Coca-cola Bottlers Japan Holdings Inc. · TSE:2579
Coca-cola Bottlers Japan — Coca-Cola West Company — Q2 2016 Earnings Presentation
45 slides from Coca-cola Bottlers Japan's earnings presentation, Aug 15, 2016
Slide 1: Results briefing for the 2nd quarter of Fiscal Year ending December 2016
HARD HEI ANve-z& Cibola West Results briefing for the 2nd quarter of Fiscal Year ending December 2016 August 15, 2016 Coca-Cola West Company, Limited (2579) [Contact]Planning Department (IR team) TEL 092-641-8774 FAX 092-632-4304 (URL] http: //www.ccwest.co.jp/ [E-mail] koji-nakagawa@ccwest.co.jp
Slide 2: Opening remarks
•Good morning everyone and thank you for attending our Financial Results Briefing despite your busy schedules. I’m Yoshimatsu. •Today, I would like to brief you on the highlight of financial results for the 1st half and our plans for the 2nd half and full-year. 1
Slide 3: Review of the 1st half
•I will start with a review of the 1st half. 2
Slide 4: Sales volume in the 1st half
• Firstly, let me review our sales volume in the 1st half. • Compared with plans, volume continued to deliver positive growth both in the 1st and the 2nd quarters, closing the 1st half accumulated total with 2.5% positive. • On the other hand, our sales volume increased by 13.47 million cases, or 13
Slide 5: Sales volume by channel
• Now, let’s take a look at the sales volume by channel. • All channels except for Food Service outperformed the volume plans. • Highly profitable Vending exceeded the volume plan by 1.9%, moving forward new vending machine placement at prime locations ahead of plan. • In terms of year-over-year com
Slide 6: Sales volume by package
• Next is sales volume by the package. • Key packages delivered positive volume compared with plans. • Against previous year, sales volume of highly profitable small PET outperformed the growth of large PET. The growth of small PET exceeding large PET is also seen in Supermarket faced with a challen
Slide 7: Sales volume by brand
• Next is sales volume by the brand. • “Coca-Cola” and “Coca-Cola Zero” outperformed volume plans. This is attributable to the sales contribution of seasonal packages such as “Stamp bottle” launched coinciding with Global Campaign. • “Georgia” “Ayataka” and “I Lohas” also made steady sales growth wi
Slide 8: RGM initiatives in Supermarket
• Next, I would like to update you on the status of key sales activities for this year carried out in the 1st half. Let me begin with RGM initiatives in Supermarket. • In Supermarket, we have worked on RGM aiming to raise revenue and profits. The RGM initiatives were reinforced in the 1st half placi
Slide 9: Vending status
• Next, I would like to brief you on our Vending status. Initiatives of “Revenue growth” and “Profitability enhancement” have made good progress and generated benefits in the 1st half. • We placed 12,800 additional vending machines which was more than 1,600 units we placed last year for “Revenue gro
Slide 10: Financial summary of the 1st half
• I now would like to go over financial summary of the 1st half from slide 9. • We booked revenue at 219.306 billion yen, operating profits at 8.883 billion yen, ordinary profits at 8.63 billion yen, and current net profits at 4.633 billion yen. • Revenue increased both against plan and from prior y
Slide 11: Performance drivers against plan
• Now let’s move on to performance drivers, firstly against the plan. • Coca-Cola business increased revenue by 6.3 billion yen thanks to volume exceeding the plan, also delivering gross profit increase by 3.2 billion yen. Furthermore, operating profits were up by 3.5 billion yen as SG&A costs dropp
Slide 12: Operating profit drivers against plan
• The chart on page 11 shows operating profit drivers compared with plans. • Coca-Cola business finished with a 3.5 billion yen positive operating profits against the plan. • Marginal profits were up by 1.6 billion yen thanks to volume outperformance and per-case revenue increase. • Productivity enh
Slide 13: Comparison with prior year
• Next is comparison with prior year. • Coca-Cola business increased revenue by 18.1 billion yen from last year, raising gross profits. This is mainly attributable to the impact from incorporating performances of Shikoku CCBC in the 1st half. • Also by keeping the increase of SG&A for Coca-Cola busi
Slide 14: Operating profit drivers against previous year
• The chart on page 13 shows drivers of operating profits against the previous year. • Coca-Cola business increased marginal profits by 1.3 billion yen from last year contributed by volume growth in Chain store. There were also 900 million yen contribution profits with per-case revenue growth, partl
