activity, performance or achievements to be materially...
TRANSCRIPT
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This material may be deemed to include forward-looking statements within the meaning of Section 27A of the US Securities Act of
1933 and Section 21E of the US Securities Exchange Act of 1934. These forward-looking statements are only predictions and you
should not rely unduly on them. Actual results might differ materially from those projected in any such forward-looking statements,
which involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of
activity, performance or achievements to be materially different from any future results, levels of activity, performance or
achievements expressed or implied by the forward-looking statements. In evaluating forward-looking statements, which are
generally identifiable by use of the words “may”, “will”, “should”, “expect”, “anticipate”, “estimate”, “believe”, “intend” or “project”
or the negative of these words or other variations on these words or comparable terminology, you should consider various factors
including the risks outlined in our Form 20-F filed with the SEC. Although we believe the expectations reflected in forward-looking
statements are reasonable we cannot guarantee future results, levels of activity, performance or achievements. This presentation
should be viewed in conjunction with our periodic interim and annual reports and registration statements filed with the Securities
and Exchange Commission, copies of which are available from Cadbury Schweppes plc, 25 Berkeley Square, London W1J 6HB, UK.
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CAGNY Conference22 February, 2007
Todd Stitzer
Chief Executive Officer
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3
Cadbury Schweppes at CAGNY 2006
• An ambitious international consumer products company
• Leading global confectionery share
• Strong regional beverages presence
• Investing in growth platforms and capabilities
Considerable untapped potential
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4
Significant Progress in 2006
• The third year of:
- Revenue growth at double historic rate
- Double digit emerging market growth
- Double digit gum growth
- Share gains in US carbonates
- Fuel for Growth cost savings
- Significant operational and strategic progress
• Offset by UK recall and Nigeria
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5
2007 Goals and Priorities
1. Deliver financial scorecard
2. Relentless focus on cost and efficiency
3. Deliver fewer, faster, bigger, better innovations
4. Expand our platform via bolt-on acquisition
5. Exploit our portfolio through innovation and execution
6. Expand our platform through further bottler consolidation
1. Deliver superior shareowner
returns
Goals Priorities
2. Be the biggest and best global
confectionery company
3. Be the best regional beverage
business
7. Embed commercial and S&T capabilities
8. Leverage our capabilities across Supply Chain, IT and Shared Business Services
4. Ensure our capabilities are best in
class
5. Nurture the trust of colleagues and
communities
9. Increase quality and bench strength through diversity and inclusiveness
10. Deliver on our CSR commitments
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6
New Financial Scorecard
• Revenue growth of 3-5% per annum
• Growth in margins over time
• Growth in ROIC over time
• Dividend growth more in line with earnings growth
• Maintain efficient balance sheet
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7
Our Growth Opportunities
Leverage our Strong Distribution Networks
Exploit Scale through Global Category Management
Focus on Growth Platforms
Expand through Acquisition
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8
Leading Confectionery Market Positions
Source: Euromonitor 2005
Global #1
North America
#4
Latin America
#1
EMEA #1
Asia Pacific
#2
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9
Exploit our Chocolate Strength
*2004-2006 ex UK 2006
CDM Revenue growth*
+8%
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10
Leverage our Gum Market Positions
Significant opportunities to expand
c.$200 million product
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11
Increase our Candy Reach
Australia: 04-06Ireland: 05-06
Ireland revenues
+40%
Australia revenues
+40%
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12
Strengthened US Beverages Route to Market
CS territories
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13
Winning in the Organised Trade
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14
Expanding in C-Stores
Significant Revenue and Margin Opportunity
CS Market CS Market
12%
18%
% V
olu
me
8%
14%
Small Format Stores Convenience and Gas
