john f. brock · 2019. 9. 3. · enhance ‘share a coke’ campaign drive package innovation win...
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JOHN F. BROCK CHAIRMAN & CEO
NIK JHANGIANI SVP & CFO
Forward-Looking Statements
2
As always, these expectations are based on currently available competitive, financial, and
economic data along with our current operating plans and are subject to risks and
uncertainties that could cause actual results to differ materially from the results
contemplated by the forward-looking statements.
The forward-looking statements in this presentation should be read in conjunction with the
risks and uncertainties discussed in our filings with the Securities and Exchange
Commission (“SEC”), including our most recent Form 10-K and other SEC filings.
Included in this presentation are forward-looking management comments and
other statements that reflect management’s current outlook for future periods.
Agenda
3
SOLID FOUNDATION
CRS AND KEY TAKEAWAYS
OPPORTUNITY FOR GROWTH
SHAREOWNER VALUE
CCE Snapshot
4
Preeminent western European bottler
$8.2 billion net sales
30 billion servings annually to
170 million consumers
17 production facilities
~11,750 employees
10-K 2013
Vision and Operating Framework
5
Be the best beverage sales
and service company
Strategic
Priorities
Vision
Deliver consistent, long-term profitable growth
Lead category value growth
Excel at serving our customers with world
class capabilities
Drive an inclusive and passionate culture
Solid Foundation for Growth
6
#1 in value & volume share in NARTD and Sparkling Successful
Position
Managing the levers of our business to deliver
consistent, long-term profitable growth
and shareowner value
Non-alcoholic ready-to-drink (NARTD); Canadean FY13, excludes tap/bulk water & dairy; AC Nielsen
Historical mid-single-digit compounded growth Growing
Category
NARTD is the # 1 category in retail sales for our customers Large
Category
Agenda
7
OPPORTUNITY FOR GROWTH
CRS AND KEY TAKEAWAYS
SHAREOWNER VALUE
SOLID FOUNDATION
Large and Growing Category
8
~$181B Beverage Market
(Retail Value)
~$27B NARTD - Measured
(Retail Value)
1. Canadean FY13, excludes tap/bulk water & dairy, rounded
2. AC Nielsen FY13, rounded
2013 Growth2
+3%
v.
20
12
+4.5%
3 Y
r C
AG
R
~$40B
~$27B
~$114B
NARTD –
Non-measured1
NARTD –
Measured2
Hot Tea/Coffee, All Alcohol, Dilutables1
Key Category for Our Customers - NARTD
9 Fast Moving Consumer Goods (FMCG)
AC Nielsen FY13 (Strategic Planner); Rankings based on most recent available data (excludes tobacco)
FMCG Sector Ranking 2013 NARTD
#1 #2
NARTD Charcuterie
Charcuterie NARTD
NARTD Charcuterie
NARTD Beer
NARTD Beer
NARTD Charcuterie
NARTD Beer
Value $B Value % Growth
27.3 2.9
10.3 4.2
8.7 0.8
2.2 2.2
2.0 7.7
1.6 6.0
2.5 0.1
Territory Opportunity – 2013 Metrics
10
CCE Performance3
1: Population in millions; CCE internal reports 2: Per Caps = Per Capita Consumption; based on eight fluid ounce servings of The Coca-Cola Company (TCCC) beverages 3: AC Nielsen FY13
CCE1 180
207
140
324
254
173
137
#1 in NARTD & Sparkling in
value & volume in every territory
Grew value & volume share in
NARTD category
Grew value & volume share in
Sparkling segment
170
63
64
11
5
10
17
Population1 & Per Caps
2
43%
18% 3%
22%
36%
10%
35% 46%
87%
NARTD Volume NARTD Value CCE Volume1 1
Sparkling Stills Water
CCE – Focused on High Value Segments
11
Category & CCE Mix Segment Strategy
Sparkling: grow segment
Still: selectively grow value share
2
1. AC Nielsen FY13
2. 10-K 2013
Capturing the Growth Opportunities
12
Successful Brands
Solid Marketing &
Execution Plans
Great People
Successful Brand Portfolio
13 10-K 2013
69%
Volume
Coca-Cola
Trademark
18%
Volume
Sparkling
Flavors
& Energy
13%
Volume Stills
2014 Highlights
Sparkling – Coca-Cola Trademark
14
2013
Growth:
+15%2
+3M new
households3
Enhance ‘Share a Coke’ campaign
Drive package innovation
Win in digital
Accelerate Coke Zero – ‘Just Add Zero’ campaign
#1 in volume and value cola
share in every territory1
1. AC Nielsen FY13
2. CCE internal reports
3. Europanel 2013
Package Innovation – 1.75L
15
1.75L
Contour
PET
Transition From 2L To 1.75L
New primary package in Great Britain
Comments
Pricing flexibility
Consumer preferred packaging
Add value to the Cola segment
Drive Recruitment
Package Innovation
16
250ml Can
1L Contour PET
Create Value Boost Frequency
1.25L Contour PET 4 x 1.5L Multipacks
Brand Innovation - Finley
17
New adult sparkling non-alcoholic beverage
Low calorie
Preservative free
With lemon juice
Range of flavors
Fully integrated marketing plan
Brand Innovation – Glacéau Smartwater
18
Vapor distilled spring water with electrolytes
Vapor distillation: a process inspired by the clouds
Added electrolytes for a clean, crisp taste
IC packs: 600ml and 850ml
Integrated marketing campaign
Scheduled launch: August, 2014
Brand Innovation – Coca-Cola Life
19
Naturally sweetened Coca-Cola
Launches in September, 2014
Delicious
Taste
33% Fewer
Calories
Natural
Sweeteners
2014 Marketing Calendar
20
Jan. Dec.
