Coca-Cola Icecek AS

IST:CCOLA.E

Earnings Call Transcript 2022-Q4

[Operator]

Good morning and good afternoon, ladies and gentlemen. Welcome to our Fourth Quarter 2022 Results webcast. I'm here with Mr. Burak Basarir, our Chief Executive Officer; and Andriy Avramenko, our Chief Financial Officer. Following Mr. Basarir and Mr. Avramenko's presentation, we will turn the call over for your questions.

Before we begin, please kindly be advised of our cautionary 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.come.tr. Now let me turn the call over to Mr. Burak Basarir. Sir?

[Burak Basarir, executive]

Thank you, Çiçek. Good morning, and good afternoon, everyone. Thank you for joining us to discuss our fourth quarter and full year 2022 results. As a nation, unfortunately, Turkey is going through very difficult times. The earthquake that hit Turkey on February 6 was among the most devastating in our modern industry. It impacted more than 13.5 million people across 11 provinces in Turkey and part of Syria.

Since the first moments of the devastating earthquake, we have mobilized our efforts as the Coca-Cola System to help the people in the region. We opened our plants in Elazig and Mersin to our employees, their families and earthquake survivors providing shelters. Throughout the affected regions, we provided tents for employees of our distributors who lost their homes.

We mobilized to meet the hydration needs of survivors and risky teams in the earthquake region. CCI has delivered more than 100 trucks of packaged water and other beverages today. Our Hazar plant, which is in Elazig region, devoted its 100% capacity to water production for earthquake survivors in the region. To contribute to healing process together with the Coca-Cola Company and the Coca-Cola Foundation, we donated TRY 30 million in cash to the Red Crescent. In addition to CCI, we have commented to making donations to the Red Crescent in cash equal to amounts donated by our employees from all the geographies we operate. This amount also exceeded TRY 2 million.

Our employees and distributors contributed in-kind donations and sent these to the impacted regions in coordination with aid forces. I share my deepest condolences with the whole nation. We realize that the healing process will be long, and we will continue to provide all of the necessary support that we can provide to the region.

Next slide, please. 2022 was, by all means, another challenging year. The social unrest in Kazakhstan in the month of January at the early beginning of the year, Russia's invasion of Ukraine in February, political volatility in our major markets, devastating floods in Pakistan and recession concerns impacted our consumer confidence and supply chain. A highly inflationary environment also added pressures on top of our consumers. Through these challenging times and many headwinds, we focused on delivering the right mix of products across different price points, leaning on revenue growth management initiatives to protect and increase our consumer base. We delivered strong volume performance exceeding our full year guidance. We grew consolidated volume by 15% on a reported basis and 8% on a pro forma basis.

Thanks to the momentum in the last quarter of 2022, we registered 7% volume growth despite fact of a high base of fourth quarter 2021. Immediate consumption share recovered slightly in the full year, reaching 27%, exceeding the pre-pandemic levels. The decline in the IC share in the last quarter was mainly due to Iraq, where the competition did not match our price increases, which is necessary for maintaining the industry's financial viability.

The transactions reached to 11.5 billion servings with 13% annual increase. Our net sales revenue grew by 144% and reached TRY 54 billion, exceeding $3 billion. Effective implementation of revenue growth management, including timely price increases and tailored discount management led to strong growth in the revenue side. Excluding foreign currency conversion impact, net sales revenue grew by 80% on an FX-neutral basis, almost doubling our initial guidance. As we communicated throughout the year, higher raw material prices and high energy costs led to 270 basis points contraction in gross profit margin. With over 200 basis points improvement at OpEx during the year, mainly on savings at selling and marketing expenses, gross profit margin contraction was slightly mitigated.

Our EBIT margin contraction was limited to 70 basis points, realizing 15% margin. Although absolute EBITDA grew by 116% in 2022, the margin was 19%, down from 21% a year ago, below our initial guidance. In an inflationary environment like this, EBIT is a more meaningful metric than EBITDA as the noncash items do not reflect the growth in the top line. Strong top line growth and tight OpEx management partially offset the cost inflation and higher net interest expenses. According to net profit grew by 95%, 91%, reaching to TRY 4.3 billion in 2022.

