2011 Full Year Result 22 February 2012 1 2011 Full Year Result - - PDF document

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2011 Full Year Result 22 February 2012 1 2011 Full Year Result - - PDF document

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2011 Full Year Result 22 February 2012 1 2011 Full Year Result Terry Davis Group Managing Director 2 Highlights of 2011 Result 1. Fifth consecutive year of strong growth from Indonesia & PNG significant investments made in

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22 February 2012

2011 Full Year Result

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Terry Davis Group Managing Director

2011 Full Year Result

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Highlights of 2011 Result

1. Fifth consecutive year of strong growth from Indonesia & PNG – significant investments made in manufacturing capacity, capability and cold drink coolers has positioned the business well for future growth 2. Successful execution of Project Zero capital investment programs which continued to deliver operational efficiencies and enhanced customer servicing capability 3. New 10 year Beam Global agreement which provides a key platform for CCA’s longer term growth in alcohol 4. $170.3 million in after tax profit from the agreement to sell Pacific Beverages to SABMiller 5. Strong balance sheet enabling refinancing of all debt out to April 2014 at attractive credit margins, materially reducing funding costs 6. Strong free cash flow generation which has supported the 8.2% increase in full year dividends and an increase in the dividend payout ratio to 74.9%

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A 10 year track record of EPS and DPS growth

Earnings per share (cents per share) Dividends per share (cents per share)

1. Before significant items

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CCA shareholder value creation since 2001

CCA  288% S&P/ASX100

 103%

Jan01-Dec11

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Warwick White Managing Director Australasia

2011 Full Year Result

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Australia

Solid result with EBIT up 2.4% and margins up 0.1 pts to 21.1%. Volumes impacted by weak consumer spending, natural disasters in H1 and wet summer weather in H2

$Am

FY11 FY10 Change Trading revenue 2,880.7 2,819.1 2.2% Revenue per unit case $8.52 $8.21 3.8% Volume (million unit cases) 338.3 343.2 (1.4%) EBIT 607.2 592.7 2.4% EBIT margin 21.1% 21.0% 0.1 pts

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Australia

  • H1 earnings impacted by lower volumes due to QLD floods and cyclone

Yasi

  • H2 affected by constrained consumer spending, prolonged discounting by

the major competitor and cool, wet weather in NSW in the lead up to Christmas

  • Weakening global economy, unemployment concerns, impact of the higher

Australian dollar on tourism numbers all impacted consumer demand and limited beverage category growth

  • Continued to drive increased brand availability and improved immediate

consumption share with additional cold drink cooler placements

  • Successful execution Project Zero programme continued to deliver

efficiency gains

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Product & pack innovation underpins strong market position

GV Milk “Strong Coffee” Mt Franklin Super Light-weight “Easy-Crush bottle” Powerade Fuel+ Mother fuel cap Powerade 600ML “Silver Charge” Glaceau “Low Cal” GV Quencher

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Investment & innovation in cold drink coolers continues to differentiate CCA from its competitors

  • Developed the most energy efficient cooler in the global Coca-Cola System with

the standard 2-door cooler now using over 50% less energy than 3 years ago

Fountain LED display cooler Low height vender C-C Global System Greenest Cooler

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Next Generation equipment provides customers with greater choice in ice cold and frozen beverages

Frozen Coke Super Cold Coolers Ice Up

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Power of the portfolio and customer servicing expertise driving licensed channel growth

No 1 NARTD portfolio

  • Increased capability and broader product

portfolio is driving NARTD customer growth

  • Supported by significant investment in cold

drink equipment and dispensing innovation

  • “Mother” on tap a world first

Leading spirits portfolio

  • Jim Beam remains the # 1 Spirit/ARTD brand

in the Australia

  • Canadian Club reached 1m standard cases in

2011

  • Potential acquisition of FGL spirits brands in

2012

Capability – on-premise activation, innovation and customer service

  • Customer relationship forums – tailoring

products and & equipment to customer needs

  • Industry leading response time for

equipment service

  • In-venue technology solutions

Expect to be back in beer from early 2014

  • Sales expertise and distribution capability

maintained post the sale of Pacific Beverages

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PET bottle self-manufacture ahead of target

  • Currently 40% self-sufficient in the self-manufacture of PET bottles with 2

lines installed in NSW, 2 in South Australia and 1 in Victoria

  • 2012 – 5 blowfill lines to be deployed which will increase self-sufficiency to
  • ver 70% by Dec12
  • Blowfill lines continue to meet our expectations in terms of operating and

financial performance

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New Zealand & Fiji

New Zealand local currency EBIT up ~3%, a very solid outcome given the soft consumer spending environment which has persisted for 2 years

