2007 Full Year Results Presentation - Coca-Cola Amatil · 2020. 6. 24. · Presentation 12 months to 31 December 2007 13 February 2008 2 2007 Full Year Results Presentation Terry

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2007 Full Year Results Presentation

12 months to 31 December 2007

13 February 2008

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Terry Davis

Group Managing Director

13 February 2008

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Major highlights of the 2007 result

1. Group EBIT1 � 15.3% to $648.4 million

� A record result for CCA

� Strong volume and revenue growth by all beverage businesses

� EBIT margin increased by 1.1 points to 16.5%

� Nine out of last twelve halves of double-digit EBIT growth

2. Divestment of South Korean business

� Significant reduction in CCA’s risk profile

� EPS accretive to CCA

3. Return on capital employed � 2.7% to 19.0%

� Driven by underlying earnings growth and the impact of the reduction

in capital employed from the sale of South Korea

4. Emerging premium alcohol business

� Revenue base of over $300m2

1. Continuing operations basis 2. Includes Maxxium revenue not reported by CCA

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� 2.7 pts to 19.0%ROCE $271.0 mStrong free cash flow

� 13.2% to $366.3 mNOPAT

� 4.7% to $6.64 pucBeverage revenue per unit case1

� 8.0% to $3.93 bnTrading revenue1

� 12.5% to 48.6 cpsEarnings per share

� 9.2% to 35.5 cpsDividends per share

� 15.3% to $648.4 mEBIT1

CCA Group results summary

1. Continuing operations basis

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Senior management changes & organisation restructure

� Chief Financial Officer – Operations, Nessa O’Sullivan

� Currently CFO for CCA’s Australasian beverage businesses

� Joined CCA in 2005 after 12 years at Yum! Restaurants

International where she held senior roles in finance, strategic

planning and IT, including 5 years as CFO of its Australia/

New Zealand region

� Chief Financial Officer – Statutory & Compliance, Ken McKenzie

� Currently Group Financial Controller for CCA

� 23 years at CCA

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Australia Beverages – EBIT �� 12.3%12.3%12.3%12.3%2.6 pts2.8%5.4%Capital expenditure / revenue

0.5 pts18.1%18.6%EBIT margin

12.3397.3446.0EBIT

2.6310.4318.6Volume (million unit cases)

6.4$7.08$7.53Revenue per unit case

9.12,198.92,399.5Trading revenue

% Chg20062007A$m

Margin expansion

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Brand Coca-Cola still the powerhouse in Australia

KEY FACTS

� Maintained volume in 2007, cycling 2006

Coke Zero launch

� Continued to improve competitive position

� Total Cola category market share in grocery

remained strong at 76%1

� Increased retail price gap to Pepsi to 33%1

� Continued investment in product and package

innovation in the Coke trademark

� Brand Coke in glass contour bottle increased

volume by 27%

1. AC Nielsen Australia ScanTrack, MAT 31 December 2007

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Higher value and higher priced premium products & packages

� Powerade

� Volume �� 7.4%

� Market share �� 2% to 2% to 2% to 2% to 46%1

� Nestea

� Strong volume growth of over 34%

� Increased market share

� Mount Franklin, Pump & Pumped

� Combined volume �� 9.6%9.6%9.6%9.6%� Mount Franklin Australia’s No. 1 premium

spring water

Premiumisation drives earnings growth in Australia

1. Nielsen combined database, 13/05/07

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� National Breast Cancer Foundation

� Key sponsor of the NBCF’s 2007 breast cancer

awareness campaign

� Contributed more than $300,000 for

breast cancer research

� Landcare Australia

� “Drink Positive Think Positive” plant-a-tree project

� 60,000 consumers registered in first two weeks

� Goal to plant 250,000 native trees

� A positive step for CCA’s community credentials

Mount Franklin – Australia’s No. 1 premium water brand

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Australia – Strong results from new products

� Kirks

� Premium mixers re-launched

� Sugar-Free launched as health & wellbeing offering

� Achieved 13% volume growth

� Goulburn Valley Brand expansion

� Continued strong volume growth in Premium Chilled

juice

� June - launch of ‘GV to Go’ – “the juice that brings

fruit to life”

� November - launch of ‘GV Smoothies’

� September - Successful WA trial of fresh

flavoured milk

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� Alcohol

� Over $300 million in revenue from the sale of premium beers and Maxxium spirits

� Incremental earnings to CCA and overheads spread over a larger revenue base

� $20 million investment in ARTD manufacturing capacity in 2007 & 2008

� Trans-Tasman business integration

� $10 million in procurement and other savings in 2007

� Additional opportunities & savings identified in 2008

� Increased capital investment program

� $120 million investment in automated warehousing, beverage production capacity and systems

