Winning Today . . . Winning Tomorrow - IIS Windows...
Transcript of Winning Today . . . Winning Tomorrow - IIS Windows...
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Muhtar KentPresident & Chief Operating Officer
February 22, 2008
Winning Today . . . Winning Tomorrow
2008
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Forward-Looking StatementsThis presentation may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will”and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Coca-Cola Company’s historical experience and our present expectations or projections. These risks include, but are not limited to, obesity concerns; scarcity and quality of water; changes in the nonalcoholic beverages business environment, including changes in consumer preferences based on health and nutrition considerations and obesity concerns; shifting consumer tastes and needs, changes in lifestyles and increased consumer information; increased competition; our ability to expand our operations in emerging markets; foreign currency and interest rate fluctuations; our ability to maintain good relationships with our bottling partners; the financial condition of our bottlers; our ability to maintain good labor relations, including our ability to renew collective bargaining agreements on satisfactory terms and avoid strikes or work stoppages; increase in the cost of energy; increase in cost, disruption of supply or shortage of raw materials; changes in laws and regulations relating to beverage containers and packaging, including mandatory deposit, recycling, eco-tax and/or product stewardship laws or regulations; adoption of significant additional labeling or warning requirements; unfavorable economic and political conditions in international markets, including civil unrest and product boycotts; changes in commercial or market practices and business model within the European Union; litigation uncertainties; adverse weather conditions; our ability to maintain brand image and product quality aswell as other product issues such as product recalls; changes in legal and regulatory environments; changes in accounting standards and taxation requirements; our ability to achieve overall long-term goals; our ability to protect our information systems; additional impairment charges; our ability to successfully manage Company-owned bottling operations; global or regional catastrophic events; and other risks discussed in our Company’s filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Coca-Cola Company undertakes no obligation to publicly update or revise any forward-looking statements.
Reconciliation To US GAAP Financial InformationThe following presentation includes certain "non-GAAP financial measures" as defined in Regulation G under the Securities Exchange Act of 1934. A schedule is posted on the Company's website at thecoca-colacompany.com (in the "investors" section) which reconciles the non-GAAP financial measures included in the following presentation to the most directly comparable financial measures calculated and presented in accordance with Generally Accepted Accounting Principles.
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We Have Achieved Significant Results Since We Last Met
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EPS Growth**
5% 9% 14%
2005 2006 2007
Operating Income Growth*
-4%
8% 10%
2005 2006 2007
Unit Case Volume Growth
4% 4% 6%
2005 2006 2007
We Are Delivering Solid, Consistent Results
6%9%
4%
3%
8%
Long-Term Target Range
* Ongoing, Currency Neutral ** Ongoing
Unit Case Volume Growth Operating Income Growth* EPS Growth**
7%
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Great Britain
We Are Rapidly Correcting Issue Markets
Philippines
Germany
India
Japan
North America
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We Have Expanded Our Beverage Portfolio
Billion US$ Brands
2006-2007 Sources of Volume Growth
2.1 B Incremental Unit Cases
Still24%
Sparkling61%
Acquired15%
KEY ACQUISITIONS
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We Have Strengthened Our Competitive Position2007 Worldwide Retail Volume Share % Change vs. Prior Year
Source: Nielsen, Intage (Japan) and IRI (Italy) YTD November* PepsiCo: RTD Tea includes Unilever.
