Coca-Cola HBC - Zoran Bogdanovic CEO DB Consumer Conference June 2019
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Coca-Cola HBC
DB Consumer Conference
June 2019
Zoran Bogdanovic
CEO
Forward looking statements
Unless otherwise indicated, the condensed consolidated By their nature, forward-looking statements involve risk and
interim financial statements and the financial and operating uncertainty because they reflect our current expectations and
data or other information included herein relate to Coca-Cola assumptions as to future events and circumstances that may
HBC AG and its subsidiaries (“Coca-Cola HBC” or the not prove accurate. Our actual results and events could differ
“Company” or “we” or the “Group”). materially from those anticipated in the forward-looking
statements for many reasons, including the risks described in
This document contains forward-looking statements that the 2018 Integrated Annual Report for Coca-Cola HBC AG and
involve risks and uncertainties. These statements may its subsidiaries.
generally, but not always, be identified by the use of words
such as “believe”, “outlook”, “guidance”, “intend”, “expect”, Although we believe that, as of the date of this document, the
“anticipate”, “plan”, “target” and similar expressions to identify expectations reflected in the forward-looking statements are
forward-looking statements. All statements other than reasonable, we cannot assure you that our future results, level
statements of historical facts, including, among others, of activity, performance or achievements will meet these
statements regarding our future financial position and results, expectations. Moreover, neither we, nor our directors,
our outlook for 2019 and future years, business strategy and employees, advisors nor any other person assumes
the effects of the global economic slowdown, the impact of responsibility for the accuracy and completeness of the
the sovereign debt crisis, currency volatility, our recent forward-looking statements. After the date of the condensed
acquisitions, and restructuring initiatives on our business and consolidated interim financial statements included in this
financial condition, our future dealings with The Coca-Cola document, unless we are required by law or the rules of the
Company, budgets, projected levels of consumption and UK Financial Conduct Authority to update these forward-
production, projected raw material and other costs, estimates looking statements, we will not necessarily update any of
of capital expenditure, free cash flow, effective tax rates and these forward-looking statements to conform them either to
plans and objectives of management for future operations, are actual results or to changes in our expectations.
forward-looking statements.
Our Company Established
markets
28% Austria, Cyprus,
Greece, Italy,
Northern Ireland,
2,192m Republic of Ireland,
unit cases Switzerland
Volume 52%
2018
20% Developing
markets
Czech Republic,
37% Croatia, Estonia,
43% Hungary, Latvia,
Revenue €6,657m Lithuania, Poland,
2018 Slovakia, Slovenia
Emerging
20%
markets
Armenia, Belarus,
35% Bosnia and
Herzegovina,
Comparable 45%
€681m Bulgaria, Moldova,
EBIT 2018
Montenegro, Nigeria,
North Macedonia,
Romania, Russia,
Serbia, Ukraine
20%
A unique
business with Passionate,
a strong Broad,
differentiated
dedicated and
engaged
growth Industry
leader in
product offering –
29% of revenues
people
profile sustainability
with deep
from non-
Sparkling
Strategic
partner of The
roots in our Coca-Cola
communities Company
Committed to, and
Diverse delivering, strong
geographic financial growth
68 years footprint – and shareholder
of history 28 countries returns – 23% TSR
across 3 CAGR since 2015
continents
In 2016 we set
ambitious
Drive volume Focus on Improve Invest in the
targets for
Targets
growth value efficiency business 2020
4-5% p.a. 26-27% Capital
Average currency-neutral expenditure
by 2020
revenue growth comparable 5.5%-6.5%
Scorecard
OpEx as % of of revenue*
revenue
11% Working capital
less than
by 2020
comparable EBIT margin €-100m
⃰ Excluding impact of IFRS 16 adoption
5
We are delivering on our 2020 targets
Currency-neutral Comparable EBIT margin Operating expenses as a
Revenue growth % of Revenue
2020 Target 11%
4-5% on average 2020 Target 26-27%
3.0% 5.9% 6.0% 8.3% 9.5% 10.2% 28.2% 27.9% 27.7%
2016 2017 2018 2016 2017 2018 2016 2017 2018
CAPEX as a % of revenue Working capital (€ mn)
5.5-6.5%
Consistently
triple-digit
negative
5.3% 5.8% 6.4%
2016 2017 2018
6
No. 1
Leader in the dynamic, growing Non-alcoholic
in SSDs in
22 of 23
ready-to-drink (NARTD) industry
measured 2018 value share 2018 CCH 2016-2020 2021-2025
markets of category in category value industry CAGR industry
total industry share CAGR
Sparkling 23 2 5 33% 56% 3.7% 3.9%
Hydration* 20 2 4 30% 10% 3.8% 3.6%
Juice 10 01 15% 15% 1.5% 2.5%
Energy 4 12 6% 15% 8.9% 7.8%
RTD tea 2 01 4% 23% 3.5% 4.4%
Other 9 1 3 13% 0.2% 4.4% 5.7%
NARTD 69 6 17 100% 26% 3.8% 4.1%
2018 (€bn) 2019-2020 projected 2021-2025 projected
increase (€bn) increase (€bn)
*Hydration includes Water and Sports drinks
Source: 2018 GlobalData and value extrapolated based on Nielsen and internal estimates. 2018-25 Forecast based on internal estimates.
