barclays back-to-school consumer conference · optimizing our business 19 improve our operating...
TRANSCRIPT
Barclays Back-To-School Consumer Conference
John F. Brock CHAIRMAN & CEO
Bill Douglas EVP & CFO
Included in this presentation are forward-looking
management comments and other statements that
reflect management’s current outlook for future periods.
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 Form 10-K for
the year ended December 31, 2012 and other SEC filings.cc
Agenda
3
Solid Foundation
Opportunity For Growth
Shareowner Value
CRS and Key Takeaways
CCE at a Glance
4
$8.1 billion net sales
30 billion servings
annually to 170 million consumers
17 production facilities
~13,000 employees
EUROPE
10-K 2012
Vision and Global Operating Framework
5
Drive consistent long-term profitable growth
Be the best beverage sales and customer
service company
#1 or strong #2
in every
category we
compete
Our customers’
most valued
supplier
A winning and
inclusive culture Strategic Priorities
Vision
Solid Fundamentals
6
Commitment to driving shareowner value
NARTD: retail value of ~$65B with a 3 year CAGR of +6% Large And Growing
Category1
#1 in value & volume share Successful Position2
Meeting or exceeding our long-term targets on a 3 & 5
year compounded annual basis
Track Record
Of Growth3
1. Non-alcoholic ready-to-drink (NARTD) AC Nielsen FY12 & Canadean FY11; excludes tap/bulk water & dairy; CAGR based on AC Nielsen
2. AC Nielsen FY12
3. Comparable CAGRS through 2012; base years represent Legacy CCE EU operating segment except EPS which is total company; 2008-
2011 includes segment remeasurement
Agenda
7
Solid Foundation
Opportunity For Growth
Shareowner Value
CRS and Key Takeaways
$65B
~$115B
~$50
CCE
Territories…
...Indexed
to US
Opportunity
Market & Category Growth Opportunity
8
Opportunity to grow NARTD category
and per capita consumption
~$40B
~$25B
~$95B
$160B Beverage Market1 (Retail Value)
NARTD (Retail Value)
NARTD –
Non-measured
NARTD –
Measured2
Hot Tea/Coffee, All Alcohol, Dilutables
1. Canadean FY11 (most recent); excludes tap/bulk water & dairy
2. AC Nielsen FY12
AC Nielsen FY12; Canadean FY11 (most recent);
CCE Territoriy indexed based on US per capita consumption
37%
11%
46%
86%
NARTD Value CCE Volume
Successful Position & Historical Growth
9
Category & CCE Mix
1 2
Sparkling Still Water
3%
A proven track record of growth and focused on
high value segments that drive favorable profit mix
1. AC Nielsen FY12
2. 10-K 2012
CCE Per Capita Consumption
CCE internal reports; TCCC beverages
based on eight fluid ounce servings
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17%
Successful Brand Portfolio
10
Coca-Cola
Trademark
68%
MIX
Sparkling
Flavors
And Energy
18%
MIX Stills
14%
MIX
10-K2012; rounded
Successful Brands Drive Category Growth
11
CCE grew both volume and value share across
entire category and in key segments
NARTD +3.4% +4.3% +0.2
Sparkling w/
Energy +4.1% +4.9% +0.4
Colas +3.8% +4.8% +0.7
AC Nielsen July YTD 2013; rounded
1H13 Category
& Segments Category Value
Growth
CCE Value
Growth
CCE Value Share
Gain (bps)
11
5 consecutive
years of
double-digit
volume growth
Sparkling – Coca-Cola Trademark
12
#1 in volume and value cola
share in every territory
Package Innovation
Brand Innovation & Expansion
► Coke Zero Cherry
► Vanilla Coke
► Multi-serve: 1.75 ltr
► Single-serve: 375 ml & 250 ml
► Norway: new package flexibility
CCE internal reports
AC Nielsen
Sparkling – Flavors & Energy
13
Package
Innovation
Fanta 1 ltr & Fridgepack
Norway: variety of new packages
Relentless 250 ml & 500 ml can
Brand Innovation
& Expansion
Sprite with Stevia
Fanta: Grape, Peach Apricot, Tropical
Burn Sugar Free
Stills
14
Package
Innovation
Oasis 2 ltr
Nestea can & 1 ltr
Minute Maid elopak
Brand Innovation
& Expansion
Oasis Mango & Lemonade
vitaminwater Sunshine
Nestea Lemon Stevia
2013 Marketing Calendar
15
2013 GROWTH WILL BE DRIVEN BY
‘CORE’ BRANDS
Share A Coke
Connect with target
shoppers and consumers
Reinforce engagement
and brand relevance
Motivate purchase
Facilitate recruitment
Drive excitement
16
Share A Coke - Video
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Supply Chain Excellence
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Customer Centric
Supply Chain
Pan European scale with global procurement capability
Flexible & efficient logistics/distribution system
Cost efficient production & expandable infrastructure
Responsible & sustainable
Optimizing Our Business
19
Improve our operating model for driving
sustainable future growth
Business Transformation Program
Streamline and reduce back office cost structure
Standardized sales and marketing into a channel-focused organization
Improve efficiency and effectiveness
New Packaging Model in Norway
20
Unlocking value by expanding package offerings
to better meet consumer & customer needs
FROM TO
Two primary
packages that
are refillable
Package flexibility
that is recyclable
and non-refillable
New Delivery Model in Norway
21
FROM TO
Direct Store
Delivery
Indirect
Delivery
Value for customers, consumers, and CCE
and a positive environmental impact
Large geography and disbursed population results in an inefficient delivery system
Higher utilization of assets
More efficient logistics
Lower cost structure
Our People
22
Attract, develop, and retain a highly talented
and diverse workforce
Experienced
management team
Solid bench strength
Investing in capabilities
Supply chain pic should be bigger and in the more prominent position vs. the sales pic; round pic and square pic look funky together; is there a way to easily change the shirt of the sales
guy to be red color (low priority)?
