Coca-Cola Icecek AS

IST:CCOLA.E

Earnings Call Transcript 2021-Q4

[Operator]

Ladies and gentlemen, welcome to Coca-Cola Icecek's Fourth Quarter '21 Financial Results Webcast.

I will now hand over to your host, Ms. Cicek Ozgunes, Investor Relations and Treasury Director. Please go ahead.

[Çiçek Özgünes, executive]

Good morning and good afternoon, ladies and gentlemen. Welcome to our fourth quarter 2021 results webcast. I'm here with Mr. 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?

[Burak Basarir, executive]

Well, thanks, Cicek. Good morning and good afternoon, everyone, and thank you for dialing in.

Let me start by thanking our employees who have been consistently delivering strong results while standing strong since the beginning of the pandemic. If 2020 was the year we had to react quickly and effectively to an unprecedented operating environment, 2021 was about emerging stronger out of pandemic, which CCI delivered successfully. 2022 will be the year where maintaining the growth momentum while maintaining the new headwinds will be our top priority.

We are happy to report strong results across all key metrics despite increased volatility, global supply chain constraints and rising cost inflation. We registered 18% volume growth in the last quarter and 16% full year on a reported basis. All markets contributed to this growth. Excluding the fourth quarter impact of Uzbekistan acquisition, organic sales growth volume in full year was 14% and 7% in the last quarter of the year.

Growth in number of transactions exceeded volume growth as IC share recovered compared to a year ago with reopening of on-premise outlets. The year-on-year recovery in IC share is more visible in the second half of the year in correlation with increased mobility and reopenings. Price increases, favorable mix, tight discount management and other RGM initiatives helped us grow net revenue above our sales volume.

Our net revenue grew by 52% and reached TRY 22 billion or $2.5 billion. Sales volume and net revenue growth were ahead of our guidance for 2021. In the fourth quarter, we managed to deliver in line with our quality growth algorithm, expanding EBITDA margin despite the very high base. In the full year, we saw a decline in EBITDA margin by 52 basis points. Andriy will talk about the details of financial performance in his section.

So strong operating performance, combined with disciplined financial expense management, resulted in 84% growth in net income to TRY 2.3 billion. Apart from solid financials, we also made progress on some of our key strategic priorities in 2021. After almost a decade since our last acquisition, we added Uzbekistan to our operating geography in 2021. First, we acquired Uzbekistan's majority stake through privatization and later on minority stake from the Coca-Cola Company reaching 100% ownership. The integration continues at full speed with significant progress to date. We are delighted to see what a tremendous opportunity Uzbek market offers.

In 2021, we also acquired the remaining 20% share in Iraq from the Coca-Cola Company. These 2 transactions further strengthened our long-term alignment with the Coca-Cola Company. On December 20, we've got our second investment-grade rating from S&P. As you know, we already had an investment-grade rating from Fitch. The second rating officially made us investment-grade company, which only 2 companies have in Turkey. The S&P rating came at the peak of the volatility in Turkish market, and it is sentiment to CCI's resilient operating model, strong shareholder structure, solid track record of almost 2 decades, strong risk management practices and financial strength.

Sustainability is at the core of everything we do. To deliver our ESG efforts in the most visible way among our stakeholders and align our sustainability strategy with our financing needs, we issued a sustainability framework with 2 KPIs that we applied in the issuance of sustainability-linked Eurobond in early 2022. The first KPI is regarding water usage and the second KPI is on the energy efficiency. Both KPIs are high developments for the beverage industry. Indeed, Sustainalytics, a leading independent ESG rating firm rated both KPIs to be strong and ambitious.

Finally, I want to highlight one more development after end of 2021, our successful issuance of Eurobond. On January 20, 2022, we completed issuance of $500 million of 7-year sustainability-linked Eurobonds with yield of 4.75%. This transaction is the largest sustainability-linked one out of Turkey and the first sustainability-linked bond out of EMEA beverage industry.

Despite the general perception of elevated Turkey related and less favorable view of investors of emerging markets in general, we managed to differentiate CCI, again, our solid financial strong record of operating in volatile markets, resilient business model. We've achieved one of the highest ever spreads to sovereign globally. We used $200 million of the proceeds or new Eurobond to make a tender offer for the 2024 bond. With that, we extended our average debt maturity from 2 years to 4 years.