Next slide, please. Our core Sparkling & Stills categories recorded double-digit growth in 2022. The water grew by 5% in line with our [ premiumization ] strategy, also cycling 11% growth. The 16% growth in sparkling was led by the 18% growth of the Coca-Cola and the double-digit growth of both Fanta and Sprite brands. On top of the solid start for the year in the first half, robust tourism season and focused consumer activations throughout the year, such as summer festivals, back-to-school and new year campaigns supported the sparkling category performance. The Stills category recorded 19% growth leverage in iced tea and energy drinks. Iced tea grew by another 34% exceeding its successful 35% performance in the previous year.

Energy drinks grew by triple digits in 2022 with the rapid expansion of Monster Energy portfolio and successful launch of affordable energy drink under Predator. We've started the pilot distribution of Costa coffee beans in mid-2022 in Turkey and have already recruited more than 100 HORECA channels, sales points by the year's end. We see the potential for this category and continue to invest in the expansion.

Let me move on to the next page. So on Turkey, the volumes grew by 3% in 2022, ahead of the full year guidance despite the accelerating inflation and pressures of households disposable income in Turkey. The core sparkling category was flattish in 2022, cycling a double-digit growth in 2021. The Stills category registered 14% growth on top of the 22% expansion in 2021. Fuse Tea became the leader among the ice tea category during the summer and recorded a 30% growth in last year. The energy drinks volume doubled in 2022 with the robust execution of Monster Energy and the successful launch of Predator affordable energy drink during the year. The water category grew by 9% in 2022, in line with our value-generating IC packages focused.

The share of IC packs in the water portfolio was up by 3% in 2022 compared to the last year. Both at home and on-premise channel has performed well throughout the year. The on-premise channel continued its recovery with 20% growth. Building on the sound recovery registered in 2021, demand at the home channel was also resilient. We successful to address various at-home occasions with a wide range of offerings, focused consumer marketing campaigns and shopper activations. Net sales revenue growth in Turkey was 124%, while per unit case sales revenue grew by 118%. This performance resulted from the timely price increases and a better brand and package mix. As the raw material prices and increased energy and transportation costs pressured the gross margin, frugal OpEx management helped to mitigate part of the negative impact. EBIT margin, excluding the other income and expenses was 10.9%, down only slightly from 11.3% of last year.

EBITDA, excluding the other income and expense, grew by 95%, reaching TRY 2.5 billion in 2022.

Let me move on to international operations. International Operations sales volume grew by 23% on a reported basis in 2022, exceeding our guidance. The growth was 12% on a pro forma basis, led by solid performance in our largest international markets, Pakistan, Uzbekistan and Kazakhstan. We continue to improve our route to market, our market execution and increase outer penetration while growing our outlet sales. The core sparkling and stills categories grew by 25% and 23%, respectively. Brand Coca-Cola and Fanta were among the best performers in the sparkling category, while the stills category grew with the sound performance in iced tea and energy drinks. Full year water sales volume declined by 6% as we kept our focus on high-value packs. International operations net sales revenue growth was 158% in 2022 on a reported basis and 132% on a pro forma basis.

Excluding the impact of currency conversion, revenue was up by 51% on an FX-neutral basis. Positive volume momentum, disciplined price adjustments and tight discount management contributed to this performance. The gross margin contraction due to continued cost inflation, the dilutive impact of Uzbekistan operations and FX headwinds were partially offset by the OpEx savings throughout the year. EBIT margin, excluding other income and expense contracted by 62 basis points to 17%. EBITDA margin, on the other hand, was down by 250 basis points to 21% in 2022 as the value of depreciable assets is not adjusted for inflation.

So let me touch base on the key international markets. After the challenging start of the year, Kazakhstan recovered quickly, delivering 16% year-on-year growth in 2022. The at home channel was particularly strong during the year, registering growth above 20%. The brand Coca-Cola led the sparkling growth with 20%, and Fanta also registered close to 30% growth during the year. Energy drink sales volume more than doubled, proving our efforts through diversify the portfolio with the new brand launches and flavors.

In addition to macroeconomic and political challenges, Pakistan faced devastating flood in 2022 that further affected the consumers. Nevertheless, we have achieved 13% growth in 2022 due to expansion to the new outlets, increased SKU penetration and strong consumer activations in the core sparkling category and energy drinks with an improvement quality of our market execution. Recording the highest sparkling soft drinks volume among the CCI geographies, CCI Pakistan also added close to 30,000 new outlets into this portfolio. Uzbekistan has been our fastest-growing international operation with a 32% growth in 2022. The ongoing improvement of the road to market capabilities, cooler placements, improvement in quality market execution and the addition of new outlets were critical contributors to this strong growth. I will cover Uzbekistan in more detail in the next slide.

