Arca Continental Sab De Cv · BMV:AC
Arca Continental Sab De Cv — Investor Presentation (August 2021)
42 slides from Arca Continental Sab De Cv's investor presentation, August 2021
Slide 1: Corporate Presentation
C O R P O R AT E P R E S E N TAT I O N
Slide 2: Coca-Cola pioneers in Mexico
Coca-Cola pioneers in Mexico 125 YEARS 6
Slide 3: Strong partnership with Coca-Cola
95 YEARS Strong partnership with 7
Slide 4: Serving 5 countries across the Americas
Serving 5 countries across the Americas USA MEXICO Sales Vo l u m e Production 2020 Facilities Associates ECUADOR 2.2 BUC 169 MXP$ billion 46 379 62 +1.5 million PERU thousand ARGENTINA Revenue Distribution Points of 2020 Centers Sales 8
Slide 5: A balanced portfolio of markets and business
A balanced portfolio of markets and business… ARGENTINA REVENUES ECUADOR SNACKS EXPORTS & VENDING 2002 - 2020 5% 3% 7% PERU 1% 9% USA CAGR 2020 2002 13x 15% 36% 40% MEXICO BEVERAGES MEXICO 99% MXP$ 13 billion MXP$ 169 billion 9
Slide 6: One of the largest bottlers in the Coca-Cola System globally
One of the largest bottlers in the Coca-Cola System globally ... 3.3 Volume (BUC) 2.3 2.2 2.1 1.8 1.2 Fitch: Fitch: Moody’s / S&P: Fitch: A- BBB+ Fitch: A Baa1 / BBB+ Fitch: A- BBB Unit Case = Measure of volume used in the Coca-Cola System, equivalent to 24 bottles of 8 oz or 5.69 liters. Volumes re
Slide 7: Value creation via organic growth and M&A track record
Pursuing value creation via consistent organic growth and an excellent M&A track record Great Plains 2002 2007 2008 2010 2011 2012 2014 2015 2016 2017 2018 ARCA Snacks Argentina & Ecuador CONTAL Snacks & Tonicorp Peru Sugar Mill USA, Innovation Merger Mexico Jugos del Valle Merger Santa Clara Argent
Slide 8: A wide brand portfolio to satisfy every occasion
A wide brand portfolio to satisfy every occasion of consumption… 2006 2021 + 28 Brands +60 Brands + 128 SKUs +1,500 SKUs 15
Slide 9: A flexible price-pack architecture
A flexible price-pack architecture to drive consumption and profitability +25 SKUs only for regular Coke in Mexico MXP $34 2.0 Ref 3.0 Pet NR MXP 600 355 PET $6 ml VR Retornable 66% No Retornable $6 $6 $10 $13 $20 $25 Low elasticity SKU´s Protect affordability (multi-serve & Returnable) Leverage on
Slide 10: A commercial model that connects the entire organization
…with a commercial model that connects the entire organization Segmentation RGM Fundamentals Picture of success Customer love score Go to market Market audit Digital tools People 17
Slide 11: Taking actions, adapting to the current situation
Taking actions, adapting to the current situation Focus areas Strategic actions being taken Crisis • Prioritize liquidity, profitability and • Savings and efficiency initiatives management protect business for the long term efforts • Reassessed Capex investments RGM • B2B platforms and e-commerce •
Slide 12: A solid operating flow expansion
… and a solid operating flow expansion 1Q20 2Q20 3Q20 4Q20 FY2020 2Q21 Accumulated +5.8% +1.8% +7.7% +7.7% +5.7% +14.1% EBITDA Var (%) 46.5 USA 26.2 22.9 21.2 20.3 9.2 8.9 11.2 8.0 7.4 8.7 11.5 MEX 4.5 3.9 South America -2.8 -8.7 -12.4 -48.5 • Impact of • Reduction of • Better than mobility restrict
Slide 13: Topo Chico Hard Seltzer
Topo Chico Hard Seltzer • Topo Chico Hard Seltzer is inspired by the Topo Chico watermark, which has been popular with many mixologists • Low calorie alcoholic flavored sparkling water and gluten free • Launched last year in Mexico, the United States and Peru • Price according to premium beers • Top
Slide 14: Second largest coffee company in the world
Second largest coffee company in the world COFFEE is the THIRD most consumed beverage in MEXICO 94% 61 MM 20%+ PENETRATION INTO CONSUMERS COSTA’S VALUE SHARE HOUSEHOLDS IN THE SPECIALTY COFFEE SEGMENT $1.8 B 1.2 kg 3 YEAR AMBITION USD MARKET VALUE IN ANUAL PER CAPITA MEXICO 2019 CONSUMPTION Sources:
Slide 15: eCommerce and Digital Transformation
eCommerce and Digital Transformation Leadership in digital platforms Food Aggregators and Groceries Online Pure Players / Food Aggregators Groceries Online B2B Direct to Home • Visibility and opportunity detection • Approach these customers as • Integrating digital tools into – Automated audit tools
Slide 16: MEXICO – Evolution and Modernization in digital platforms
MEXICO – Evolution and Modernization in digital platforms COCA-COLA EN TU HOGAR AC DIGITAL Aggregators • 7 months superior vs Nacional • +7.4% incidence vs Nacional Pure Players / Bricks & Clicks • +22.7% volume vs prior year • Expansion to 9 cities • $100 MM sales 2020 • 274,000 customers with purc
Slide 17: Long-term growth opportunity in other categories
Long-term growth opportunity in other categories Value Share Mix (Mexico) • Growth potential in other categories where we are 40.1% Water 9% not yet leaders. 51.8% Stills 8% • Developing emerging categories through portfolio 58.3% Flavors 18% diversification and optimization 42.3% Jug 11% • Focus on
Slide 18: New avenues for growth
New avenues for growth Alcoholic Beverages Argentina Topo Chico Hard Seltzer Mexico y Peru Costa Coffee Mexico • Strengthen relationship with CCU, to be • New channels and customers • Integral proposal: espresso machines, the best beer distributor • Massive media plan, focus on social networks coffe
Slide 19: United States
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Slide 20: Setting the base for the new normal
Setting the base for the new normal Adaptation strategies Reinforcing strategies • Focusing on accelerating digital initiatives such as • Immediate consumption focused on RGM MyCoke.com as primary order method for FS/OP affordability in small packages channel and convenience stores, where 51% of • C
Slide 21: Northpoint Houston plant: The newest member of the family
Northpoint Houston plant: The newest member of the family • First plant built in the last 10 years in the KO system in the USA • US$250 million investment • Close to US$30 million in cost savings and operating efficiencies, optimizing the cost of production and logistics • State-of-the-art technolog
Slide 22: South America
South America 34
Slide 23: Slower recovery amid second wave
Slower recovery amid second wave Peru Ecuador Argentina • In terms of mix, multi-serve packs • Ecuador was affected by the second • The On-Premise channels were still continue to grow their share of the wave of the pandemic and along affected by capacity restrictions and sales mix as a result of the
Slide 24: Opportunity in the recovery of South America
Opportunity in the recovery of South America Recovery drivers Opportunity to recover margins in the region Volume Commercial Initiatives +400 • Positive, double-digit growth • Increase the coverage of the bps • Expected GDP: Home Channel in Peru and -70 Ecuador bps • Peru 8.5%, Ecuador 2.5%, and Arg
Slide 25: Food & Snacks
Food & Snacks 37
Slide 26: High potential growth opportunity based on strategic adjacencies
High potential growth opportunity based on strategic adjacencies Around USD$ 394 MM Sales in 2020 Complementary to our core business Participating in the industry with leading brands and gaining scale Strengthening our presence in Mexico and the United States Mejorar constantemente el uso y el abast
Slide 27: Innovation at Arca Continental
Innovation at Arca Continental 39
Slide 28: AC digital transformation agenda
AC digital transformation agenda Optimize business Potential business engines Customer Optimize core assets Consumer Traditional trade 2.0 • Optimize manufacturing • Digitalize ACT • Modernize & • “Modernize” TT efficiency and flexibility expand direct-to- consumer • Create fully automated • Become
