Full year result - ccamatil.com

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BARCLAYS

2017 GLOBAL CONSUMER

STAPLES CONFERENCE 5-6 September 2017, Boston

COCA-COLA AMATIL

Alison Watkins

Group Managing Director

Martyn Roberts

Group Chief Financial Officer

David Akers

Group Head of Investor Relations

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COCA-COLA AMATIL

2Coca-Cola Amatil Barclays Global Consumer Staples Conference

GROUP OVERVIEW

Publicly listed Australian company

(ASX: CCL) – market capitalisation

approximately $5.8B (5 Sep 2017)

Top 10 Coca-Cola bottler globally

FY16 Revenue $5.25B

FY16 Underlying EBIT $683.4M

FY16 Underlying NPAT $417.9M

Investment grade credit ratings (A3/

BBB+)

INDUSTRY AND MARKETS

Non-alcoholic ready to drink

beverages in Australia, New

Zealand, Fiji, Samoa, Indonesia,

Papua New Guinea

Alcohol and coffee beverages in

Australia, New Zealand and Fiji with

additional export potential

Food products through SPC,

predominantly in Australia

REPORTING SEGMENTS

Australian Beverages

New Zealand & Fiji

Indonesia & Papua New Guinea

Alcohol & Coffee

Corporate, Food & Services

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OUR PLANS REFLECT THREE STRATEGIC THEMES

3

LEAD

Strengthening category

leadership position

Leading brands in each major

NARTD category in each market

Up-weighted levels of innovative

marketing to continually strengthen

brand equity

Evolving portfolio that adapts to

changing consumer preferences

EXECUTE

Step change in productivity and

in-market execution

World-class customer servicing

capability

Route to market that provides

customer diversification and real

competitive advantage

Effective leverage of our

large-scale, low-cost manufacturing,

sales and distribution capability

PARTNER

Better alignment with The Coca-

Cola Company and our other

partners

Shared vision of success and aligned

objectives

Joint plans for growing system

profitability

Balanced share of risk and rewards

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SHAREHOLDER VALUE PROPOSITION

4

We are focused on generating attractive sustainable returns for shareholders

Investment case EBIT drivers EPS driversTargeting shareholder

value creation

Coca-Cola franchisee with leading brands

Route-to-market with scale and reach

Large-scale, modern, low-cost infrastructure

Steady cash flow from core Australia and New

Zealand franchises

Growth opportunities including Indonesia

and Alcohol & Coffee providing upside

Targeting low single-digit

EBIT growth

Core developed market

franchises (Australia and New Zealand)

Targetingdouble-digit EBIT growth

Developing markets

(Indonesia, Papua New

Guinea and Fiji)

Targetingdouble-digit EBIT growth

Alcohol & Coffee and SPC

Revenue growth plans and continuous cost focus

across the group

Modest capex for developed markets

Growth capex for Indonesia

funded via TCCC equity injection

Continuous working capital management

Bolt-on acquisitions

Capital management initiatives

+

+

+

+

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Mid single-digit EPS growth

Attractive dividends: above 80%payout ratio

Strong balance sheet

Strong return on capital employed

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COCA-COLA FRANCHISEE WITH LEADING BRANDS

5

Our investment case is based on being a Coca-Cola franchisee with leading brands across Sparkling and Still Beverages


Indonesia(3)New Zealand(2)Australia(1)

Approximate market volume composition Approximate market volume composition Approximate market volume composition

Ap

pro

xim

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A s

ha

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Ap

pro

xim

ate

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A s

ha

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Ap

pro

xim

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A s

ha

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EnergyCola Flavours Adult

Dairy

Sparkling TeaJuice Dairy SportsCola JuiceFlavours Water

Adult

SportsSports

Energy

Water Tea Juice Tea

1. Sources: Aztec Australian Grocery Weighted and AU Convenience scan. MAT 1H162. Sources: Nielsen Total MM, YE 2015.3. Sources: Nielsen; internal estimates. Excludes water ~60% of the NARTD market. Oct 2016.

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ROUTE-TO-MARKET WITH SCALE AND REACH AND LARGE-SCALE, MODERN, LOW-COST INFRASTRUCTURE

6

Our operations and route-to-market has significant scale and reach and we have large scale, modern and low cost infrastructure


Our footprint across Asia PacificOur operations

Australian Beverages

New Zealand

Fiji Indonesia Papua New

Guinea

Production facilities

12 4 1 8 2

Production lines

40 11 4 37 6

Warehouses 15 3 2 8 7

Customers* (approx.)

115,000 25,000 3,000 720,000 10,000

Coolers (approx.)

