Coca-Cola Icecek AS
IST:CCOLA.E
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
36.474
81.5908
|
| Price Target |
|
We'll email you a reminder when the closing price reaches TRY.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Coca-Cola Icecek AS
You don't have any saved screeners yet
Ladies and gentlemen, welcome to Coca-Cola Icecek's First Quarter 2022 Financial Results Webcast.
I will now hand over to your host, Ms. Cicek Ozgunes, Investor Relations and Treasury Director. Please go ahead.
Good morning and good afternoon, ladies and gentlemen. Welcome to our first quarter 2022 results webcast. Today we have on the call Burak Basarir, our Chief Executive Officer and Andriy Avramenko, our Chief Financial Officer. Following Mr. Basarir's and Mr. Avramenko's presentation, we will turn the call over for your questions.
Before we begin, please kindly be advised of our cautionary statement. 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, Cicek. Good morning, and good afternoon, everyone. Thank you for joining us today to discuss CCI's first quarter 2022 results. I want to start by thanking all of our employees who are driving force of our success. It has been more than 2 years since the global pandemic started. This was a quite extraordinary period. 2022 is poised to be even more challenging from a macro and geopolitical perspective.
Post COVID economic recovery and gradual normalization of the supply chain were disrupted by Russia Ukraine War causing another broad-based supply chain shock and persistent cost inflation. Although we do not have direct exposure in our geographies, the sanctions against Russia and its countermeasures add to food and commodity inflation, creating logistics and trade route related problems.
We are happy to deliver a successful start to the year in these turbulent times, thanks to the agile organization, our diverse brand portfolio and excellent execution in the marketplace. Once again, we've delivered our quality growth algorithm in the first quarter of 2022. CCI registered 18% reported and 10% organic volume growth in the first quarter. By organic, we mean excluding Uzbekistan from 2022 financials, as it was not included in our financials in the first 3 quarters of the last year either. Stagnant 12% growth from a year ago, Turkey sales volume grew by 2%, while international operations continued to deliver exceptional performance with 30% reported and 17% organic growth. The increase in the number of transactions ahead of volume growth and the improvement of IC's share in the first quarter of 2022 positively impacted our profitability.
In the first quarter, net sales revenue increased by 131% led by timely price increases, favorable channel and package mix and other RGM initiatives. We registered a 135% EBITDA growth in the first quarter with 35 basis points EBITDA margin expansion. The margin expansion was driven timely pricing for active hedging and procurement initiatives and disciplined OpEx management. In the first quarter of 2022, our net income increased by 56% to TRY 630 million. Besides delivering solid financial performance, we continue to advance our sustainability agenda. First, we successfully issued our sustainability linked to Eurobond in January, aligning our sustainability strategy with our financing needs.
This was the first sustainability-linked bond from the EMEA beverage industry and Turkey's largest one. We aim to create value in everything we do for all of our stakeholders, our people, customers, consumers, communities and stakeholders. We have always lived up to its motto and achieved significant success. However, we still have to do a lot. Therefore, we took another important step by making our 2030 commitments public in the recent published sustainability pledge. I will briefly talk about these in the coming slides.
So let me move on to the next slide, please. We've delivered balanced growth in our portfolio in the first quarter of 2022. Sparkling volume was up by 16%. Trademark Coca-Cola grew by 15%. Fanta was the best performer in the sparkling category growing by 28%. The stills category grew by 27%. Juice, ice tea and energy drinks grew double digits. The water category was up by 28% with our more profitable small pack focus cycling at 15% contraction a year ago.
We maintained our small pack focus in all channels. The IC share in total sales increased by 3% year-on-year and reached 27% in the first quarter of 2022. The main drivers of the growth were solid momentum in the on-premise channel and prioritization of multiple small packs in at-home channels. Channel wise, the path to normalization continued with a 30% rebound at the on-premise channel, the at-home channel stayed strong despite cycling a robust 22% growth in the first Q of '21. FC packs grew by 6%, while IC grew by 25% in the first quarter.
To the next slide, please. We delivered in line with our quality growth algorithm in Turkey in the first Q of 2022. Sales volume increased by 2%, factoring at 12% growth in last year. Despite the strong base, adverse weather conditions and price increases, we delivered growth, thanks to our segmented marketing campaigns and continuous innovation ahead of the Ramadan period. The continued rollout of Coca-Cola Zero Sugar performed exceptionally well, becoming the #1, #2 immediate consumption products in value share behind the Brand Coke.
