2005 Full Year Results Presentation 12 months to 31 December 2005 - - PDF document
2005 Full Year Results Presentation 12 months to 31 December 2005 9 February 2006 1 EPS Growth Consistent delivery continues Earnings per share 1 CAGR of EPS 43.3c +14.4% since 2001 39.0c 34.3c 29.2c 1 growth of EPS 25.3c
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1 CAGR of
1 growth of
Earnings per share
25.3c 29.2c 34.3c 39.0c 43.3c 2001 2002 2003 2004 2005
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Dividends per share
14.0c 18.5c 23.0c 28.0c 31.5c 2001 2002 2003 2004 2005
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11.0% to 43.3c
EPS1
$54.2m to $435.2m
Operating Cash Flow
4.1 pts to 17.5% (due to the inclusion of SPCA)
ROCE1
10.1% to $570.6m
EBIT1
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Backed by revenue management and cost discipline
cannot be profitably matched by our competitors
placements and outlet expansion
Product Innovation continues to drive category growth
74 new product launches in 2005
10 20 30 40 50 60 70 80 2001 2002 2003 2004 2005
Product launches
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50,000 100,000 150,000 200,000 250,000 300,000 350,000 2001 2002 2003 2004 2005
New customers and cold drink equipment driving product availability
15% increase in active customers in 2005 19% increase in cold drink coolers in 2005
Cold drink coolers Active customers
100,000 200,000 300,000 400,000 500,000 600,000 700,000 2001 2002 2003 2004 2005
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1 10.1% to $570.6m
Beverage EBIT margin a healthy 15.5% Food EBIT margin 13.0% (10 months)
Standout result from Indonesia with 49.6% local currency EBIT growth
32.4% to $42.9m Indonesia & PNG1
Result better than expectations with strong local currency revenue growth in H2 of 10.2%
EBIT loss of $6.6m South Korea1
Solid earnings result despite an intensifying competitive environment
$45.7m (10 months) SPC Ardmona
Competitive trading conditions in New Zealand lead to under-recovery of COGS
12.1% to $72.0m Pacific
EBIT margin maintained in a competitive market
5.3% to $455.5m Australia
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Australia – Solid EBIT growth & margin performance in a more competitive market
6.3% 7.8% Capital Expenditure / Sales Revenue 0.2pts 21.2% 21.4% EBIT Margin 5.3% 432.5 455.5 EBIT
322.9 322.0 Volume (million unit cases) 4.4% $6.32 $6.60 Sales revenue / case 4.1% 2,041.6 2,125.1 Sales revenue % Chg 2004 2005
A$m
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Fruitopia Classic, Fruitopia Alive and multi-pack water
and Sprite Zero growing the Sprite category by 10%
Australian revenue KEY DRIVERS
platform for profitably growing our customer and consumer relationships
Australia – Growing category leadership capability through product and package innovation
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5.4% 5.8% Capital Expenditure / Sales Revenue
19.2% 15.9% EBIT Margin
81.9 72.0 EBIT
67.7 67.1 Volume (million unit cases) 6.7% $6.31 $6.73 Sales revenue / case 5.8% 427.2 451.9 Sales revenue % Chg 2004 2005
A$m
Pacific – Competitive trading conditions in NZ lead to under-recovery of COGS
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revenue up 10%
20% led by Pump, Kiwi Blue and Powerade
introduction of the Keri 3 Litre Easy Grip pack and price rises in September KEY DRIVERS
new outlet expansion and customer service enhancement to maintain category leadership
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6.2% 6.7% Capital Expenditure / Sales Revenue
0.8%
EBIT Margin n/a 4.6
EBIT1 2.7% 122.7 126.0 Volume (million unit cases) 9.4% $4.58 $5.01 Sales revenue / case 12.3% 561.5 630.7 Sales revenue % Chg 2004 2005
A$m
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South Korea – Successful launch of Minute Maid underpinned H2 sales growth
100% juice category in a little over 6 months
coolers
merchandising and shelf space gains KEY DRIVERS
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South Korea – Initiatives to lower cost of doing business
MAJOR INITIATIVES
merchandising roles
Key Benefits:
strengthening
2006
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6.1% 9.0% Capital Expenditure / Sales Revenue 2.3pts 7.7% 10.0% EBIT Margin 32.4% 32.4 42.9 EBIT1 9.6% 113.1 124.0 Volume (million unit cases)
$3.71 $3.45 Sales revenue / case 1.9% 419.8 427.9 Sales revenue % Chg 2004 2005
A$m
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training and development programs
and flavour extensions as well as sports and tea categories
foodservice channels
placed (up 60%) KEY DRIVERS
training
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n/a 6.2% Capital Expenditure / Sales Revenue n/a n/a 13.0% EBIT Margin n/a n/a 45.7 EBIT n/a n/a 351.9 Sales revenue % Chg 2004 2005
A$m
10 months
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Lady Apple and Pineapple offerings
the convenience and petroleum channel
warehouse consolidation
SPCA – Transitioning to a modern customer service focused
KEY DRIVERS
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n/a 67.0% Working capital / sales – Food 0.8 pts 13.0% 12.2% Working capital / sales – Beverages 1.3 pts 6.1% 7.4% Capex / sales Cash Flow 4.7x 4.1x Interest cover Financial Health 16.8% $274.3m $320.5m NPAT1 growth 72.2% 21.6% 39.0c $518.3m n/a 16.0% 2004 73.5% Dividend payout ratio 4.1 pts 17.5% ROCE1 Returns 11.0% 43.3c EPS1 growth 10.1% $570.6m EBIT1 n/a 13.0% EBIT margin – Food 0.5 pts 15.5% EBIT margin – Beverages Change 2005 Performance
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EBIT driven by volume and price/mix recovery of higher COGS + inclusion of SPCA
518.3 (40.7) 33.4 113.3 (99.3) 45.7 570.6 EBIT FY04 Volume Price & Mix COGS Indirect costs &
SPCA EBIT FY05
