Coca-cola Femsa Sab De Cv Units Cons Of 5 Shs -l- + 3 Shs Series -b- · BMV:KOF/UBL
Coca-cola Femsa Sab De Cv Units Cons Of 5 Shs -l- + 3 Shs Series -b- — Coca-Cola FEMSA — Investor Presentation (October 2005)
31 slides from Coca-cola Femsa Sab De Cv Units Cons Of 5 Shs -l- + 3 Shs Series -b-'s investor presentation, October 2005
Slide 1: Coca-Cola FEMSA October 2005
Coca-Cola FEMSA October 2005
Slide 2: Cautionary Statement
Cautionary Statement FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements relate to Coca-Cola FEMSA, S.A. de C.V. and subsidiaries (“KOF”) and their bus
Slide 3: KOF Evolution
KOF Evolution We have faced an evolutionary process since the integration of the new territories, increasing our operating complexity… 2002 LTM June 05 ∆ 02-05 Volume (MM UC) 620 1,862 + 171% Revenues (MM US$) 1,685 4,299 + 155% Assets (MM US$) 1,546 6,432 + 316% Plants 9 30 + 21 Distribution Facili
Slide 4: Challenges resulting from the acquisition
Challenges resulting from the acquisition We acquired operations with a high level of deterioration, markets poorly executed and significant challenges… Mexico: • Contain B-brands expansion • Deal with a more competitive environment Central America: • Increase per capita consumption • Develop an int
Slide 5: Initiatives and Strategies Implemented
Initiatives and Strategies Implemented During this period we focused our efforts on finding strategic and operating solutions to address these challenges… KOF • Development and implementation of multi-segmentation models Operations • Implement sharing commercial knowledge and best practices replicat
Slide 6: Initiatives and Strategies Implemented
Initiatives and Strategies Implemented During this period we focused our efforts on finding strategic and operating solutions to address the challenges… Colombia • Consolidation of manufacturing network • Design a competitive porftolio within the CSD flavor segment, and strengthen brand Coca-Cola at
Slide 7: … and we have seen the results …
… and we have seen the results … 7
Slide 8: Fostering Market Development
Fostering Market Development Multisegmentation strategy has allowed us to increase per capita consumption in our territories, resulting in a sustainable volume growth path KOF CSDs Per Capita Consumption CAGR CAGR KOF CSDs Volume (8 oz Servings) 1.6% 3.1% (MM UC) 213 KOF 1,586 KOF 208 1,549 206 79 8
Slide 9: Successful Brand Portfolio Management
Successful Brand Porftolio Management The development of our Product and Package Portfolio has been crucial to foster demand, demonstrating our capability to handle successfully a sophisticated portfolio 2005 Volume 2004 2003 2001 2002 2000 1999 1997 1996 1995 1994 Previous 1994 9
Slide 10: KOF Brazil – A Successful Turnaround Story
KOF Brazil – A Successful Turnaround Story This experience provided us with the ability to take over the control of the presale function, developed the traditional channel, eliminating transshipment, improving our competitive position … Transshipment Traditional Channel % of Total Volume % of Total
Slide 11: KOF Colombia – A Story of Innovation
KOF Colombia – A Story of Innovation When we arrived in Colombia, we found an overdeveloped flavor segment and a very weak competitive position of KO Brands CSD Industry Mix Colas* Flavors 48% 52% Together with KO, we built a new flavor portfolio to increase our market share in this segment • Launch
Slide 12: KOF Colombia – A Successful Innovation
KOF Colombia – A Successful Innovation As a result, Crush has exceeded volume expectations and reached a relevant Market Share in the Flavor segment 25,000 Crush Results 8.0% >10% 7.0% 20,000 6.0% >9 MM UC 15,000 5.0% SOM within Flavors 4.0% Acc. Volume 10,000 3.0% 2.0% 5,000 <1% 1.0% 0 0.0% Jan Feb
Slide 13: Leveraging on a strong and flexible asset base…
Leveraging on a strong and flexible asset base… Completing the integration and streamlining our asset base, let us develop a more flexible and solid platform to foster growth Operating Efficiencies Indicators 2003 LTM 2005 Var 03-05 Plants 52 30 - 22 Distribution Facilities 284 237 - 47 Line Utiliza
Slide 14: …our initiatives are supporting our growth…
…our initiatives are supporting our growth… Our financial results in the 1H 2005 showed the results of our strategic initiatives implemented during the last three years intended to improve our market position and our competitive performance… Sales Volume Revenues EBITDA (MM UC) (MM USD.) (MM USD.) +
Slide 15: …remaining one of the most profitable bottlers globally…
…remaining one of the most profitable bottlers globally… Our profitability levels are one of the highest worldwide… LTM 05 EBITDA Margin 25.7% 23.4% 22.4% 21.9% 20.5% 18.4% 16.0% 14.2% 13.5% KOF Arca Andina KOF Contal Amatil Hellenic PBG CCE Mexico Source: Analyst and Companies reports 15
