Coca-Cola (CCOLA) 2Q26 Financial Results

Coca-Cola İçecek announced 2Q26 net sales of TL 67.2 billion, up 6% in real terms, EBITDA of TL 14.9 billion, up 26%, and net profit of TL 8.3 billion, up 24%. Revenue came in 1% below the market estimate, broadly in line, while EBITDA and net profit beat expectations by 7% and 5%. The above-expectation EBITDA and net profit reflected the quarter's margin performance. In a period when consolidated sales volume grew nearly 10%, international operations were the main driver of growth, while the expansion in gross margin and cost management lifted profitability. Free cash flow turning strongly positive and the continued decline in the net debt/EBITDA ratio support the balance-sheet side. We view the results as neutral. Accordingly, we raise our 12-month target price to TL 112 from TL 103, maintain our "BUY" recommendation and continue to keep the stock in our model portfolio.

The main source of volume growth was international operations, while real unit revenue declined on the currency effect… Consolidated sales volume rose 9.8% in 2Q26 to 519 million unit cases, while international operations grew 15.4% and lifted their share of total volume by 336 basis points to 69.4%; Türkiye volume posted a modest 1.1% contraction. On a country basis, Uzbekistan (+21.1%), Pakistan (+17.0%) and Kazakhstan (+12.7%) stood out. On the category side, still beverages (+18.5%) and water (+18.4%) grew strongly, while sparkling beverages rose 7.9%. Despite the strong volume, the more limited 5.7% real-terms increase in revenue was due to a 3.7% real-terms decline in revenue per unit case, as the TL's depreciation against the dollar remaining below inflation limited the reflection of strong local-currency pricing into the post-TAS 29 figures.

The improvement in profitability was driven by gross margin and cost management, while growth was seen in both Türkiye and international operations… Consolidated gross margin expanded 284 basis points to 38.2%, supported by low-cost raw material inventories, favorable sugar prices and well-timed pricing, while the EBITDA margin also rose to 22.1% from 18.6%. On a segment basis, growth was spread across both Türkiye and international operations, with profitability improving on both sides. On the net profit side, the decline in net financial expense (2Q25: TL 3.9 billion → 2Q26: TL 2.9 billion) and the increase in operational profitability were decisive, and despite the higher tax expense, net profit rose 24% to TL 8.3 billion.

Free cash flow's return to positive territory and the ongoing reduction in debt strengthened the balance-sheet outlook, while year-end guidance was maintained… In the first half, free cash flow reached TL 2.3 billion on stronger operating profitability and a lower net working capital/sales ratio (1H25: -TL 7.4 billion); the capex-to-sales ratio came in at 6.1%. Net debt stood at TL 30.0 billion, while the net debt/EBITDA ratio declined to 0.66x from 0.77x at year-end 2025. The company maintains its year-end guidance of mid-single-digit consolidated volume growth, low-to-mid-single-digit growth in Türkiye and high-single-digit growth in international operations.