john f. brock · 2019. 9. 3. · john f. brock chairman & ceo bill douglas evp & cfo . ......
TRANSCRIPT
John F. Brock CHAIRMAN & CEO
Bill Douglas EVP & CFO
Forward-Looking Statements
• 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.
2
INCLUDED IN THIS PRESENTATION ARE FORWARD-
LOOKING MANAGEMENT COMMENTS AND OTHER
STATEMENTS THAT REFLECT MANAGEMENT’S
CURRENT OUTLOOK FOR FUTURE PERIODS.
Agenda
3
OPPORTUNITY
GROWTH
SHAREOWNER VALUE
CRS and KEY TAKEAWAYS
SOLID FOUNDATION
CCE at a Glance
10-K 2012 4
$8.1 billion net sales
30 billion servings
annually to 170 million consumers
17 production facilities
~13,000 employees
EUROPE
Vision and Global Operating Framework
5
Be the best beverage sales and customer
service company
VISION #1 OR STRONG #2 IN EVERY CATEGORY WE COMPETE
1 1 OUR CUSTOMERS’ MOST VALUED SUPPLIER
1 2 A WINNING AND INCLUSIVE CULTURE 1 3
Drive Consistent Long-Term Profitable Growth
Solid Fundamentals
6
Commitment to Shareowners
1. Non-alcoholic ready-to-drink (NARTD) AC Nielsen FY12 & Canadean FY11; excludes tap/bulk water & dairy
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
LARGE AND
GROWING
CATEGORY1
NARTD: Retail Value of ~$65B with a +6% 3 year CAGR
SUCCESSFUL
POSITION2 #1 in Value & Volume Share
TRACK RECORD
OF GROWTH3
Meeting or exceeding our long-term targets on a
3 & 5 year compounded annual basis
Agenda
7
OPPORTUNITY
GROWTH
SHAREOWNER VALUE
CRS and KEY TAKEAWAYS
SOLID FOUNDATION
Market Overview
1. AC Nielsen FY12
2. Canadean FY11
3. Excludes tap/bulk water & dairy 8
BEVERAGE MARKET
~$25B
~$40B
~$95B
NA
RTD
CHANNELS
All
Non-measured2
Measured1
Grocery, Take
Home, and
On-Premise
SEGMENTS3
Ready-to-Drink:
Sparkling, Still,
and Water
Hot Tea/Coffee,
All Alcohol,
Dilutables
All Other2
BEVERAGES IS A ~$160B RETAIL MARKET IN CCE TERRITORIES
US CCE Territories
~30% ~15%
~40%
~25%
~30%
~60%
NARTD – Category Growth Opportunity
1. FY12 AC Nielsen
2. FY11 Canadean 9
• GROW NARTD – European consumption is ~0.6x of US
• GROW SPARKLING – European consumption is ~0.5x of US
BEVERAGE PER CAP MIX
NARTD Sparkling1 NARTD Other2 All Other Bev2
OPPORTUNITIES
3%
CCE – Focused on High Value Segments
1. AC Nielsen FY12
2. 10-K 2012 10
2 1 1
Sparkling
Still
Water
CATEGORY & CCE MIX
NARTD Volume NARTD Value CCE Volume
39%
17%
24%
37%
11%
37% 46%
86%
CCE participates in the highest value segments that drive favorable profit mix
Per Capita Consumption Growth Opportunity
PER CAPS IN CCE TERRITORIES1
TCCC PER CAPS1,2 2012
CCE PER CAPITA CONSUMPTION GROWTH IS KEY TO DRIVING 4-6% LT SALES TARGET
CCE
401
180
333
246
200
172
141
141
745
1: CCE internal reports 2: TCCC beverages based on eight fluid ounce servings; CCE & KO 2012 10-K
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
11
Agenda
12
OPPORTUNITY
GROWTH
SHAREOWNER VALUE
CRS and KEY TAKEAWAYS
SOLID FOUNDATION
Securing the Growth Opportunities
13
OUTSTANDING
MARKETING & EXECUTION
GREAT PEOPLE
SUCCESSFUL BRANDS
Successful Brand Portfolio
10-K 2012 14
COCA-COLA
TRADEMARK 1 68% MIX