** Nestle: RTD Tea JV with San Pelligrino for Belte in Italy.NARTD = Nonalcoholic, Ready-to-Drink, Excluding Dairy
CORE SPARKLING +0.7 - 0.2 N/A Flat
SPORTS DRINKS +1.5 - 1.8 FlatFlat
JUICE/ JUICE DRINKS - 0.7+0.6 FlatFlat
BOTTLED WATER +0.1+0.4 - 0.1
RTD TEA +1.5*
- 1.6RTD COFFEE N/A
+1.1ENERGY DRINKS Flat N/A
TOTAL NARTD +0.4 - 0.2
- 0.2
Flat - 0.3
Flat**
+0.3
+0.4
- 0.1
+0.1
Flat
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We Have a Healthier Bottling System
Return on Invested Capital*
7.7%
9.3%
2005 2007
Improving Profitability
+160 Basis
Points
* Includes Coca-Cola Enterprises, Coca-Cola FEMSA, Coca-Cola Hellenic, and Coca-Cola Amatil; representing nearly 40% of KO’s 2007 Global Volume
Unit Case Volume
20.6
22.7
2005 2007
Solid Volume Growth
+5% C
AGR
+11% CAGR
Reinvesting → Long-Term
Investment*(US $MM Currency Neutral)
2005 2007Capex DME
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We Are On Track and Achieving Quality Growth
% % Growth Growth vs. PYvs. PY
6%
4%
Global Unit CaseVolume Growth Rates
-1
0
1
2
3
4
5
6
7
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Total Trademark Coke
1999
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There Is No Better Consumer Business –Today or in the Future
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We Compete in a Vibrant Industry
5.2%
5.5%
5.8%
6.0%
6.3%
Household Care
Packaged Foods
Total AlcoholicBeverages
Cosmetics andToiletries
NARTD
Estimated CAGR in Consumer Spend (2007-2010)
NARTD = Nonalcoholic Ready-to-Drink, Excluding DairySource: EuromonitorData for all sectors covers KO Key 22 Markets
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We Expect Strong Consumption Tailwinds
Growth in BRIC Middle Class
Growth in Urbanization
RTD Conversion Opportunity
More Consumers With More Money Drinking More
Sources: Population Division of the Department of Economic and Social Affairs of theUnited Nations Secretariat, World Bank Development Indicators; Internal Estimates
Developed RTD Markets: Mexico, US; Emerging RTD Markets: China, Russia, TurkeyExcludes Alcoholic Beverages
2,000
2,500
3,000
3,500
4,000
2005 2015
0
250
500
750
1,000
1,250
2005 2015
+650MM
+700
MM
Developed Emerging
Non-RTD BeveragesRTD Commercial Beverages
2005 20052015 2015 Developed Emerging
30%
30%
70%
70%
Approx. 60 B UC
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We Have a Compelling Profit Opportunity
* Packaged** Excluding WaterSource: Internal Estimates
By Geography
By Category
Total Industry ProfitsToday
Emerging20%
BRICs13%
Developed67%
Sparkling
Still**
61%
32%
Sources of Incremental Industry Profit - Next 3 Years
Emerging
BRICs34% Developed
39%
27%
SparklingStill**
50%41%
6% Industry Growth
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The Coca-Cola Company is Best Positioned to
Capture the Opportunity
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Operate in More Than 200 Countries. . .
We Have a Significant Scale Advantage
300 Franchise Bottlers. . . Top 8 = 47%
900 Plants . . . 7X P&G
500,000 Trucks. . . 5X UPS
$50 Billion Supply Chain
. . . One of the Largest Consumer Goods Systems in the World
2006 Global Sales ($B)
>$80B
Coca-ColaSystem
Nestle P&G PepsiCoSystem
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We Have Achieved Unrivaled Commercial Reach
Source: Internal Data
Universally Available. . . . . . Uniquely Merchandised . . .