7
Future opportunity in Coffee
2018 value share 2018 CCH 2016-2020 2021-2025
of category in category value industry CAGR industry
total industry share CAGR
Sparkling
Hydration*
Juice
Energy
RTD tea
Other
NARTD
Coffee 56 4 13 2.7% 4.0%
2018 (€bn) 2019-2020 projected 2021-2025 projected
increase (€bn) increase (€bn)
*Hydration includes Water and Sports drinks
Source: 2018 GlobalData and value extrapolated based on Nielsen and internal estimates. 2018-25 Forecast based on internal estimates.
8
54% of
Favourable demographics -
Nigeria’s growing population with very low
population is
less than per-capita consumption
19 years old
Population (m) 2018 industry SSDs servings per-capita
+3.0% +4.4%
644
598 616
CCH
103
103
124
124
132
147
180
182
183
222
223
237
262
274
275
288
298
307
330
367
435
523
623
55
2015 2019 2025
avg.
Bulgaria
Germany
Emerging
Italy
France
Established
Egypt
Developing
Switzerland
avg. (31)
Spain
Greece
Poland
Nigeria
CCH
Serbia & Mont.
Romania
Great Britain
Austria
Ukraine
Russia
Belgium
United States
Mexico
Nigeria
Nigeria CCH
CCH excl.
excl. Nig
Nigeria
Europe
Europe
Sources: IHS, internal estimates
Serving is 8oz or 237ml
9
Diverse, balanced country portfolio
mitigates country-specific risks
Nigerian Naira 11.0
Diverse geographical depreciates 80%
source of EBIT Russian Rouble
depreciates 60% 9.0
3 countries
7.0
with >10% of
EBIT contribution 7 countries
each with 5-10% of 5.0
EBIT contribution
each
3.0
18 countries 1.0
withThe strongest, broadest, most flexible portfolio
8 categories, over 100 brands, c. 4,000 SKUs
% in CCH
revenue Categories Brands
71% Sparkling
9% Hydration (Water & Sports)
8% Juices
4% Ready-to-drink tea
3% EnergyMeals at home
Growth Routine
Eating out
Retail value: €26bn
Avg €/ltr: 1.3
opportunity habits
at home
CCH value share: 5.4%
in commercial At school
My Moments at home
Retail value: €14bn
beverages within Avg €/ ltr: 1.3
CCH value share: 4.8%
the largest
At work
and most Hanging out
AFH
valuable
occasions Snacktime Screen
time
Physical
activity AFH Drinking out
Retail value: €30bn
Avg €/ltr: 6.2
CCH value share: 3.3%
On the go
Breakfast Socialising
at home
Occasion figures refer to total commercial beverages: including NARTD alcohol and hot beverages
12Our growth will be driven by
a crystal clear vision
13Each of our growth pillars is a core strength
or competitive advantage
Fuel growth
Leverage Win in the
through Cultivate the Earn our
our unique marketplace
competi- potential of licence to
24/7 with our
tiveness and our people operate
portfolio customers
investment
Growth Capabilities
14Sparkling
Water
Leveraging RTD Tea
our unique
24/7
portfolio with Juices Adult Sparkling
clear
category
strategies
Plant-based Energy
Coffee Premium SpiritsOur 24/7 portfolio allows us to stay relevant for every outlet in every channel
Winning in the marketplace
with customers
Next generation
customer JOINT
approach VALUE
driven CREATION
by insights
We win with customers when they
win with shoppersOur capabilities are catalysts for growth
and drivers of competitive advantage
Growth-focused To monetise our data through
BDAA targeted value creation opportunities
Big Data Advanced Analytics
Value-led To maximise value from
RGM every transaction
Revenue Growth Management
Trends
Tech-enabled For targeted execution excellence via outlet
RTM and salesforce segmentation, cooler coverage
Route to Market & connectivity and technology
Why?
Customer-centric To identify and capture sources
KAM of mutual value creation
Key Account Management
Disciplined
As fuel for profitable topline growth
INNOVATION
18Fuelling growth through competitiveness
and investments
Efficiency scorecard 2016-20 2021-25
Production overheads as % of revenue 140 bps improvement 40 bps improvement
(beginning – end of period)
Cost to supply as % of revenue 60 bps improvement 40 bps improvement
(beginning – end of period)
Capex as % of revenue 7% 6.5% to 7.5%
(average p.a. – restated for impact of IFRS 16 adoption)
Production line efficiency 69% 72%
(average p.a.)
Europe 71% 78%
Capacity utilisation Russia 65% 77%
(average p.a.)
Nigeria 72% 78%5-6% We aim to deliver another
Annual organic
step up in performance 20-40bps
revenue EBIT margin
growth expansion p.a. on
average
Accomplish our
2025 Greater
sustainability Fuel growth than high
Leverage Win in the
commitments through Cultivate the Earn our performing norm
our unique marketplace Employee
competi- potential of licence to
24/7 with our engagement
tiveness and our people operate score
portfolio customers
investment
Growth Capabilities
20We have the
strategy and
competitive Strongest, Relentless focus on
advantage broadest, most cost and efficiency
flexible, to fuel investments
24/7 portfolio for growth
of brands
Leader in the
dynamic, growing
NARTD industry Diverse,
balanced Significant growth
country
portfolio with opportunities
very low across high-value
per-capita occasions and
consumption categories
21To deliver
superior Cash-generative
Total
shareholder
shareholder business that
invests 6.5-7.5% of
returns above
industry
returns revenue in capex
for profitable
average
growth
Superior organic
revenue growth
of 5-6% p.a.
Strong balance sheet with
opportunity to leverage for:
Bolt-on acquisitions of strong
local brands in still drinks
Consistent
margin Geographic opportunities
expansion of 20 with a growth profile, where
to 40 bps p.a. we can create value
on average
22Q&A
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