Coca-Cola Icecek AS

IST:CCOLA.E

Earnings Call Transcript 2020-Q3

[Operator]

Ladies and gentlemen, welcome to Coca-Cola Içecek Q3 2020 Financial Results Conference call and Webcast.

I will now hand you over to your host, Ms. Çiçek Özgünes, Investor Relations and Treasury Director. Madam, please go ahead.

[Çiçek Özgünes, executive]

Thank you. Good morning, and good afternoon, ladies and gentlemen. Welcome to our third quarter 2020 results webcast. I'm here with Burak Basarir, our Chief Executive Officer; and Andriy Avramenko, our Chief Financial Officer.

Following Mr. Burak's and Mr. Avramenko's presentation, we will turn the call over for 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?

[Burak Basarir, executive]

Well, thank you, Çiçek. Good morning, and good afternoon, everyone, and thank you for joining us today. I hope everyone is staying safe and well.

I'm happy to report that we have achieved a successful recovery in the third quarter after witnessing the worst crisis in our company's history in mid-March.

We are proud of timely response and execution in our system and encouraged by the solid progress. In the third quarter, our business recorded 1.8% consolidated sales volume growth, supported by the strong performance of our international operations, especially Pakistan and Jordan.

Consolidated net sales revenue grew by 29%, driven mainly by our RGM initiatives in all of our operations, which is supported by the volume growth. Consistent revenue per unit case growth is critical to our sustainable growth algorithm. We have continued to execute our pricing strategy once business entered the recovery phase in the third quarter. Besides that, the proactive initiatives that we have been taking since the start of COVID-19 pandemic, on the cost management side, continued well into the third quarter.

As a result, our EBITDA margin expanded by 568 basis points in the Q3 of -- in 2020 versus the same quarter of the previous year. Andriy will also discuss in greater detail, but to briefly mention prudent financial policy resulted in a well-controlled financial expense line despite significant lira devaluation. And accordingly, we have managed to protect our operating profitability, reporting TRY 857 million of net income, 50% higher than the last year. Last, but definitely not the least, our free cash flow generation has been TRY 1.9 billion in the first 9 months of the years, in a very challenging period.

So let's move on to the next slide, please. In this very challenging environment, we managed to stick to our quality growth algorithm, except for the number of transactions, which is linked to declining share of on-premise consumption, all of our metrics were in line with our algorithm. Our 2% volume growth was translated into 29% net sales revenue growth. Growth in EBITDA was more than twice of net sales revenue, resulting in significant margin expansion.

We are particularly happy with the achievement of such a strong profitability despite ongoing pandemic and negative package mix. In the first 9 months, volume contraction was limited at 5%, with net sales revenue growth at 14%, reaching to TRY 11.2 billion of consolidated revenues. EBITDA growth was more than twice of net sales revenue growth. Our 9-month consolidated EBITDA reached TRY 2.6 billion.

So let me move to the next slide, please.

As we have discussed in previous slides, we defined last 2 weeks of March as the start of the crisis as it was sudden, and the month of April was the peak.

Since then, every month, we have seen a gradual improvement in the business in response to our crisis management efforts, centered around fast adaptation in the first -- in the second quarter, followed on a fast recovery plan in the third quarter of the year.

Business improvement was also highly affected with improving activity in the on-premise channel. In the third quarter, our on-premise volume recovered significantly compared to the second quarter, more accounts opened and consumer traffic increased.

This resulted in improving IC shares still being below the last year's average, but there is a significant improvement compared to second quarter. Recovery in IC is not only linked to reopening of our on-premise accounts, but also a result of our efforts to increase IC share in the home market through multi-packs and consumer promotions to expand IC pack consumption occasions. September was especially strong in all operations with improving on-premise sales with the assistance of good weathers in majority of our markets.