On to the next slide, please. All categories posted double-digit growth during the year. Our core sparkling category accounted for 81% of our sales volume, down 1% compared to 2020 due to a rebound in the stills category driven by double-digit growth in iced tea, energy drinks, sport drinks and juices. We have seen a 2% increase in iced tea share in 2021 versus 2020, supported by strong momentum in the on-premise channel. On on-premise channel, volume grew by 36% during the year. At-home consumption trends continue to be strong, as evidenced by the double-digit growth rates in all 3 main channels.

Traditional channel grew by 10%, the [ modern ] channel by 15% and the discounted channel by 26%. Our focus supported the continued resilience of the at-home channel to capture various home occasions with our diversified portfolio.

Let's move on to the next page, please. So let me talk about the Turkey a little bit. In Turkey, our sales volume grew by 8% in the fourth quarter despite cycling another strong quarter of 7% a year ago. This was achieved mainly on the back of high traffic at the on-premise channel and increased focus on at-home occasions. Cycling 18% growth a year ago, sparkling beverages grew by 1% in the fourth quarter with 3% growth of the brand Coca-Cola on top of 24% a year ago. The stills category registered a 19% growth in solid growth in juices and iced tea. The energy drinks also maintained robust growth momentum and its sales volume increased by 97%, mainly led by Monster Energy brand. The water category sales volume was up by 32% with the continuous small pack focus in the last quarter.

On a full year basis, Turkey's sales volume increased by 13% with a double-digit growth in all main categories. In 2021, our package mix improved significantly in Turkey, share of IC packs recovered to 29% from 25% level in 2020. Timely price increases and favorable mix helped net sales per case to grow 24% in full-year 2021 and 42% in the last quarter.

Although commodity prices had a negative impact on cost of sales, higher net sales price and increased operational efficiency mitigated this impact. EBITDA margin increased by -- to 11% in the fourth quarter while contracting by 200 basis points in the full year.

Let me move on to international operations. Our international operations registered another strong quarter with 26% volume growth on a reported basis. Despite cycling versus substantial 16% growth a year ago, organic growth in the international markets in the fourth quarter was 6%. Growth came mainly on the back of sparkling and stills, while growth in the water category was relatively softer in line with our value focus. Sparkling beverages grew by 19% in full-year 2021. Sparkling beverages sales in Uzbekistan also contributed to this robust performance. Excluding the impact of Uzbekistan, growth in sparkling was 15% organically, cycling a 7% growth.

Stills category grew by 66% in the last quarter and 40% in the full-year 2021. This performance was mainly driven by iced tea and juices. Monster Energy also continued its growth momentum.

Excluding the conversion impact, FX neutral international net revenue was 44% in the fourth quarter and 34% in the 2021 on a reported basis, thanks to our strategic RGM initiatives such as price adjustments, tighter discount management and better channel and IC mix. Reported international EBITDA excluding other income and expense grew by 7% in the last quarter on an FX-neutral basis, delivering a 17% EBITDA margin. In the full year, international operations recorded 32% FX-neutral EBITDA growth with a 24% EBITDA margin.

Let me move on to the others, next slide. For the last couple of years, we have been talking about the successful turnaround in our Pakistan operations. The 2021 was a continuation of the robust performance, balancing volume growth and value generation. The competitive environment became more rational with the price realization becoming a norm for all major players. In 2021, we solidified our market leadership in the sparkling category with our robust growth of 17%. The brand Coca-Cola grew by 20% in the year. The stills and the water category were up by 60% and 17% in the same period, respectively. Total volume growth was also strong at 17% while transactions grew in line with this. This growth was led by higher [indiscernible] penetration supported by additional cooler replacement, high product availability in existing [indiscernible] improved route-to-market capabilities and better promotion management. In the last quarter, Pakistan sales volume grew by 4%, cycling a 32% growth a year ago.

Kazakhstan sales volume grew by 8% in the last quarter, thanks to a significant recovery in the on-premise channel and continued good performance of the at-home channel. Full-year '21, sales volume increased by 15%, mainly driven by 10% sparkling category growth. All channels grew by double digits year-on-year basis. As you know, there was a short period of unrest and declared state of emergency in Kazakhstan at the beginning of this year. Due to the Internet disruptions and security concerns, sales were interrupted around the [indiscernible] area for a short period of time. But since January is a small sales month in our business, it did not have any material impact on our operations. Operations in Kazakhstan are fully back to normal now.

