Morgan Stanley Asia Pacific Summit 2006 · 2020-07-05 · 1 1 Morgan Stanley Asia Pacific Summit...
Transcript of Morgan Stanley Asia Pacific Summit 2006 · 2020-07-05 · 1 1 Morgan Stanley Asia Pacific Summit...
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Morgan StanleyAsia Pacific Summit 2006
14-16 November 2006
John WartigChief Financial Officer
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Consistent delivery continues in margins, EPS and dividends
2001-2005 EPS CAGR +14.4%
Earnings per share1
1. before significant items
Dividends per share
2001-2005 DPS CAGR +22.5%
7.0c 8.0c 10.0c12.5c 14.0c 14.5c
7.0c
10.5c
13.0c
15.5c17.5c
2001 2002 2003 2004 2005 2006
14.0c
18.5c
23.0c
28.0c31.5c
H1
H2
11.7c 13.3c15.8c 17.7c 19.8c 19.4c
13.6c15.9c
18.5c
21.3c
23.5c
2001 2002 2003 2004 2005 2006
25.3c
29.2c
34.3c
39.0c 43.3c
H1
H2
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CCA moving to a broader based and better balanced business mix…
Carbonated beverages
Non-carbonated beverages
Food
Revenue$4.0bn
EBIT$570.6m
Capital Employed
$3.6bn
Revenue MixGeographic Mix - 2005
53%75%
42%
11%
12%
11%
16%20%
11%7%
9% 7%19%
0%
7%
Food - SPCABeverages - Indonesia & PNGBeverages - South KoreaBeverages - PacificBeverages - Australia
2001 HY06
95% 68%
22%
5% 10%
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Agenda
Importance of product and package innovation
Competitive landscape in Australia
Impact of the commodity cycle on CCA’s cost base
Asian business performance
CCA’s alcohol strategy
Capital management
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Product Innovation continues to drive growth
74 new product launches in 2005
0
10
20
30
40
50
60
70
80
2001 2002 2003 2004 2005
Product launches
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In Australia, diet CSDs have delivered 10% revenue growth per annum for the last 3 years
Coca-Cola Zero a great consumer proposition with overwhelming early results –Coca-Cola trademark volumes up 9% in the first half of 2006
Coca-Cola Zero expected to be as popular as diet Coke over time, a $300 million pa brand in Australia – the No. 2 brand behind Coca-Cola
New product pipeline led by Coke Zero
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Launch of Coca-Cola Zero – January 2006
KEY FACTS:
Outstanding consumer acceptance
Coca-Cola Zero has already taken 13% share of the Australian cola category
We have grown our total cola market share from 74% to 78%* in the supermarket channel
Volume growth of 9% for Coca-Cola, diet Coke and Coca-Cola Zero in HY06
Coca-Cola Zero already at > 60% of diet Coke volumes
* YTD September 2006
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Launch of Powerade Isotonic – May 2006
New formulation Powerade Isotonic launched in May06 – more effective at hydrating and delivering energy to the body
Key opportunity for the sports drink category is to increase per capita consumption which is <30% of US and Japanese per caps
Powerade grew volumes >25% in HY06
5751
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Japan USA Taiwan Australia
Per Capita Sports Drink ConsumptionPer 8oz Serve
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CCA’s non-CSD business has grown over 30% per annum in the last 3 years driven by the growth of water, sports drinks and juice
Revenue from non-carbonated soft drinks accounts for 20% of Australian revenue
Opportunities in non-carbonated beverages continue
Argenti
na
New Ze
aland
Canad
a
United
Stat
esTh
ailan
d
SOURCE: Perrier Vittel S.A.,
Switz
erlan
d
Italy
Belgium
Spain
Portu
gal
Greec
e
Austra
lia
Brazil
Philipp
ines
Japa
nChin
aSou
th Afric
aViet
nam
Annual bottled water consumption per capita
Fran
ce
United
King
dom
German
y
Annual bottled water consumption per capita
Canadean
Annual bottled water consumption per capita
Annual bottled water consumption per capita
Average
Argenti
na
New Ze
aland
Canad
a
United
Stat
esTh
ailan
d
SOURCE: Perrier Vittel S.A.,
Switz
erlan
d
Italy
Belgium
Spain
Portu
gal
Greec
e
Austra
lia
Brazil
Philipp
ines
Japa
nChin
aSou
th Afric
aViet
nam
Annual bottled water consumption per capita
Fran
ce
United
King
dom
German
y
Annual bottled water consumption per capita
Canadean
Annual bottled water consumption per capita
Annual bottled water consumption per capita
Average
Australia’s per capita consumption is only a quarter of Europe’s and half of the USA’s
CCA’s lead brands Mt Franklin and Pump continue to deliver 15-20% revenue growth each year
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Australia - Competitive landscape
Australian business represents ~80% of CCA earnings
2001-2005 EBIT CAGR of +12.1%
2005 and 2006 more difficult trading environment due to commodity driven cost increases
Brand Coke has grown market share despite a widening in the average retail price gap to major competitor
Mount Franklin and Pump continue to grow volumes around 15%
Expectations of earnings growth of 6-8% on revenue growth of around 7-8% for the second half of 2006
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Three key categories of CCA’s COGS:
– 40% - Concentrate (syrup) purchased from The Coca-Cola Company
– 30% - Aluminium, sugar, PET resin, including conversion to aluminium cans, PET bottles and refined sugar