SPARKLING
FLAVORS
AND ENERGY 1 18%
MIX STILLS 1 14%
MIX
Sparkling – Coca-Cola Trademark
AC Nielsen FY12 15
PACKAGE INNOVATION
• MyCoke 1.75 ltr, 375ml & 250ml
BRAND INNOVATION & EXPANSION
• Coke Zero Cherry
• Vanilla Coke
2009 2010 2011 2012
COKE ZERO VOLUME 1
12.6% 3YR
CAGR
#1 IN VOLUME AND VALUE COLA SHARE IN
EVERY TERRITORY
2012 ENERGY SEGMENT GROWTH
CCE OUTPERFORMED
THE SEGMENT IN 2012
Sparkling – Flavors & Energy
AC Nielsen FY12 16
Energy
Segment
CCE
Brands
Volume 8% 19%
Value 9% 16%
PACKAGE INNOVATION
• Fanta 1 ltr & Fridgepack
• Relentless 250ml & 500ml can
• Burn 500ml
BRAND INNOVATION & EXPANSION
• Sprite with Stevia
• Energy line extensions
SWEETENER INNOVATION
• Burn Sugar Free
Stills
17
• Oasis 2 ltr
• Nestea can & 1 ltr
• Oasis Mango &
Lemonade
• vitaminwater
Sunshine
• Nestea
Lemon Stevia
• Oasis Citrus
Punch Light
PACKAGE
INNOVATION
BRAND
INNOVATION
& EXPANSION
SWEETENER
INNOVATION
2013 Marketing Calendar
18
2013
GROWTH WILL BE
DRIVEN BY
‘CORE’
BRANDS
Share A Coke
19
• Connect with target
shoppers and consumers
• Reinforce engagement
and brand relevance
• Motivate purchase
• Facilitate recruitment
• Drive excitement
Commercials
20
shareacoke.com
Supply Chain Excellence
21
CUSTOMER CENTRIC
SUPPLY CHAIN
• Pan European scale with
global procurement capability
• Flexible & efficient
logistics/distribution system
• Cost efficient production &
expandable infrastructure
• Responsible & sustainable
BUSINESS TRANSFORMATION PROGRAM
Optimizing Our Business
22
IMPROVE OUR OPERATING MODEL FOR DRIVING SUSTAINABLE FUTURE GROWTH
• Streamline and reduce back
office cost structure
• Standardized sales and marketing
into a channel-focused organization
• Improve efficiency and effectiveness
Best practice
evolution
Proven results in
Benelux
More aligned to
customers’ needs
Better position to
capitalize on
opportunities
New Operating Model in Norway
23
FROM TO RESULT
Two
primary packages
that are refillable
Package flexibility
that is recyclable and
non-refillable
Expanded
package offering
Direct Store
Delivery
Indirect
Delivery
Customer preferred
delivery method
POSITIVE ENVIRONMENTAL IMPACT: RECYCLING, PRODUCTION, PACKAGING, AND DISTRIBUTION
Investing in Our Future
24
CAPITAL INVESTMENT
AND…
• Evolving customer value creation
model and increasing selling
capabilities
• Advancing enabling technologies
and improving on-line &
digital shopping
• Developing people and investing
in local communities
Agenda
25
OPPORTUNITY
GROWTH
SHAREOWNER VALUE
CRS and KEY TAKEAWAYS
SOLID FOUNDATION
Financial Priorities
26
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
DRIVE
CONSISTENT
LONG-TERM
PROFITABLE
GROWTH
Financial Approach
27
CASH FROM
OPERATIONS
CAPITAL
INVESTMENT
OPTIMIZE CAPITAL
STRUCTURE
M&A
RETURN CASH TO
SHAREOWNERS
Achieve long-term targets
Invest prudently
Reach and operate within target leverage
Short Term “use” and long-term “source” of cash
Competitive dividend and share repurchase
─
+
=
+/–
Cash from Operations