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17.9 (359.8) (341.9) Deferred income tax liability 2,469.3 (332.8) 1,445.6 1,221.7 494.6 2004 1,088.2 (7.3) 552.8 290.8 234.0 $ chg 1,512.5 Property, plant & equipment 3,557.5 Capital Employed (340.1) Other net assets 1,998.4 IBAs & intangible assets 728.6 Working capital 2005
A$m
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Working capital improvements continue
Working capital
Total working capital increased due to inclusion
Beverages improvement a result of better inventory and debtor management Food working capital has reduced from its peak of ~90% of sales in June to 67%
Working capital / sales
2004 n/a 0.8 pts Chg 67.0% Food 12.2% Beverages 2005 Group working capital
2004 2005
Beverages Food Non-trading $494.6m $728.6m
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Net debt increase due to up-weighted capex and SPCA acquisition Interest cover strong at 4.1x Long-term interest cover target range of 3.0 – 4.0x
Net Debt & Interest Cover
Net Debt Interest Cover
1,000 1,500 2,000 2001 2002 2003 2004 2005
2.0 3.0 4.0 5.0 $m times
26 7.3% 8.8% 10.2% 21.6% 17.5% 2001 2002 2003 2004 2005
ROCE impact resulting from inclusion of SPCA
ROCE
Group ROCE down 4.1 pts due to first time inclusion of SPCA Beverage ROCE down slightly due higher capex spend and lower returns from NZ and South Korea Short-term ROCE dilution expected from lead times in generating returns from infrastructure capex ROCE target of ~20% level over time for current business mix
Post IFRS Pre IFRS
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Capital expenditure increases as infrastructure development commences
Capital Expenditure
infrastructure spending – commencement of Sydney and Auckland automated warehouses
drink cooler placement and replacement program
– 5-6% base capex – 2-3% infra capex – < 1% returnable containers
$0 $50 $100 $150 $200 $250 $300 $350 2003 2004 2005 Infrastructure Returnable cont & other base capex Cold drink equipment 4.8% 6.1% 7.4%
$m
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54.2 381.0 435.2 Operating cash flow 3.9 (15.1) (11.2) Other (95.2) 236.5 141.3 Free cash flow (84.9) (211.8) (296.7) Capital expenditure (64.5) 67.3 2.8 Sale of assets & other 29.1 (176.8) (147.7) Income tax paid (134.8) (24.3) 182.6 570.6 2005 16.2 166.4 Depreciation (25.0) (109.8) Net interest (22.3) (2.0) Change in working capital 52.3 518.3 EBIT $ chg 2004
A$m
Operating cash flow remains strong, up 14.2%
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Consistent cash flow generation
Continuing strong growth in beverages cash flow SPCA operating cash flow impacted by increased working capital since acquisition $50m one-off tax payment in 2004 Free cash flow impacted by up-weighted capex due to increased infrastructure spend
Operating Cash Flow
$268.1 $389.2 $408.3 $381.0 $435.2 $0m $100m $200m $300m $400m $500m 2001 2002 2003 2004 2005
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Strong earnings provide dividend growth momentum
Dividends per share
2005 payout ratio increased to 73.5% 70-80% target payout range Expect 100% franking for at least the next 2 years At ~4%, fully franked dividend yield is strong
14.0c 18.5c 23.0c 28.0c 31.5c 2001 2002 2003 2004 2005
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Tax
$11.2 million impact of overseas withholding tax structure change The effective tax rate for 2006 is expected to be within the range of 29% to 30%, depending on the geographic mix of earnings for the year
One-off costs for 2006
Successful outcome of the South Korean Early Retirement Plan (ERP) would result in a one-off cost of between $10 million and $20 million in 2006 Payback 12 – 18 months
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Beverages
Commodity and currency exposure to sugar, aluminium and PET resin Represents ~30% of COGS 2006 COGS per unit case expected to be up 6% to 7% 2006 hedging effectively in place > 80% for aluminium and sugar
Food
Commodity and currency exposure to tin plate and plastic Represents ~25% of COGS 2006 COGS (on a like-for-like basis) expected to be up 6% to 8%
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IFRS recap – CCA’s underlying business remains unchanged
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Australia % of Population Consuming in the Last 24 Hours
16% 12% 11% 5% 2% 2% 4% 3%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 12-19 years 20-29 years 30-39 years 40-49 Years
Coca-Cola Sugar Diet Coke
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USA % of Population Consuming in the Last 24 Hours
diet
16% 13% 12% 13% 7% 8% 11% 11%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 12-19 years 20-29 years 30-39 years 40-49 Years
Coca-Cola Sugar Diet Coke
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Coke Zero Doubled Vanilla Coke Sales During Launch
First Five Weeks after Launch 1,000 2,000 3,000 4,000 5,000 6,000 Vanilla Coke UC (000's) Coke Zero
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Total supersites: 35 nationwide Total outdoor : 2,000 sites nationwide (AdShel, JC Decaux and Tribe)
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198 Sales Professionals from 42 Different Countries
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Key Factors Driving 2006 Performance: Strong new product pipeline for 2006 led by Coca-Cola Zero backed by up-weighted marketing spend by CCA and TCCC Regained momentum in Australia Improved operating performance from New Zealand South Korea to return to profitability Higher raw material costs will result in 6% -7% increase in beverage COGS per case and 6% - 8% increase in food COGS Price increases to recover higher COGS
Expect to deliver another year of solid growth in EBIT for 2006
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