Coca-cola Bottlers Japan Holdings Inc. · TSE:2579
Coca-cola Bottlers Japan — Coca-Cola East Japan — FY2013 Earnings Presentation
39 slides from Coca-cola Bottlers Japan's earnings presentation, February 2014
Slide 1: One+ Coca-Cola East Japan
Slide 2: Forward-Looking Statements
Forward-Looking Statements The plans, performance forecasts, and strategies appearing in this material are based on the judgment of the management in view of data obtained as of the date this material was released. Please note that these forecasts may differ materially from actual performance due to
Slide 3: Presenters: Calin Dragan, Michael Coombs
CALIN DRAGAN MICHAEL COOMBS CHIEF FINANCIAL OFFICER
Slide 4: A World-Class Japanese Bottler
A World-Class Japanese Bottler Encouraging Results in 2013 • Discussion of Full-Year 2013 Normalized Results Positioning for Growth in 2014 • 2014 Full-Year Plan Reasons to Believe • Growth, Synergies, Infrastructure, People Our Roadmap for Sustainable Growth Q&A
Slide 5: Encouraging Results in 2013
ENCOURAGING RESULTS IN 2013
Slide 6: Our Roadmap for Sustainable Growth
Our Roadmap for Sustainable Growth 2013 Still Early in Our Roadmap OI Margin OI Margin +1-2 pts 2017- Tokyo Olympic Games & Beyond +1-2 pts OI Margin 2015-2017 Accelerating +1 pt 2014-2015 Performing 2013-2014 Norming Meet & exceed Approaching world-class 2012-2013 Storming Refine & global bottler b
Slide 7: Strategic Priorities
Strategic Priorities Growth Speed Synergies Realign against Unprecedented Reduce costs current strength speed and scope and drive and future of change efficiency Growth Infrastructure People Create optimal Build a world- operating class, modernized structure workforce
Slide 8: We are on Track and Delivering Early Results
We are on Track and Delivering Early Results One+ Roadmap for Progress Measure 2013 Results Sustainable Check Growth +1.60% (unit case) Volume Volume growth +0.18% (physical case) ahead of industry +0.6 ppt volume performance Share* +0.4 ppt value Operating +0.06 ppt vs. Plan Improving Margin OI gre
Slide 9: Q4: Initial Signs of Market Share Improvement
Q4: Initial Signs of Market Share Improvement vs. Prior Year vs. Prior Year 2013 Actual Market Share* Sales Full Year Q4 Full Year Q4 Volume 284,014 (BAPC) +0.18% +1.53% Volume -0.3 +0.6 425,099 (UC) +1.56% +4.26% Value -0.3 +0.4 Volume Share vs. Prior Year Value Share vs. Prior Year +0.9 +0.9 +0.7
Slide 10: Focus on Execution is Starting to Deliver Results
Focus on Execution is Starting to Deliver Results Sales Equipment Net Increase Volume & Commercial NSR Change from 2012 end cumulative 32 Top SKU Coverage vs. Plan Market Share
Slide 11: Expanding New Route-to-Market Model
Expanding New Route-to-Market Model Reorganized Commercial Structure
Slide 12: Rapidly and Actively Integrating… As Committed
Rapidly and Actively Integrating… As Committed Projects Office relocation complete. 2,000+ people moved. Legacy HQ offices closed. Production company consolidation complete. From 4 companies to 1 CCEJP. Next phase of legal entity consolidation started (26 on Day One to 11 by 2015). Divestment of
Slide 13: Rapidly and Actively Integrating… As Committed
Rapidly and Actively Integrating… As Committed Capabilities and Infrastructure Commercial reorganization complete; Model market program expanding New Chief Information Officer appointed “CokeOne” world-class ERP approved by BOD. Kick-off on February 14, 2014. 11 of top 120 leaders are external h
Slide 14: Delivering Operating Income Above Plan
Delivering Operating Income Above Plan • Growing sales volume in a year of transition and integration • Delivering supply chain synergies to partially offset pricing environment • Accelerating operating expense savings in 2013 to grow OI margin versus plan 2013 FY 2013 FY 2013 FY 2012 FY Vs. PY Vs.