On the next slide, sparkling category was the best performer of the year. Despite all of the challenges, our sparkling sales volume grew in every country without exception. In Turkey, which accounts -- accounted for 43% of our consolidated volumes continued its gradual recovery trend. 4% growth in sparkling was mainly driven by 9% growth in the brand Coca-Cola. Reopening of on-premise outlets and our effective marketing initiatives enabled us to improve IC share in total to 29%, signaling a strong recovery compared to previous quarter. Favorable better conditions also supported sales volume performance in Turkey.

Pakistan had a remarkable quarter with sales volume growth by 13%. This growth was assisted by easing COVID restrictions, successful consumer promotions, right execution and favorable weather conditions. Strong execution also led to market share increase in Pakistan. In addition, as you might remember, we had a short third quarter in Pakistan last year as we fixed the fundamentals to operate more profitably by adjusting our prices to higher levels.

Third quarter in Kazakhstan started a bit more challenging compared to our other operations, mainly due to increased number of COVID-19 cases and restrictions, which was normalized during the quarter.

The sparkling category grew by 2.4% in the third quarter. Again, brand Coke was the best performer. Stills and the water categories were softer, resulting in total volume contraction by 4.5%.

In Iraq, the brands Coca-Cola, Fanta grew by high single digits and supply, by double digits, taking sparkling growth to 11%. Water category was down by 34%, resulting in a flat Q3 total volume in Iraq.

On the next slide let me talk about the Turkey a little bit. So the third quarter in Turkey showed significant recovery compared to previous quarters. Reopening of on-premise accounts and favorable weather conditions supported by our effective execution and well-managed consumer promotions.

Accordingly, the contraction in sales volume narrows down to 11% in the first 9 months of the year. On a year-on-year basis, net sales revenue per unit case increased by 20% in the first 9 months. The growing share of the sparkling category, price increases effective discount management offset the contraction in sales volume and resulted in 7% net sales revenue growth.

In line with our quality growth algorithm, increase in EBITDA outperformed NSR growth, yielding a 157 basis points EBITDA margin expansion. Home market channel turned to growth in the third quarter, decrease in the first 9 months sales volume construction to low digits, a big improvement compared to the first half. Although on-premise channel showed significant recovery month-over-month, the channel is performing well below last year.

Lower volumes in on-premise is impacting IC mix, unfortunately, negatively, but our efforts to increase availability of multipacks in the home market channel is offsetting its impact to a certain extent. Although it is still below its prior year levels, in the third quarter, IC share in total mix showed a remarkable recovery compared to the second quarter of the year.

So on the next slide, let me talk about the international business a little bit. As I mentioned earlier, there was a very solid recovery in Pakistan and Jordan in the third quarter, while Central Asia and Iraq were flat. Nevertheless, in all of our countries, sparkling category recorded a solid growth. Therefore, the first 9 months sales volume international operations was flat in the first 9 months despite the severe impact of the pandemic.

In the international operations, we've also managed to deliver our quality growth algorithm through higher net sales revenue per unit case and a tight cost management. Like Turkey, on-premise channel was the weakest channel in international operations, but it is -- share in the total sales is half of Turkey, having a much smaller impact. All the other channels in the international markets grew in the first 9 months on a year-on-year basis.

So let me move on to the next slide. It is not easy to task, to operate with agility in such a rapidly changing environment, but we are happy with our performance, navigating through the challenges of the pandemic. Now we look beyond COVID-19, accept and adapts to new market realities and consumer preferences. COVID has accelerated the need for digitization in our business, reshapes some of the consumption occasions and channels and change consumer preferences. Our years of investment in digitalization certainly made our job easier for quick adaptation, but we still have a lot to do.

We've improved our digitized operations capabilities, building more efficient, more effective route to market model. We are implementing a more powerful next-generation consumer relations model to make data-driven decisions and serve our customers and consumers more effectively.

