First of all, I would like to express my deep sadness due to the earthquakes, which took place in the southeastern provinces of our country on Monday, February 6th and posed great damage, losses of life, and injuries in 11 provinces, and which caused deep grief to all of us. I wish God’s blessings for those who lost their lives, my condolences to those who lost their relatives, and a fast recovery to those who were injured.
As soon as we received the news of the disaster, we focused on the health and ensuring the safety of our employees and business partners in the region. In order to support our people and help the regions affected by the disaster, we have carried out and continue to carry out many aid works with the support of volunteer employees and stakeholders, alongside in-kind and in-cash donations made by our Company. We will continue to support both our stakeholders and our employees in solidarity.
Anadolu Efes, which carries out its operations in a wide geography consisting of Türkiye, Russia, Commonwealth of Independent States, Central Asia, and the Middle East countries, with its experience of over half a century, maintains its position as the market leader in many countries where it operates with its rich product range consisting of strong beer and soft drink brands. Anadolu Efes continues to be one of the largest beer companies in Europe and the world in terms of production volume. On the other hand, Coca-Cola İçecek, which our Company is the main shareholder and which is one of the most important bottlers in the Coca-Cola system, successfully continues to carry out soft drink operations in 11 different countries with its production and bottling facilities.
Anadolu Efes, which obtains a significant portion of its revenues from operations abroad, brings its diversified product range to hundreds of millions of consumers from different cultures and profiles through its export markets, in addition to the geographies where it operates.
The ongoing inflation environment since 2021, together with the supply-side restrictions caused by the pandemic and the record high commodity prices, increased its pressure on our operations in 2022. While the events in Kazakhstan at the beginning of the year, the developments between Russia and Ukraine, and the subsequently increasing global tensions accelerated macroeconomic volatilities, the increase in energy prices, supply chain problems, and increasing input costs inevitably affected all our operations. Our ability to strongly continue our existence in the extraordinary conditions have proved our financial, corporate, and risk management competencies once again.
With the beginning of the events between the two countries, it became our priority to take all possible precautions to ensure the safety of our employees and their families. In this context, we have suspended production activities in Ukraine for a while as of February 24th. Then, in the light of our risk analysis and general evaluations, we resumed production in one of our factories as of October. However, the growth that was recorded in Türkiye and CIS operations with the support of successful market practices largely compensated for the negative impacts of the extraordinary situation experienced in our two major markets.
In the beer group, the Russia operation that continued its growth trend at the beginning of the year reached the highest operational profitability levels in its history as a result of the price increases we implemented during the year in the face of cost inflation. Despite the strong performance achieved in Kazakhstan and Georgia, which continued their growth momentum, the volumes of Moldovan beer operations declined. The Turkish beer market recorded a growth that was beyond expectations due to the rapid recovery in on-trade sales channel following the pandemic and the successful tourism season. The new products that added to our portfolio with our innovation power also contributed to the increase in volume. Bremen 1827, which we launched in the Turkish market in mid-2022, showed its positive impact on our market share in a short time. While maintaining our market leadership in all our beer operations excluding Ukraine, we increased our share in the beer markets in the CIS countries.
The volume increase in soft drink operations mainly resulted from international operations, while Uzbekistan, CIS countries, and Pakistan provided the highest contribution to growth. In the Turkish market, there was limited growth in sales volume, as the decline in disposable income pressurized consumer demand.
In this period when cost and expense management is more compelling than ever, our Company’s operational efficiency increased, and as a result, we achieved strong financial results, with the effective use of risk mitigating mechanisms against the increases in commodity and raw material prices.
Our consolidated net sales revenues increased thanks to proactive price adjustments, effective discount management, balanced product portfolio, and our focus on value creation. The high sales trend obtained from on-trade sales channel accompanied such efforts of ours.
As an advantage of geographical differentiation, the currency conversion effect also supported our revenue growth. With our cash generation capabilities, free cash flow reached historic levels, and our debt leverage ratio maintained its healthy progress. As a result, our revenue and profitability performance was realized beyond our plan.
Although Anadolu Efes maintains its powerful position with its strong financial and operational results, the macroeconomic outlook and the challenges and uncertainties in the geopolitical environment in the countries of operation were reflected in our credit rating results.