So on Uzbekistan, it has been 5 quarters since we've added the operation to our business. Uzbekistan was the missing crown-jewel in our portfolio being the most populous country in Central Asia region with attractive demographics and underpenetrated any RTD fundamentals. We started the well-planned integration from day 1, achieving significant outcome in a year. Uzbekistan recorded the highest volume growth in 2022 within our portfolio. When we acquired this Uzbekistan operation, it was a basic manufacturer within sufficient production capacity and a limited portfolio driven by only 3 core brands, Coke, Fanta and Sprite. The distribution structure relies on a basic wholesaler model and the number of coolers did not do justice to the market potential and also record keeping was primarily manual. We invested in certain of our distributors' infrastructure and training and significantly decreasing dependence on the wholesaler system.

As a result, we increased outlet to reach penetration, improved in-market execution and strengthened customer relationships. While adding new lines to increase capacity, we also invested heavy in cooler placements, expanding our portfolio visibility. We are starting to build a new plant in Uzbekistan, which we expect to become operational in 2024. We will keep increasing our production capacity with additional production lines until then. We started portfolio diversification, doubled our Fuse Tea sales and improved our IC mix by 3%. In addition to the primary focus on accelerating the growth of our core sparkling portfolio, we will continue to be selective in expanding into categories of strategic importance for CCI with a long-term value creation potential.

The digital foundation of our business has become operational. We provided thousands of hours of training to our employees to upskill and reskill them. We will continue to expand CCI's digital technology capabilities to accelerate the business growth. The quality growth algorithm was delivered in Uzbekistan in its first year. We drove revenue growth ahead of transaction growth, which was ahead of the volume growth.

Profitability margins were also improved with the tailored revenue growth initiatives.

Looking ahead, we will continue investing in our business to accelerate growth in this high potential market. Let me move on to the next slide. 2022 is also a marketed strategic transaction aligned with our value creation mindset. As we continue to communicate, we seek inorganic growth opportunities that create value for CCI thanks to our strong balance sheet, talent pipeline and execution capabilities.

In line with that, we've signed a binding share transfer agreement at the end of 2022 to acquire a majority of Anadolu Etap Içecek, one of Turkey's primary fruit and vegetable juice concentrate and puree production company. With this acquisition, we will secure sustainable procurement and optimization of the juice ingredients and achieve diversification of our top line through export revenue in hard currency. Moreover, Etap Içecek's immediately EBITDA margin accretive for CCI with its profitable business model. Finally, we have a clear business plan to accelerate Etap Içecek export sales with targeted investments and optimize its operating costs. We also signed a binding share agreement with Coca-Cola Company to acquire their 49.67% share in our Pakistan operation. By becoming the sustainably sole owners of Pakistan operations, we will fully capitalize on country's tremendous long-term growth potential.

During the last 14 years, under the CCI umbrella since 2008, Pakistan grew volume by 6x, achieved sparkling soft drink market leadership. Pakistan became the second biggest CCI market and the 10th largest sparkling market globally. The fifth most populated country with very long -- with very low per capita consumption, we believe a compelling growth opportunities lies ahead. This transaction is important to underline our alignment with the Coca-Cola company, strengthening CCI's position as a key partner in the Coca-Cola system. We applied for regulatory approvals for both acquisitions and expect to close them within the first half of this year. We are committed to value creation in everything we do, and we will keep an eye on further growth opportunities having the potential to contribute to this strategy going forward.

Now I will leave the floor to Andriy for the financial review. Thank you.

[Andriy Avramenko, executive]

Thank you, Burak. Before going into the financial details, I also want to express my deepest sadness for the lives lost in the earthquake in Turkey. Along with everyone in CCI, I wish fast recovery to those injured and affected by the tragic event and extend my condolences to those who lost their loved ones and to the whole nation.

Looking at the results. 2022 was a year with sound operational and financial performance. Our consolidated net sales revenue was up by 144% in 2022, while organic NSR growth was 122%. This performance was mainly driven by the strong volume growth and proactive RGM initiatives, including timely price adjustments and efficient discount management. Currency-neutral NSR growth was 80% in 2022. As Burak mentioned earlier, this is almost double of our original guidance. NSR per unit case growth was [ 138% ] to TRY 34 per unit case. NSR growth was 129% in the last quarter with 115% NSR per unit case growth. Cost-side inflation peaked in 2022, but continues to remain elevated.

