Investor Relations Overview
November 2014
This 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; water scarcity and poor quality; evolving consumer preferences; increased competition and capabilities in the market place; product safety and quality concerns; increased demand for food products and decreased agricultural productivity; changes in the retail landscape or the loss of key retail or foodservice customers; an inability to expand operations in emerging and developing markets; fluctuations in foreign currency exchange rates; interest rate increases; an inability to maintain good relationships with our bottling partners; a deterioration in our bottling partners' financial condition; increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters; increased or new indirect taxes in the United States or in other major markets; increased cost, disruption of supply or shortage of energy or fuels; increased cost, disruption of supply or shortage of ingredients, other raw materials or packaging materials; changes in laws and regulations relating to beverage containers and packaging; significant additional labeling or warning requirements or limitations on the availability of our products; an inability to protect our information systems against service interruption, misappropriation of data or breaches of security; unfavorable general economic conditions in the United States; unfavorable economic and political conditions in international markets; litigation or legal proceedings; adverse weather conditions; climate change; damage to our brand image and corporate reputation from negative publicity, even if unwarranted, related to product safety or quality, human and workplace rights, obesity or other issues; changes in, or failure to comply with, the laws and regulations applicable to our products or our business operations; changes in accounting standards; an inability to achieve our overall long-term growth objectives; deterioration of global credit market conditions; one or more of our counterparty financial institutions default on their obligations to us or fail; an inability to realize additional benefits targeted by our productivity and reinvestment program; an inability to renew collective bargaining agreements on satisfactory terms, or we or our bottling partners experience strikes, work stoppages or labor unrest; future impairment charges; multi-employer plan withdrawal liabilities in the future; an inability to successfully integrate and manage our Company-owned or -controlled 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 for the year ended December 31, 2013 and our subsequently filed Quarterly Reports on Form 10-Q, 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.
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Reconciliation to U.S. GAAP Financial Information
Forward-Looking Statements
The following presentation may include 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 www.coca-colacompany.com (in the “Investors” section) which reconciles our results as reported under Generally Accepted Accounting Principles and the non-GAAP financial measures included in the following presentation.
3
Grounded in Strength
+2% Volume
Sept. YTD 2014
+1% Price/Mix
Sept. YTD 2014
Profitable Growth 70% of EP Growth
Our Growth Algorithm Assumes Balanced Top-Line Growth and Productivity
4
Our Economic Profit Model Drives Shareowner Returns
Industry Volume Growth
Vibrant Industry
(Best in CPG)
Share Gains
Best Brands & Capabilities
Revenue Realization
Perfect Execution at the POS
Productivity & Reinvestment
30% of EP Growth
Margin Expansion
Ongoing Productivity
Capital Efficiency
Economies of Scale
+64 bps Sept. YTD 2014
Working Capital
* Source: IHS Global Insights
Global Beverage Industry Growth is Fueled by Macro Trends
Increase in Urban Population
Growth
in Middle Class Growth
in Personal Expenditure Per Capita*
Billion Teens Today
2010 - 2020
5
2014–2020 INDUSTRY VALUE GROWTH BY CATEGORY ($ BILLIONS)
$- $100 $200
RTD Coffee
Functional Hydration
Sports Drinks
RTD Tea
Energy Drinks
Packaged Water
Juice and Juice Drinks
Value-Added Dairy
Core Sparkling
2014–2020 INDUSTRY GROWTH BY MARKET TYPE (%)
We Remain Confident in Our Long-Term Growth Potential
6
30%
16%
54%
Emerging
Developing
Developed
Source: Internal Estimates and Canadean 2014 - 2020 NARTD Industry Value Growth: › $300B
#1
NM
#1
#2
#5
#3
#2
#1
#1
KO Value Position
We Have a Broad and Growing Portfolio of Brands
Schweppes is owned by the Company in certain countries other than the U.S. 7
We Have the World’s Strongest Beverage System