160,000 40,000 3,600 330,000 17,000

* Includes outlets served indirectly.

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THE COCA-COLA COMPANY’S STRATEGY TO FOCUS ON CHOICE, CONVENIENCE AND THE CONSUMER


ACCELERATE GROWTH

OF CONSUMER CENTRIC

BRAND PORTFOLIO

TAKING MORE AND BOLDER

ACTION TO REDUCE SUGAR

Source: The Coca-Cola Company Presentation April 2017

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WE ARE ALSO DEVELOPING STRONG

RELATIONSHIPS WITH OTHER LEADING

PARTNERS

8


MONSTER ENERGY ALCOHOL & COFFEE

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AUSTRALIAN BEVERAGES

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Strategic Themes

Rebalancing the portfolio

Focus on Sparkling Beverages

Accelerate Still Beverages

Targeting low single digit EBIT

growth

Lead

Execute

Partner

Shareholder Value

Proposition

Stabilise earningsCost optimisation to

support continued

rebalancing

Return to growth

Leveraging our route-to-market approach and driving strong customer engagement

Identified at least a further $100M of cost optimisation opportunities and a further ~$20M cost savings from 2020

Minimising the impact of container deposit schemes

Refreshed and strengthened category growth plan

Significant pipeline of additional new product development and activity in 2017

Incidence pricing commenced on 1 July

Embracing the “Total Beverages Company” strategy

We continue to implement initiatives to stabilise earnings, drive cost optimisation to support portfolio rebalancing and return to growth


Better alignment with The Coca-Cola Company

Monster Energy agreement

Revenue growth management

Route-to-market

Cost optimisation $100M delivered

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LEAD

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INNOVATING IN SPARKLING BEVERAGES

EXPANDING PORTFOLIO IN STILL BEVERAGES

Significant launches already in 2017 with Coca-Cola No Sugar and Keri Juice Blenders with more activity and additional new product development in the pipeline for 2H17

Coca-Cola No Sugar• ~28% of Sparkling Beverage

consumers in Australia have consumed a Coca-Cola No Sugar

• ~39% have consumed a Coca-Cola No Sugar more than once

• Already achieved penetration in state immediate consumption and HORECA of ~68%

Additional Sparkling Beverage products in 2H17• Launch of additional rotational flavours

to attract lapsed consumers and new consumers


Keri Juice Blenders• Launched on 30 June and already

above target penetration in state immediate consumption and HORECA at ~27%

• Volume per outlet already exceeding previous juice offering

• High re-order rate • Commenced supplying to major

national chain customers

Additional Still Beverage products in 2H17• Launch of additional new product

development in several Still Beverages categories in 2H17 including juice, water and energy

Launched 30 June

Launched 9 June

Packaging innovation in 2H17• Innovative packaging targeting special occasions• Opportunities targeting the HORECA channel

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LEAD

11

Priority objectives utilising our leading multi-segment water portfolio


LEADING MULTI-SEGMENT WATER PORTFOLIO

BULK VALUE MAINSTREAM

ENHANCED / PREMIUM

PRIORITIES

Targeted price investment in value and mainstream water in grocery to increase competitiveness

Additional new products in enhanced and premium water brands in 2H17

Targeted growth of water distribution in state operational accounts, including HORECA

Still Water• Grocery penetration: ~100%• State operational accounts

penetration: ~76%• HORECA penetration: ~42%

Mount Franklin Lightly Sparkling• Grocery penetration: ~100%• State operational accounts

penetration: ~39%• HORECA penetration: ~26%

1

2

3Enhanced water segment represents

• ~60% of packaged water category revenue growth and ~11% of volume growth (year to date)1

• ~35% of packaged water category revenue and ~16% of volume (year to date)1

ENHANCED WATER

1. Category value and volume of packaged water in grocery to 6 August.

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EXECUTE

12

Leveraging our route-to-market advantage and driving strong customer engagement

LEVERAGING OUR ROUTE-TO-MARKET STRONG CUSTOMER ENGAGEMENT

Expanding customer base• By the end of 1H17, increased high

value customers by ~10%

Targeted approach to HORECA channel• Dedicated sales team for HORECA

channel• By the end of 1H17, increased high

value customers by ~30%

Online ordering and expansion• Online ordering at ~50% of orders• Exploring additional e-commence

opportunities

In Grocery we have worked closely with our customers to become #1 supplier

Recipient of several recent industry awards• Supplier of the Year – Romeo’s, Cornetts Supermarkets,

Ritchies, AACS, 7-Eleven• Grocery Supplier of the year – Spar • Trade partner of the Year – UCB • Best new product launch – 7-Eleven (Powerade Silvercharge)• Promotional support of the year – Campbells