. . .Enjoyed Daily
20 Million Outlets20 Million Outlets 1.5 Billion Servings 1.5 Billion Servings Every DayEvery Day
10 Million Cold Drink 10 Million Cold Drink AssetsAssets
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We Have an Unmatched Global Footprint
Source: 2006 Canadean
#1Juices &
Juice Drinks
##11Juices & Juices &
Juice DrinksJuice Drinks
#1Sparkling Beverages
##11Sparkling Sparkling BeveragesBeverages
#1RTD
Coffee
##11RTD RTD
CoffeeCoffee
#1RTD Tea
##11RTD RTD TeaTea
#2Sports Drinks
##22Sports Sports DrinksDrinks
#3Packaged
Water
##33Packaged Packaged
WaterWater
NARTD Volume Share
Global
2.1X
GlobalGlobalGlobal BRICNorth America International
3.2X
1.2X2.7X
North AmericaNorth AmericaNorth America InternationalInternationalInternational BRICBRICBRIC
KO Closest Global Competitor Closest BRIC Competitor
2.8X
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We Have a Disciplined StrategyTo Win
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Our Priorities for Driving Growth
Grow Sparkling
Leadership
Grow Sparkling
Leadership
Leverage Balanced
Geographic Portfolio
Leverage Balanced
Geographic Portfolio
Rapidly Grow Still Beverages
Rapidly Grow Still Beverages
Accelerate InnovationAccelerate Innovation
Strengthen System
Capability
Strengthen System
Capability
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Three-Cola Strategy – Driving Coke TM +4%
Source: Volume Share: Internal Data, Value Share: Nielsen/Intage/IRI YTD November Coca-Cola Light includes Diet Coke
Grow Sparkling
Leadership
Grow Sparkling
Leadership•• Highest Global Growth Rate Since 1998Highest Global Growth Rate Since 1998•• Highest Growth in Japan Since 1977Highest Growth in Japan Since 1977•• Driving Both Volume Share +0.4 pts. and Value Share +0.5 pts.Driving Both Volume Share +0.4 pts. and Value Share +0.5 pts.
+3% Globally +9% Globally
Driving Cola Share +3.1 pts.
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Coke Zero - Most Successful Brand Launch in 25 Years2007: ~450 Million Unit Cases
Global Integrated Marketing Campaign
Increased Availability
Grow Sparkling
Leadership
Grow Sparkling
Leadership
Aggressive Recruitment
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NASCAR screen shot to come
Global CommercialsGrow
Sparkling Leadership
Grow Sparkling
Leadership
Africa
France Global
United States
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Rapidly Grow Still Beverages
Rapidly Grow Still Beverages
• Affordable Formulations• Functional Benefits• Bolt-on Acquisitions• Margin Enhancement
Still Beverage Expansion Driving +12% Growth
EMERGING CATEGORIES COFFEE AND TEA
JUICE
SPORTS DRINKS
WATERS
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GLACÉAU – Changing the Game“Active Lifestyle - A Category in Itself”
• Deliberate International Expansion
• Launching in Australia Now
• Transform into a Global Icon
• Continued Triple Digit Growth
• Galvanizing the U.S. System
• Rapid U.S. Expansion
Rapidly Grow Still Beverages
Rapidly Grow Still Beverages
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Achieving Balanced and Sustained Growth
Volume Growth
Rate
Contribution per Unit Case
BRIC Markets: Invest to Win Long-Term
Leverage Balanced
Geographic Portfolio
Leverage Balanced
Geographic Portfolio
Emerging Markets:Realize
Profitable Growth
Developed Markets:Expand
Leadershipand Grow
Value
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Emerging Markets Are Realizing Profitable Growth
Leverage Balanced
Geographic Portfolio
Leverage Balanced
Geographic Portfolio
4x 4x 6x 9x
30x
53x
Brazil Mexico South Africa
Change in Volume and Financial Performance2007 vs. 1983
Unit Case Multiple
Operating Profit Multiple
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Winning in China
Together, 1.6X Share of Sparkling as Nearest
Competitor
• Minute Maid +68%
• Sprite +25%
• Coca-Cola +8%
Growth Across the PortfolioGrowth Across the Portfolio
No. 1 OverallNo. 1 OverallNo. 1 Overall
Inspire China to Love and Drink
Our Core StrategyOur Core Strategy
Leverage Balanced
Geographic Portfolio
Leverage Balanced
Geographic Portfolio
Source: Internal Data
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2008 Olympics - “The Year of the Shuang”Coke = 爽 Physical, Emotional, & Spiritual “Refreshment”
ADVERTISINGADVERTISING OLYMPIC TORCH RELAYOLYMPIC TORCH RELAY
SHUANG PASSION CENTERSSHUANG PASSION CENTERS