Let me move on to the next page, please. Touching base on Iraq and Uzbekistan, Iraq operation posted a solid 11% sales growth in the last quarter. The increase was mainly driven by 16% growth in brand Coca-Cola. Crystal brands also had a resilient performance and supported the growth. Iraq sales volume was up by 3% on a full-year basis. In full-year '21, the total volume in Iraq grew by 3%, although sparkling grew by 9%. The water category continued to decline in line with our value-focused approach.

Finally, let me give you a few highlights of our new addition, Uzbekistan. We've acquired 57% of the Uzbekistan business at the end of September from the State Privatization Agency and remaining 43% from the Coca-Cola Company in December 2021. As the most populous country in Central Asia, after Russia, the Uzbek market has quite sizable NARTD consumption potential. Uzbek economy has been liberalizing itself in the last 3 years. Prospects for the economic growth and the growth in per capita income are very high, while current per capita consumption of NARTD beverage is also low. We believe in the great potential of this business, we are pretty confident that with the addition of CCI's execution capabilities, we will have another very successful operation in Central Asia.

In the fourth quarter of the year, Uzbekistan registered 25 million unit cases of volume. 97% of this was parked in beverage, primarily brand Coca-Cola and Santa. Integration is going at full speed with no significant setbacks.

I will now leave the floor to Andriy to review the financial results.

Thank you.

[Andriy Avramenko, executive]

Thank you, Burak. 2021 was a year with robust operational and financial performance. In the fourth quarter, our net sales revenue increased by 75%, including positive impact of currency translation. On an FX-neutral basis, the growth was also solid at 47%, driven by broad-based volume growth, together with revenue growth management, such as well-planned price increases, tighter discount management and better package and channel mix. On an organic basis, NSR increased by 60% in fourth quarter. Commodity cost pressures and devaluations in local currencies resulted in an organic gross profit margin contraction by 237 basis points. The most severe cost pressure was due to the spike in PET resin and sugar prices. Our financial hedges mitigated the negative impact to a certain extent. Reported gross profit contraction was limited to 68 basis points. This is due to timing of certain expenses in the newly acquired Coca-Cola Beverages Uzbekistan. This one-off situation resulted in an exceptionally high gross margin for CCBU in the fourth quarter, which also positively impacted consolidated margins.

On a full year basis, gross margin was flat at 35.2% despite significantly higher cost base compared to a year ago, thanks to proactive revenue and cost management initiatives. Operating expenses as a percentage of NSR increased by 245 basis points to 25% in the fourth quarter 2021. There were some reclassifications in international markets that impacted OpEx negatively. At the same time, due to the accounting change of direct marketing expenses allocation between quarters, Turkey OpEx was positively impacted. OpEx continued to be frugal, and we achieved some positive scale in selling and marketing expenses. Tight OpEx management offset the gross margin contraction in the fourth quarter and EBITDA margin expanded by 9 basis points. This brought our full-year EBITDA margin to 21.3%, implying 52 basis points contraction compared to 2020. Organic EBITDA margin contraction was 63 basis points. This performance was in line with our guidance.

We delivered TRY 231 million net income in the last quarter. This brought our full-year net income to TRY 2.3 billion. The 84% growth in net income was achieved on the back of strong top line growth and disciplined COGS and expense management. In addition, favorable FX gains had a positive impact despite higher tax expense. Net financial income was TRY 225 million in the year. Although we incurred FX loss from hard currency borrowings, these were covered under net investment hedge and did not go through P&L. Considering our hard currency cash balances, we registered positive net financial income despite higher interest rates on local currency borrowings. Additionally, there was a TRY 54 million one-off related to noncash provision for spare parts amortization.

Growth in operating profit, combined with tight balance sheet management resulted in TRY 2.2 billion free cash flow. CapEx to net sales was 6%.

Next slide, please. Our consolidated net sales revenue per unit case increased by 25% on FX-neutral basis in fourth quarter, thanks to timely pricing actions, better discount management, improved package mix and other revenue growth management initiatives. Turkey and Kazakhstan were the main drivers of growth. Full-year NSR per unit case growth realized 18% with higher per-unit case pricing in all key markets. However, due to the significant increase in commodity prices, COGS per unit case growth was slightly above NSR per unit case at 27% in fourth quarter. The gap was small, thanks to our proactive hedging initiatives. FX-neutral EBITDA per unit case growth was 18% in the fourth quarter and 13% in the year.

