Coca-cola Bottlers Japan Holdings Inc. · TSE:2579
Coca-cola Bottlers Japan — Coca-Cola East Japan — Q3 2015 Earnings Presentation
28 slides from Coca-cola Bottlers Japan's earnings presentation, Nov 9, 2015
Slide 1: Coca-Cola East Japan Q3 & YTD 2015 Earnings Call
Coca-Cola East Japan Q3 & YTD 2015 Earnings Call Calin Dragan, CEO Michael Coombs, CFO November 9, 2015 www.ccej.co.jp (Posted to CCEJ Website November 6, 2015)
Slide 2: Forward-Looking Statements
Forward-Looking Statements Q3 & YTD 2015 The plans, performance forecasts, and strategies appearing in this material are based on the assumptions and judgment of the management of Coca-Cola East Japan Co. Ltd. (CCEJ) in view of data obtained as of the date this material was released. These forecasts
Slide 3: Q3 & YTD 2015 Earnings Call Agenda
Q3 & YTD 2015 Earnings Call Q3 & YTD 2015 Introduction • Overview and Key Messages • Incorporating Learnings and Progress to-date Third Quarter and Year-to-Date Results • Share, Volume and Financial Results Outlook for Full-Year 2015 • Revised Full-Year Plan • Key Takeaways 3
Slide 4: Q3 and YTD Overview and Key Messages
Q3 and YTD Overview and Key Messages Q3 & YTD 2015 October 7 revision of full-year performance targets Growth in YTD volume, revenue and operating income, including the benefit of the Sendai Coca-Cola Bottling Company integration in the second quarter Improving gross margins, as we deliver manufa
Slide 5: Full-Year Estimate Revision (announced October 7, 2015)
Full-Year Estimate Revision (announced October 7, 2015) Q3 & YTD 2015 Full-year reported operating income growth forecast revised to +13% (from +51%) • Softness in vending channel persists due to channel mix shift since consumption tax rise. Poor summer weather in Kanto region also a factor. • Cont
Slide 6: Incorporating Learnings and Progress
Incorporating Learnings and Progress Q3 & YTD 2015 Actual results have differed from original assumptions, primarily in topline performance and industry competition and pricing trends. This masks real underlying progress: • High efficiency of new lines and further production insourcing • Pricing, te
Slide 7: Priority Issues – Dedicated Task Forces
Priority Issues – Dedicated Task Forces Q3 & YTD 2015 Vending Synergies Cost Structure Situation Situation Situation Vending channel value proposition Ongoing synergy capture offset by • Current Route-to-Market rollout less appealing with consumers topline erosion and unplanned costs focused on impl
Slide 8: Q3 & YTD 2015 Results
Q3 & YTD 2015 Results www.ccej.co.jp
Slide 9: Year-to-Date Volume Performance
Year-to-Date Volume Performance Q3 & YTD 2015 YTD Reported Volume Q3 Reported Volume by Quarter by Month YTD volume +6.8% (-0.1%*) Q3 Highlights • Changeable weather: A tale of two summers • Continued soft results in vending channel +11% • Competitor promotions, +11% +9% new product launch +9.0% +7%
Slide 10: Share Loss amid Strong Competition
Share Loss amid Strong Competition Q3 & YTD 2015 2015 vs. Prior Year • Share gains in teas, sports and coffee Market Share* Q3 YTD • Challenges in sparkling due to competitor launches Volume -1.0 -0.4 and water due to pullback on 2L PET package Value -0.8 -0.4 • 6 out of 8 quarters volume & value sh
Slide 11: New Products & Retail Pricing Trends
New Products & Retail Pricing Trends Q3 & YTD 2015 New Product Performance (YTD) OTC Retail Price Per SKU volume weaker than prior year CCEJ average price declined vs. prior year, but our retail pricing is above market average, especially in large PET, where we have maintained price discipline Volum
Slide 12: Volume Performance by Channel
Volume Performance by Channel Q3 & YTD 2015 Q3 Volume by Channel Channel Volume Growth (% of total) Including Sendai Others Supermarket 11% (SM) Vending 23% (VM) Drug & Discounter 27% (D&D) Eating & Convenience 12% Drinking Store (CVS) (E&D) 14% 13% vs. Prior Year CVS D&D Nat’l SM Local SM VM Eat &
Slide 13: Volume Performance by Category
Volume Performance by Category Q3 & YTD 2015 Q3 Volume by Category Category Volume Growth (% of total) Juice Including Sendai Others 4% Sparkling (SSD) 11% 26% Coffee 14% Teas Water 21% Sports 10% 14% vs. Prior Year NST Water Coffee Sparkling Sports Juice Q3 2015 +10% even +17% +8% +7% +18% Total Vo