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EXECUTE

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Targets

1st

$100M

2014 2015 2016 2017 2018 2019 2020

2nd

$100M

~$20M

Announced Oct14

Announced Oct16

Announced Feb17

At least a further $100 million cost optimisation

~$20 million cost

optimisation

$100 million delivered ahead of schedule

Indicative timeline of cost optimisation and reinvestment programs


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PARTNER

14

Continuing to improve alignment with The Coca-Cola Company and embracing the “Total Beverages Company” strategy

SUCCESSFUL IMPLEMENTATION OF INCIDENCE PRICING

THE COCA-COLA COMPANY’S “TOTAL BEVERAGES COMPANY” STRATEGY


“Total Beverages Company” strategy

• In early 2017, The Coca-Cola Company unveiled its “Total Beverages Company” strategy

• Consumer-centric approach

• Category-cluster beverage segmentation

• Importance of growing beyond the flagship brand

Coca-Cola Amatil

• Embracing “Total Beverages Company” strategy in the markets in which we operate

Overview

• Successful implementation of incidence pricing in Australia on 1 July 2017

• More aligned pricing model that links the concentrate price per unit to revenue

Key benefits

• Greater alignment resulting in greater focus on the market and consumers

• Joint focus on growing transactions and value

• Faster day-to-day decision making

• Simplification of funding arrangements and greater certainty with promotional plans

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INDONESIA

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1. Improve product availability

2. Increase affordability

3. Build brand strength

4. Build channel relevance

Investing in capacity to sustain

growth

Driving effective and efficient route

to market execution

Driving cost competitiveness

A more agile and responsive system

Focus – how we’ve changed our strategy since 2014

Indonesian population

Indonesian population

Niche

Mass market

Targeting double digit EBIT growth

Shareholder Value

PropositionStrategic priorities

Supported by a number of enablers

Since 2014, we have made solid progress across all our strategic priorities

and are accelerating to transform the business

2013

2014 onwards


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INDONESIA

16

We are highly leveraged to significant profit improvements when the market returns to growth

MACROECONOMIC FACTORS CURRENTLY CHALLENGING

OPERATIONAL LEVERAGE OPPORTUNITY WHEN GROWTH RETURNS


1. Revenue Growth

2. Cost Leverage

and Efficiencies

3. Cost savings

4. Capability

Investment and DME

Economic ReturnsROCE above WACC by 2020EBIT margin of 10% by 2023

Cost growth to be less than inflation

6.0 5.6

5.0 4.9 5.0 5.0 5.2 5.3 5.5

2012 2013 2014 2015 2016 2017 2018 2019 2020

5.5 5.5 5.3 4.8 5.0 5.0 5.2 5.3 5.3

2012 2013 2014 2015 2016 2017 2018 2019 2020

4.3

6.4 6.4 6.4

3.5 4.4 4.5

5.8 5.7

2012 2013 2014 2015 2016 2017 2018 2019 2020

9.3 10.5

11.9 13.4 13.3 13.4 14.0 13.5 13.3

2012 2013 2014 2015 2016 2017 2018 2019 2020

Gross domestic product 2012-2020

Personal consumption expenditures2012-2020

Inflation2012-2020

Currency: Indonesian Rupiah to US dollar

2012-2020

Source: Information Handling Sources

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NEW ZEALAND

17

Build for growth

Recession & Earthquake

Price and cost out led resultsGrowth plans based predominantly on

volume growth

Recovery Phase

2009-2012 2013-2014 2015 2016

Volume Net Sales Revenue

Targeting low single digit

EBIT growth

Shareholder Value

Proposition

Since 2014, we have delivered on our strategy of volume based growth


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ALCOHOL & COFFEE

18

Spirits & RTDsBeer, Cider &

BittersCoffee

Paradise Beverages

Since 2014, we have developed a larger and stronger portfolio with our

brand partners across alcohol and coffee categories

Shareholder Value

Proposition

Targeting double digit EBIT growth


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SPC

19

Update

• Good progress modernising manufacturing capabilities and improving operational performance

• Good progress bringing new innovative products to market, such as ‘ProVital’, ‘Perfect Fruit’ and several snacking-fruit products

• Further opportunities to expand the range of products and expand into new markets

Innovative products

Continue transformation into a profitable modern food business

Since 2014, we have made significant progress on our investment plans,

and remain committed to securing SPC’s long term future


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FINANCIAL TARGETS

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FINANCIAL TARGETS

UNDERLYING NPAT & EPS

Expecting FY17 underlying NPAT to be broadly in line with FY16

Medium term target continues to be mid single-digit EPS growth

This will depend on the success of revenue initiatives in Australia, Indonesian economic factors and regulatory conditions in each of our markets