Share of e-commerce in our sales is increasing, and we are also exploring and investing in such solutions for the future of our company. Consumers are also adapting from lockdown more to living with COVID. We want to make sure our portfolio is capturing every occasion, whether it is in the growing home market channel or at away-from-home channel. We are making sure our products are the first choice in home occasions with focus on leisure at home, movie time, friends and family. We are specifically addressing consumers' passion points, too, such as gaming, music and movies. As always, we continue to hold an innovative pipeline, prioritizing product innovations with functional benefits such as added vitamins and sustainable packaging.

On the next page, as you know, our purpose and strategy is pretty clear. We aim to create value in everything we do for our stakeholders. While doing that, we focus on 3 main pillars, our people, our consumers and customers and the community we live in. To that end, our short-term focus is on protecting the health and safety and well-being of our people, supporting the communities we live in and ensuring that uninterrupted business continuity.

As we have demonstrated at the peak of the crisis, we want to make sure our profitability is protected with the quick and effective measures even under extremely challenging conditions. But our execution is more focused on the long-term. As I mentioned in the previous slides, we are adapting ourselves to changing consumer behaviors, making sure that we stay as the consumers' first choice in beverages by maintaining a relevant portfolio, including targeted innovation pipeline. We are exploring ways of expanding our business beyond its borders either geographically or with the product portfolio, while making sure that we have the financial capabilities and the bank strength to do that.

In line with this, we keep on investing in our talent and increase the flexibility of our balance sheet. As one of the most aligned bottlers, I'm happy to say that our relationship with the Coca-Cola Company is stronger than ever. So with that, let me hand over to Andriy to talk a little bit more detail about our financial results. So Andriy?

[Andriy Avramenko, executive]

Thank you, Burak. Good morning and good afternoon, everyone. Thank you for taking the time to be with us today. Burak already talked about our third quarter performance and how our business turned from adaptation mode to recovery so quickly. Now let me get into more financial detail.

Our consolidated net sales revenue grew by 29.2% in the third quarter, while year-to-date revenue was up by 13.7%, reflecting higher volumes, successful pricing initiatives, revenue growth management and higher share of sparkling and positive foreign currency translation effect of international operations. Our cost of sales per unit case increased by 17% in the third quarter, mainly due to termination of cash designation methodology. However, the increase in COGS per case was below net sales revenue per case growth, resulting in 347 basis points gross profit margin expansion. Apart from our cost-cutting measures, limited or no increase in certain raw materials also helped contain the increase in COGS.

As discussed before, since the start of pandemic, we have been taking some proactive initiatives to balance the pressures on the sales volume. We have seen the benefit of these measures in the OpEx line. These are mainly coming from cuts in marketing expenses, meeting and travel expenses and other general and administrative expenses. With the start of the pandemic, we have also adapted with the much leaner SKU portfolio that delivered significant efficiency.

As the trade recovers, number of SKUs is also increasing from the lowest level in early April. However, we are still below our pre-pandemic level.

This leaner SKU model also helps us to operate more efficiently. This is one part of the cost reduction that we believe will be sustainable during future periods.

Accordingly, with the tight OpEx management, our EBIT and EBITDA margin increased by around 600 basis points in the third quarter. Solid operating profitability translated to strong bottom line, yielding TRY 857 million net income in the third quarter, a 54% increase year-on-year.

Going into the next slide, please. Our consolidated net sales revenue per unit case increased by 15.7% on an FX-neutral basis. This was assisted by dynamic pricing, revenue growth management initiatives and high share of sparkling. Our gross profit per unit case grew by 28.6%, attributable to higher gross margin in both Turkey and international operations. As we discussed before, although gross profit of Turkey operation was impacted by the termination of cash designation, tight cost management enabled us to offset the cash designation impact as well as negative mix impact due to lower share of IC packages.

International operations gross margin was very strong, increasing by 665 basis points, with the support of revenue growth management initiatives and savings in certain raw materials in the majority of our countries. EBIT per unit case was up by 57.8% driven by significant efficiencies and savings achieved, as I discussed in the previous slide.