Slide 14: Q3 & YTD 2015 Financial Results
Q3 & YTD 2015 Financial Results www.ccej.co.jp
Slide 15: Drivers of Third Quarter Operating Income
Drivers of Third Quarter Operating Income Q3 & YTD 2015 In MM JPY -1,708 +573 -291 +684 -539 -449 GP Impact Supply Chain DME** Other Depreciation OPEX of Mix & Vol. Savings Subsidiaries vs. PY • In line with plan • -0.4% organic • 1.6B yen • In line with 7,810 volume manufacturing & plan • Sendai •
Slide 16: Third Quarter 2015 Results
Third Quarter 2015 Results Q3 & YTD 2015 • Improving gross margin driven by manufacturing and procurement efficiency • SG&A increase led by continued marketing investment, logistics & distribution, depreciation, Sendai integration, etc. • Tax rate increased by revisiting deferred tax accounting 2015
Slide 17: Drivers of YTD Operating Income
Drivers of YTD Operating Income Q3 & YTD 2015 In MM JPY GP Impact Supply Chain of Mix & Vol. Savings +3,224 -1,872 -2,705 +2,870 -609 +1,224 Depreciation DME** vs. PY 8,719 • -0.1% organic • 5B yen OPEX 6,587 volume manufacturing • In line with Other • COGS: +599 plan In line with plan Subsidiaries
Slide 18: YTD 2015 Results
YTD 2015 Results Q3 & YTD 2015 • Improving gross margin driven by manufacturing and procurement efficiency • SG&A increase led by marketing investment, logistics, Sendai integration • YTD taxes decreased due to additional deferred tax assets for integration of subsidiaries in Q2 2015 YTD 2015 YTD 20
Slide 19: Outlook for Full-Year
Outlook for Full-Year www.ccej.co.jp
Slide 20: Revised Full-Year Outlook (announced October 7, 2015)
Revised Full-Year Outlook (announced October 7, 2015) Q3 & YTD 2015 2015 FY 2015 FY 2015 FY 2014 FY Vs. PY Revised Estimate One-time Revised Comparable Diff % in million yen Items Comparable Result Estimate Sales Volume* 303,685 - 303,685 281,586 22,099 +10% (BAPC) (,000 cases) Net Revenue 562,500 -
Slide 21: Drivers of Full-Year Revised OI Estimate
Drivers of Full-Year Revised OI Estimate Q3 & YTD 2015 In million JPY +2,697 -1,881 -2,543 +2,883 +1,595 Depreciation DME** -1,288 vs. PY GP Impact Supply Chain • In line with OPEX Other of Mix & Vol. Savings previous plan Subsidiaries • COGS: • IT costs up +634 • Weakness in • 6B yen during • Smoot
Slide 22: Fourth Quarter Key Marketing Initiatives
Fourth Quarter Key Marketing Initiatives Q3 & YTD 2015 Coca-Cola Bottle 100th Anniversary Coca-Cola Winter Promotion Coca-Cola Aluminum Contour Bottle Winter Design Coca-Cola Winter Song Lime Bottles Georgia 40th Anniversary / Vending Hot Drink Activation / iLohas Peach / Aquarius Cold Prevention En
Slide 23: Key Takeaways
Key Takeaways Q3 & YTD 2015 2015 is a second full year of fundamental transformation Market situation has been tougher than we had anticipated (competition, lasting impact of consumption tax hike, etc.) We are taking urgent action with task forces to address specific priority areas Vending machi
Slide 24: APPENDIX
APPENDIX \ 100 YEARS OF THE COCA-COLA BOTTLE CxLbela Cast Japan DAFT —-AhY eo NRRL www.ccej.co.jp
Slide 25: CCEJ One+ Roadmap for Growth
CCEJ One+ Roadmap for Growth Q3 & YTD 2015 2018- Tokyo Olympic Games & Beyond 2016-2017 Accelerating 2015-2016 Performing 2012-2014 Norming Meet & exceed Approaching world-class Forming & Storming 2012-2013 Refine & global bottler bottler levels optimize new performance Forming Define & deploy new b
Slide 26: The Coca-Cola System
The Coca-Cola System Q3 & YTD 2015 A powerful partnership driving growth of the Coca-Cola business The Coca-Cola system in Japan consists of the Coca-Cola (Japan) Company (CCJC), bottlers and other related companies. CCJC, as the franchise owner, is responsible for supplying concentrate and beverage
Slide 27: Glossary of Frequently Used Terms
Glossary of Frequently Used Terms Q3 & YTD 2015 Q2 CDE Abbreviation of Cold Drink Equipment. Vending machines, coolers and beverage dispensers, etc. Coolers The equipment with Coca-Cola’s logos which keeps beverages at an appropriate temperature (chilled and/or hot) for immediate consumption, and re
Slide 28: THANK YOU
THANK YOU Coca-Cola East Japan Q3 &YTD 2015 Earnings Call November 9, 2015 <Inquiries> Investor Relations Coca-Cola East Japan ir@ccej.co.jp +81-3-5575-3797 http://investor.ccej.co.jp/ www.ccej.co.jp