Higher raw material prices, increasing energy and transportation costs and depreciating local currencies compressed gross profit margin by 273 basis points to 32.5%. It was not possible to fully pass the impact of these exceptional cost increases onto our prices within a single year. Efficient use of RGM and timely build head in position ahead of 2022 mitigated the cost impact of a great extent. Moreover, we achieved 203 basis points OpEx margin improvement year-on-year with frugal OpEx management, efficiencies in selling expenses due to scale as well as in general and administrative expenses.

As a result, the contraction in EBIT margin was limited to 70 basis points in 2022. Full year EBITDA was TRY 10.1 billion with an EBITDA margin of 18.9%. The higher rate of compression in EBITDA margin is -- the EBIT margin was mainly due to the effects of inflation, [ NPL ] devaluation on the nominal top line and EBIT growth, while noncash expenses do not increase in line with inflation. EBITDA was TRY 1.5 billion in the last quarter of the year with 71% increase, while EBIT grew by 90% to TRY 1 billion in fourth quarter 2022. Net income generation was also strong, thanks to higher operating profitability and low FX burden on deferred [indiscernible] gains, partially offset by the higher net interest and FX losses.

Net profit was TRY 17 per share, indicating 2% growth in U.S. dollar equivalent terms despite Turkish lira depreciation against U.S. dollars by 90% year-on-year. On the next slide, please. Our consolidated net sales revenue per unit case increased by 57% on an FX-neutral basis in the full year, exceeding our guidance, thanks to pricing realization, tight discount management and improved IC mix. The persistent raw material inflation and higher energy costs, core FX-neutral COGS per unit case to increase 63% leading to gross profit margin compression. Well-placed hedges generating significant cost advantage in the first half of 2022 helped to limit the cost increase impact to a certain degree.

FX-neutral EBITDA per unit case grew by 27% in the full year. On to the next slide, please. EBIT increased 133% and reached TRY 8 billion in 2022. The biggest impact on EBIT growth came from pricing. It was also supported by positive volume momentum both in Turkey and international operations and better mix, particularly in Turkey. Persistent raw material inflation, mounting energy and transportation costs weighted on the COGS pressuring margins. efficient OpEx management mitigated this impact, limiting the margin contraction at EBIT to 70 basis points. Free cash flow generation was in line with the guidance. We were able to grow free cash flow by 22% year-on-year. Despite the heavy working capital load with significant prebuys of raw materials in the first half of 2022, cash flow generation turned positive in the second half with strong operational performance, disciplined CapEx management and improving working capital. The CapEx over sales was 6.2% in the full year.

To the next slide, please. As always, we were proactive in managing our cost base through hedges, prebuys and long-term supply contracts. In a year with elevated geopolitical tensions, continuing supply chain disruptions and persistent commodity cost inflation, the resulting visibility of input cost and continuity of supply helped us better manage our operations. We avoided any supply disruption during the year and managed to control cost base effectively. Looking at the commodity exposure for 2023, we are comfortable at the current hedge rates. We continue to monitor markets closely and ready to add further coverage in case of significant market weakness. We also started adding initial coverage for 2024 to ensure business continuity and cost visibility.

On to the next slide, please. 2022 was not an easy year to manage liquidity with a significant increase in borrowing rates and deteriorating risk appetite for emerging market credit. Our proactive bond issuance at the beginning of the year enabled us to extend our maturities beyond 3 years and generated sufficient liquidity. Sound free cash flow generation also helped with deleveraging and as a result, our net debt was USD 320 million at the end of 2022, while leverage ratio was close to historically low levels of 0.6x EBITDA, leaving significant headroom on the financial covenants.

The announced acquisitions of Pakistan minority and Etap Içecek will not materially change our leverage ratio, keeping it in 1 to 1.5x of EBITDA range. The payments will be done from the existing cash, and we do not need external financing for these acquisitions. Our net short FX position, including the net investment hedge was approximately $34 million. Excluding net investment hedge, our net FX short position was close to $400 million at a level more or less 1x of international operations EBITDA. We consider these levels sustainable. Manageable FX short position and sound liquidity continue to be the building blocks of our strong balance sheet. And now I will leave the stage to Burak for his closing remarks.