Now moving on into the next slide, please. Expansion in margins was primarily the result of the NSR per unit case growth achieved both in Turkey and internationally. On top of that, cost efficiencies and reduction in certain operating expenses as well as our SKU optimization, assisted margin expansion.

If 199 basis points positive impact of cash designation were excluded from consolidated gross margin over the last year, the expansion in gross margin in third quarter 2020 would have been 546 basis points. Similarly, EBIT and EBITDA margins would have increased by 808 and 767 basis points, respectively.

We recorded TRY 857 million net income in the third quarter, taking our year-to-date net income to TRY 1.4 billion. Growth in EBITDA was the primary driver of the bottom line growth. Higher taxes due to net investment hedge methodology negatively impacted net income. Compared to the last year, we have reduced the share of FX borrowings significantly and increased the share of FX deposits as well. I will discuss this in more detail in the next slide.

This shift to more local currency-based borrowing resulted in higher interest expenses. At the same time, it decreased the hard currency exposure, hence lowered net loss from the currency impact. It is worth remembering that in the third quarter, Turkish lira devalued by 14% compared to end of second quarter, while in the same period of 2019, there was a 2% appreciation of Turkish lira. Therefore, on a net basis, financial expense line was slightly above last year.

Moving on to the next slide, please. We are particularly pleased with our balance sheet and liquidity. As I mentioned in the previous slide, we reduced the FX-based borrowings by almost $150 million compared to the end of the last year. Similarly, our FX-denominated cash has increased by USD 72 million as part of our natural hedging approach. Counting financial hedges and the net investment hedge were actually in the net FX -- [ net long FX ] position of over $90 million. Almost 60% of our cash is in U.S. dollars. We have significant headroom under our financial covenants, and we do not have a major refinancing until year 2024.

Moving to the next slide, please. As we mentioned many times before, free cash flow generation is a core priority for our business. In the first 9 months of the year, we recorded TRY 1.9 billion of free cash flow, more than doubling last year's amount in the same period. Lower CapEx and tighter working capital management were the main pillars of this solid cash generation, in addition to operational performance and resulting EBITDA growth.

With the start of the pandemic, we have frozen all uncommitted CapEx with the exception of digital investments. Accordingly, our CapEx to net sales ratio was 2% lower compared to the last year. Net working capital to sales improvement to 0.7% was primarily driven by extensions of accounts payable, especially in Pakistan, Iraq and Kazakhstan. As a result of strong cash flow generation, our net indebtedness decreased further to only 0.54x of EBITDA.

Let's move to the last slide of financial section, please. We are almost 100% hedged for 2020 in key raw materials. For 2021, our hedges are nearly 50%, and we even hedged some aluminum for 2022. We continue monitoring commodity markets and try to lock in favorable levels for the upcoming periods as much as we find feasible.

With that, now I hand over to Burak for his closing remarks. Burak, please?

[Burak Basarir, executive]

Well, thank you, Andriy. Once again, thank you for joining our call today. Our business is, as you know, built on solid fundamentals. We are looking at the prospects of our company beyond COVID-19 and continue adapting our business to new market realities, different consumer preferences and evolving channels and occasions. Our people is and always will be our top priority. We are constantly evaluating and updating the robust measures already in place to ensure the safety and well-being of our people. We are fully committed to deliver our quality growth algorithm and create value for our stakeholders.

We are encouraged by the fact that we are able to deliver quality growth even at the peak of the crisis. We continue to focus on underlying potentials of our markets based on favorable demographics and low per capita consumption levels. In order to recruit more consumers, we are also focusing on improving affordability and increased household penetration. While delivering affordable products to our consumers, we also want to make sure that we grow our revenues ahead of our volumes through dynamic pricing and effective revenue growth management initiatives, including selective premiumization.