Comparable & Currency Neutral 28
GENERATE SOLID FREE CASH FLOW
GROWTH ACHIEVE LONG-TERM
TARGETS
NET SALES
OPERATING INCOME
4% – 6%
6% – 8%
Invest for Long-Term Growth
10-K 2012 29
• LT target ~4.0% – 4.5% of net sales
• ~2/3 supports growth
• ~1/3 maintains existing assets
2012 CAPITAL MIX CAPITAL HIGHLIGHTS
Operations Cold Drink Equipment IT, Other
58% 28%
14%
Balance Sheet Flexibility
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
30
NET DEBT1 TO EBITDA
WACD ~3% AND DEBT MATURITIES ARE GENERALLY < ANNUAL FCF
2010 2011 2012 2013E
1.6x2 1.7x 2.0x
≥ 2.5x LONG-TERM TARGET 2.5x – 3.0x
Investing in High Return Opportunities (including M&A)
31
• 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
OPPORTUNITIES EVALUATED AGAINST ALTERNATIVES, INCLUDING RETURN OF CASH TO SHAREOWNERS
Solid Return on Invested Capital (ROIC)
Average Invested Capital = (Beginning & Ending Net Debt & Equity) / 2
32
After Tax Comparable OI
Average Invested Capital CCE ROIC 14% 2012 Year End = =
LONG-TERM TARGET OF ≥ 20 BPS ANNUAL IMPROVEMENT
Working Capital
TIGHTLY MANAGE
in High Return Initiatives
INVEST Operating
Growth
DRIVE
2010 2011 2012 2013E
0.2
0.8
0.8
~1.0
Cash Returned to Shareowners
33
SHARE REPURCHASE (in $B)
~$2.8B OF SHARE REPURCHASES AFTER
FORMATION OF NEW CCE THROUGH 2013E
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
03 04 05 06 07 08 09 10 11 12 13E
2013 RATE
INCREASE OF 25%
DIVIDENDS
10-K, rounded
Cash Available for Shareowners
CCE internal reports 34
+
+
FUTURE OPPORTUNITY
Dividends
Share
Repurchases
~12% of Market Cap
Ongoing FCF MSD
Organic FCF Growth +
Increasing leverage
(to mid point of LT target range) LSD
Maintain Debt Leverage +
% of Mkt Cap
2013E
Operating Context
1. Internal reports
2. Comparable, currency neutral; rounded 35
• Restored growth after 2004
and 2005
• Grew at an average rate of
5.5% from 2006 – 2011
• Delivered 2.5%2 OI growth
in a challenging 2012
2013 remains dynamic and challenging - our focus
continues to be managing business levers to drive
shareowner value
VOLUME + PRICE PER CASE1 (Annual Growth Rates)
02 03 06 07 08 09 10 11 12
6.5
8.0
-3.0
-1.0
5.0
3.0
5.0
9.5
5.0 5.5
0.0 04 05
Key Financial Takeaways
36
FOCUS ON
CONSISTENT
LONG-TERM
PROFITABLE
GROWTH
• 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
37
OPPORTUNITY
GROWTH
SHAREOWNER VALUE
CRS and KEY TAKEAWAYS
SOLID FOUNDATION
CRS
38
• 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 behaviorial study with
Exeter University
SIGNIFICANT PROGRESS: CARBON REDUCTION,
WATER USAGE AND PACKAGING RECYCLING
2012 KEY HIGHLIGHTS
• 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
39
THOUGH OPTIMISTIC
ABOUT OUR LT 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
40
CCE IS
EXECUTING
OUR
STRATEGIC
PRIORITIES
• Operating environment remains
challenging
• History of solid growth
• Financial priorities focused on
long-term profitable growth
• Track record of and focus on
delivering shareowner value
John F. Brock CHAIRMAN & CEO
Bill Douglas EVP & CFO