Coca-cola Bottlers Japan Holdings Inc. · TSE:2579
Coca-cola Bottlers Japan — Coca-Cola West Company — FY2016 Earnings Presentation
50 slides from Coca-cola Bottlers Japan's earnings presentation, Feb 7, 2017
Slide 1: Results briefing for the Fiscal Year ended December 2016
FAHD HEIDE Nve-ze Cibola West Results briefing for the Fiscal Year ended December 2016 February 7, 2017 Coca-Cola West Company, Limited (2579) [Contact] Planning Department (IR team) TEL 092-641-8774 FAX 092-632-4304 CURL] http://www.ccwest.co.jp/ [E-mail] koji-nakagawa@ccwest.co.jp
Slide 2: Opening remarks and overview of briefing
•Good morning everyone and thank you for attending our Financial Results Briefing despite your busy schedules. I’m Yoshimatsu, President of CCW. •From me, you will be briefed on the review of 2016 and its financial summary as well as business plans for 2017. 1
Slide 3: Looking back at 2016
•Now, let’s look back the year 2016. 2
Slide 4: Sales volume and market share
• First is on the sales volume. •Sales volume in 2016 closed with positive 6.8% compared with the year earlier. Even excluding the impact of Shikoku CCBC, the result shows 3.0% positive against last year. •The chart on the screen shows year-over-year monthly sales volume. You can see outperformances
Slide 5: Sales volume by channel
• Now, let’s take a look at the sales volume by the channel. • In terms of year-over-year comparison, Supermarket and Convenience stores closed with positive volume by 5.2% and 7.3% respectively from the year earlier, driven by the sales from new launches including high-value added products. • Meanw
Slide 6: Sales volume by brand
•Next is on the sales volume by the brand. •In the year-over-year comparison, core 8 brands delivered 5.3% positive volume leading the overall volume growth. •By the brand, Coca-Cola and Coca-Cola Zero enjoyed positive volume from the year earlier owing to large-scale promotions linked with the Rio
Slide 7: Financial summary of 2016
•I now would like to go over the financial summary of the year 2016 from slide 6. •We booked consolidated revenue at 460.455 billion yen, operating profits at 21.143 billion yen, ordinary profits at 20.602 billion yen, and current net profits at 5.245 billion yen. •Revenue increased by 19.9 billion
Slide 8: Drivers of operating profits vs previous year
•The chart on page 7 shows drivers of operating profits against the previous year. •Coca-Cola business increased marginal profits by 1.5 billion yen from last year contributed by volume growth in Chain store. Revenue per case also jumped from the year earlier with 2.7 positive growth, indicating vis
Slide 9: Plans for 2017
•Now, I would like to talk about plans for 2017. 8
Slide 10: Assumptions behind 2017 plans and business integration
•At first, let me give you some comments on the assumptions behind the plans for 2017 we disclose this time. •CCW plans to launch a new merger company Coca-Cola Bottlers Japan Inc., or CCBJI, as of April 1, 2017 through a business integration with Coca-Cola East Japan. •The performance plans we disc
Slide 11: Full-year consolidated performance plan
• Here is a full-year consolidated performance plan of Coca-Cola West group. •We project full-year consolidated revenue at 462.5 billion yen, operating profits at 22 billion yen, ordinary profits at 20.6 billion yen, and current net profits at 12.5 billion yen which correspond to revenue increase an
Slide 12: Healthcare & skincare business performance
•As I mentioned earlier, Healthcare & skincare business impaired losses of 6.7 billion yen from the goodwill relating to FOSHU field at the end of last year. •Last year’s operating profits resulted in 300 million yen as shown in the graph, deviating from the target of 3-year plan for FOSHU field alo
Slide 13: Healthcare & skincare strategies for 2017
•Let me now move on to introducing this year’s strategies for Healthcare & skincare business. •Firstly on product strategies. For Healthcare products, we will launch new products mainly with functional claim by identifying promising fields from the perspectives of market scale and growth potential.