Agenda
23
Solid Foundation
Opportunity For Growth
Shareowner Value
CRS and Key Takeaways
CONSISTENT earnings in line with our
long-term objectives
MAXIMIZE free cash flow (FCF) and maintain
financial flexibility
INCREASE return on invested capital and drive shareowner value
Financial Priorities
24
Drive consistent long-term
profitable growth
Financial Approach
25
Achieve long-term targets while investing in CapEx prudently
Reach and maintain target leverage range
Invest in high return M&A opportunities and/or
return cash to shareowners
Drive Cash From Operations
Optimize Capital Structure
Opportunistically Invest and/or Return Cash To Shareowners
Focus on total shareowner return
Net Sales growth 4% – 6%
Operating Income growth 6% – 8%
Drive Cash from Operations
26
Comparable & Currency Neutral
Long-Term Targets
Long-term target 4.0% - 4.5%
of net sales
2/3 on growth & 1/3 on
maintenance
Long-term target of ≥ 20 bps
annual improvement
Focus on operating growth, high
return initiatives, and managing
working capital
CapEx Return On Invested Capital (ROIC)
Investing in long-term growth
1.6x2 1.7x 2.0x
2010 2011 2012 2013 est.
2.5 to
3.0x
WACD ~3%
Balanced debt maturities
with all years near or
below annual Free Cash
Flow
Optimize Capital Structure
27
We expect to continue to operate within our
long-term target range of 2.5-3.0x
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
Debt Profile Net Debt1 To EBITDA
Internal reports
Invest in High Return M&A Opportunities
28
Opportunities evaluated against alternatives,
including return of cash to shareowners
Cash flow of existing business
Incremental value
creation by CCE
Incremental value to
CCE’s core business
Risk, cost, and timeframe
Evaluation Criteria
Core business growth
Adjacent territories and
adjacent categories
Other territories
New business
Opportunities
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
03 04 05 06 07 08 09 10 11 12 13E
Cash Returned To Shareowners ($B)
2010 2011 2012 2013 est.
$3.6
$1.0 $1.0
$1.2
Return Cash to Shareowners
% of
Mkt Cap
29
Dividends
Other
Share Repurchase
Dividends
10-K, YE market cap (2013E as of 8/19/13); internal reports; rounded
10-K, internal reports; rounded
Focus on total shareowner return with almost
$7B of cash returned after the formation of new
CCE through 2013 est.
43% 12% 11% 12%
2013 RATE
INCREASE OF 25%
Future Cash Availability
30
CCE internal reports
Free Cash Flow
Annual Cash Available As % Of Market Capitalization
Non-recurring
cash costs
Organic growth
while maintaining
debt leverage Annual cash
available
LONG-TERM GROWTH
Opportunity for ~9 - 10% of our current market
cap annually for M&A and/or shareowners
2013 est.
+ + =
+
~5%
~9 -10% ~2%
~2 - 3%
2013 Outlook
31
Near term, we expect business results and share repurchase to drive EPS growth above our long-term objective
Net Sales growth LSD
Operating Income growth LSD - MSD
Earnings Per Share $2.45 - $2.50
Net Sales & Operating Income growth are comparable and currency neutral; EPS is comparable
2013 Growth Guidance
Key Financial Takeaways
32
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
33
Solid Foundation
Opportunity For Growth
Shareowner Value
CRS and Key Takeaways
CRS
34
Significant Progress: Carbon Reduction,
Water Usage And Packaging Recycling
2012 Key Highlights
15% carbon footprint reduction
Lowest ever water usage ratio
15M bottles recycled at the London
2012 Olympic Games (6 week from
waste to shelf)
Announced residential recycling
behavioral study with Exeter University
Community investment, including
active and healthy living programs
Expanded portfolio of low and no-
calorie offerings
All new cooler placements
are HFC-free
Business Environment Risks
35
Though optimistic about our long-term
outlook, we are realistic about key
business environment risks
Challenging macroeconomic environment
Volatile commodity costs
Increasing focus on health and wellbeing
Risk of increased taxes
Key Takeaways
36
CCE is executing our strategic priorities
History of solid growth
Operating environment remains challenging
Financial priorities focused on long-term profitable growth
Track record of and focus on delivering shareowner value
Barclays Back-To-School Consumer Conference
John F. Brock CHAIRMAN & CEO
Bill Douglas EVP & CFO