[Burak Basarir, executive]

Thank you, Andriy. So foreign exchange volatility, recession concerns and inflation are among the primary considerations in 2023. In our 2 largest markets, there are additional challenges as well. In Pakistan, the long talks on steps needed to revise a $6.5 billion loan program have resulted in turmoil in financial markets, which have very recently come to close in reaching an agreement. Naturally, this will include some bigger measures on the economy. We have seen nearly 20% devaluation in rupee since the end of 2022 and expect volatility to continue with sticky inflation, current account deficit and low level of central bank reserves.

In Turkey, the economy will face further headwinds due to the earthquake and uncertainty around the elections. Nevertheless, we are confident in the future growth of our business, thanks to our strong brand portfolio, compelling growth dynamics of our geographies, dedicated people and agile operating model. Therefore, we maintained our guidance for now while acknowledging the additional challenges that have emerged since we first published our 2023 guidance in January.

We believe we will continue to monitor the situation and revise it if it is necessary. We expect consolidated sales volume to grow by mid- to high single digits in 2023. In Turkey, we expect flat to mid-single-digit volume growth. In international markets, we expect high single to low double-digit growth in volume. With sound volume momentum and effective revenue growth management, we foresee 40% to 50% (sic) [ high 40s to low 50s percentage ] FX-neutral NSR growth in 2023.

Raw material, wage, energy and transportation inflation are expected to stay elevated. We expect to see more headwinds in the first half of the year due to high volume base and low cost base of the last year and the gradual normalization towards the year-end. We plan to keep mitigating the cost inflation with efficient OpEx management. Accordingly, we expect to deliver a flat or slightly expanded EBIT margin in 2023 over 2022. We plan to -- we plan for tight working capital management, which should result in net working capital as a percentage of net revenue sales in low single-digit range. We will continue to invest in our business by adding new capacity to maximize first future revenue and value creation.

CapEx is expected to be at the high single digit as a percentage of consolidated net sales revenue. Despite higher CapEx, we expect absolute growth in free cash flow in Turkish lira terms versus 2022. As we announced earlier, after 25 memorable years, I will hand over my role as CCI's CEO by September 1, 2023. Karim Yahi is appointed as Deputy CEO of CCI, effective tomorrow, March 1. We will continue to work with Karim in transition period until September 1, and he will take over the CEO role from me.

Karim has nearly 20 years of diverse experience in the Coca-Cola system and is no stranger of our geography. I warmly welcome Karim to our great company. I am confident he will bring strong knowledge and global experience to CCI and add further value to our journey to becoming the best FMCG company across every market we operate. We are now ready to take your questions, and I will open the floor for Q&A. Operator, please?

[Operator]

[Operator Instructions]

The first question comes from Hanzade Kilickiran from JPMorgan.

[Hanzade Kilickiran, analyst]

I have a few questions. One is regarding Pakistan. You have highlighted a pressure on the currency so far, around 20% depreciation. I wonder how you manage this headwind so far in the country. And have you seen a material cashback in demand on a year-to-date basis in Pakistan? And second question is about the cost inflation. How much cost pressure was left to count on prices in 2023 in U.S. dollar terms? And your guiding of [indiscernible] margin? Will this be driven by pricing ahead of cost ratio or exchange, and there will be also another driver for exceeding that margin this year?

[Andriy Avramenko, executive]

Thank you for the questions. So let's start with the Pakistan, yes. The current situation in Pakistan in terms of currency is not easy. There was a devaluation and caused by sort of a currency deficit and sort of current account deficit and shortage of foreign currency in the country. That caused some other issues in terms of currency availability for the importers. Now we are watching in terms of development of discussions between the government and IMF, and it seems like it will be positive. So we hope for a positive resolution very soon.

In the meantime, what we did in Pakistan, we obviously ensured continuity of supply. We continue to operate in terms of the raw materials, we have enough safety to continue to produce in the foreseeable future. When we come to the import items and we're actively pursuing the almost complete localization of supply wherever possible. In terms of the impact on the -- of the cost on our sort of financials, obviously, there are -- there are multiple levers that as always, we continue to pull. It's a comprehensive approach.

Yes, pricing is part of the solution. Mix is also very important in Pakistan and how we continue to develop it. As always, we are focused on the cost optimization reductions and frugal cost management in general. And with the fact that Pakistan has been growing significantly in the last few years and continues to be a growth market for us. There is a significant operation leverage that helps us to mitigate the cost per unit case impact in terms of the OpEx and other items.