Standard and Poor’s downgraded Anadolu Efes’ long-term credit and bond ratings by one notch from BBB- to BB+ and set the outlook of its credit rating as negative. Fitch Ratings continued its negative long-term foreign and local currency credit rating of BB+, while maintaining its national credit rating as AAA(tur), which is the highest rating. JCR Eurasia Rating confirmed our Company’s long-term national rating with the highest rating level of “AAA (tr),” its short-term national rating at “J1+ (tr),” and their outlook as “stable.”
In 2022, we also realized a “first” for our Company, by undersigning our first domestic debt instrument issuance in order to diversify our borrowing structure.
In addition to our solid financial structure, we reinforce our ethical, transparent and responsible corporate identity towards our stakeholders with our corporate structure. Anadolu Efes, which has a Corporate Governance Rating of 96.3%, won the Best Company in Investor Relations prize in the consumer sector among developing countries in the emerging EMEA region by Institutional Investor.
In 2022, we continued to realize our actions in the field of sustainability, which we have internalized as one of the main elements of our business strategy, within the framework of our Positive Impact Plan and in line with the 2030 Sustainability Goals that we have set to embody our contributions to the United Nations Sustainable Development Goals. We are accelerating our endeavors in the axes of zero waste and net zero carbon emissions for the environment, increasing our social impact for the society and strengthening equality of opportunity in business life, which we have determined as our main focuses.
In line with our goal of achieving net zero carbon emissions in all our operations by 2030, we are also working to obtain the Zero Waste Certificate, which we were entitled to receive for all our breweries and malteries in Türkiye last year, for our facilities in other geographies where we operate. We monitor our work within the framework of the roadmap we have determined at the level of our Global Sustainability Committee and Board of Directors, which cover all our operations. We continue to increase our contribution to the circular economy, while supporting our activities towards our net zero target, with our efforts to increase the use of renewable energy in production, to safeguard energy efficiency and natural resources, and to reduce the use of packaging and plastics.
With our R&D and innovation competence, while we are the pioneer of innovative products in the market, we trigger the entrepreneurial spirit for the development of the entrepreneurship ecosystem and support young entrepreneurs inside and outside the Company. Anadolu Efes Entrepreneurship Workshop, which we established to spread the entrepreneurship culture within the Company and bring added value to the future, completed the 3rd year Incubation Program in 2022. Malty, the malt-based protein bar which is the first in-house initiative of Anadolu Efes Entrepreneurship Workshop, which was born in 2021 and became commercialized with the seed investment we made last year, and which also stands out in the field of sustainable food, also received its second investment support.
Supporting the empowering and developing aspects of culture, arts, and sports in order to contribute to a sustainable future is our important area of development in increasing our social impact. As a Company that provides half of its raw materials from the soil, we have been collaborating with our farmers for more than 40 years within the scope of our “Future is in Agriculture” program to contribute to the sustainability of agriculture, and we conduct agricultural R&D and innovation studies. In order to support sustainable agricultural practices, we distribute proprietary varieties of barley seeds and common hops that we have developed to our farmers, provide consultancy and training to increase productivity, and aim to increase their financial means with incentive packages. Within the scope of our Smart Agriculture project, we facilitate the lives of farmers through smart agriculture applications such as humidity and temperature measurement via soil and air sensors, satellite field health monitoring, and digital soil analysis.
Anadolu Efes’ business model principles focus on ensuring gender equality and empowering women’s presence in business life. While approximately 40% of the managers at Anadolu Efes comprise women, we aim to increase the ratio of female employees from 30% to 51% by 2030.
I believe that in the forthcoming period, when we will accelerate our steps towards increasing and improving our environmental, social, and governance (ESG) focused practices, we will continue to offer sustainable value to our stakeholders and undersign new successes with our foresighted practices and management competence despite challenging conditions.
I would like to extend my sincere thanks to our esteemed board members, shareholders, dealers, distributors, suppliers, business partners, with whom we share our strong results and who are always with us with their contributions and support, to our colleagues whose dedication and perseverance never diminish, and to our consumers whose trust and preferences we have earned.
Chairman of the Board of Directors