Slide 15: Plans for the 2nd half and full-year
•Now, I would like to talk about plans for the 2nd half and full-year. 14
Slide 16: Coca-Cola business volume plans
• I will first take you through Coca-Cola business. These are sales volume plans by the channel and the brand. • Without changing the initial plan for the 2nd half, we aim to grow 0.2% from the previous year as Coca-Cola business in total including Shikoku CCBC. • By the channel, we aim to grow in e
Slide 17: Sales strategies: RGM in Supermarket
• Now, let me explain our sales strategies beginning with RGM initiatives in Supermarket. We will increase revenue and profits by combining the 3 elements of “Raising wholesale prices in trade”, “Improvement of product mix” and “sales volume growth”. • First, we will continue to strengthen “Sales ac
Slide 18: Vending strategies
• Next, I would like to describe our Vending strategies. We will transform the Vending business by executing strategies from 3 perspectives of “Revenue growth”, “Profitability enhancement” and “Efficiency”. • For the first element of Revenue growth, we will continue the promotion leveraging smartpho
Slide 19: Raising profitability and efficiency in Vending
• For the second strategy to “Raise profitability”, we will continue to work on improvement of unprofitable locations and review of trade terms with customers. • We plan to generate profit contribution of a 190 million yen by improving unprofitable locations with 2,800 vending machines and project a
Slide 20: Reinforcing brand competitiveness with Olympic products
• Now, let me discuss a topic about reinforcement of brand competitiveness. Today I would like to introduce Olympic related products and promotions currently underway on a large scale coinciding with the ongoing Rio Olympics. • Firstly with products, we will further raise competitive advantage of Co
Slide 21: Healthcare & skincare sales strategies
• Let me now move on to introducing sales strategies of Healthcare & skincare business for the 2nd half. • Firstly for “reinforcing home-shopping business”, it will be critically important to gain new consumers. We will strive to improve consumer attraction capabilities of home-shopping programs by
Slide 22: Consolidated performance forecasts
• Let me now show you our consolidated performance forecasts for the 2nd half and full- year. • In light of the performances in the 1st half, we revise the initial plan for full-year operating profits upward by 4.5 billion yen to be 20.5 billion yen. • We project full-year consolidated revenue at 46
Slide 23: Performance plans by business
• This shows performance plans by the business. • We project increase of full-year operating profits of Coca-Cola business by 5.89 billion yen from prior year to be at 17.1 billion yen. • Note that while we forecast revenue decrease of Coca-Cola business in the 2nd half by 132 million yen from prior
Slide 24: Drivers of full-year operating profits
• Page 23 shows drivers of full-year operating profits against prior year. • As we expect volume and revenue increase in Chain store and Vending in the 2nd half, we project marginal profits of Coca-Cola business to increase by 1.2 billion yen from prior year. • Though it is also expected that fixed
Slide 25: Revision of 2016 dividend forecast
• Let me brief you on revisions of 2016 dividend forecast here. • Based on the upward revision of full-year performance plan this time, we decided to increase year-end dividend per share (forecast) by 2 yen to be 24 yen from the total of 22 yen we announced on February 3 that consists of ordinary di
Slide 26: Summary of takeaways
• Lastly, I would like to summarize some takeaways. • With good progress of performances, we finished 1st half with consolidated operating profit exceeding the plan by 4.3 billion yen, up by 6.4 billion yen from prior year. • Particularly Coca-Cola business began to see impacts of initiatives in per
Slide 27: References
[ References ] 26 26
Slide 28: Account settlement for Q2 (April-June)
Account settlement for Q2 (April-June) Revenue Gross prorfit Operating income Ordinary profit Current net income {attributable to 2015 Q2 actual (uni: MMIPY, $6) * PY actual doesnot include actual performances of Shikoku CCBC 27 27
Slide 29: OTC market share trends (excl. VM)
OTC market share trends (excl. VM) 21.8 (Unit: %, pts) | -0.2 +05 “17 -1.0 +0.7 2015 Q2 Q3 *Values outside the graph show gap vs. PY same period Q4 Q2 (Source: intage) 28 28