Brands in
Countries
Bottling Partners
Customer Outlets
Million
Global System Employees Thousand
Top 10 Private Employer
Billion Servings Every Day
Nearly
8
We Are Expanding Our Brands and Capabilities with Our New Partnership Models
• Access new technologies, segments and assets through equity investments
• Utilizes unique assets and relationships of each partner to maximize value
• Preserves cash and limits capital investment
9
We Are Focusing on Price Realization Across Our Geographies
10
*For September YTD 2014
Price/Mix*
1% 8% 5% 7% 1%
-2% -1%
Consolidated LAG EUR EAG NA APAC BIG
Geographic mix Stronger growth in China
& India at lower net revenue per case
CCR: Drive Supply Chain & COGS Savings
• Collaborative Procurement
• CCR Supply Chain Optimization
• Next Generation Capabilities (e.g., Design to Value)
We Are Imbedding Productivity in Our Culture…
11
Transform Our Marketing & Commercial Model
• DME Productivity & Redeployment Program:
• Consumer promotions
• Ad spend quality improvement
• Enabling DME
• Strategic prioritization
Optimize Center, Field and Support Functions
• End-to-End Redesign
• Group/BU Standardization
• Operational Cost Management (OCM)
• Information Technology
…and We Will Deliver $3 Billion in Annualized Savings by 2019
We Generate Strong Free Cash Flow
12
Free Cash Flow defined as Cash Flow from Operations less Capital Expenditures Conversion ratio = free cash flow divided by net income
2011 2012 2013
Free Cash Flow Conversion Ratio
$6.6B $7.9B $8.0B
76%
87% 93%
• 52 Consecutive Years of Annual Dividend Increases
• 9% Increase in 2014
• $5 Billion in 2013
• CAPEX ~$2.5 Billion in 2014
3
SUSTAINABLE VALUE CREATION
1 2
• Accelerate Growth and Efficiency Through Acquisitions and Partnerships Across Our Value Chain
3
• Net Share Repurchases ~$2.5 Billion in 2014
4
We Have a Disciplined and Consistent Prioritization for Cash
13
Leverage (2011 to 2013)
Our Capital Structure Balances Financial Flexibility with Cash Returns to Shareowners
14
Cash Sources & Uses (2011 to 2013 Cumulative)
2.6x 98%
Returned
1.1x 1.1x 1.2x
2011 2012 2013
Net Debt / EBITDA Gross Debt / EBITDA*
2.3x 2.1x
Free Cash Flow Cash Returned toShareowners
Net Share Repurchases
Dividends
$ Billions
*
*Comparable EBITDA
+ Divestitures
FCF
Divestitures $23 $24
Business Update
• More challenging macro environment leading to slower industry and Company growth versus expectations
• Our execution in various markets can be improved, notably Europe
• Progress to date in North America and key emerging markets
Overview of Third Quarter 2014 and YTD Performance
16
We Remain Confident in the Long-Term Opportunity
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Long-Term NARTD Opportunity
•Short-term macroeconomic headwinds
•Mid single-digit revenue growth over the long term
3%
2%
Core Sparkling NARTD
Core Sparkling Is Resilient
September YTD 2014 Retail Value Growth
Growth Potential in Stills
$- $100
Sports Drinks
RTD Tea
Energy Drinks
Packaged Water
Juice and Juice Drinks
Value-Added Dairy
Retail Value Growth 2014-2020
17
B
While We Are Evolving Our Long-Term Growth Targets, Our Long-Term EPS Target Is Unchanged
18
Net Revenues 5-6%
Operating Income 6-8%
Earnings Per Share High Single Digits
Net Revenues Mid Single Digits
Profit Before Tax 6-8%
Earnings Per Share High Single Digits
Note: Targets are comparable currency neutral
Previous Long-Term Growth Targets
New Long-Term Growth Targets
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5 Priorities Are Critical to Our Success
19
We Are Taking Actions to Improve Performance
20
Streamlining and simplifying our operating model
Refocusing on our core business model
Targeting disciplined brand and growth investments
Driving revenue and profit growth with clear portfolio roles across our markets
Aggressively expanding our productivity program
1
3
4
5
2
• Speed decision making
• Flexibility and focus
• Empower our people to drive growth
• Focusing role of our Corporate Center
• Linking long-term incentives to line-of-sight metrics
Streamlining and simplifying our operating model
21
1
21
Aggressively expanding our productivity program
22
Streamlined
Operating Model
Restructured
Global Supply
Chain
Zero-Based
Budgeting
Marketing
Efficiency
$3B in annualized
savings by 2019
Support investment
to deliver sustainable
net revenue growth
+
Margin enhancements
+
Improved ROIC
2
22
Refocusing on our core business model
23
3 3
• Refranchise majority of our Company-owned bottling territories in North America by end of 2017