The sparkling category contracted by 7% in the quarter, primarily due to normalization of the category mix back to the pre-pandemic split. Stills category grew by 27% with juice, ice tea and energy drinks registering a double-digit expansion in the quarter. The water sales volume increased by 26% with the continued small pack focus on the first quarter of 2022. Looking at channels, on-premise continued its recovery, aided by increased consumer mobility while there was an ongoing resilient demand in the at-home channel across our markets.
Price adjustments, tight discount management and other revenue growth management initiatives helped register 89% net sales revenue growth, while NSR per case increased by 85%. Despite increasing cost pressures, EBITDA excluding other income and expense, items grew by 143%, thanks to top line growth momentum, tight expense management and timely hedging initiatives that we have taken.
Next slide, please. International operations sales volume grew by 30% in the first quarter of 2022. Organic growth was 17% in the quarter despite cycling a solid performance in the first quarter of '21. On a pro forma basis, achievement in Uzbekistan was also part of CCI in first Q'21 growth would have been 18%. Pakistan, Kazakhstan, Uzbekistan were the main growth contributors. Share of the total international operations in total volume increased to 63% from 57% a year ago on the back of robust sales performance and the addition of Uzbekistan business.
Category-wise, growth was broad-based. The core sparkling grew by 30%, led by 30% growth in the Coca-Cola trademark and 72% in Fanta. Uzbekistan also contributed to sparkling volume growth, organic growth in sparkling was 16%. Stills category grew by 27% in the first quarter, mainly driven by juice and ice tea, while the water category volume was up by 31%. International operations net sales revenue growth was 162% in the first quarter on a reported basis and 130% on a pro forma basis. This was achieved by timing the price adjustments and effective revenue growth management initiatives.
The conversion of international currencies into TL also had a positive impact. But on an FX-neutral basis, NSR growth was still strong at 57%. Reported international EBITDA, excluding other income and expense, grew by 132% in the first quarter of '22.
On to the next page, please. In first quarter of '22, Pakistan continued its excellent performance in both operational and financial terms. Pakistan delivered 20% volume growth in the first quarter, factoring a robust 41% growth in the first quarter of '21. This was achieved by increased new outlet penetration, cooler replacements and focused marketing campaigns ahead of Ramadan period. On top of this, our presence in the fast-growing e-commerce channel is continuously rising in Pakistan. The sparkling category grew by 20% on a 21% increase in the brand Coca-Cola and 13% in Sprite.
Although being a small portion of the total sparkling volume, for now Coca-Cola Zero also performed well, doubling its volume. In first quarter '22, we successfully launched the Roar stimulant drink and consumers greatly appreciate it. The stills category was up by 61%, led by Roar launch and robust growth in juices. We believe in the great potential of Pakistan and continue to invest in the country.
We recently commenced production in our newest bottling plant in Islamabad to better capture the growth potential and improved penetration in certain regions. It is our seventh plant in the country. It has 46 million unit cases annual production capacity. There was a short period of unrest in Kazakhstan at the beginning of the year. We suspended our production in the Almaty plant for a few days to protect our employees and assets, while the Nur-Sultan plant continued its operations without any interruption. As the unrest did not last long and given that January was the smallest month of the year, it did not have any material impact on our business. In addition, the weather was quite unfavorable in the quarters while we started the year with price increases. Nevertheless Kazakhstan operation grew by 16% in the first quarter. Growth was broad-based in all categories.
Let me move on to the next page. Iraq operation registered 8% sales volume growth in the first quarter, supported by efficient promotion ahead of the Ramadan period. The increase was mainly driven by 11% sparkling growth. The water category continued its contraction with a 14% volume reduction in line with our continued value-focused approach. Uzbekistan, our newest operation completed its second consecutive quarter under the CCI umbrella. We are happy with the operational performance so far. Uzbekistan registered 22 million unit cases volume in the first quarter with a 30% growth on a pro forma basis and was the fastest-growing operation in the first quarter of '22. The sparkling category accounts for 96% of the total portfolio. Integration is going at the full speed according to the plan. We are confident in the long-term potential of Uzbekistan's leveraging CCI's execution and route-to-market capabilities.