Next slide, please. In 2021, we continue to create value through operating profitability growth, and we converted this profitability to solid free cash flow generation as well with prudent CapEx and tight working capital management. When we look at the bridge of our 2025 EBIT growth, we see that this main contribution came from pricing and mix, timely price increases and improving package and channel mix supported profitability growth. Obviously, solid volume growth was another contributor. As Burak discussed in detail, this volume performance was achieved mainly on easing pandemic restrictions and recovery at on-premise channel during high season, along with strong at-home consumption.

On the cost side, global issue of high commodity prices impacted us as well and pressured margins through costs. Our frugal mindset and the learnings from the pandemic helped us to run a lean and efficient operation. We also benefited from favorable currency conversion impact. As a result, we reported TRY 3.4 billion EBIT in full-year 2021, up 60% from a year ago. Pillars of free cash flow generation were operational profitability, tight working capital management and prudent CapEx. We generated TRY 2.2 billion free cash flow in 2021.

On to the next slide, please. Since we acquired Uzbekistan with cash, our net leverage increased to 1.1x despite strong free cash flow generation. Without that acquisition, our net debt would have been 0.1x EBITDA. The leverage ratio of 1.1x is still quite low. We have substantial headroom on the financial covenants. We see this level as transitory and with continued free cash flow generation, we expect further deleveraging in the absence of a sizable acquisition. As Burak briefly mentioned, we recently issued a 7-year sustainability-linked bond in the amount of $500 million. Although we did not have immediate refinancing requirements, we wanted to be proactive to seize on what looks like the last days of an abundant liquidity period in financial markets. We combine this new issue with a tender offer on our existing 2024 bonds. Both the new issue and tender offer were successful. We priced the 2029 bonds with 4.75% yield, $200 million of the 2024 bonds were tendered. As a result, our maturity schedule extended significantly, bringing additional comfort to us. As of the end of December 2021, our average maturity was around 2 years. Now with this new issue and tender offer, it is extended to over 4 years.

On to the next slide, please. The all-cash acquisition of Uzbekistan impacted our net FX position. At the end of 2021, we had an FX short position of $43 million. This was before the new bond issue and the tender of existing bonds in early 2022. However, since we used $200 million of the new issue to tender existing euro bonds and the remaining amount is kept in dollars, the new borrowing did not change our net FX position so far. Considering the current environment, we continue to pursue financial discipline to mitigate the negative effects of currency depreciation on our balance sheet. We also closely monitor the markets for opportunities to add protection with hedges. When taking a hedging decision, we look at our FX position before net investment hedges and compare to our international EBITDA. A short position of 1x to 1.5x of international EBITDA is manageable from our perspective.

Half of our cash is held in U.S. dollars as of the end of 2021. Currently, this ratio is higher because of Eurobond proceeds. Majority of our debt is in U.S. dollars, and we manage this by hard currency cash balances and hedges, as I explained earlier. Currently, majority of our debt bear fixed interest, increasing our visibility in the back of the hawkish Central Bank stances and expected monetary tightening in 2022. We remain committed to maintaining a healthy balance sheet and high liquidity through strong cash generation and disciplined financial management.

On to the next slide, please. The sharp rise in commodity prices was the hot topic in 2021. The outlook is still vague, and it is very important to have some visibility in this environment. Therefore, we are very comfortable to have high hedge ratios for our majority commodities. In sugar, we have 99% hedged for unregulated markets and 97% overall hedge coverage, while aluminum is hedged by 80%. More than half of our resin procurement is hedged as well, and we are looking into increasing this a bit further during the year. High hedge rates provide us visibility. Nevertheless, due to the low levels of commodity costs in the last year's financials, we are still looking at average increase of around 25% to 30% in U.S. dollar terms and prices of these key commodities in 2022. We are mitigating the high negative impact from commodities by taking proactive price increases, revenue growth management initiatives and using various levers in our supply chain.

I now hand over to Burak for 2022 guidance and his closing remarks. Burak, please?

[Burak Basarir, executive]

Well, thank you, Andriy, for the review. And I can confidently say that we emerge stronger from the COVID-19 crisis, thanks to our agile operating model, strong brands and resilient business, but most important, our people. As we look into 2022, we can say with the complete confidence that CVOID restrictions will not be imposed again or if Omicron will be the last variant [indiscernible] we also witnessed the tension between Russia and Ukraine today. There are other uncertainties now might be ahead of us. Besides many other headwinds ahead, including supply chain challenges, macro pressures, geopolitical risks, but we are confident that with the strength of our business, our past learnings and our frugal mindset, we will continue to overcome every challenge and continue delivering profitable growth while creating value for all of our stakeholders.