Slide 14: First quarter consolidated forecasts
•Let me now continue with consolidated performance forecasts for the first quarter. •As I mentioned earlier that our annual forecast does not take into account the business integration, the plan for the first quarter you see is a target to aim for as Coca-Cola West group that we ensure solid activit
Slide 15: Drivers of first quarter operating profits
•The chart on page 14 shows drivers of operating profits in the first quarter against the previous year. •We aim for gaining 1.5 billion yen, up by 100 million yen year-over-year in Coca-Cola business. •Profits are expected to decrease by 200 million yen from volume declines in the highly profitable
Slide 16: Commercial strategies
•Good morning everyone, I’m Takagi. •I will take you through commercial strategies from here on. 15
Slide 17: Volume plans by channel and brand for 2017
• Firstly on volume plans by the channel and the brand for 2017. • While incorporating a cyclic effect from last year’s good summer weather, we project 0.7% positive volume year-over-year. • By the channel, we expect growth particularly in Super market, Drug store and Discounter. By the brand, we ar
Slide 18: Basic strategies of 3-year plan for Coca-Cola business
•Here is the basic strategies in the 3-year management plan for Coca-Cola business. •Among these 3 basic strategies for Growth, Efficiency and Structure, I will elaborate you on “Enhance profitability by ensured reinforcing existing business”, “Invest right capital (people, goods, cash)” and “Drive
Slide 19: Reinforce the existing fields
•Firstly, I would like to brief you on “Reinforce the existing fields”. 18
Slide 20: Pricing and package strategy in existing fields
• We will ensure not to depend on selling methods to increase volume by lowering prices, as a way of “reinforcing the existing fields”. • In Chain store, we implement initiatives to transform how we offer our products in raising the price point of 2L PET, positioning Aquarius 2L PET as a main packag
Slide 21: Expanding regular products and capturing PoC
•As another initiative to reinforce the existing fields, we will engage in “expanding regular products”, “capturing PoC” and “gaining sales in low share market” with a theme of “expanding valuable PoC through effective use of new products and sales equipment”. •For “expanding regular products”, we w
Slide 22: Challenges to new markets with customer-centric perspective
•Next, I would like to brief you on our “challenges to new markets with customer-centric perspective”. •In addition to maintaining and raising per case revenue of existing products, we will increase per case revenue and profits of brands in total by introducing products with high unit price and valu
Slide 23: Expansion and advancement of RGM
•Now, let me give you some details on “expansion & advancement of RGM”. •RGM is abbreviation of Revenue Growth Management and initiatives to expand profits through revenue growth ahead of volume. •We worked on this initiative by promoting compliance to “price guideline” and “guard rail as the lowest
Slide 24: Investing right capital (people, goods, cash)
•Next is on “Investing right capital (people, goods, cash)”. 23
Slide 25: Promotion investments and vending profitability
•In Chain store, we are going to plan and conduct promotions by clearly identifying return on investments from the 3 perspectives in making investments, that is “to urge customers to take initiatives”, “to encourage consumers to purchase” and “to areas with high growth”. •As a contract renewal cycle
Slide 26: Driving CSV
•Lastly, let me take you through “driving CSV”. 25
Slide 27: Creating Shared Value priorities
•CSV is short for Creating Shared Value and means common value creation, that is, to both solve social issues and achieve company growth. •“Health”, “Environment” and “Communities” are set as our priority challenges in CSV. •As specific sales activities in line with the 3 priorities, we are going to
Slide 28: Coke ON vending machines and Beacon bank alliance
•As I have already mentioned, currently we are working on expanding deployment of “Coke ON” enabled vending machines. •A business alliance is concluded between CQ Ventures invested by Coca-Cola West Group with a next-generation marketing company “Unerry” as a first step of our attempt to add new val
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Slide 30: FY2016 results: key drivers vs prior year
Financial results of FY2016 ended Dec (Jan-Dec) -Key drivers (Vs. PY) (vee teomm ar) PY Actual* itt Key drivers bift = Coca-Cola Busines s (CCW +Shikoku CCBC) 22075 Revenue 4,404 s199 Healthcare & Skincare Business a7 + Coca-Cola Business (CCW +Shikoku CCBC) +1540) Gross profit 2,239) +146 + Healthc
Slide 31: FY2016 results: key drivers vs plan
Financial results of FY2016 ended Dec (Jan-Dec) -Key drivers (Vs. Plan) (unit:100MMu>y} Plan* Revenue 4,602 Gross profit 2,398 Operating income: 205 Ordinary profit 188 Current net income 108 (attributable to shareholders) “Plan referstovalues based on performanceforecastsannouncedon ‘Aug 12, 2016.