Let's move on to the next page, please. Sustainability is an integral part of CCI's corporate strategy. Our sustainability journey started back in 2002 with the announcement of our environmental policy. Since then we have continuously increased our efforts, building a sustainable feature at CCI. Making the 20th anniversary of our sustainability efforts last month, we've announced our sustainability pledges for 2030, covering 6 main areas. Let me briefly go over our commitments.
We have determined the main topics of our 2030 roadmap in a way that overlaps with our prominent focus areas in environmental and social sustainability; packaging, water and climate change in the environment sustainability, human rights and diverse and inclusion on social sustainability. Our first pledge is to continue making 100% of our packaging recyclable and using 50% recycled materials in our plastic packaging by 2030. Our second target under packaging is collecting and recycling a bottle or can for each one we sell in Turkey, Pakistan and Kazakhstan while initiating collection programs in other countries. We already use around 50% of collected and recycled materials in Turkey and Pakistan. In Kazakhstan it's about 10%. Our commitment is to reach 100% in all 3 countries.
Our third pledge is to improve our water efficiency in our plants by 20% by 2030 compared to 2020 baseline. This pledge is also one of the KPIs of our sustainability framework, which we used as a reference document for our sustainability linked bonds. Our fourth pledge is on water neutrality and availability in water stressed locations through community projects. With this pledge, the Coca-Cola Company's new water security strategy and methodology was instrumental in determining our roadmap. We have already exceeded our 100% water neutrality target in certain plants. In some plants we need to either add new projects or expand the new of existing projects.
Finally, there are 10 locations where we need to develop short and medium-term projects. Our fifth commitment is related to climate. The goal is to run manufacturing sites on 100% renewable electricity and make them carbon neutral. This will not be an easy, but we have already started installing solar panels and wind turbines in selected facilities. Our 6 commitments under the climate pillars is to reduce absolute carbon emission by 13% and emission per liter of our products by 50%. Coolers, packaging and ingredients create the most significant portion of our carbon emissions today. We will achieve our carbon emission target via sugar reduction, packaging light weighting, increasing the use of recycled plastics, carbon neutral production, route optimization and cooler improvements.
On human rights, our commitment is to increase our distributors' compliance with CCI's human rights policy from 85% to 100%. As a responsible bottler, this is a critical pledge for us. Our people, as always, are our most important asset and diversity is our richness. We are always proud of the diverse culture that we have in CCI. In this respect, we will make sure that 35% of our new hires, 40% of our managers and 50% of the executive committee members to be women by 2030.
Finally, on the community side, by 2030, we want to reach up to 3.5 million people with a sustainable development programs. We are committed to creating value for our people, for our community and for our environment to live a more livable world for the future generations, while growing our great business. I will now leave the floor to Andriy to revise and talk about our financial results. Andriy, please?
Thank you, Burak. Despite the challenging environment, we made a solid start to the year. Our reported net sales revenue increased by 131% in the first quarter and 114% on a pro forma basis. This performance included the positive impact of FX conversion on international operations. However, on an FX neutral basis, growth was also strong at 74%, driven by solid volume performance, price adjustment, improved package channel mix and other RGM initiatives.
NSR per unit case growth was 47% on FX-neutral basis. Despite increasing commodity costs and FX pressures, gross margin contraction was limited to 99 basis points. This was achieved by timely price increases, a proactive procurement process, hedge coverage and improvement in the mix. In this high inflationary environment, we leverage the efficiency we achieved in the pandemic. With this respect, disciplined OpEx management continues to be a norm for us. We reduced our operating expenses as a percentage of NSR by over 300 basis points in the first quarter 2022. Despite intensifying cost pressures, top line solid growth and contained contraction in gross margin and higher operational efficiency led to a 35% basis point expansion in EBITDA margin. Net income grew by 56% to TRY 630 million. The growth was achieved by strong operational profitability despite increased net financial expenses. The higher financial expense was mainly due to one-off Eurobond related charges and the increased interest expenses on local borrowings.
Next slide, please. Our consolidated net sales revenue per unit case increased by 47% on an FX-neutral basis in the first quarter 2022. The inflationary pressure on the cost base is one of the biggest challenges this year. Despite that, our COGS per unit case increase was contained at 48%, thanks to proactive procurement action, hedging initiatives and mix improvement. FX neutral EBITDA per unit case growth was also strong at 45% in the first quarter.
