Arca Continental SAB de CV · BMV:AC
Arca Continental SAB de CV — Investor Presentation (December 2016)
35 slides from Arca Continental SAB de CV's investor presentation, December 2016
Slide 1: Corporate Presentation
$07 ARCACONTINENTAL ALWAYS MOVING FORWARD Corporate Presentation
Slide 2: Disclaimer
Disclaimer During this presentation management may discuss certain forward- looking statements concerning Arca Continental’s future performance that should be considered as good-faith estimates made by the Company. These forward-looking statements reflect management expectations and are based upon c
Slide 3: A solid partnership with Coca-Cola since 1926
A solid partnership with Coca-Cola since 1926 90 YEARS Pioneers of the system in Mexico 3
Slide 4: Current ownership structure
Current ownership structure Arca Continental Control Group 68% Float Mexican Stock Exchange: AC* 19% The Coca-Cola Company 9% Lindley Family 4% 4
Slide 5: An institutional company
An institutional company • Balanced Board of Directors: ‒ 21 members ‒ 6 of them are independent • Majority shareholders only at Board level • Audit Committee comprised of independent members only • No transactions with related parties The Coca-Cola Company appoints one member of the Board 5
Slide 6: Sustainable and profitable growth…
Sustainable and profitable growth… 1% Exports 13% 10% 2002 CAGR 7.0x 15% 3Q16 15% 99% 55% LTM 7% Snacks Mxp$13 billion Mexico Beverages Exports and Vending Mxp$ 91 billion Mexico Ecuador Argentina Peru Snacks 6
Slide 7: …based on strong organic growth and an excellent M&A track record
…based on strong organic growth and an excellent M&A track record 2002 2007 2008 2010 2011 2012 2014 2015 ARCA Snacks Argentina & Ecuador CONTAL Snacks Tonicorp Peru Merger Mexico Jugos del Merger International Valle & Santa 7 Clara
Slide 8: Delivering solid results in a challenging environment
Delivering solid results in a challenging environment MXP$ billion Sales $91* EBITDA $20* $76 $17 $62 $14 $60 $56 $13 $51 $11 $10 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 EBITDA Margin 18.9% 20.1% 21.3% 22.0% 21.9% 21.6% 8 *Last twelve months as of 3Q16
Slide 9: Highest credit rating among Mexican companies
Highest credit rating among Mexican companies Net Debt / EBITDA Global Scale 1.9 “A2” “A” 1.3 National Scale 0.5 “Aaa” “Aaa.mx” 2014 2015 2016e Global Investment Grade above Financial flexibility and low leverage Mexico’s sovereign rating ratio 9
Slide 10: Consistent value creation…
Consistent value creation… (MXP$ billion) +179% $209 $191 $18 +275% $75 $12 $60 $48 Contal $16 Arca Market Cap Arca Market Cap Arca Dividend Total Value Market Cap Market Cap Dividend Total Value Dec '02 Dec '10 '02 - '10 Dec '10 Arca+Contal Dec '16 '11 - '16 Dec '16 Dec '10 10
Slide 11: …based in our strategic core pillars
…based in our strategic core pillars Value Creation Operational Strengths Execution (ACT) Supply Chain Finance & IT • Segmentation Management • Price-pack architecture • Solid financial profile • Supply network design • Standard and streamlined • Service models • Operational Excellence business proc
Slide 12: A model that connects the entire organization
A model that connects the entire organization in order to reach the perfect execution Segmentation RGM RTM Fundamentals Market tools Sales School Innovation Collaboration Commitment Innovation Standardization 12
Slide 13: Balanced business portfolio
Balanced business portfolio New sparkling beverage franchises Emerging still categories + Value added dairy Snacks, vending machines CSDs and exports Core NARTD Adjacencies SSDs NARTD: Non-Alcoholic ready to drink 13
Slide 14: Arca Continental: beverage operations
Arca Continental: beverage operations Start date: 1926 Start date: 2010 • Sales volume (MUC) 1,078 • Sales volume (MUC) 156 • % KO volume 30% • % of KO volume 100% • Population served (MM) 30 Mexico • Population Served (MM) 15 Ecuador Start date: 2015 • Sales volume (MUC) 292 • % of KO volume 100% S
Slide 15: An extensive brand portfolio to satisfy every consumption occasion
An extensive brand portfolio to satisfy every consumption occasion 28 Brands + 50 + Brands 2015 + 1,200 SKUs 2006 +128SKUs 15
Slide 16: Strategic franchise location in Mexico
Strategic franchise location in Mexico Nogales • The dawn of a new era of growth CDF • Active participation in the consolidation of the KO System in AC Mexico Nayar Bepensa Rica • Further opportunities for synergies Colima and find better ways to serve KOF 16
Slide 17: Mexico
Mexico 7% 10% 6% 2% S-Markets On Premise 11% Stills 5% Vending Flavors Water 13% C-Stores 17% Jug Channel Category 8% Other 60% 61% Traditional Colas Format 52% 37% 48% Returnable Single-serve Multi-serve 63% Non Returnable Package 17
Slide 18: Argentina: Investing in core capabilities and increasing profitability
Argentina: Investing in core capabilities and increasing profitability • EBITDA margin expansion from 10% to 20% in 7 years • Increasing cooler coverage and reaching a 48% cooler coverage • Standardized operational processes and replicating best practices such as ACT 22
Slide 19: Argentina