We do acknowledge that the roll-out of container deposit schemes in Australia will challenge us over the next couple of years given the inherent uncertainty of their impact across the industry

CAPITAL EXPENDITURE

2017 Group capex expected to be around $365M

2018 Group capex expected to be at a similar level to 2017

This reflects initiatives to rebalance Australian Beverages’ portfolio and remodel its supply chain and continued investment in Indonesia

DIVIDEND OUTLOOK

Continue to target medium term dividend payout ratio of over 80%

It is anticipated that franking will continue to be at a lower level than prior years

BALANCE SHEET

Balance Sheet to remain conservative with flexibility to fund future growth opportunities

Expecting to maintain strong return on capital employed

We will also continue to explore opportunities to extract value from our property portfolio.


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RECAP

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QUESTIONS & ANSWERS

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APPENDIX

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ADDITIONAL DEVELOPMENTS

25

• Entered into agreements for the sale and leaseback of the Richlands manufacturing and warehousing facility in Queensland

• Proceeds of ~$156 million will result in a one-off gain of ~$100 million before tax in 2H17

• Expected that this will be substantially realised as profit after tax due to the utilisation of capital losses

• Sale due to settle on 1 December 2017

• One-off gain in the second half to offset one-off costs from Australian Beverages cost optimisation initiatives for the year, treated as non-trading items

• Significant progress on NSW container deposit scheme

• Coca-Cola Amatil is a partner in Exchange for Change, an industry joint venture, which has been appointed as Scheme Coordinator

• The Scheme Coordinator has published the fees it expects to charge suppliers in the first three months of the scheme

• The Scheme Coordinator will charge all suppliers based on its estimate of the supplier’s proportionate share of eligible containers by material type

• The fees will be adjusted for the actual costs of the CDS over time

Board Renewal

• Appointment of Ilana Atlas as Chairman

• Appointment of Paul O’Sullivan as a Non-Executive Director

Group Leadership Team

• Search progressing for appointment of Australian Beverages’ Managing Director – expect to make an announcement in the coming months

• Augmented the Group Leadership Team with the appointment of Chris Sullivan as Group Director, Partners and Growth

RICHLANDS SALE & LEASEBACK

NSW CONTAINER DEPOSIT SCHEME

LEADERSHIP CHANGES


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COST OPTIMISATION & REINVESTMENT

26

At least a further $100 millionTo be delivered over the three years to 2019

• ~$80 million (Richlands warehouse automation project)• Spend predominantly in 2H17 and 1H18

• ~$90 million (spend predominantly in 2018)• Richlands: new glass production line, additional juice

and dairy capacity

A further $20 million per annumTo be delivered from 2020

• ~$25 million of restructuring costs recognised in 1H17• ~$25 million expected to be recognised in 2H17

• One-off costs to be offset by profit from sale of Thebarton and surplus profit from Richlands sale

• Remodel supply chain• Richlands warehouse automation project • ‘Business Excellence’ program

• Outsource merchandising and sales force restructure • Procurement optimisation• Support services optimisation• Good progress on delivering in 1H17

• Remodel supply chain• Closure of South Australian manufacturing facilities• Other manufacturing activities to move to Kewdale

(WA), Moorabbin (Vic) and Northmead (NSW)• New glass production line at Richlands• Expand dairy and juice capacity at Richlands

• Salesforce of the future• Rebalancing of the portfolio through innovation

• Additional marketing• Price investment

Initiatives

Reinvestment

Capex

One-off costs

Cost optimisation

targets

• One-off costs to be offset by one-off gain from sale of Richlands

• ~$100 million before tax to be recognised in 2H17 following settlement of sale (1-Dec)

• Expected that this will be substantially realised as profit after tax due to the utilisation of capital losses

One-off gains

• ~$40 million restructuring costs recognised in 1H17 • ~$5 million expected to be recognised in 2H17 • ~$5 million expected to be recognised following closure

of Thebarton


Continued focus on cost optimisation and reinvestment to rebalance our portfolio and remodel our supply chain

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Coca-Cola Amatil Barclays Global Consumer Staples Conference 28

DISCLAIMER

Coca-Cola Amatil advises that these presentation slides and any related materials and cross referenced information, contain forward looking statements which may be subject to significant uncertainties outside of Coca-Cola Amatil’s control.

No representation is made as to the accuracy or reliability of forward looking statements or the assumptions on which they are based.

Actual future events may vary from these forward looking statements and you are cautioned not to place reliance on any forward looking statement.

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Full year result - ccamatil.com