Leverage Balanced
Geographic Portfolio
Leverage Balanced
Geographic Portfolio
1.5 MM Outlets
CUSTOMERSCUSTOMERS
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Taking Action in North AmericaLeverage Balanced
Geographic Portfolio
Leverage Balanced
Geographic Portfolio
Execution ExcellenceExecution Excellence
• Improved In-store Appeal
• Customer Relationships
• Foodservice Leadership
• Powerade Growth +10%
• Innovate for Value
Grow Still Mega BrandsGrow Still Mega Brands
New Launch
• Three-Cola Strategy
• Reconnect to Core Occasions
Restore Sparkling GrowthRestore Sparkling Growth
• Leverage Contour Packaging
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North America CommercialsLeverage Balanced
Geographic Portfolio
Leverage Balanced
Geographic Portfolio
vitaminwater Sweat
It’s Mine
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Accelerate Innovation - Today and Tomorrow Accelerate InnovationAccelerate Innovation
Equipment
Packaging
Ingredients
Products
IN DEVELOPMENTIN DEVELOPMENT
IN MARKETIN MARKET
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Pre-Sport
Sports Drink Innovation Accelerate InnovationAccelerate Innovation
Launching Now in Australia
During Sport Post-Sport
Powerade Energy EdgePowerade Energy Edge Powerade IsotonicPowerade Isotonic Powerade RecoveryPowerade Recovery
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Strengthening Our Core Capabilities
New Pilot Markets for Best Practices
New Focus on Account Management
New Leadership and Focus at Point of Sale
WinEvery Day
ConsumerMarketingConsumerMarketing
Commercial Leadership
Commercial Leadership
FranchiseLeadershipFranchise
Leadership
Strengthen System
Capability
Strengthen System
Capability
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Productivity is a Critical Growth EnablerStrengthen
System Capability
Strengthen System
Capability
Key Focus AreasKey Focus Areas ObjectivesObjectives
Supply Chain OptimizationSupply Chain Supply Chain OptimizationOptimization
Marketing & Innovation
Effectiveness
Marketing & Marketing & Innovation Innovation
EffectivenessEffectiveness
Operating EfficiencyOperating Operating EfficiencyEfficiency
• “Lean & Green” Supply Chain
• Total System
• Enhance Margins
• Increase Affordability
• Global Campaigns
• Upgraded R&D
• Optimize Global Brand Investment
• Organizational Alignment
• Shared Services
• Spend Effectiveness
• Fuel Growth and Build Foundation for Future Performance
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Sustainability is Good for Business
‘Grow the Business, Not the Carbon’
‘Recover or Reuse the Bottles & Cans
We Make’
‘Return the Water We Use’
‘Thriving at the Nexus of Refreshment &
Nutrition’
Strengthen System
Capability
Strengthen System
Capability
• Improved Water Efficiency
• Recycling Technology and Investment
• eKOfreshment Collaboration with Greenpeace
• Physical and Nutritional Education Programs
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Building a Winning Culture
CLARITYFocused,
Consistent Strategy
STEWARDSHIPSustainability
Actions
ACCOUNTABILITYDelivering
Targets
LEADERSHIPPeople
Development
SPEED & RISK TAKINGGlaceau
Acquisition
FLEXIBILITYInnovative Still
Business Models
COLLABORATIONAligned and
Healthy Bottlers
WINNING CULTUREWINNING CULTURE
Strengthen System
Capability
Strengthen System
Capability
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Our Business Success is Driving Results for
Our Shareowners
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Providing Solid Returns to Shareowners
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
'01 '02 '03 '04 '05 '06 '07
FYDPS
$ 1.36
US$
Bill
ions
30%Total Return toShareowners
in 2007
11%Dividend Growth
(5 Year CAGR)
2001 2001 -- 20072007Cash from OperationsCash from Operations
US $40BUS $40B
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We are Confident in Our Future
• Achieving Stronger Results …balanced growth
• No Better Business…vibrant industry
• Best Positioned …to capture the opportunity
• Focused on Winning …a disciplined strategy
Winning Today…Winning Tomorrow
Ongoing Currency Neutral
Our Winning Our Winning StrategyStrategy
LongLong--Term Growth Term Growth TargetsTargets
6%-8%
5%-6%
3%-4%
Volume Revenue OI EPS
High Single Digit
Muhtar KentPresident & Chief Operating Officer
February 22, 2008
2008
Winning Today. . . Winning Tomorrow