Slide 15: Drivers of Operating Income vs. Prior Year
Drivers of Operating Income vs. Prior Year Production savings offsetting continued top-line pressure from competitive pricing environment and channel mix trends. We continue to invest in our brands, with DME up +3%. Benefits expense was down as a result of purchase price allocation related to the CC
Slide 16: Drivers of Operating Income Improvement vs. Plan
Drivers of Operating Income Improvement vs. Plan* In million JPY +240 • Production cost reductions partially offset the impact of lower volume and increased pressure from channel mix. • Benefit from accelerated OPEX savings more than offset this 10,240 10,000 pressure. • Estimate for non-recurring i
Slide 17: Channel Mix Pressure Accelerated in Q4
Channel Mix Pressure Accelerated in Q4 FY Volume By Channel (% of total volume) Channel Volume Growth Other Supermarket 10% 22% Drug & Vending Discount 31% Eating & 10% CVS Drinking 13% 14% vs 2012 D&D CVS Local SM Nat’l SM VM Total BAPC Volume Growth Eat & Drink • Full-Year 2013 +0.18% FY +5% +1% +
Slide 18: Category Mix Trends in Q4 Also Diverged
Category Mix Trends in Q4 Also Diverged FY Volume by Category (% of total volume) Category Volume Growth Other Juice 6% Sparkling 12% 27% Coffee 15% Tea Water Sports 20% 9% 11% vs 2012 SSD NST Sports Water Coffee Juice Total BAPC Volume Growth • Full-Year 2013 +0.18% FY +1% +4% +2% -2% -4% +2% • Q4
Slide 19: Positioning for Growth in 2014
POSITIONING FOR GROWTH IN 2014
Slide 20: CCEJ Full-Year 2014 Estimate Highlights
CCEJ Full-Year 2014 Estimate Highlights • OBPPC initiatives driving year-on-year sequential revenue improvement • Capturing continued supply chain synergies to benefit gross profit • Strong OI growth leads to operating margin growth in line with One+ Roadmap 2014 FY 2014 FY 2014 FY 2013 FY Vs. PY Pr
Slide 21: Drivers of Operating Income Estimate vs. Prior Year
Drivers of Operating Income Estimate vs. Prior Year In million JPY +1,122 -862 +4,760 DME OPEX -1,297 -218 Depreciation Non-Core Business +5,915 Volume growth forecast of +1% with flat NSR. Continued supply chain synergy capture as part of our commitment to achieve JPY 20-25 billion in savings by 20
Slide 22: Reasons to Believe in 2014
REASONS TO BELIEVE IN 2014
Slide 23: Strategic Priorities
Strategic Priorities Growth Speed Synergies Realign against Unprecedented Reduce costs current strength speed and scope and drive and future of change efficiency Growth Infrastructure People Create optimal Build a world- operating class, modernized structure workforce 23
Slide 24: 2014 Growth: Positioning for the Future
2014 Growth: Positioning for the Future Growth Occasion, Brand, Pack, Price, Realign against Channel Segmentation current strength and future Growth Recruitment, Defined Channel Over 15 Incidence & 2014 Priorities & Roles New Packages Frequency Volume (BAPC): +1% to 2%, NSR: even, Market share growt
Slide 25: 2014 Roadmap: Channel Priorities
2014 Roadmap: Channel Priorities Channel Focus Growth Vending, Key Accounts, HORECA Realign against current strength and future Vending Focus on High-Potential Locations Growth • +5,000 net increase of indoor vending machines 2014 • Allocate location “hunters” to Tokyo, Kanagawa & Aichi • Leverage e
Slide 26: Commercial Roadmap: Solid Growth Pillars
Commercial Roadmap: Solid Growth Pillars Category Growth Priorities in Alignment Growth with Coca-Cola Japan Realign against Coca-Cola Japan current strength Coffee +1%: Coffee Revival System Presentation and future27 February • New campaign “Weekly Georgia” launched in January Growth • New flavor l
Slide 27: Strategic Priorities