Our volume growth expectation for 2022 is the mid-single-digit on a pro forma basis at the consolidated level. This will be achieved on the back of flattish Turkey volume and high single-digit pro forma international volume. With our balanced revenue growth management actions, we foresee low to mid-40s percentage FX-neutral net sales revenue growth in 2022. Considering ongoing commodity price pressures, supply-side bottlenecks and margin-dilutive impact of Uzbekistan operations, we project a flat to maximum 100 basis points contraction in EBITDA margin. We expect our CapEx to sales ratio to be in the 8% to 10% range. This is significantly higher than the past 5 years average, and it is due to the newly acquired Uzbek business.

In addition, to continue capturing the vast potential of our operations, we will continue to invest in all of our markets. Despite higher CapEx spending compared to 2021, we will continue to generate absolute free cash flow growth in 2022 through profitable growth and working capital management. As part of our dividend payment policy, our Board announced the proposal of TRY 600 million of dividend to be paid from 2021 distributable income. This equals to TRY 2.4 per share dividend, which is in line with our balanced capital allocation and consistent dividend policies.

Let me move on to the next slide, please. We have a resilient business that has proven its strength in many times by successfully navigating many turbulences. Each time we emerge stronger, thanks to our amazing people, diversified and very well-known portfolio and prudent financial management. CCI is an emerging and frontier markets bottler. We operate in a volatile geography, but on the other hand, which comes with a massive potential for growth. Our execution capability is one of our strongest muscles. In all of our markets we operate, we have a well-established manufacturing footprint and ever-improving route-to-market systems. Our digital capabilities improve our employee and customer experience, provide us with advanced marketing, consumer care capabilities and bring production efficiencies.

Sustainability is a fundamental and indispensable aspect of our business. It is embedded in our vision and goals. We integrate sustainability principles into all of our operations and objectives. As one of the largest bottler in the Coca-Cola system, we have a strong alignment with the Coca-Cola Company.

Let me move on to the next slide. A long time ago, we defined 5 key strategic priorities, and we've always focused on them. One of the priorities is accelerating the quality growth through balanced portfolio, frugal OpEx and prudent CapEx management. Pricing is also a very important component of our strategy. Accordingly, we want to grow our revenue ahead of volumes and our EBITDA ahead of revenues. Being the best FMCG company in execution with enhanced digital capabilities and winning with our people and stakeholders are the other strategic priorities that we have. It is no surprise that the CCI strength I discussed in the previous slide are outcome of these strategic priorities. Building on our key strengths, we have a long-term commitment to creating value in everything we do through a clearly defined purpose-driven strategic priorities.

Once again, we want to thank you for your interest in CCI for dialing in and listening to our story. So I think we can open the floor for your questions. Thank you very much. Thank you.

[Operator]

Ladies and gentlemen, we will now start the Q&A session. [Operator Instructions] The first question comes from Ece Mandaci from Unlu Securities.

[Ece Mandaci Baysal, analyst]

Congratulations on the strong results. We noticed that you still see a strong working capital management and effective working capital management and free cash flow generation in the 2022 as well. So with the Uzbekistan operations, is this currently cash flow positive business? Or how should we think about it for 2022 overall like -- could there be a seasonal weakness in the first quarter, for example, in Uzbekistan operations and margin recovery maybe during the year? And do we expect similar kind of growth for every quarter for Uzbekistan, sand when do you plan to have planned CapEx or additional investment on potential new [indiscernible] beverages. Could you please just elaborate on your strategy overall for the next 1-, 2-year time for Uzbekistan operations?

[Burak Basarir, executive]

Okay. Thank you very much for the question. So I understand the full disclosure on Uzbekistan. So let me try to answer your question that I can because as you know, we do not disclose this level of information for each country. Now I understand the interest. So what we disclosed on Uzbekistan. One, is it is a high-growth market, and it will continue to be a high-growth market from us from our perspective. So to put volume in context in -- and this is, I think, in the public domain, in 2020, the volume of Uzbekistan was 78 million unit cases. This year, on a pro forma basis, for the full year, not this year, 2021 full year, if we count all 4 quarters before and after acquisition, it will be over 100 million cases. So that's a high-growth market. And I can tell you that the EBITDA margin is -- while it's, as we said, marginally dilutive to overall CCI, It's at a very respectable level and it's a profitable business.