As we have proven during the peak of the pandemic as well, effective cost management and fast adaptation are among the core strengths of our company. We believe -- continue to building on our strength and be frugal in each dollar we spend. Our balance sheet is strong and flexible, and we have sufficient liquidity. Focus on financial discipline is embedded in our D&A, and this strength will be a key enabler for our future growth. Finally, we are one of the best aligned bottlers within the Coca-Cola system, and our relationship gets stronger every day.

We are proud to be part of this great system and fully committed to grow organically and inorganically with the support of our great people, great brands, solid experience and excellent execution capabilities and harvest our financial strength. We thank you for your interest, your investment in our company and for joining us today. And I think we are ready now to take your questions. Thank you very much.

[Operator]

[Operator Instructions]

Our first question comes from Ece Mandaci, Unlu Securities.

[Ece Mandaci Baysal, analyst]

Congratulations on your strong third Q results. I have 3 questions, if I may. First is about the competition environment in Pakistan. I believe part of your volume increase as of third quarter was related to your market share gains in the market. How do you see going forward for the fourth quarter and 2021? Could there be some severe increase in -- or increase in the competition? And could that be a threat on your volume growth -- double-digit volume growth? That would be very helpful.

The second question is about Turkmenistan. You just mentioned in your earnings release that you have started production again there. Could you please also touch upon the convertibility issues there? I believe you still have some local currency-denominated cash remaining there.

And thirdly, to have a better insight regarding your portfolio in 2021, if everything normalizes in a scenario when everything is normalized, what I mean is if your SKU portfolio improves back to pre-COVID levels and the revenue breakdown is back to pre-COVID levels, what would be your expectation regarding gross margins and EBITDA margins on a consolidated basis for 2021?

[Burak Basarir, executive]

Well, thank you, Ece, for your questions. Let me start with the first one, the Pakistan, the competition environment. I mean as far as we see, competition is still the same. So there is no lesser competition in Pakistan in 2020, but we are better than last year in terms of our execution capabilities and go-to-market. So I don't think we're going to be seeing any loosening in the competition or getting competition more aggressive, which is always possible, right?

So when they want to play the pricing game, they can always play the pricing game, and we're going to respond as long as it makes sense. But we've been -- keep saying it, we're trying to fix the fundamentals in Pakistan for the last x years. So I think we've seen the results of that, the right decisions that the team is taking. So I'm not expecting any weakening in the Pakistan results depending on if the market locks down and everything is obviously something else that we cannot control.

On Turkmenistan, the convertibility issue still continues. But we have a production facility. We have people on the ground. So we are basically importing concentrate and then trying to produce as much as possibly we can. So our production facility runs and we also supply our products to the Turkmen consumers in the marketplace, but the convertibility is still an issue. And we're not foreseeing that issue will resolve itself next year either.

On your third question about the portfolio, I think the portfolio rationalization is -- was one of the biggest learnings for us during the pandemic time. So we have made some hard choices during the pandemic, and all of our choices have paid off in a positive sense. We will obviously increase number of SKUs that we serve to our consumers in the marketplace as long as they make sense, both for our consumers and for our company as well, right? So we don't want to sell any SKU, which doesn't deliver bottom line in the long term as long as it's not a strategic choice for the system. I don't know if it makes sense.

[Ece Mandaci Baysal, analyst]

Regarding margins, could you provide some insight? Is it possible? Or is it too early?

[Burak Basarir, executive]

Yes, it is possible. I mean my job is the easiest one. I'm asking the team to improve the margin. So they're going to find a way to increase the margins. So that's what I said, we had a town hall meeting just today. So I asked them to build -- keep building on the margins. It's going to be tough. It's going to be tough because, as you know, as you can see from the figures, the margin expansion was significant. There were many reasons behind it. We have had a very strict OpEx management and et cetera. So it's going to be tough. But is it doable? Yes, it is doable.

[Operator]

Our next question comes from Alexander Gnusarev, VTB Capital.