Slide 29: Modernizing the traditional trade through digitalization
Modernizing the traditional trade through digitalization B2C • Payment options Large & X-large • Variety of services customers • Online commerce 20% B2B+ • Credit card & service transactions Micro, small and 1 medium customers • Supply consolidation +10,500 80% Customers • Automated replenishment 43
Slide 30: Advanced analytics use cases
Advanced analytics use cases Progress update Next steps • Full Mexico rollout; 15% OOS Suggested reduction • Extend development to Peru and Ecuador + • complementary business units order Predictive recommendation model for all products in collaboration with MIT • Work order prioritization in f(x) of
Slide 31: Financial Performance
Financial Performance 45
Slide 32: Debt profile & maturity schedule
Debt profile & maturity schedule AC AC Debt Maturity Profile PEN Total Debt: MXP$ 52,114 million USD 11% 7,648 7,926 7,926 34% By ARP 6,320 PEN MXP Currency 2% 5,462 4,681 3,587 55% 3% 20% 3,225 2,995 2,344 Cash Position 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 MXP By Currency USP
Slide 33: The highest credit rating among Mexican issuers
…with the highest credit rating among Mexican issuers Global Scale Net Debt / EBITDA 1.5 1.3 “A2” “A” 1.2 1.0 National Scale 0.7 0.6 “AAA(mex)” “mxAAA” Global Investment Grade above Mexico’s 2016 2017 2018 2019 2020 2Q21 sovereign rating Financial flexibility and low leverage ratio * Without conside
Slide 34: Consistent and disciplined capital allocation
Consistent and disciplined capital allocation Improve cash CAPEX focused on conversion cycle Annual dividend Focus on growth and through better with a payout ratio acquisitions with productivity to negotiations with of at least 30% of high opportunities improve ROIC suppliers and net income for valu
Slide 35: Profitability
Profitability Volume Price COGS SG&A The opportunity to Positive volume In line or above Higher than 2020, maintain or expand across the operations inflation mainly PET and margins will depend sweeteners with lower on our ability to aluminum prices maintain the discipline Our goal for 2021 is to pro
Slide 36: Sustainability
Sustainability 50
Slide 37: Making sustainability a core business strategy
Making sustainability a core business strategy Institutional commitment to achieve higher standards and build a culture of social responsibility Human Capital and Sustainability Committee Operational Committees Portfolio Water Packaging Well-being Value Chain Operations 51
Slide 38: PetStar Facility
PetStar Facility • The largest PET recycling plant in the world, with the capacity to recycle 4,000 million bottles each year • PetStar has an effective business model that drives a sustainable circular economy • It is also one of the main promoters of inclusive recycling in Mexico. 52
Slide 39: Integral approach for sustainable packaging
Integral approach for sustainable packaging Recycled and BioPET Content 26.9% 53
Slide 40: Strong commitment towards our environment
Strong commitment towards our environment RECYCLING WATER* ENERGY* Mexico 2020 27% of PCR 1.55 Water Lts. / Beverage Lts. 0.25 MJ / Beverage Lts. 52,157 tons 26% energy reduction of resin produced by PetStar 100% treated vs 2010 Mexico is the global leader in Leader in water reuse 33% from renewable
Slide 41: Key Investment Highlights
Key Investment Highlights 55
Slide 42: Thank You!
THANK YOU! Investor Relations Contact Information WEBSITE Ulises Fernandez ulises.fernandezdelara@arcacontal.com www.arcacontal.com Felipe Barquin felipe.barquin@arcacontal.com Pamela Ortiz pamela.ortizsa@arcacontal.com Diego Alvarez diego.alvarez@arcacontal.com 56
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