– 30% - production costs, labour, depreciation, etc
Commodity inputs all trading 30-80% above 10 year average prices
CCA hedging policy aims to provide some clarity to the cost base over a 12 month period for sugar and aluminium
No forward market for PET resin
Expect COGS per unit case for beverages to increase by 8% in 2006 (in constant currencies)
Impact of rising commodity prices on beverage COGS
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Key commodity inputs trading 30-80% above 10 year averages
NB: as at 10 August 2006
6.00
8.00
10.00
12.00
14.00
16.00
18.00
2000 2001 2002 2003 2004 2005 2006 2007 2008
USc/lb
SUGAR - USD
Last 10yrs Avg (1995-2005)
NY No.11 Raw Sugar Futures - Usc/lb
800
900
1,000
1,100
1,200
1,300
2000 2001 2002 2003 2004 2005 2006
USD/MT
PET - USD
Last 10yrs Avg (1995-2005)
PET Resin - Far East USD/MT
1,300
1,500
1,700
1,900
2,100
2,300
2,500
2,700
2,900
2000 2001 2002 2003 2004 2005 2006 2007 2008
USD/MT
ALUMINIUM - USD
Last 10yrs Avg (1995-2005)
Aluminium 3 month - USD/MT
7
13
1500
2500
3500
4500
Jan05 Apr05 Jul05 Oct05 Jan06 Apr064%
8%
12%
16%
20%
Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06
Indonesia – Economic landscape
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130
140
150
160
170
180
Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-066%
8%
10%
12%
14%
Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06
InflationFuel Prices
Retail Sales IndexInterest Rates
IDR per Litre
Inflation climbed as high as 18%...
Fuel prices have increased by > 160% since Jan05…
Retail sales declined by 18%
And interest rates have increased to 12.5%...
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Indonesia
H1 2006 EBIT impacted by volume declines and significant increases in cost base driven by:
Higher COGSHigher fuel costs, flow on effect of high inflation2005 investment in sales force and coolers
Steady improvement since July with volumes starting to stabilise
Expect Indonesia to return to profitability in H2 2006
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South Korea
Great progress in HY06 with the business well on track to materially increase profits for the full year
Delivered significant improvements in EBIT in HY06 with local currency revenue per case up 10%Continued expansion of the product portfolio with the launch of Coca-Cola Zero, Haru green tea and Minute Maid flavour extensions
Extortion in July has resulted in volume declines of 7% over the past 4 months –expected to take 6-12 months for the business to stabilise
Impact of the extortion is the subject of an insurance claim – to be finalised in H2 2007
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JV with SABMiller to sell and distribute imported premium beer in Australia – Peroni Nastro Azzurro, Miller Genuine Draft and Pilsner Urquell
Exclusive agreement to distribute the premium spirit portfolio of the global premium spirits distributor Maxxium and manufacture alcoholic RTDs including Jim beam & cola
Leverages CCA’s scale, customer relationships, sales force capability and distribution reach with SABMiller and Maxxium’s world-class marketing and technical capabilities
Broadening the beverage portfolio into alcohol
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Capital expenditure
Capex expected to be around 7% of revenue for the next few years
– ~5% maintenance capex– ~2% for infrastructure capex
Maintenance capex focus:– Cold drink equipment– Incremental capacity expansion– Computers, vehicles etc
Major infrastructure capex: – $160 million or ~2% of revenue
for 3 years on automated warehousing – Sydney & Auckland
– $15 million SPCA warehouse consolidation
Capital Expenditure
$0m
$20m
$40m
$60m
$80m
$100m
$120m
HY04 HY05 HY06
PPEOther (vehicles, computers etc)Cold drink equipment
5.0%5.0%
4.8%4.7%
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Balance sheet remains strong
Expecting to maintain current debt levels
Interest cover strong at 3.8x within CCA’s target range of 3.0 – 4.0x
Net Debt & Interest Cover
$0m
$500m
$1,000m
$1,500m
$2,000m
$2,500m
2001 2002 2003 2004 2005 HY060.0x
1.0x
2.0x
3.0x
4.0x
5.0x
Net Debt Interest Cover
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Dividend
Target payout ratio of between 70-80% of net profit
2005 payout ratio at 73%
Dividends per share
14.0c
18.5c
23.0c
28.0c
31.5c
2001 2002 2003 2004 2005
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Morgan StanleyAsia Pacific Summit 2006
14-16 November 2006
John WartigChief Financial Officer
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The material in this presentation is general background information aboutCoca-Cola Amatil
and is current at the date of the presentation. It is information given in summary form and does not purport to be complete.
This presentation is not intended to be relied upon as advice to investors or potential investors and does not take into account
the investment objectives, financial situation or needs of any particular investor. It does not amount to advice or any recommendation in relation to
Coca-Cola Amatil shares.
For further information visit
www.ccamatil.comor contact
Kristina DevonInvestor Relations Manager
(Ph) +612 9259 6185 [email protected]