• Intend to substantially complete refranchising of remaining territories no later than 2020
• Outside of North America, continue to pursue opportunities to refranchise
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Targeting disciplined brand and growth investments
24
3 4
Sparkling Accelerate top-line growth across
Coca-Cola, Fanta and Sprite
• Improve the quality of marketing • Scale global investments through a networked
marketing model
Still
4
24
Build on global leadership in still beverages and accelerate growth over time
• Continue to invest in our core growth priorities • Expand investments in selected profitable categories
Innovation
Sweeteners Plant PET Small Packs
25
5 Driving revenue and profit growth with clear portfolio roles across our markets 5
25
Incentives Tied to Portfolio Roles
Growth Model Based on Segmented Market Roles
Balancing:
• Price realization
• Volume
• Incidence and transactions
Full Year 2015 Expectations
26
Challenging macro environment
Transition in operating model
Productivity savings will take time to achieve
26
Additional details provided in December modeling call
We do not expect 2015 comparable currency neutral EPS growth to differ significantly from 2014
Currency headwinds continue, mid single-digit impact on profit before tax
Our Reach Is Truly Global and
Truly Local
A Truly Global Business
North America
21% of Total Company Unit Cases
24% of Total Company Operating Income
Latin America
29% of Total Company Unit Cases
28% of Total Company Operating Income
0% FY 2013 Volume Growth
+1% FY 2013 Volume Growth
Europe
14% of Total Company Unit Cases
28% of Total Company Operating Income
-1% FY 2013 Volume Growth
Eurasia & Africa
15% of Total Company Unit Cases
11% of Total Company Operating Income
+7% FY 2013 Volume Growth
Asia Pacific
21% of Total Company Unit Cases
24% of Total Company Operating Income
+3% FY 2013 Volume Growth
Note: Total Company Operating Income on this page totals >100%, as it does not reflect Corporate expenses. All percentages are based on full year 2013 data.
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Europe: Future Growth Opportunities Despite Headwinds
Billion
Europe’s NARTD Industry Retail Value Growth
• Top 3 Sparkling Brands
• Opportunity for Volume and Value Share Gains
• Largest NARTD Retail Value Pool
Europe Group
2012 2020
29
Asia Pacific: A Tale of Two Worlds Growing Together
Vietnam
+25%
2013 Volume Growth Rates
Indonesia
+10%
India
+4% Thailand
+9%
China
+3%
• GDP Per Capita
Developed
~$35K
• GDP Per Capita
Emerging
~$6K
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NARTD Industry Volume Growth
2012 2020
NARTD Industry Retail Value Growth
2012 2020
Eurasia & Africa: A Solid Foundation to Capture Growth
#3 RTD Tea
#1 Juice & Juice Drinks
#1 Sports Drinks
#2 Packaged Water
#1 Sparkling
31 Note: Beverage category rankings are for volume share
North America: Executing Our Consistent Strategy to Win in this Profitable Market
• Build Strong Brands
• Translate Brand Value into Customer Value
• Invest in Capabilities to Sustain & Repeat
Our Strategy
• Expanding Population
• Favorable Demographics
• Vibrant NARTD Business
Our Market
2013 Full Year
Volume Share
Sparkling
Sports Drinks
RTD Tea
Juice/Juice Drinks
Energy Drinks
Still
Value Share
NARTD
32
4% 4% 4% 4% 6%
Latin America Group
Latin Center Mexico Brazil South Latin
4-Year Volume CAGR 2010-2013
Latin America: We Are Delivering Sustainable and Balanced Growth
33
Bottling Investments Group & CCR Continue to Evolve
Company-Owned Bottlers Management/Oversight Role Recent Bottling Divestitures
• Largest Global Bottler • 20 Markets • > 25% of System Volume • ~115K Employees
CCR: Coca-Cola Refreshments
34
BIG Is a Growth Accelerator for the System
• Provide Strategic Market Leadership to Drive Growth
• Act as Venture Capitalist to Move Quickly into a Market
• Resolve Ownership and Management Changes – Structural or Philosophical
• Create Long-Term Sustainable Growth
• Act as a Model of Collaboration with Other Bottlers
35
We Build Sustainable Businesses
• We Manage the Business for the Long Term – Key Metrics: OI, EBITDA, Economic Profit, Margin
Improvement, Volume AND Value Share
• Committed to Refranchising
• Finding the Right Partner Is Key – Aligned, Long-Term Strategy for the Business
– Proven Management Team with Capabilities in Market Environment
– Financial Flexibility and Willingness to Invest in the Business
– Strong Culture / Engagement
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Investor Relations Overview
November 2014
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