Argentina 2% 1% 3% On Premise C-Stores 21% Stills 10% S-Markets Water 25% 29% Flavors Other Channel Category 47% 62% Traditional Colas 8% Single-serve Format 44% Returnable 92% 56% Multi-serve Non Returnable Package 19
Slide 20: Ecuador: Successful expansion of best practices
Ecuador: Successful expansion of best practices • Deployment of business strategies learned in Mexico to mitigate tax effect • Increasing cooler coverage from 24% to 45% in the last 5 years • All CAPEX investments made from its own cash flow 20 20
Slide 21: Ecuador
Ecuador 8% 13% 10% S-Markets On Premise Stills 1% C-Stores 32% 10% Flavors Water 11% Other Channel Category 67% 48% Traditional Colas Format 21% 29% Returnable Single-serve 71% 79% Multi-serve Non Package Returnable 21
Slide 22: New partnership in South America
New partnership in South America COLOMBIA ECUADOR Iquitos • Population 31 million • Currency Sullana Nuevos soles Piura BRAZIL PERU • 2015 Sales volume 292 MUC Chiclayo • EBITDA margin +17% Trujillo • Net Debt $380 MMD • Collaborators 3,300 Callao • Production facilities 8 Lima Ica Cusco BOLIVIA Are
Slide 23: Peru: large market with attractive macroeconomic and demographic dynamics
Peru: large market with attractive macroeconomic and demographic dynamics Five avenues to reach value creation opportunities of US$25 million at CL 1. Raw Materials 2. Process Innovation and Packaging 3. Supply Chain and Transportation 4. Administration 5. Revenue Expansion Alternatives 23
Slide 24: Peru
Peru 9% 11% 4% 7% S-Markets On Premise Jug Stills 1% 4% 17% Vending C-Stores Water 8% Other Channel Category 67% 72% Traditional CSDs Package 28% 41% 59% Returnable Single-serve Multi-serve 72% Non- Returnable Format 24
Slide 25: RGM strategy: sustain profitability & affordability
RGM strategy: sustain profitability & affordability MX $30 3.0 2.0 NR RP 600 $5 MX 12 Oz PET VR $5 $5 $10 $13 $20 $25 Protect affordability Low elasticity SKU’s (Multi-serve & Returnable) Keep magic prices Leverage on diet & single serve presentations 25
Slide 26: Transactions: A way to profitable volume
Transactions: A way to profitable volume • Smaller formats, higher profitability • Finding new opportunities and competitive advantages 1 x 2 lts 3 x 600 mls better than 3 transactions 1 transaction • Higher price per milliliter • RGM initiatives • Increase single-serve mix • New consumption occasio
Slide 27: Growing our Still Beverage Portfolio
Growing our Still Beverage Portfolio • Very positive trend in Market Share • Higher volumes in AC than in the rest of Mexico Market Share Total Channels (%) 85.0 • Surpassed our main competitor in the 57.5 indicator base of consumption and closing gap in the indicator Favorite 11.0 39.1 Brand 2006 2
Slide 28: An extensive brand portfolio to satisfy every consumption occasion
An extensive brand portfolio to satisfy every consumption occasion Mexico Ecuador • Introduced UHT milk in in the traditional • Founded in 1967, with leading position channel, 48% growth vs 2015 in high value-added dairy: flavored milk and yogurt • Leveraging our Direct to Home channel • 50/50 Joint
Slide 29: Leveraging our capabilities in adjacent business: Salty Snacks…
Leveraging our capabilities in adjacent business: Salty Snacks… 2007 2013 2013 • 3rd largest snack brand in • Over 90 years history • 40 year history Mexico • Leading regional brand • Strong position in the • 40 year history Ecuadorian market • #1 brand in NY metro • Plan to expand area • 2nd larges
Slide 30: … and successful development of Direct to Consumer channels
… and successful development of Direct to Consumer channels Vending Direct to Home Leading innovation with telecommunications to Jug Water & DTH currently reach more than increase profitability Mexico 600,000 households DTH Routes Vending 532 Machines (‘000) 31 336 26 226 163 2012 2013 2014 2015 201
Slide 31: Capitalizing on exports to the US
Capitalizing on exports to the US $104 MM USD growing market Million Unit Cases Exports to USA Coca-Cola (Nostalgia) 8.0 7.7 6.9 6.8 6.4 5.2 13.0 13.0 13.0 4.9 4.5 10.6 4.0 9.0 3.9 6.6 3.1 4.3 4.4 2.0 2.9 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 31
Slide 32: Expanding Topo Chico
Expanding Topo Chico • On July, Arca Continental (AC) agreed to transfer the rights of the Topo Chico brand in Mexico to The Coca-Cola Company (TCCC) • This will allow the expansion of volume in all the territories operated by Arca Continental. • The new territories are the states of Jalisco, Zacate
Slide 33: Our strategic revenue growth target
Our strategic revenue growth target Future Sales 2x 100 MXP$ billion 2x 56 2x 25 13 2002 2008 2012 2017 Strategic pillars support our goal to reach Mxp$100 billion in sales by 2017 and sustain our profitable growth momentum beyond… 33
Slide 34: Our Commitment to Sustainability
Our Commitment to Sustainability RECYCLING WATER* ENERGY* Mexico 2015 34% Of PCR 1.69 Water Lts. / Beverage Lts. 23.5 G CO2/ Beverage Lts. 49,447 Tons 16% Improvement 10% energy reduction of resin produced by PetStar vs 2010 Vs 2010 Mexico is the global leader in Leader in water reuse 17.3% from ren
Slide 35: Contact us
Contact us at: ulises.fernandezdelara@arcacontal.com felipe.barquin@arcacontal.com monica.velasco@arcacontal.com francisco.leyvaa@arcacontal.com 35
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