Next slide, please. EBIT more than doubled in the first quarter compared to the last year same quarter. The main contribution to EBIT growth came from pricing and mix with robust volume growth. Timely price increases and improving package and channel mix continued to support profitability. Intensified commodity price pressures, fueled by geopolitical tensions weighted on margins. However, we managed to navigate these challenges with strong top line growth, hedging initiatives and tight OpEx management. We also benefited from a favorable currency conversion impact. As a result we reported TRY 1.3 billion EBIT in first quarter 2022, up 172% from a year ago with a 15% EBIT margin.
On to the next slide please. Our balance sheet continues to be strong with healthy liquidity. After successfully completing $500 million new Eurobond issuance and $200 million tender offer on our existing Eurobonds, we successfully extended our average maturity to 4.3 years. In January, proactive refinancing our needs helped us access favorable interest rates in debt capital markets considering today's challenging environment. Profitable operations and disciplined financial management help us keep our net leverage at manageable levels.
Our net debt-to-EBITDA ratio was realized at 1.2x at the end of the first quarter, significantly below the covenants. On the hard currency open position, we target to keep our short FX position before net investment hedges close to around 1 to 1.5x of our annual international EBITDA, which we believe is a sustainable level. Including the net investment hedge, our net short position is only $125 million. Please remember that the FX cash amount you see in this graph does not include the hard currency cash we have in the Dutch subsidiary because that ended its reporting currency is U.S. dollars.
It is not incurring any effect gain or loss from that cash. Since this graph shows the FX's short position that impacts our P&L, the cash in the Dutch company, which is currently over $300 million is not visible here. If we were to include it, our short position is slightly over 1x of our international EBITDA before net investment hedge. Prudent financial management will continue to be a priority for us going forward.
Next slide, please. Finally, I want to talk about our commodity hedging initiatives for this year. The cost inflation and the mitigating action plans to protect margins have been the most discussed topic. Although we don't expect a supply disruption that would cause production delays in our geographies, the sustained higher prices continue to weigh on financials. First, sugar, as being a lawfully procured raw material in most of our markets, we hedged on or pre-brought close to 90% of our sugar needs for 2022. Considering the sanctions on Russia, we also worked and fixed alternative supply routes for Kazakhstan and Uzbekistan. On the packaging, we hedged around 84% and 80% of our 2022 exposure on resin and aluminum cans, respectively.
We are always looking for opportunities to lock in favorable price levels as opportunities arise in the market from time to time. However, we are not rushing to lock in more purchases from elevated price levels. We continue monitoring the price environment patiently beyond 2022. And now I will return to Burak for the closing remarks.
Thank you, Andriy. Is it last slide? As I mentioned during this call, commodity price pressures, supply side disruptions, local currency devaluation and geopolitical risks continue to be headwinds for the full year outlook, unfortunately. On the positive side, the solid start for 2022 with the continued top line momentum increases our confidence for the whole year from a demand perspective. However, the adverse effects of elevated commodity prices, higher inflationary outlook and currency volatility affecting emerging markets, put additional pressures on our EBITDA margin in the remainder of the year. Since only the smallest quarter of the year is behind us now, we keep our guidance unchanged. After seeing the entire first half of the year, we will reevaluate our guidance to understand better the likely impact of additional top line opportunities and commodity cost pressures on the EBITDA margin.
Our prudent CapEx, tight networking capital management and focus on delivering positive free cash flow remain intact. We have a resilient business with a solid fundamental. Throughout its history, CCI has managed to navigate various external crisis, macroeconomic and political fluctuations, currency sharks, global pandemics and etc. We proved to emerge stronger every time from these events in our geographies. Once more, we commit to creating sustainable and profitable feature at CCI by leveraging our excellent brand portfolio, our people, winning culture, excellent execution capabilities with a customer-centric focus and a robust system alignment.
Now we are ready to take your questions, and thank you very much. Operator, please?
[Operator Instructions] The first question comes from Ece Mandaci from Unlu Securities.