Slide 32: Financial results of Q4 (Oct-Dec)
Financial results of Q4 (Oct-Dec) Coca-Cola Business Healthcare & Skincare Business Ordinary profit Current net income (attributable to shareholders) 2015 Q4 Actual (une PY, 9 “Plan based on er on Aug 12, 2016. 31 31
Slide 33: Trend of OTC market share
Trend of OTC market share (excl. VM) (Unit: %, pts) 2015 Q4 Qi * Values outside the graph show year-over-year differences. Q2 Q3 2016 Q4 + Along with changes in data aggregation targets by the research company, 2015 Q4 Actual was retroactively revised. (Source: Intage) 32 32
Slide 34: 2016 mix by brand/channel
2016 (Jan — Dec) — Mix by brand/channel Sales Vol. Revenue Gross profit Sales Vol. Sales Vol. Revenue Gross profit Sales Vol. * Due to some changes in saleschannelcategories PY actual isretroactively revised Revenue Revenue Gross profit Gross profit 33 33
Slide 35: Q4 mix by brand/channel
Q4 (Oct — Dec) — Mix by brand/channel Sales Vol. Revenue Gross profit Sales Vol. Revenue Gross profit Sales Vol. + Due to some changes in saleschanneicategories PY actual is retroactively revised Revenue Gross profit 34 34
Slide 36: Sales update on vending machines by segment
Sales update on vending machines by segment |At work (office etc) -22 +21 00 25 -16 “14 13) “44 +06 3.8 07 54 At work (plant etc) -28 9 18 3.0 25 “1.4 28 6.0 +08 47 108) 47 Mass retailers -24 +16 26 42 -22 29° +19) 43.6 “16 26 23 57 Transportation +12 B80 413) Hd 08) +06 +21 +63 +06 13 16 3.0 School
Slide 37: FY2016 sales volume by package
FY2016 ended Dec (Jan-Dec) — Sales Volume by package (Unit: K c/s, %) Small (less than 850 ml) Medium (less than 1,500 ml) PET Large (1,500 ml or more) Total Can (incl. bottle can) Others Syrup & powder CCW total (excl.Shikoku CCBC) CCW + Shikoku CCBC total [Ref] Vs. PY Vs. Plan Diff Diff % Diff Dif
Slide 38: 2016 Q4 sales volume by channel
2016 Q4 (Oct-Dec) — Sales Volume by channel (Unit: K c/s, %) Supermarket/Drug/Discounter (Convenience store Chain store total Vending Retail Food Service Others CCW total (excl.Shikoku CCBC) CCW + Shikoku CCBC total [Ref] Vs. PY Vs. Plan Diff Diff % Diff Diff % -632 -4.2 -394, -2.7| -161 -2.3) +523
Slide 39: 2016 Q4 sales volume by brand
2016 Q4 (Oct-Dec) — Sales Volume by brand Coca-Cola Coca-Cola Zero Syrup & powder CCW total (excl.Shikoku CCBC) [CCW+ Shikoku CBC total [Ref] Vs. PY? Vs. Plan Diff Diff % Diff Diff % 6 0.2 +83 +23) 7 05 +13 +09) 74 -4.0 +14 +08 -180 “1.5 -160) -13 -35 “15 -138 “5.8 +107 43.9) -264 -85 +127 42.9 +372
Slide 40: 2016 Q4 sales volume by package
2016 Q4 (Oct-Dec) — Sales Volume by package [Ref] Vs. PY Vs. Plan (unit: K c/s, %) Diff Diff % Diff Diff % Small (less than 850 ml) -174 -1.2 -170 -12 Medium (less than 1,500 ml) +254) +77.4 +113 +23.9) PET | _targe(1.500 ml or more) 88 89 480025 Total -808 3.2 -545 -2.2 Can (incl. bottle can) -618'
Slide 41: FY2017 sales volume plan by package
FY2017 ending Dec (Jan-Dec) — Sales Volume Plan by package Vs. PY (Unit: K c/s, %)} Diff Diff % Small (less than 850 ml) +2,558 43.9 | Medium (less than 1,500 ml) +780 (4263 PET Large (1,500 ml or more) -1,067 -2.3 Total +2,271 +2.0 Can (incl. bottle can) -37 -0.1 Others +649 +4.6 Syrup & powder -1,