World Cup
Trophy Tour
Recruitment Pack / Music “COKE WITH MEALS”
Always “on”
Enhanced
‘Share a Coke’ and World Cup
21
Expand ‘Share a Coke’ World Cup
Trophy Tour: 5 countries and 10 cities
“Get Active” activation in-store and community
Fully integrated marketing campaign
Over 1,000 names
More packages (Home & Cold)
In-store promos, Pop-up stores
Social media
Commercials
22
World Cup Share a Coke
Customer Centric Supply Chain
23
Pan European scale supported with global procurement
capability
Flexible & efficient logistics & distribution
Cost efficient production & expandable infrastructure
Responsible & sustainable
Procurement, Production, and
Logistics Excellence
Enhanced Capability and Capacity
24
Flexibility to
execute wide-
scale customized
programs
Norway: new
package and
route to market
Continuously
improving
efficiency &
effectiveness
Expanding
package, pack,
and pallet
flexibility
Serving Our Customers With World-Class Capabilities
25 2013 Advantage Group survey
GREAT BRITAIN
FRANCE
BELGIUM
NETHERLANDS
#1
#2
#1
#1
10 years in a row
Up from #5 in 2008
4 years in a row
4 years in a row
Most Valued FMCG Supplier
Optimizing Our Business
26
Standardizing (e.g. channel-focused sales and
marketing organization)
Centralizing (e.g. shared services center)
Improving (e.g. cold-drink equipment service
activities)
Business
Transformation
Program
(BTP)
Enhancing our operating model for driving
sustainable future growth
Our People
27
Experienced Team
Solid Bench Strength
Investing In Capabilities
Drive an inclusive and passionate culture
Agenda
28
CRS AND KEY TAKEAWAYS
OPPORTUNITY FOR GROWTH
SHAREOWNER VALUE
SOLID FOUNDATION
SHAREOWNER VALUE
Financial Priorities
29
CONSISTENT earnings in line with
our long-term objectives
MAXIMIZE free cash flow (FCF) and
maintain financial flexibility
INCREASE return on invested capital
and deliver shareowner value
Deliver
Consistent
Long-Term
Profitable
Growth
Financial Approach
30
Maintain target leverage range
Invest in high return M&A opportunities
and/or return cash to shareowners
Opportunistically
Invest and/or
Return Cash To
Shareowners
Optimize
Capital
Structure
Focus on total shareowner return
Grow profitably while investing CapEx prudently Drive
Cash From
Operations
Grow Profitably to Drive Cash from Operations
31
Net Sales
Operating Income
EPS
Growth
4 - 6%
6 - 8%
High Single-Digit
Long-Term Targets
Low Single-Digit
Mid-Single-Digit
+10%
2014 Outlook
Comparable & currency neutral
Generate Solid Free Cash Flow
Cost of Sales - Profile
32 CCE internal reports for bottle/can; rounded
COGS Mix Comments
Maintain and opportunistically
expand gross margin
~85% of COGS is variable,
while ~15% is fixed
Of commodity based costs,
~half are related to conversion Commodity Based
Costs
Concentrate,
Finished Goods
Manufacturing,
D&A, All Other
Excise
Taxes
45%
30%
15%
10%
Selling, Delivery, and Administrative (SD&A) - Profile
33 CCE internal reports; comparable; rounded
SD&A Mix Comments
Expand operating margins with
modest SD&A leverage
Our Ownership Cost Management
(OCM) approach ensures disciplined
cost management
Our flexible route to market enables
our supply chain to work with
customers to optimize delivery D&A 10% D&A 10%
General Admin 30%
Sales & Marketing
30%
Supply Chain 30%
Non-Labor 45%
Labor 45%
Invest for Long-Term Growth
34 10-K 2013
2013 Capital Mix Capital Highlights
Long-term target 4.0% – 4.5%
of net sales
~2/3 supports growth
~1/3 maintains existing assets
61%
23%
16% Operations
Cold Drink
Equipment
IT, Other