Source: Nielsen
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15
Improved CS Brand Performance+17%
+16%
+6%
0%
+7%
+2%
Total CS Brands Franchise Brands#
Jan - Apr May - Dec
2006 V
olu
me
Gro
wth
Excludes All American and Easley; # Excludes water
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16Revitalising Snapple… A Multi-Stage Programme
Source: Nielsen
Mainstream Premium Super Premium
% RTD Tea Vol 77% 22% 1%
% RTD Tea $ 59%
Snapple Vol Share 0% 50% 42%
37% 4%
Volu
me
Cas
es
US Ready to Drink Tea Market
+99%
+1%
+40%
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17
Snapple Mainstream Launch in Second Quarter
• Leveraging CSBG low cost manufacturing and distribution reach
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18
Further increase pace, scale and quality of innovation
Exploiting our Global Scale in Confectionery
• Doubled innovation rate
• CS global consumer study identifies market similarities
• CS global platform exploits these similarities
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19
Driving Growth Through New Global Category Structure
AmericasBeverages
AmericasConfectionery
EMEA Asia Pacific
Chocolate
Gum
Candy
Beverages
Global Commercial
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20
Innovation
Fewer
Bigger
Faster
Better
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21
Entering the UK Gum Market
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22
Bringing Innovation to the UK Gum Market
• Current market value $450m - $550m
• Market in decline; per capita consumption under-developed
• 95% products functional; >50% chew for pleasure or distraction
Gum Market Growth and Consumption
Growth 05/06 Per Cap. (Index)
75
100
France +9% 88
UK -4%
US +8%
Source: Nielsen/IRI/Euromonitor
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23
Opportunities in Other Markets
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24
Focusing on Growth Platforms
Beverages Wellbeing SuperiorIndulgence
Chocolate Wellbeing SuperiorIndulgence Affordability Gifting
Gum Wellbeing Centre Filled Affordability Packaging
Candy Wellbeing SuperiorIndulgence Affordability Masterbrands
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25
Chocolate Wellbeing
High CocoaContent
CalorieControlled
Fortified
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Strong Position in High Cocoa Content Products
• c.20% share of global moulded chocolate market
• Growing at double digits
• Less than 10% share of mouldedin Cadbury heritage markets
• Heritage markets growing nearly twice as fast as global market
Source: Euromonitor
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27
Developing a Beverages Wellbeing Portfolio
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28
Super-Premium Snapple Growth
Snapple Super-Premium Teas Volume 2006
January April July October
White Tea Green Tea Red Tea
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29
Further Expansion into Growth Categories .. Accelerade
• Intellectual property/ brand acquired in 2006
• Entry into $6.8bn fast growing functional sports drink category
• Patented carbohydrate – protein drink
• Differentiated position: for the serious athlete
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30
Superior Indulgence - Growth in Chocolate
• Superior tasting Cadbury chocolate aimed at mass premium market
• Mass premium:
- Accounts for one third of UK market
- Is growing at high single digits
• Super premium:
- less than 1% of the market
Source: Nielsen
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Superior Indulgence - Chocolate
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Superior Indulgence - Chocolate
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Superior Indulgence - Beverages
US Carbonate Market Share Performance
-60
-40
-20
0
20
40
60
80
2003 2004 2005 2006
Source: Nielsen
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Largest Confectionery Emerging Markets Business
One-third of confectionery revenues;10% p.a. revenue growth
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35
Affordability in Gum
1 peso
0.5 peso
3 pesos
3.5 pesos
Mexico
<$2k $2k-$5k $5k-$10k $10k-$20k $20k+
Volu
me
GDP/CapitaSource: Euromonitor
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0.03kg
India
India
• CS share 72%
• 20% revenue growth in 2006
4.9kg
Per capita chocolate consumption
Affordability in Chocolate
Source: Euromonitor
0
1
2
3
4
5
Developed Markets
GDP per capita$38,000
GDP per capita$700
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Growing Through Disciplined Acquisition Programme
• Focus on emerging markets
• Well placed to drive synergies
• Strong knowledge of the opportunities