Congratulations on the strong numbers. I would like to ask 3 questions. One is about the IC pack shares. You have mentioned it has risen from 25% to 32%, above 30% levels. Is this current level be sustainable going forward or should we expect a normalization back to 25% level forward in the following quarters? And second question is on the margin gains in the Turkey operations as of first quarter. It has many reasons, of course, price adjustments and effective cost management higher IC pack share, etc. Would these favorable or tailwinds would continue to support the margin performance in the quarters ahead for Turkey patients? So could there be an upside to your guidance for EBITDA margin for 2020? And the third question is the working capital management. We have seen an increase with the increase in inventory in the first quarter. So will these levels continue as working capital over sales ratio for the rest of the year? And could you also provide some color on your assumption regarding net debt-to-EBITDA ratio?
Okay. Thank you very much, let me start answering the questions. In terms of IC pack share, the increase which we experience right now is a sustainable increase. We are recovering from lows of the pandemic and so on. So as you know, growing IC share in our mix is one of the important sort of priorities for us. And we have very specific strategies how we will do it as environment is normalizing right now. So we will continue to focus on growing IC pack shares and the levels that we see right now, short of any major disruption in the market that similarly to what COVID did in 2020. We should continue to grow IC share, obviously, with smaller steps, but growing IC share remains a priority for us and we see levels that you saw in the first quarter is sustainable.
Now going to the second question, margin gains in Turkey and essentially from what I heard is there an upside. I would say that there is a reason why we overall do not sort of give any changes to guidance right now because there are many changes that are happening and many uncertainties that are remaining in the market. So far, first of all, we were very successful with the price increases. Obviously, everybody can understand that this is an area we need to continuously monitor how much more pricing we can take before it starts affecting the consumer.
Second, first quarter is really covered from commodities perspective by hedges and some from last year and from earlier periods and from prebuys, early prebuys. So the cost pressure during the year will actually continue to grow. And therefore, we see this good margin performance in Q1, and we have a good outlook for Q2. I think it's safe to say that second half will be more difficult. And that's why we, at this point, in terms of the margins for overall CCI and Turkey is integral part of the forecast, we remain as we guided at the beginning of the year. And when we pass the second quarter, we may have some other changes to the guidance, but I can emphasize very clearly that the pressure on the margin is very, very strong this year. And particularly in the second half of the year, there is a very strong pressure, there will be very strong pressure on the margins. And therefore, we want to be very careful in terms of how we guide you in this respect. The third question was about working capital.
Working capital is affected right now by very significant prebuys and advances that we needed to pay to secure raw materials because raw materials -- 2 aspects, one, we needed to secure physical availability because there were risks of supply interruption. And therefore, we had to do some extraordinary measures to make sure that supply is secure and we continue to produce for this year. And second, we were making prepayments to make sure that we take advantage of the pricing opportunities and in terms of time value and so on, it still delivers a positive impact and returns for us. So you should see a normalization of net working capital later in the year as we go to the second half of the year.
I think this is it on the 3 questions. Was there anything else?
Thank you for your clear answers. On net debt to EBITDA, still there is room for further improvements, right, for the rest of the year?
Net debt to EBITDA if we continue to operate within the businesses that we have, obviously, we plan to have positive free cash flow and generate some cash. So we should have continued improvements in net debt-to-EBITDA relationship.
The next question comes from Hanzade Kilickiran from JPMorgan.
I have a follow-up question on margin and also demand. In the presentation, you showed that per unit cost has increased by around 47%, and you already covered this through the price increase and the mix change as far as I noticed. And you have mentioned that you have already secured the raw material. I mean you did some prebuy and also hedged the raw material. So for the rest of the year, how should we think about this per unit cost changing? I mean, is it reasonable to assume that this is going to be in the range of 45% - 50% based on your hedging prices or will there be more increase on the rent cost and second, in relation to this, I mean, after a very strong first quarter, what is the price elasticity of demand now in operating market? Did you -- I mean, do you -- I mean, have you started to absorb some sort of volume weakness in markets? I mean can you comment based on each market?
Thank you for the questions. First, on the margins and the commodity pressures. It deserves more detailed explanations. So we take hedge positions and make prebuys step by step. So right now, what you see in our cost of goods is actually based on the first in, first out type of methodology is the lowest cost, lowest price commodities going into P&L, right, that we have booked earlier, the earliest. So we will have -- so what you see right now is actually comparatively lower levels of commodity impact compared with what we will see for the rest of the year. So as we progress from quarter-to-quarter, the commodity pressures will continue to increase based on the positions we already took and how we take them into P&L. There're still better, our coverage provides us better prices if compared it with -- if we were buying at the spot market today. And we believe this will remain for the remainder of the year. But I want to make sure that I'm clearly emphasizing that the commodity pressure will continue to grow from quarter-to-quarter.