So this is, in general, how we plan to address Pakistan situation with devaluation of the currency. In terms of the cost inflation and the guidance in terms of EBIT margin holding. Yes, you mentioned price increases and mix. Obviously, we use both levers to help us. There are many more levers that we pull to make sure that despite of the continued cost inflation, we are able to hold the margin as we communicated in our guidance. One of other items that we are actively working on are sort of discounts and other items between gross revenue and net sales revenue, which are important in management overall sort of NSR. And again, we continue to be very frugal to protect our bottom line because it's one of the items that we are excel in and we continue to do it to make sure that we have flexibility to sort of invest and grow and withstand various impacts, including the cost inflation as we experience right now.

[Hanzade Kilickiran, analyst]

Andriy, I want to make a follow-up on Pakistan. Do you have enough inventory to bottle currently? I mean is there any issue in terms of availability of the products?

[Andriy Avramenko, executive]

No, we continue to produce in full capacity. In -- I would rephrase it, we continue to produce in accordance with our plans, original plans for the year. So there is no shortage of our product in terms of caused by, let's say, raw materials problem, if you're referring to that. And moreover, we are sufficiently covered for the next few months on pretty much all raw materials. There are small issues here and there that we are proactively resolving.

Yes, the importation is very difficult in Pakistan, but we prepared for the season, we prepared for the year, and we continue to manage it, particularly focusing on primarily local supply and some other measures to ensure the continuity. So in short, in the next few months, we don't see the sort of the shortage of supply or shortage of our products in the market.

[Hanzade Kilickiran, analyst]

Great. And on the cost pressure, majority of the bottlers guided the cost pressure is high single digit for this year in hard currency? Is it also the general side?

[Andriy Avramenko, executive]

I wouldn't go into -- I mean, this becomes really a detailed conversation in terms of which commodities will move to where. I think I would speak to our guidance where, yes, we will have some pressure on -- from inflation, but we do believe that we will be able to sufficiently offset it by the pricing mix and the frugal OpEx management.

[Operator]

[Operator Instructions]

The next question comes from Ece Mandaci from Unlu Securities.

[Ece Mandaci Baysal, analyst]

Could you please provide on a country basis, your -- or any thoughts on or any discussions would be very helpful about the potential growth in major countries, I mean, you're operating. You have already provided for Turkey, but for other regions, for example, in Kazakhstan and Uzbekistan were the 2 strong growth regions with double-digit growth in 2022, should we expect a similar growth momentum to purchase for both regions? And for Pakistan, how was the growth until this time? And with the prospective increase in the taxation there for soft drinks, will there be still growth going forward? And at what pace would you expect?

[Andriy Avramenko, executive]

Thank you for the question. As you know, we do not provide guidance by country. So I will not go into this detail, but I want to emphasize a few things to help you think through this. I think we are holding the guidance on the top line, right, which says high single to low double-digit growth in the international operations. You also know very well our portfolio in international operations, it's -- the lion's share of contribution is from Pakistan, Kazakhstan and Uzbekistan. So I think this will give you a good confidence of how we see these markets. Yes, there may be some minor -- the inputs here and there, including the algorithm that may be adjusted in Pakistan in terms of -- there may be interest in terms of the extra taxation, but we are adjusting for that accordingly to drive revenue.

The Uzbekistan part, we have seen the performance this year. You know how much we are excited and focused on driving Uzbekistan. Uzbekistan is sort of double the size of population of Kazakhstan, while per capita is approximately half of Kazakhstan. We are making heavy investments there. So I think you can make the conclusions in terms of Uzbekistan by itself. And Kazakhstan, it's probably the most -- on one hand, it's the most developed market that we have, but we continue successful growth there. We are expanding the capacity. We're making extra investments. So we have -- they're very positive on Kazakhstan. That's what I would say.

[Operator]

[Operator Instructions] Ladies and gentlemen, there are no further questions. Dear speakers, back to you.

[Burak Basarir, executive]

So I would like to thank each and every one of you for taking the time on joining our call. As I said at the beginning, 2022 was a challenging year, and then we came out much stronger and very successfully. 2023 also started to be a challenging year as well. But I believe we have all of the skills and capabilities required to overcome and deliver our goals this year as well. So once again, thanks a lot for your time and interest in CCI and hope to see you in person soon. Thank you very much.

[Operator]

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