[Alexander Gnusarev, analyst]

In terms of your results, if I may I would like to get a brief information how your sales will perform in October in year-on-year terms.

[Burak Basarir, executive]

Well, unfortunately, I cannot tell you anything specific about our October sales, but we are still seeing the same strong trend. Let me tell you that much.

[Alexander Gnusarev, analyst]

It's stronger than September or comparable?

[Burak Basarir, executive]

Well, I mean, unfortunately, I cannot elaborate on that any further, but we've seen a strong performance again in the month of October.

[Operator]

Our next question comes from Asli Tuncer, Goldman Sachs.

[Asli Tuncer, analyst]

I have a couple of questions. First of all, just trying to understand, so how can you sustain this minimized tight CapEx and working capital management? I understand that you mentioned you have low inventory levels in Turkey and the expansions of payables in -- across your international geography. How far can this go? Do you expect some normalization in this going forward?

And also, I was wondering for Turkey. Obviously, you had low volume growth but significant pricing growth. We understand that that's more of a reflection of a shift in mix and also of price adjustments. Do you have a sense of that switch? How much of this is driven by the change in mix versus price adjustments? And also, I don't know how much you can comment on this, but how is this going so far in fourth quarter? And then my last question is I know that you have a comfortable leverage position. You have strong cash flow generation. Is there any expansion opportunities that you might be considering?

[Andriy Avramenko, executive]

Thank you for your questions. This is Andriy.

So I understand the first question was about the fact that we minimized CapEx and OpEx in this year and how does it reflect in terms of sustainability of those expenses. Look, obviously, we try not to do anything in this period that is not sustainable, right? So there is no point to have a onetime cut and then reverse everything back. So we try, to the extent possible, making sustainable reductions in the cost base. And again, this was a great journey for us.

One piece that obviously will be coming back, to some extent, is the marketing expenses because we will continue to invest in marketing going forward. That will be coming back partially. But obviously, marketing investments are supposed to justify themselves through driving growth in volume and pricing, so this should not be by itself a significant burden going forward. We will be just doing those investments for clearer and more sustainable base.

In terms of CapEx, again, we continue to invest in digital significantly through this period. We didn't stop investments. The rest, we were very careful. So as the needs come up, we will invest going forward. Now they are -- all our investments are kind of purpose-driven, right? So for example, when we invest in coolers, coolers remain fairly easy investment in the sense that they generate positive returns, and we'll continue to generate positive returns for our business for the foreseeable future. Therefore, we will continue to invest in coolers.

In capacity, capacity is a mathematical exercise. And when we come close to kind of full capacity, then we invest and try to optimize. Obviously, each project is evaluated based on returns on investment for each specific line or other capacity investments. So we will take it step by step. But overall, we may see some further investments about this year level in the future. But again, as you know, we are very disciplined in terms of investing CapEx, and you can see our ratios for the last 2, 3 years. And I think it will give you a good sense of what the sustainable investment is in CapEx.

In terms of Turkey, yes, lower growth. And the question was how much of it is pricing and how much of it is mix. While I will not quote precise numbers, our firm believe is that predominant impact was the fact that the on-premise consumption was shut down.

And Turkey has a very high, compared with other markets, of share of immediate consumption and on-premise consumption in the mix. And therefore, Turkey was affected more than other markets.

We believe our price increases this year continue to be sustainable and should not depress our volume. So the long story short, the primary driver of lower volume in Turkey was on-premise channel. And as it continues to recover, we recover our IC mix quickly. And we are optimistic in terms of continued recovery in Turkey on this basis.

Third question is expansion and linked to our strength of the balance sheet. I don't have any news. Therefore, the answer will be pretty much the same as you've heard before. We are actively looking for opportunities to expand, but every expansion investment shall make clear sense, both strategically and financially for us. We published on our website and in all our presentations, our criteria of what expansion opportunities we will pursue. And we will be very disciplined on that basis. Unless we see how we can get -- among other things, we can get return on invested capital from that expansion investment in foreseeable future, above base average cost of capital, we will be disciplined and we will not make those investments.