Slide 42: FY2017 Q1 sales volume plan by channel
FY2017 Q1 (Jan-Mar) — Sales Volume Plan by channel (Unit: K c/s, %) Supermarket/Drug/Discounter Convenience store Chain store total Vending Retail Food Service Others CCW total (excl.Shikoku CCBC) CCW +Shikoku CCBC total Vs. PY Diff Diff % +501 +3.9| -143 -2.1 +359 +18 -628 -4.0 -89 -4.0 +139 +2.5 +
Slide 43: FY2017 Q1 sales volume plan by brand
FY2017 Q1 (Jan-Mar) — Sales Volume Plan by brand Vs. PY (Unit: K c/s, %)] Diff Diff % Coca-Cola -722 -2.3 Coca-Cola Zero -64 -4.5 Fanta +128) +8.4) Georgia +126 41.1 g Sokenbicha 3 -0.2 “ Aquarius +15 +0.6) Ayataka +329 48.6 | LOHAS +194 46.3) Sub total +653 42.2 Others -428 -5.0 +225) +0.6) Syrup &
Slide 44: FY2017 Q1 sales volume plan by package
FY2017 Q1 (Jan-Mar) — Sales Volume Plan by package (Unit: K c/s, %) PET Small (less than 850 ml) Medium (less than 1,500 ml) Large (1,500 ml or more) Total Can (incl. bottle can) Others Syrup & powder CCW total (excl.Shikoku CCBC) CCW-+t Shikoku CCBC total Vs. PY Diff Diff % +401 +3.0) +263 471.5 -1
Slide 45: Performance Trend
Performance Trend j= (Unit: MM JPY) we | ame ] mon | me | am | sm | me | ome | co | mee | om | me | mu | om: | we | mu | os | oe [27 Revenue ssi 71] 207827] 26121] 207,737] 240825] 253248] 265,74] 327821] 952i] 255556] 3egese] 375754] 308.717] 306637] @i71i] cates] aaqare| aeoass| 402.0) oer 5.1m) 1
Slide 46: Managerial KPI trend
Managerial KPI trend = <Operating profits/Operating profit ratio> (MM JPY) (%) [_ =operating profits _—*—Operating profit ratio | 25,000 10.0 20,000 8.0 15,000 6.0 10,000 40 5,000 2.0 2012-2013. 2014 2015 2016 <ROA/ROE> (%) —*-ROE —*-ROA 8 6 56 5.5 4 2 0 2012 2013 2014 2015 =. 2016 <Net asset/capita
Slide 47: Coca-Cola System in Japan — Capital Relationship
Coca-Cola System in Japan — Capital Relationship The Coca-Cola Company (TCCC) 2 [ ———> investments with figures indicate %; ( ) in total by CCW+ Shikoku (As of Jan 1, 2017) Goca-Gola : 13.7% Coca-Cola Tokyo Research & Development Co., Ltd (cctr&o) @ 100% Coca-Cola (Japanyeoy Ltd (cag @ WEStGo;, Led
Slide 48: Coca-Cola affiliated companies and their roles
Coca-Cola affiliated companies and their roles 1. Coca-Cola West Co., Ltd. (CCW) Coca-Cola West Japan (CCWJ) was established in 1999 by merging Kitakyushu CCBC and Sanyo CCBC. CCW) acquired ownership of Mikasa CCBC in 2001. In 2006, CCW) and Kinki CCBC merged the management of both companies, and in
Slide 49: Glossary
Glossary *Coca-Cola business (soft drink business) Business to manufacture and sell soft drink beverages including Coca-Cola * Healthcare & skincare business *Vending Business to manufacture and sell health food and cosmetics operated by Q'sai and their 5 subsidiaries Business to deliver products to
Slide 50: Forward-looking statement
Forward-looking statement The plans, performance forecasts, and strategies appearing in this material are based on the judgment of the management Please note that these forecasts may differ materially from actual performance due to risks and uncertain factors such as those listed below. - Intensific
Coca-Cola West Company — FY2016 Earnings Presentation on 6ix