Australia – Additional earnings streams

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(3.4) pts14.0%10.6%Capital expenditure / revenue


19.565.177.8EBIT


7.4$6.34$6.81Revenue per unit case

9.1416.3454.3Trading revenue

% Chg20062007A$m

New Zealand & Fiji - EBIT �� 19.5%19.5%19.5%19.5%Business back on track, great margin expansion

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� New Zealand volume growth

� Coke Zero � by 12%

� Pump and Kiwi Blue � by 12%

� Powerade � by over 40%

� Deep Spring re-launch � by over 50%

� L&P 100th anniversary, � of 15%

� Sprite Zero � by 23%� FijiFijiFijiFiji

� Successful launch of Coke Zero and continued strong growth in Powerade, � 20%New Zealand & Fiji 2007 – Rewards of innovation

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(1.1)pts8.2%7.1%Capital expenditure / revenue


109.117.636.8EBIT


(2.6)$4.25$4.14Revenue per unit case


% Chg20062007A$m

Indonesia & PNG - EBIT �� 109.1%109.1%109.1%109.1%One way packs drive over-performance

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Indonesia & PNG 2007 review

� Indonesia

� Increased availability of new product & pack combinations in modern & traditional channels

� Increased production capacity & cold drink equipment

� Volume growth of 8% driven across all major brands

– Fanta Flavours �� 9%

– Coca-Cola �� 8%

� PNG

� Increased investment in cold drink & vending

� Water category �� volume by over 38%, Powerade �� over 90%– Sprite �� 6%

– Frestea �� of 16%

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(6.8)pts18.8%12.0%Capital expenditure / revenue

(0.1)pts14.9%14.8%EBIT margin

5.182.887.0EBIT


% Chg20062007A$m

Food & Services Division - EBIT �� 5.1%

Continuing tough conditions

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� SPC Ardmona

� Over $10 million provided in emergency drought assistance in 2007

� Sales revenue increase of 4%� International business continues to expand

� Growth in Australia in baked beans & spaghetti, tomatoes and spreads with new product development the key to future growth

� Higher commodity input costs, particularly tin-plate, continue to impact

� Services

� Neverfail delivered strong earnings growth of 18.5% driven by successful Palm Springs integration

Food & Services Division 2007 review

Drought impact

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� Premium beer

� Volume � by over 150% in Australia on prior distribution arrangements

� Increased availability through CCA’s large customer network

� Successful launch of Miller Chill creates a new category

� Distribution commenced in New Zealand

� Maxxium spirits portfolio

� Strong volume growth of 9% over prior comparable period

� Jim Beam & Zero Sugar Cola captured 67% market share

� Second ARTD line in Queensland in 2008

Pacific Beverages – Beer volume �� +150%+150%+150%+150%Strong customer and consumer support

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Beer brands equity & sales momentum building

Source: ACNielsen Australia Scan Track

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Brand investment building

� Branded Glassware

� 100,000 glasses

� 350 outlets

� Sales Incentives

� 500 outlets

� In-venue special events

� 150 outlets

� Fridges

� 500 outlets

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� Bluetongue acquisition

� Strong brand attributes

� Availability increased through CCA’s large customer network

� Development of the Bluetongue Brewery

� Warnervale, NSW

� Fully operational during 2010

� 500,000 hectolitre capacity

� Materially increase production of Bluetongue and,

potentially, other premium beer brands

Pacific Beverages –New Bluetongue Brewery operational 2010

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John Wartig

Group Chief Financial Officer

13 February 2008

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10.0%282.4310.7NPAT1 (reported)

17.2%313.6367.6NPAT

29.7%(114.4)(148.4)Income tax expense

(31.2)

428.0

(134.5)

562.5

FY06

20.6%

1.6%

15.3%

% chg

(132.4)Net interest expense

(56.9)Discontinued operation

516.0Profit before tax

648.4EBIT

FY07Continuing operations:

A$m

Continuing operations NPAT growth of 17.2%

1. Including the loss on sale and other significant items

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3,048.0

(454.3)

15.6

(153.3)

1,441.6

1,302.6

895.8

FY07

174.6(327.9)Deferred tax liability

46.7(31.1)Derivatives – non-debt

(497.3)

(59.6)

(559.7)

(197.3)

98.0

$ chg

1,499.9Property, plant & equipment

3,545.3Capital Employed

(394.7)Other net assets / (liabilities)

2,001.3IBAs & intangible assets

797.8Working capital

FY06A$m

Capital employed reduced following South Korean sale

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Balance sheet remains strong

� Net debt decreased by $467.3 million to $1.6bn due to strong operating cash flows and receipt of proceeds from sale of South Korea

� CCA has total committed debt facilities of approximately $2,200 million with an average maturity of 6.5 years