Strategic Priorities Growth Speed Synergies Realign against Unprecedented Reduce costs current strength speed and scope and drive and future of change efficiency Growth Infrastructure People Create optimal Build a world- operating class, modernized structure workforce
Slide 28: 2014 Synergies: Enabling the Business for Growth
2014 Synergies: Enabling the Business for Growth Synergies ¥5-6 Billion Supply Chain Savings 2014 vs. 2013 Reduce costs and drive Strategic • 5 new bottling lines & PET in-line blowing efficiency Infrastructure • Insourcing of production (from 65% to 90%) • Maintenance cost reduction 2014 ~60% & Man
Slide 29: Strategic Priorities
Strategic Priorities Growth Speed Synergies Realign against Unprecedented Reduce costs current strength speed and scope and drive and future of change efficiency Growth Infrastructure People Create optimal Build a world- operating class, modernized structure workforce
Slide 30: 2014 Infrastructure: Investing for Growth
2014 Infrastructure: Investing for Growth 2014 Infrastructure Create optimal operating structure Incremental CAPEX for synergy capture • ¥8 billion incremental CAPEX in 2014 • Currently exploring optimal financing options
Slide 31: 2014 Infrastructure: Investing for Growth
2014 Infrastructure: Investing for Growth 2014 Consolidation • Consolidating Logistics & Equipment companies Infrastructure • Transitioning from 6 to 2 call centers Create optimal • Equipment refurbishment facilities operating • Warehouses structure CokeOne ERP* System for Business Transformation •
Slide 32: Strategic Priorities
Strategic Priorities Growth Speed Synergies Realign against Unprecedented Reduce costs current strength speed and scope and drive and future of change efficiency Growth Infrastructure People Create optimal Build a world- operating class, modernized structure workforce
Slide 33: 2014 People: Transforming for Growth
2014 People: Transforming for Growth New Company-wide incentive program rollout 2014 Pay for Performance: volume, net sales revenue and operating income People Greater variable incentive component for more impactful roles Build a world- class, modernized Additional capabilities development workf
Slide 34: A Clear Path for Growth
A CLEAR PATH FOR GROWTH
Slide 35: Our Roadmap for Sustainable Growth
Our Roadmap for Sustainable Growth 2013 Still Early in Our Roadmap OI Margin OI Margin +1-2 pts 2017- Tokyo Olympic Games & Beyond +1-2 pts OI Margin 2015-2017 Accelerating +1 pt 2014-2015 Performing 2013-2014 Norming Meet & exceed Approaching world-class 2012-2013 Storming Refine & global bottler b
Slide 36: World-Class Performance Aspirations: Long-Term by 2017
World-Class Performance Aspirations • Market share #1 NARTD* Market share in our territory Performance Long-Term: By 2017 • Volume growth Greater than Industry performance • NSR growth Ahead of volume growth mid- to long-term • OI margin** +4 pts by 2017 Operational Employee Customer Capabilities En
Slide 37: Q1 2014 Milestones
Q1 2014 Milestones Commissioning of two new lines and two new in-line blow molds Order placement for next four lines to be commissioned in 2015 Completion of call center consolidation from six to two centers (Nagoya, Okegawa) Introduction of new employee performance management & incentive progra
Slide 38: Thank You
THANK YOU
Slide 39: Non-Recurring Items in 2013 Full-Year Results
Non-Recurring Items in 2013 Full-Year Results Non-Recurring Items P/L Line Items 2013 FY P/L Line Items 2013 FY In million yen In million yen Elimination of Unrealized Extraordinary One-time gain from COGS Gain in Stock; Accounting 951 Profit negative goodwill -12,969 Standardization Extraordinary O