Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil –...

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1 March 2005 Mr Terry Davis Managing Director Citigroup Australia and New Zealand Investment Conference Thursday, 10 March 2005

Transcript of Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil –...

Page 1: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

1March 2005

Mr Terry DavisManaging Director

Citigroup Australia and New Zealand Investment Conference

Thursday, 10 March 2005

Page 2: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

2March 2005

Coca-Cola Amatil – Australia’s Best Performing Beverage Company

• 6 Countries• 280 million potential

consumers• 750,000 active customers• 34 beverage bottling plants• 16,800 employees

59%

79%65%

15%

16%

12%

16%

10% 1%17%

6%4%

Australia OceaniaSouth Korea Indonesia

Revenue$3.4bn

EBIT$518m

Capital Employed

$4.7bn

2004

Page 3: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

3March 2005

Outstanding Progress Since 2001

Market capitalisation increased by approx $2 billion

ROCE improved from 7.3% to 11.3%

Total shareholder returns increased by 14.4% CAGR

Net profit, ongoing increased by 17.6% CAGR

EBIT increased by 12% CAGR

EBIT margin improved by 3.4 pts

Earnings per share increased by 22.5% CAGR

Page 4: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

4March 2005

strong$236.6mFree Cash Flow

increased by 1.1 percentage points

11.3%ROCE

increased by 1 percentage point

15.0%EBIT margin

increased by 10.1%A$518mEBIT

CCA Group – 2004Net profit (pre sign. items) $278m (up 16.4%)

2004 – Fourth Consecutive Year of Double Digit Earnings Growth

Page 5: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

5March 2005

Dividends Have Doubled in Last Three Years

28c

23c

18.5c

14c12c

0

5

10

15

20

25

30

2000 2001 2002 2003 2004

Target Dividend Payout Ratio70% to 80% of net profit

Dividends increased by 133% over 4 years

Page 6: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

6March 2005

CCA GroupEBIT $518m (up 10.2%)

EBIT margin 15.0% (up 1 point)

Australia 14.4% - outstanding EBIT growth(incl. Neverfail)

Oceania 10.0% - solid EBIT, led by NZ and improved PNG

Indonesia 7.2% - return to earnings growth

South Korea $4m - consumer confidence impacting results and restructuring continuing

Strong Group Performance Continues in 2004

EBIT

Page 7: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

7March 2005

Non-Carbonated Beverage Growth Continues to Accelerate

95%

5%

80%

20%

Carbonated soft drinks

Non-carbonated beverages

CCA in 2001 CCA Today

Page 8: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

8March 2005

Bolt-On Acquisitions Strengthen CCA’s Market Position

• $342 million invested in bolt-on acquisitions (excluding SPC Ardmona)

• $330 million received from non-core asset sales

• Northern Territory Coca-Cola Licence

• Crusta Juice• Quirks Refrigeration

• Peat’s Ridge• Pacific Beverages• Neverfail• Rio Beverages

Page 9: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

9March 2005

CCA - A History of Leading Change Ahead of Consumer Trends…

CCA Australia

1982

Introduction of diet Coke

1986 1987 1993 1994

Introduction of 300ml Buddy

bottle

Introduction of Mt. Franklin

Introduction of Powerade sports drinks

Introduction of small PET packaging

2001 2002 2002 20042003

Acquisition of Neverfail

20% of sales in non-

carbonated beverages

Introduction of Fridge Pack

Introduction of diet Coke with lemon

Introduction of Vanilla

Coke

2002 2003

Acquisition of Rio Beverages

Introduction of diet Vanilla

Coke

Page 10: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

10March 2005

CCA Continues to Drive Brand Leadership in Australia with 17 out of the Top 20 Products

Source: ACNeilsen – 2004 Convenience ReportCCA Product

Other

0 2 4 6 8 10 12 14 16 18

COCA-COLA SGR 600 ML PET

COCA-COLA SGR 2 L PET

COCA-COLA SGR 1.25 L PET

COCA-COLA SGR 390 ML PET

COCA-COLA SGR 375 ML CAN

DIET COKE DIET 600 ML PET

COCA-COLA SGR 1.5 L PET

COCA-COLA BONUS SGR 2 X 1.25 L PET

VANILLA COKE SGR 600 ML PET

PEPSI MAX PEPSI DIET 600 ML PET

DIET COKE DIET 390 ML PET

SOLO LMN SGR 600 ML PET

SPRITE SGR 600 ML PET

DIET COKE DIET 375 ML CAN

DIET COKE DIET 2 L PET

FANTA ORNG SGR 600 ML PET

LIFT SGR 600 ML PET

DIET COKE VANILLA DIET 600 ML PET

SOLO LMN SGR 1.25 L PET

COCA-COLA SGR 24 X 375 ML CAN

National Value % Share

Page 11: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

11March 2005

Mexico US

German

y

Great B

ritan

Spain

Austra

lia

New Zea

land

Japa

n

Philipp

ines

South

Korea

Indon

esia

Growing Per Capita Consumption Continues to be CCA’s Number One Priority

200 litres 135

litres75

litres 18 litres

400litres

Per Capita Consumption -Non-Alcoholic Ready-To-Drink

Page 12: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

12March 2005

Delivering Higher Profit to Our Customers and to CCA through Execution of Five Main Pillars

• Product and package innovation • Non-carbonated beverage growth

• Cold drink equipment placements

• New outlet expansion

• Customer service improvement

Page 13: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

13March 2005

CCA Continuing to Lead through Innovation

• CCA continues to be the market leader in product and packaging innovation

• In 2004, new products to market in Australia included:

• ‘Fanta Spider’• ‘Mount Franklin Lightly Sparkling’• ‘Powerade’ in squeezable pack• ‘Recharge By Sprite’

Page 14: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

14March 2005

Growing Per Capita Water Consumption is a Key Priority for CCA

• Australia’s per capita consumption is only a quarter of Europe’s and half of the USA’s

Switzerl

and

United

Stat

es

United

King

dom

Italy

Belgium

Spain

German

y

Portug

al

Greece

Thail

and

Austra

liaArge

ntina

Brazil

Philipp

ines

Japa

n

China

South

Africa

Vietna

m

New Zea

land

SOURCE: Perrier Vittel S.A., Canadean

Annual bottled water consumption per capitaLitres

Fran

ce

Canad

a

Average

Page 15: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

15March 2005

Water Growth Accelerating• Three out of the top five water brands in Australia are CCA’s, with

‘Mount Franklin’ a strong number one, followed by ‘pump’ and ‘Neverfail’

1999 2000 2001 2002 2003 2004

CCA - Water Volume Growth in Australia

21%18%

16%

60%

56%

Page 16: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

16March 2005

Cold Drink Equipment Placement Accelerating

Cold Drink Equipment Invested by CCA:• 2001 - $10 million• 2003 - $60 million

Australian Cooler Placements

• 2004 - $75 million• 2005 - $100 million

% of Total 22% 4% 7% 9% 9% 2% 2% 9% 2% 4% 15% 15%

Prior 1993

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Page 17: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

17March 2005

Growing our Customer Base through Outlet Expansion

Potential Customer Universe

2004 Growth0.3m outlets >5%

0.1m outlets 2%

1.4m outlets 15%

0.5m outlets 30%

0% 20% 40% 60% 80% 100%

South Korea

Indonesia

New Zealand

Australia

Direct Customers Potential

100k

20k

400k

100k

Page 18: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

18March 2005

Faultless Customer Service Execution

• Automated Distribution Centre • Delivering improved customer service • Generating annual cost savings of approximately $7

million• Planning construction of automated distribution facilities

in NSW and Auckland, due for completion by early 2008

• Centralised Call Centres in Australia and New Zealand

• Re-focus sales force from order taking to conceptual selling

Page 19: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

19March 2005

Australia and OceaniaContinue the Momentum

• Australia and New Zealand, with 14% and 21% EBIT growth in 2004, respectively

• Leading markets in the global Coca-Cola system• New Zealand a test market for new initiatives• Australia with over 60% share of CSD market• New Zealand with 80% share of CSD market

KEY DRIVERS

• Continuing the momentum through driving and executing the five main pillars

Page 20: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

20March 2005

Indonesia – 2004: Returns to Growth with EBIT increase of 7.2%

• More stable economy post Presidential Elections• Carbonated soft drinks returned to growth in H2

2004• Tsunami tragedy impacted January 2005

consumer spending

KEY DRIVERS

• Balancing affordability of products with improving financial returns and building a sustainable soft drink culture

Page 21: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

21March 2005

South Korea -2004: Improving the Fundamentals

• New Outlet Expansion – 30,000 net new outlets• Model Markets – 46 areas converted & 10-15% volume uplift

per outlet• Cold Drink Placements – extra 15,000 coolers• Consumer Marketing – significant increase in 2005 spend

KEY DRIVERS

• Development of sales force capabilities

• Upgraded sales execution

• Increased brand marketing investment & execution

Page 22: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

22March 2005

Source: Korea National Statistical Office

80

90

100

110

120

Dec-

01Fe

b-02

Apr-0

2Ju

n-02

Aug-

02O

ct-02

Dec-

02Fe

b-03

Apr-0

3Ju

n-03

Aug-

03O

ct-03

Dec-

03Fe

b-04

Apr-0

4Ju

n-04

Aug-

04O

ct-04

Dec-

04

South Korea - Consumer Confidence Uplift the Key to Consumption Growth

Optimistic

Pessimistic

Jan-

05

Page 23: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

23March 2005

Acquisition of the Brand Leader in Emerging High Growth Category

29%Baked Beans & Spaghetti

111%Tinned Tomatoes

112%Henry Jones Spreads

160%PackagedFruit

SPC Ardmona Market Position

Share of SPC Ardmona Revenue

Deciduous Fruit Category•6% CAGR since ‘02•8% growth in ‘04

Fruit Snacks Category•6.6% CAGR for last ten years•6.4% growth in ‘04

Source: AC Nielsen – Scan Track. Excludes food service

SPC Ardmona 2004 EBIT = $45m(underlying business)

Page 24: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

24March 2005

SPCA Integration Plan to be Finalised by June 2005

Strategic Business Review – SPC Ardmona andCCA’s existing beverage business

• Key areas to be assessed• Product & packaging innovation• Channel development• Export sales development• Key synergies with CCA• Manufacturing infrastructure

Page 25: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

25March 2005

Key Factors Driving 2005 Performance

Aim to continue Double-Digit Net Profit Growth in 2005

• Momentum in Australia and New Zealand needs to continue

• Increase in COGS by 5% due to higher raw material costs – to be recovered by price increases

• Earnings growth greater in H2 2005

• Indonesian consumer spending impacted by Tsunami but LGT removal a positive

• South Korean consumer confidence uplift remains the key

• SPC Ardmona synergies commence in H2 2005

Page 26: Coca-Cola Amatil - Mr Terry Davis Managing Director...2005/03/10  · Coca-Cola Amatil – Australia’s Best Performing Beverage Company • 6 Countries • 280 million potential

26March 2005