� Interest cover strong at 4.7x within CCA’s new target range of 4.0 – 5.0x

Net Debt & Interest Cover

$0m

$500m

$1,000m

$1,500m

$2,000m

$2,500m

2003 2004 2005 2006 2007

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

Net Debt Interest Cover

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A significant improvement in ROCE

ROCE� Group ROCE up 2.7 pts to

19.0% due to strong EBIT growth and reduction in capital employed from South Korean sale

� Further improvements in ROCE expected post completion of automated warehouse infrastructure projects in Australia and New Zealand

17.5%16.3%

19.0%

22.0%

2005 2006 2007 2007

2007 Reported

2007 Continuing operations

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Infrastructure development fuels growth

Capital Expenditure� Strong discipline in capital

management

� 6.8% capex / revenue – in line with expectations

� Driven by infrastructure spending on Sydney and Auckland automated warehouses, additional can capacity in SA and NSW, hot-fill line in QLD and commencement of SAP project

� 2008 capex expected to be around 7% of revenue including 1-2% for infrastructure

0%

20%

40%

60%

80%

100%

2006 2007

Australia NZ & Fiji

South Korea Indo & PNG

Food & Services

6.5%

of revenue

6.8%

of revenue

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53.0(41.1)11.9Cash impact of significant items

55.5468.4523.9Operating cash flow

(15.9)77.361.4Other

(3.4)271.6271.0Free cash flow

(19.3)(281.0)(300.3)Capital expenditure

(37.2)84.247.4Proceeds from sale of PPE & other

(12.1)(129.4)(141.5)Income tax paid

(139.8)

(98.0)

176.8

653.1

FY07

(24.4)201.2Depreciation & amortisation

11.1(150.9)Net interest

(28.8)(69.2)Change in working capital

72.6580.5EBIT

$ chgFY06A$m

Outstanding free cash flow result

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Commodity input cost increases moderate but still above 10 yr averages

NY No.11 Raw Sugar Futures

6.00

8.00

10.00

12.00

14.00

16.00

18.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

USc/lb

Sugar USD

Last 10 years Avg (1998-2007)

PET Resin - FOB Korea

800

900

1,000

1,100

1,200

1,300

1,400

1,500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

USD/Mt

PET USDLast 10 years Avg (1998-2007)

Aluminium 3 month

1,300

1,500

1,700

1,900

2,100

2,300

2,500

2,700

2,900

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

USD/Mt

ALUMINIUM USD

Last 10 years Avg (1998-2007)

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Overview

� Commodity and currency exposure to sugar, aluminium and PET resin

� Commodities represent ~30% of COGS

� Commodity inputs still trading well above 10 year average prices

2007 COGS

� On a constant currency basis and excluding South Korea, beverage

COGS per unit case increased by 6.3% for both the second half and

the full year

2008 outlook

� Expect the increase in COGS per unit case to be around 3-4% on a

constant currency basis and excluding South Korea, including ~1-2%

increase from improved mix

2007 COGS – Impact of commodities & product mix

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� Sale to LG Household & Health Care Ltd completed in

October 2007 for $520.0 million including net debt

� Total cash proceeds of $414.2 million

– $375.6 million received in 2007

– $38.6 million held in escrow

� Loss on disposal after income tax expense of $49.4 million

($46.3 million on a pre-tax basis) reflected as a significant

item in 2007

Completion of sale of South Korea

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� 21.7 million shares were bought back – 2.9% of shares on

issue

� Buy-back price of $7.84, a 14% discount to the market price

� Delivers on our commitment to use part of the proceeds from the

sale of the South Korean business to return capital to

shareholders

� Balance sheet strengthened – EBIT interest cover has increased

to 4.7x from 4.0x at HY07

Successful completion of $170 million Buy-Back

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Terry Davis

Group Managing Director

13 February 2008

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Glacéau Launch in February 2008

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Glacéau is the category leader

9.614.7

30.4

55.7

123.5

2003 2004 2005 2006 2007

glaceau phys casesGlaceau Unit Cases

� In just 7 years its

sales are exceeding

$USD1.5 billion

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� CCA is in a very strong position

� Focus on organic growth has been correct

� South Korean divestment has materially ‘de-risked’ CCA

� Premium alcohol business a key priority for 2008

� Capital investment to deliver incremental earnings

� Balance sheet remains strong

� Average debt maturity of over 6 years

� EBIT interest cover targeted at 4 to 5 times in 2008

� COGS per unit case forecast to increase by 3 to 4% on a constant currency basis, including a mix impact of 1 to 2%

� CCA well-positioned to respond to changes in economic conditions

2008 outlook

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Questions

13 February 2008

2007 Full Year Results Presentation - Coca-Cola Amatil · 2020. 6. 24. · Presentation 12 months to 31 December 2007 13 February 2008 2 2007 Full Year Results Presentation Terry

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