Now in terms of free cash flow, again, we do not disclose individual country's free cash flows. But we specifically mentioned that our increased CapEx this year will be due to disproportionate investment in Uzbekistan. So that, I think, says for itself. But again, it's a profitable business, and we will be focused on ramping up capacity and coolers there and so on to continue high growth in that market with applying our capability and capital in Uzbekistan. I hope this answers at least partially your question.

[Ece Mandaci Baysal, analyst]

Like regarding any potential capacity increase, do you have any concrete plans to increase like still capacity to some level by 2020 kind of guidance... can you provide...

[Burak Basarir, executive]

Yes. We have plans to continue expanding capacity to make sure that we support high-growth rates in Uzbekistan for the foreseeable future.

[Operator]

[Operator Instructions] Your next question comes from Hanzade Kilickiran from JPMorgan.

[Hanzade Kilickiran, analyst]

I have 3 questions. And the first one is about your volume performance. So [indiscernible] has been performance year-to-date, particularly in Turkey. And related to this, how much relative price increase will be needed to cover the inflationary pressure in Turkey or you are almost done with price increases in the country? And my final question is about Russia and the impact on the CIS operations. Can you please remind us what your experience in the past in this area of operations when we had the similar risk in Russia? And what could be different this time, actually?

[Burak Basarir, executive]

Thank you for the questions. So first of all, volume at the beginning of 2022, you saw our fourth quarter numbers, and this was in the midst of currency devaluation and inflation spike in Turkey. We took unplanned price increase in the fourth quarter. We still delivered substantial growth in the fourth quarter. We continue to do well in the first days of the first quarter. And despite of sort of few days lost in Kazakhstan and so on, we continue to do well. But we need to see more in terms of February and March before we can really declare the success in first quarter, but the quarter started with positive growth with solid positive growth. Now overall in CCI. In Turkey, obviously, we are focused on a balanced growth in terms of both price increases and digesting what we increased unplanned in Q4 and potentially looking at how much we need to price going forward. So the growth so far, we believe is we are on track with our guidance for both international and Turkish market.

In terms of pricing and pricing specifically in Turkey, we discussed it, I think, on the volume call recently, I mean, we have scenarios, right? And we are benchmarking ourselves to inflation, but also to inflation, not just in immediate today, But in a sort of a longer term in a year and in a better perspective in a 3- to 5-year basis. And we said very clearly and consistently for the last few years, that we will aim to price at or above inflation on that time frame. There may be periods of lower pricing increases. There may be a period of higher pricing increases. But if our history over the last 2, 3 years is a confirmation. I think we are very particular and very committed to that strategy. So that's what we will continue doing. Now the commodity, I think we need to separate overall inflation for consumers and some of the commodity spikes that were completely different. And that will take time to digest for everybody, markets and us. And therefore, we guided, as we guided and potentially flat or some impact on margin up to 100 basis points dilution. And this is because of the mismatch of how fast we will be taking pricing and how hard commodities increased, that's the sort of the balance that we are trying to find. But we will continue to focus on making sure that we pass inflation in Turkey and in other markets in due course.

In terms of Russia impact, I think I will not sort of go into the geopolitics of this, but rather tell you that our Central Asian markets, including sort of Azerbaijan, they generate around 30% of our volume and revenue. And I think it gives you a sense of where sort of maximum exposure of us to this is. Now in a bigger context, there should not be any direct impact and depending on how everything plays out. But indirectly, there may be some remittances imapcts and so on in some of the smaller markets. But if we look at the larger markets in that geography, they are strongly oil-oriented markets. And if we look at the oil price today, it's very supportive of continuous growth in those markets, markets like Kazakhstan and Azerbaijan. So that's what I would comment on the impact of the Russia situation on our Central Asian markets.

[Operator]

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

[Burak Basarir, executive]

Well, I would like to thank each and every one of you for joining the call and taking the time and most importantly, your trust into our company. As I said in my closing remarks, we're going to be doing everything possibly we can to keep our promises in 2022. So we're basically being ready to positively surprise the market. But we also know there are a lot of headwinds that we have to deal with. But operating in this geography for many, many years, we have the skills and the capabilities. But most importantly, we have the people to operate in this difficult times. So once again, thank you for your time and belief in our company and hope to see you on the next call. Thank you very much.

[Operator]

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.