But we are actively looking for opportunities. Our balance sheet is very strong, and we are on the leverage, if anything, and we are looking for the opportunities. Also, we are obviously looking at other ways to optimize our capital structure and deploy our resources in core business because our core business represents a significant opportunity, plus we have debt to pay back. And so there are other ways to deploy capital. But we are on a lookout for expansion opportunities.

[Operator]

Our next question comes from Hanzade Kilickiran, JPMorgan.

[Hanzade Kilickiran, analyst]

I have 2 questions. The first one is about your cash management, which you already mentioned that you are -- continue looking for inorganic growth opportunities. But you also build up a significant cash on the balance sheet. Would it be possible to assume much higher dividend distribution next year as you also canceled this year dividends because of regulations? Or would you prefer to hit this cash for future inorganic growth opportunities?

That's going to be -- that's the first question. The second one is about your margin trend. You mentioned about high level of IC packages in Turkey in the third quarter. If I didn't misunderstand, it was around 29%. But would it be reasonable to assume that Q3 IC packages may have lower margins due to multipack campaigns for at-home consumption? Hence, there could be some room to build more gross margin next year with the opening of on-premise, particularly, in Turkey?

[Andriy Avramenko, executive]

First, on the cash management and significant cash and dividends. Yes, the government imposed certain restrictions, so we were not able to pay the dividends. As soon as the government releases restrictions, we will deliver on our promise and pay what we owe to the shareholders. From the announced dividends this year, that will be done.

Going forward, obviously, we do not give guidance on dividend payouts and so on, but our policy is published. We'll continue to follow our policies, our earnings increase, so you should expect that we will be focused on delivering sustainable and continuously growing at dividends.

[Hanzade Kilickiran, analyst]

Andriy, actually, I'm trying to understand because you couldn't pay dividends this year, and you have also profit this year as well. So is it reasonable to assume that your dividend potential is much higher than it would seem in 2020?

[Andriy Avramenko, executive]

Yes. We paid approximately half of announced dividends, right, back in May. And we owe the other half. So as soon as we have ability to pay, we will pay this amount. This is relevant for announcement of 2021. If you talk about -- of 2020. In 2021, obviously, we'll continue to -- we plan to continue announcing and paying dividend in the next round. Yes. So that's -- yes.

Now margins in Turkey and IC, that is quite a sophisticated question, and I'm not sure if I can fully answer it. Obviously, the realization of price and margins using exact same package in different channels may be somewhat different, but it should not be materially different, whether we're using multipacks or we're using on-premise because on-premise will have higher discounts and some other incentives. And in multipacks, it's a more straightforward sale.

So from that perspective, you should not be worried about the fact that it somehow affects our business negatively next year. In fact, I would take it positively in the sense that the on-premise channel is not fully opened, right, and did not reach its pre-COVID potential. While it may not reach the full potential, pre-COVID potential for some time, clearly, there is additional growth that we can see in on-premise channel going forward because it will continue to recover.

On the other hand, with multi-packs and some other ideas that we have been implementing to expand immediate consumption, I would see it as an additional opportunity rather than threat to our profitability in Turkey, specifically.

[Operator]

[Operator Instructions] We have no further questions. Speakers, back to you for the conclusion.

[Burak Basarir, executive]

Well, thank you very much again for joining our call today. So we're -- as the CCI team are proud about the performance that our company has shown in the third quarter of the year. And we believe if everything goes well, and we're going to be performing the same outstanding results in the last quarter of the year, so 2020 will be another successful year in our company's history.

So I would like to thank you for your confidence in our company again. So wishing you all to stay safe and well. And hope to talk to you on our next call. Thank you very much. Thank you. Bye-bye.

[Operator]

Thank you. Ladies and gentlemen, this concludes today's webcast. Thank you all for attending. You may now disconnect.