Slide 30: 1H mix by brand/channel
1H (Jan — June) — Mix by brand/channel 1 LOHAS Ayataka is] = 2 = Qa Georgia Coca-ColaZero Sales Vol. Revenue Gross profit Sales Vol. Revenue Gross profit a— Retail [aera SM Bi-ne 29 Sales Vol. Revenue Gross profit Sales Vol. Revenue Gross profit
Slide 31: Q2 mix by brand/channel
Q2 (April — June) — Mix by brand/channel is] = 2 = Qa Coca-ColaZero Sales Vol. Revenue Gross profit Sales Vol. Revenue Gross profit Retail [aera SM Bi-ne Sales Vol. Revenue Gross profit Sales Vol. Revenue Gross profit 30
Slide 32: Sales update on vending machines by cluster
Sales update on vending machines by cluster |At-work (office) +22 +21 +0.0 25 -16 -14) JAt-work (plant) -28 +19 +18 3.0 25 “14 Mass retailer -24 +16 -2.6 42 -2.2 -29 Transportation +12 +38 +13 +11 08 +06 School -08 +57 +3.2 al -16 +33 Leisure -37 +06 34 46 13 91 Pachinko 58 18 6.8: 58 03 3.6) Sports
Slide 33: 1H sales volume by channel/package
1H (Jan — June) — Sales Volume by channel/package Wichain store (Unit: K cases, %) SS PET (smaller than 850ml) Midi PET (less than 1,500ml ) LS PET (1,500m! or larger) Can (incl. bottle CAN) Other CCW total (excl. Shikoku CCBC) Bivending (Unit: Kcases, %) SS PET (smaller than 850ml) LS PET (1,500ml
Slide 34: Q2 volume by channel
Q2 (April-June) -Volume by channel Vs. Plan Vs. PY* (unit: K c/s, %)| Diff Diff % Diff Diff % Super market/Drug/Discounter +695, +3.8) +1,360 47.7 Convenience store +92 +13 +551) 48.1 Chain store total +787 43.1 41,912 47.8 Vending +195 41.1 -381 -2.2 Retail +16 +4.6 +2 40.1 Food service -109 -1.7|
Slide 35: Q2 sales volume by brand
Q2 (April — June) — Sales Volume by brand (unit: K c/s, %) Coca-Cola lcoca-Colazero. Fanta |Georgia \Soke nbicha _ FEY) Aquarius Ayataka | LOHAS Sub total Others Syrup & powder CCW total (excl.Shikoku CCBC) CCW+ Shikoku CCBC total Vs. Plan vs. PY* Diff Diff % Diff Diff % -60 “15 +119 43.1 +86 +4.9 +
Slide 36: Q2 sales volume by package
Q2 (April — June) — Sales Volume by package (unit: K c/s, %) Small (less than 850ml) Medium (less than 1,500m!) PET Large (less than 1,500ml) Total Can (incl. bottle can) Other Syrup & powder CCW total (excl.Shikoku CCBC) CCW + Shikoku CCBC total Vs. Plan Vs: PY* Diff Diff % Diff Diff % -107 -0.6 +7
Slide 37: Q2 volume by channel and package
Q2 (April-June)—volume by channel and package Wchain store | Mer than 850ml) | Midi PET (less than 1,500ml ) ___SS PET (smaller than 850m!) __ Syrup/Powder CCW total Cexcl. Shikoku CCBC) | 1SPET (1500ml or larger) Vs. Plan Vs. PY Diff Diff % Diff Diff % -117 -13) +400 +4.6 4217 +362 +453 4124.5) +37
Slide 38: 2H volume target by package
2H (July-Dec) —Volume target by package Vs. PY* (uit: Ke/5, 9) _oift | pitt% | Small (less than 850ml) +1,792 $5.4 Medium (less than 1,500ml) +438 $52.2 PET | Large (less than 1,500ml) -171 -0.7 Total +2,060 43.5 Can (incl. bottle can) -880 -3.2 Other +415 +5.7 Syrup & powder -1,474 -6.8 CCW total (
Slide 39: 2H volume target by channel and package
2H (July-Dec) — Volume target by channel and package Wichain store SS PET (smaller than 850ml Midi PET (less than 1,500mI ) LS PET (1,500ml or larger) —Can(incl. bottle CAN) Other CCW total Cexcl. Shikoku CBC) 38 38
Slide 40: Performance Trend
Performance Trend (Unit: MMJPY) 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2008 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 oie Revenue | 164731] 207.827] 226.111| 247.737| 240.825 253.248| 245.874] 327.821] 409,521| 395,556] 369,698] 375,764] 309.717] 386,637) [Operating 43
Slide 41: KBI Trend
KBI Trend <Operating income & its ratio> SS crewtes notes pon iry <Net asset/capital ratio> eas eae (%) — \ssets (MM JPY) (%) — — Capitalratio(%) (MM JPY) T6469 10 (mm spy) 100 15,000 3 mmo 250,000 g64 231,056 90 10,000 8 200,000 4 150,000 80 5,000 3 100.000 70 50,000 F P F 66 60 2011 2012 2013 2014
Slide 42: 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, 2016) Joint companies of TCCC/CCI Coca-Cola Tokyo Research 100% & Development Co., Ltd (cctr&o) @ Coca-Cola UapanyGoy Ltd (cacy @ and b
Slide 43: 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 (CCW) was established in 1999 by merging Kitakyushu CCBC and Sanyo CCBC. CCWJ acquired ownership of Mikasa CCBC in 2001. In 2006, CCW) and Kinki CCBC merged the management of both companies, and in
Slide 44: 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 45: 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
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