Balance Sheet Flexibility
35 1. 10-K; Net Debt is total 3rd party debt less cash & cash equivalents; comparable EBITDA
2. Pro forma FY10 assumes D&A of low to mid $300M
1.6x2 1.7x
2.0x
2.6x
0.0
1.0
2.0
3.0
2010 2011 2012 2013 2014+
Net Debt1 to EBITDA
LONG-TERM TARGET
RANGE = 2.5x – 3.0x
Weighted average cost of debt ~3%
Invest in High Return M&A Opportunities
36
Opportunities Evaluation Criteria
Core business growth
Adjacent territories and adjacent
categories
Other territories
New business
Cash flow of existing business
Incremental value creation by CCE
Incremental value to CCE’s core
business
Risk, cost, and timeframe
Opportunities evaluated against alternatives,
including return of cash to shareowners
Improving Net Income to Free Cash Flow Conversion
37 10-K 2013; CCE internal reports; comparable; one-time / other = cash restructuring, cash tax, other
FCF as a % of Net Income Comments
2013 impacted by non-recurring
items (e.g. restructuring)
Over time, we expect FCF to more
closely align with Net Income
Continued focus on annual ROIC
improvement
~75%
~100%
~25%
0%
25%
50%
75%
100%
2013 FCF One-Time /
Other
Net Income
Future Cash Availability
38
Opportunity to generate significant cash annually
for M&A and/or shareowners
CCE internal reports; illustrative
Annual Cash Available as % of Market Capitalization
~6-7% ~8-10%
~2-3%
Net Income
Organic growth while
maintaining debt
leverage Annual cash
available + =
Cash Returned to Shareowners
39
Almost $8B of cash returned after the
formation of new CCE through 2014E
2010 2011 2012 2013 2014E
$3.6B
$1.0B $1.0B
$1.2B
$1B
Other Share Repurchase Dividends
10-K, YE market cap (2014 as of 06/12/2014); internal reports; rounded
44% 12% 11% 11% 9%
% of
Mkt
Cap
Key Financial Takeaways
40
Focus on consistent long-term profitable growth
and total shareowner return
Realistic about challenging environment
History of and commitment to managing the levers of our
business to deliver growth
Favorable and flexible capital structure
Long-term financial objectives are challenging, yet achievable
Agenda
41
SHAREOWNER VALUE
OPPORTUNITY FOR GROWTH
SHAREOWNER VALUE
SOLID FOUNDATION
CRS AND KEY TAKEAWAYS
CRS Vision and Recognition
42
Sustainability
Vision:
Improve operational effectiveness
Increase engagement and advocacy
Enhance image and reputation
Rated #1 Food & Beverage
Company by Corporate Knights;
#2 Newsweek Green Rankings
Corporate Responsibility and Sustainability (CRS)
We will deliver for today, growing a low carbon, zero waste business, and inspire and lead change for a more sustainable tomorrow
CRS Progress/Achievements
43
Water Use Ratio
(water used to make 1 liter of product)
1.64 1.57 1.51 1.48 1.43 1.40 1.35 1.20
2007 2008 2009 2010 2011 2012 2013 2020
target
Carbon Footprint
(energy consumed per 1,000 liters of product)
91 90 88 88 82 82 77 75
2007 2008 2009 2010 2011 2012 2013 2020
target
Decreasing environmental impact while reducing costs
CCE internal reports
Business Environment Risks
44
Though optimistic about our long-term outlook,
we are realistic about key business environment risks
Challenging macroeconomic environment
Increasing focus on health and wellbeing
Risk of increased taxes
Key Takeaways
45
CCE is executing our strategic priorities
Operating environment remains challenging
Financial priorities focused on long-term profitable growth
Track record of and focus on delivering shareowner value
JOHN F. BROCK CHAIRMAN & CEO
NIK JHANGIANI SVP & CFO
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