Andriy, can I just step in here. I just want to clarify because when we look at the commodity price increases in Turkish lira, it is almost close to around 80%. So does it mean that per unit cost is eventually going to increase up to those levels on a quarter level, not immediately, but eventually?
This is the market and unless the market pulls back, I think you will see those increases later in the year or next year, potentially, right? As I said, our coverage is advantageous to the market prices. But the 47%, 48% increase that you see is at the lower end of the spectrum in terms of the quarters that you will see this year. Okay, so the second question was about demand, right, and prices. As of now, we see a continuation of strong demand across the markets. But we are very conscious and very aware of the situation and the pressure the price is put on the consumers. And we monitor very carefully and we'll proceed with any additional price increases very carefully after doing the proper research and assessment and so on, as we always do.
And particularly this year, it's critical because obviously, we all understand, at least in theory, the elasticity of demand. But this year, situation is fairly unusual, right, if not unprecedented. And so we have to take those steps on pricing to make sure that we balance out our performance and pass the commodity inflation, at least to a large part to the consumer, but we are very well aware and we will continue to monitor as we progress through the year, particularly when it comes to additional price increases compared with what we already passed to the market. But so far, we see a continuation of healthy demand.
[Operator Instructions] We have a question from Cemal Demirtas from Ata Investment.
My first question is about trends in the HORECA segment. Do we expect a significant improvement in that tranche considering the potential growth in the tourism side? Do you see any signal? And I wonder how was the Ramadan performance compared to other periods in the history. Do you see any -- you mentioned that you see the strength in the market or markets. But I wonder how well the trends in April compared to March in the areas where Ramadan was in effect.
In terms of the HORECA channel, obviously, this year, we see the improvement in recovery, a rapid recovery and rapid improvement of volume, which is reflected in our IC numbers of HORECA channel. Now when we look at the longer term, obviously, by the end of the year and so on as we progress, the trends will start normalizing, right? And we do see, in the future, still continued improvement of HORECA sales, but at the -- potentially at the lower dumps than we saw recently in terms of when we see the improvement because of the COVID restrictions going away and people really going out and consumer and traveling and so on.
So that's what I would say that we see the HORECA channel continue to improve maybe at the lesser pace. And in terms of Ramadan, yes, there is a positive influence, but this is following into the second quarter. And I think this would be appropriate for us to talk in terms of how exactly it impacted us. When we talk about second quarter numbers, but I would say that the Ramadan, we do a lot of activation promotion and so on around Ramadan. And so far, the period was good, and this is applicable for pretty much all of our markets.
As a follow-up in Pakistan, could you further elaborate the market condition in Pakistan over the last several years, we see improvement in your performance in the area. Are you gaining some market share or the overall demand is coming up? Could you further elaborate that?
Yes, Pakistan. Pakistan in terms of, again, last quarter and history over the last few years, both the category continues to grow. The demand continues to be improving. And also, we do gain some share. And so this is the combination of both. As you know, in terms of sparkling, we are the market leader. Finally, although with a small margin of sort of advantage, but we are the market leader in sparkling, and we continue to grow the category and continue to grow share. So the growth comes from both sides. And we do see a continuation of strong demand in Pakistan. And obviously, the macroeconomic situation and political situation is volatile, but it's no different from previous years. What really makes a difference is our focus on our development of our own capabilities as we continue to improve route to market, as we continue to improve execution capabilities, we also put additional capacity. We reach a new outlet as we develop our sales and distribution network. So that's primarily what drives our growth in Pakistan.
[Operator Instructions] Dear speakers, there are no further questions. Back to you.
So I would like to, once again, I want to thank each and every one of you for your trust and commitment in our company and in your interest. As we've talked about, we just left behind the smallest quarter behind us, but we are fully committed to deliver our guidance. But we also know the rest of the year will not be easier than the first quarter, but we have all of the proactive plans in place and our commitment remains the same. So thanks a lot for your commitment and passion about our company, and I hope to see you next time. Thanks a lot. Thank you very much. Bye-bye.
Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.