiscernible].

Marian Sefcovic speaking. 2022 was a very successful year for [indiscernible] our sales has exceed our plans as well as year 2031 and 2019 due to price for electricity and as our savings cost in operating expenses was very good and Anders passed its budget for 2022. We have started the year 2023 very well. table so far the data budget in Slovenia, Croatia and also export markets. We have successfully negotiated new prices without our customers to ordering input costs, high material cost, energy transport authorities, and we are initial the rest of the Energy prices for PCT and us on the stock exchange has decreased from RBL and regulated as for electricity in set from both Slovenian provision governments, which help us in stabilizing our businesses and buying activities. The newspaper finance in Slovenia, in public far for investor in Solana have recognized a desire in the field of sustainability. Mono received the as the most unlimited friendly company in Slovenia of suspect campaign of pancreas tunable packaging strategy in the organization of the amine in Slovenia. Lastly, we offer new products to the market. The Vitamin plan with the Claro, Orange and Agote has joined our pest of vision in vertical we are particularly part of the new line of functional rings, functional Arista. It combined midocarbonated material mineral to dams, Nal and tees. Touching the pure digitization with the aim of improving and simplifying the way ordering for our customers, we at just develop the Sapa online platform. We are satisfied with the customer response and are really setting the risk orders. We are also preparing eating necessary for launching the platform in Croatia. We are also average application in the new optionalities such as ordering and the paying directly from the table. More than 300 price is our oil being digital enjoy. And in 2022, our vision price list was only more than 4 million tons. Thank you very much.

Ladies and gentlemen, now it's time for your questions. [Operator Instructions] we have first questions from Mr. Pavel Ryska. Please go ahead.

Good morning to everybody. I just want to check if I can be heard because my sound connection wasn't very good during the presentation. So just to check.

Yes, we can be very cleanly.

Pavel Ryska we can hear you clearly. Could you please ask your question?

Okay. So good because it was muted here. Thank you very much. The question is simple. It was discussed in some media in recent weeks that Kofola might be interested in buying a certain brewery group local here in the Czech Republic. I want to ask the management if this is really the case, if this is being considered because, obviously, does the market might be concerned about the deleverage that Kofola has. So for example, I personal accounts, begin a big acquisition being made by Kofola. So I want to ask if this is -- if this can be real...

Thank you for your question. I have to say that we are not commenting on any of our potential or basically any like M&A activities, which we are doing. So I will not comment also on the rumors, which incur in media during the last week in retirals of the -- our leverage of still. It's about our expectation that we would like to keep our leverage below 3x EBITDA. And for sure, we are -- in case of any acquisition, we don't want to grow above of 3.5x EBITDA.

Okay. Thank you very much. So the second half of the answer helps. So maybe I have a follow-up question. So in case a sizable acquisition is considered by Kofola. So then it implies if you want to keep leverage, let's say, under 3% or approximately around 3% at most. So this would imply that you would need a new equity capital, if I'm right.

Basically, net capital can be one way. But in case of what an acquisition, we can always consider somewhere joint venture or financing or some like coinvestors in the acquisition. So it's not only about of, but we have like more ways how to do a sizable acquisition or how to participate on the size of the acquisition.

Okay. And maybe one final question like regarding the product portfolio. So in the last few years, you have expanded quite a lot the range of products that you offer to the market. So maybe then it is logical to think that you want to expand even further that you want to have the capacity to, for example, offer to supermarkets, a whole range of things like starting from tea through the Mango flood drink even into -- continuing into alcoholic beverages. So can you comment on whether it is the ambition of Kofola to even expand the range of products that you are offering to the market.

Well, we do not have an ambition to offer like full portfolio of beverages included, I don't know, spaces, wine and so on. On the other hand, we are like still looking for some new segments, which we can add and which can like have overall portfolio to be more profitable and more effective...

Ladies and gentlemen, [Operator Instructions]. Now we have a question from Mr. Petr Bartek.

Sorry, I move a little bit like to the call. So we don't know what you actually discussed before. Was this a little bit about the potential acquisition and previous segment, we want in a newspaper. And maybe explain the rationale for this.

We are discussing this rumor is included in India, and we do not comment on the these rumors at all.

Do you have an additional question? please, if not, bring your hand down. Thank you. Ladies and gentlemen, as a reminder, now it's hard to ask your questions. We have the next question from Mr. Petr Bartek.

Maybe regarding the full year guidance, which was unchanged. Have you see any potential upside from no side and after 1 or 2 months to the guidance which you have provided, meaning that the energy prices being lower than original but, on the other hand, deempact from the higher price system on volumes , actually, the volumes in Medicare quite substantially down. So if you can comment on the development from [indiscernible] as well.

Yes. Thank you for the question. In general, we are satisfied as first quarter of 2023. We expected a much steeper decrease in the volume during the first quarter. So far, we are above our expectation. We -- in regard of Slovakia, the first quarter in general is very weak, and it depends a lot on very resting impacts, for example, when are the stents in April. So it's also like changing the sediment first on the second quarter a bit. And it's very hard to analyze the first quarter with some like longer term. So usually, first quarter is very specific in trans. I did not comment on the like particular particle trends, which we now can see in slovakia and [indiscernible]. And in respect of new target below adjusted target together with the first quarter results, which we will publish in the beginning or the ensure volumes are mainly expected also from input costs better than we expected. So most probably we will cut the interval from the bottom part of our expectation -- but at the moment, the range is quite wide. I mean, to CZK 1.25 million for checkpoint say within this impact also after the first for the first quarter.

There are no more questions. This concludes today's conference call. Thank you all for your participation. can for today's call will be available on our page. You may now disconnect. Thank you, and goodbye.