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Ken HannaChief Financial Officer
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Our Financial Scorecard
• Revenue growth of 3-5% per annum
• Growth in margins over time
• Growth in ROIC over time
• Dividend growth more in line with earnings growth
• Maintain efficient balance sheet
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Agenda
Margin Improvement Opportunities
Capital Resource Allocation
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The Last 12 Months
Key Events
• Completed sale of Europe Beverages
• Purchased DPSUBG and two other bottlers – created CSBG
• Acquired confectionery businesses in emerging markets
• Reduced debt by nearly $2bn and improved financial ratios
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The Last 12 Months
Financial Metrics
• 2006 dividend increase of 8% (double historic increase)
• Dividend to grow more in line with earnings
• Target debt rating of BBB+
• Return of surplus funds at appropriate time
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Improving our Margin
Costsavings
Input costs
2003margin
2006margin
Other
Growth Investment
CS Margin 2003 – 2006
+80bps
Mar
gin
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44
Improving our Margin - Opportunities
Fixing under-performing markets
Leveraging our global scale to improve efficiency
Improving supply chain performance
Realising synergies from bottling acquisitions
Mar
gin
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45
Fixing Under-Performing Markets
• Actively addressing under-performing markets
- Russia, China
• Investing ahead of growth
• Starting to see results coming through
Mar
gin
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Margin Progress in Under-Performing Markets
Brazil
Japan
+890bps
+440bps
Mar
gin
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Leveraging Our Global Scale
• Common global processes
• Global standardisation and aggregation
• Out-sourcing Shared Business Services and IT
• Addressing our organisational structure
Mar
gin
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Improving Supply Chain Performance
• Announced closure of 15 plants
• 23 sold or up for sale
• Reconfiguration of existing plants
• Creating efficient dedicated manufacturing centres
Mar
gin
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Concentrating Gum Production
Rockford
Mexico
Turkey
Poland
Thailand
Mar
gin
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Beverages Reconfiguration - Motts
NY
PA
Mar
gin
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Beverages Reconfiguration - Motts
FL
TX
CAUT IL
NY
PA
Mar
gin
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Capital and Resource Allocation
Working capital efficiency
Maintaining an efficient balance sheet; dividend policy
Disposals of non-core businesses and surplus assets
Investing in higher-growth segments
Disciplined acquisition programme
Capi
tal
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Working Capital Progress
0
10
20
30
40
50
60
Day
s Sal
es O
uts
tandin
gTrading Working Capital Performance
2003 2004 2005 2006
Capi
tal
Excludes Europe Beverages, CSBG & Cadbury Nigeria
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Exit Low Growth and Non-Core Businesses
• Europe Beverages February 2006
• Programme of Non-Core disposals 2005-07
c.$3 billion
Capi
tal
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Investing in Growth Markets
• Confectionery acquisitions Ongoing
• Beverages route to market 2006 & 2007
c.$1.5 billion
Capi
tal
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Investing Behind Growth & Efficiency
Long-term Capex / Sales Ratio of c.5%
0%
1%
2%
3%
4%
5%
6%
2003 2004 2005 20062002
Perc
enta
ge
of
reve
nue
Capital Expenditure
Excludes PROBE Capi
tal
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0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Balance Sheet EfficiencyN
et D
ebt
$’b
n
Net
Deb
t/EBIT
DA
Net debt Net debt/EBITDA
Targeting BBB+ rating
2002 2003 2004 2005 20060
1
2
3
4
At 2006 FY average rates
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Summary
• Committed to improving margins and returns over time
• Opportunities to improve cost and efficiency performance
• Allocating our capital and resources to the highest growth and return opportunities
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CAGNY Conference22 February, 2007
Todd Stitzer
Chief Executive Officer
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Conclusion
Using all value levers to drive returns
Relentlessly focusing on cost reduction
Aggressively exploiting and expanding our platforms
Optimistic about our future
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