Slide 16: …with a healthy and strong balance sheet…
…with a healthy and strong balance sheet… After the acquisition we have managed to reduce net debt by US$595 mm, equivalent to more than US$25 mm per month since May 2003 $2,828 Cash KOF Net Debt 3,000 $2,574 330 $2,319 $2,242 $2,218 $2,413 2,500 248 208 510 323 290 2,000 1,500 2,498 2,326 1,000 2,1
Slide 17: … creating sustainable value for our stakeholders
… creating sustainable value for our stakeholders Our stakeholders have seen significant increases in their investment during the last decade… Market Capitalization (Million US$) 4,917 4,399 4,100 3,188 2,755 2,860 2,502 2,551 1,888 1,556 1,371 1,169 879 1993 1994 1995 1996 1997 1998 1999 2000 2001
Slide 18: Coca-Cola FEMSA - Mexico
Coca-Cola FEMSA Coca-Cola FEMSA - Mexico October, 2005
Slide 19: Agenda
Agenda 1. KOF Mexico 2. Our Operating Transformation Process 3. Growth Opportunities 19
Slide 20: KOF Mexico importance for KOF and for KO system
KOF Mexico importance for KOF and for KO system The Company is the preeminent bottler of Coca-Cola products in Mexico representing, almost 50% of Coca-Cola volumes in the country • The most important KOF operation, representing during the 1st Half of 2005: • Approximately 55% of total sales volume •
Slide 21: KOF Mexico Evolution
KOF Mexico Evolution • During 2003 and 2004 we focused on integrating our new operations • In these years we also adapted our packaging/product portfolio improving our competitive position 2003 Var. 2004 2005* (May) 03 - 05 Clients (000s) 552.4 574.6 585.9 6.1% Cooler Coverage 66% 67% 67% +1.0 pp Pl
Slide 22: Our "Portfolio of Choice"
Our “Portfolio of Choice” • During the last two years we have redesigned our packaging portfolio, now offering more than 13 different packaging presentations for brand Coca-Cola in Mexico with different price points, from Ps. 3 up to Ps. 16 • Additionally, we are strengthening our flavor portfolio w
Slide 23: Implementing a market multi-segmentation model
Implementing a market multi-segmentation model… • We have been developing an execution model segmented through a differentiated portfolio, adapting to the competitive environment of the country, like we did it in Argentina. • The revenue management strategies implemented in Argentina, have provided
Slide 24: … which is supporting our improvement in profitability
… which is supporting our improvement in profitability Consumption recovery together with a better packaging segmentation by channel is allowing us to capture more profitable volumes. 30 30% 29.6% 29.5 29% 29 Average Price per UC (Ps) 28% 28.5 EBITDA Margin 28 27.0% 27% 27.5 29.57 26% 25.2% 27 25% 2
Slide 25: Agenda
Agenda 1. KOF Mexico 2. Our Operating Transformation Process 3. Growth Opportunities 25
Slide 26: KOF Mexico's Operational Transformation
KOF Mexico's Operational Transformation In Mexico, we have started the Operational Transformation Project Operational Transformation Collaborative Multisegmentation Go to Market Customer Relationship Model • Traditional Trade • Rural Territories • Modern Trade – Product portfolio by cluster • Local
Slide 27: Multi-segmentation rationale
Multi-segmentation rationale There are no average consumers, customers and competitors, therefore we should understand their differences and build clusters that share common characteristics Cooler Service Layout 3 Product Attribute 1 Commercial Portfolio Rules of Conditions engagement 2 sl ne an 1 P
Slide 28: An example of our multi-segmentation strategy
An example of our multi-segmentation strategy • 2 Regions: Puebla and Oaxaca • 2 Socioeconomic levels: low and Mid High • 3 Competitive intensity: Base, High 1 and High 2 Puebla Oaxaca High 2 PB2 PB2 PA2 PA2 Competitive Intensity High 1 PB1 PB1 PA1 PA1 OB1 OB1 OA1 OA1 PB0 PB0 PA0 PA0 OB0 OB0 OA0 OA0
Slide 29: Key for a successful implementation
Key for a successful implementation To effectively manage the multi-segmentation strategy, we believe that the most critical factor is to have a robust operating model, comprised of processes, organization and systems… SYSTEMS PROCESSES A full set of systems was developed including The processes for
Slide 30: Agenda
Agenda 1. KOF Mexico 2. Our Operating Transformation Process 3. Growth Opportunities 30
Slide 31: Growth opportunities
Growth opportunities • Improve per capita consumption • Opportunity to develop a segmented product portfolio, as in Argentina • Foster single serve consumption through directed strategies • Reinforce our portfolio of premium CSD’s brand alternatives • Opportunity to capture flavored carbonated soft
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