$Am

FY11 FY10 Change Trading revenue 415.8 420.1 (1.0%) Revenue per unit case $6.46 $6.39 1.1% Volume (million unit cases) 64.4 65.7 (2.0%) EBIT 79.5 81.4 (2.3%) EBIT margin 19.1% 19.4% (0.3) pts

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New Zealand & Fiji New Zealand

  • Local currency EBIT up ~3% - while the Rugby World Cup boosted volumes during

Sep/Oct, it was not enough to overcome the impact from the Christchurch earthquakes and the record rainfall which affected large parts of the North Island in the lead up to Christmas

  • Maintained strong market share position and fully recovered COGS increases
  • First blowfill line commissioned in Auckland delivering efficiency gains in line with

expectations with additional Auckland line and Christchurch line to be commissioned during H1 2012

Fiji

  • Recorded a small decline in local currency earnings as the business faced

challenging trading conditions which included a significant decline in tourism and the imposition of an increase in the VAT from 12.5% to 15%

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Warwick White Managing Director Australasia

2011 Full Year Result

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Terry Davis Group Managing Director

2011 Full Year Result

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Indonesia & PNG

Local currency EBIT growth >20% driven by strong volume growth, increased sales and manufacturing footprint and Project Zero efficiency gains

$Am

FY11 FY10 Change Trading revenue 845.5 789.1 7.1% Revenue per unit case $5.57 $5.56 0.2% Volume (million unit cases) 151.7 141.9 6.9% EBIT 88.1 75.0 17.5% EBIT margin 10.4% 9.5% 0.9 pts

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Indonesia & PNG Indonesia

  • Local currency EBIT up >20% driven by strong H2 trading and efficiency benefits

from the significant manufacturing and distribution investments made to reduce the cost of doing business over the past few years

  • OWPs volumes up 15% supported by the acceleration of cold drink cooler

placements and improved in-market execution

  • Volumes in modern food stores grew ~15% with an increase in market share to 40%
  • Minute Maid Pulpy Juice volumes up ~25% and Brand Coca-Cola, Sprite and Fanta

in OWP up ~15%

  • Placed >25,000 cold drink cooler doors and increased PET bottle production

capacity by 24%

PNG

  • Strong local currency earnings growth with brand Coca-Cola volumes growing by

15%

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Alcohol, Food & Services

Solid results from the Services division and the first time inclusion of the earnings stream from the Beam portfolio more than offset by an earnings decline from SPCA

$Am

FY11 FY10 Change Trading revenue 659.2 462.0 42.7% EBIT1 93.2 94.3 (1.2%)

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Alcohol, Food & Services Alcohol

  • First time inclusion of alcohol revenue and earnings under the revised 10 year Beam

sales and distribution agreement

SPC Ardmona

  • Solid results from snacking was offset by lower revenues and earnings from multi-

serve packaged fruit as the business continued to exit a number of unprofitable export, private label and international activities

  • The stronger Australian dollar materially impacted SPCA’s competitiveness against

cheap imported brands and imported private label categories in the domestic market

Services

  • Improved earnings from refrigeration and equipment management services, higher

demand for refrigeration servicing contracts and lower operating costs as a result of efficiency gains

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Sale of Pacific Beverages

Sale of Pacific Beverages

  • $170.3 million in after tax profit from the agreement to sell Pacific Beverages to

SABMiller

  • As part of the agreement, CCA has the right to acquire one or all of the following at

multiples ranging from 5 to 10 times EBITDA

– Foster’s Group Australian spirit and spirit RTD business; – Australian non-alcoholic beverages business; and – Fijian Brewery and Fijian liquor and Fijian non-alcoholic beverage business.

Update on potential acquisitions

  • Expect any acquisition to be complete by mid 2012
  • Potential acquisition cost – outlay of up to $200 million
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Nessa O’Sullivan Group Chief Financial Officer

2011 Full Year Result

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2011 Financial Scorecard

Key Objectives FY11 v FY10

1. Mid to high single-digit growth in earnings

  • 19.0% NPAT growth (reported)
  • 5.0% NPAT growth (before

significant items)

  • 2. Maintain strong ROIC
  • At 17.1%, ROIC is well above

WACC

  • 3. Recovery of COGS and other cost increases
  • COGS recovery across all

regions except Indo & PNG

  • NARTD beverage margins up

0.1% to 18.7%

  • 4. Strong balance sheet & cash management
  • Net debt held at ~$1.74bn
  • Interest cover  0.5 pts to 6.8x
  • 5. Dividend payout ratio over 70%
  • Payout ratio increased from

72.3%

1 to 74.9% 1

1. before significant items

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Profit & Loss

  • Lower interest expense driven by lower effective interest rates, improved cash management and

lower funding costs

  • 28.2% effective tax rate (before significant items) largely driven by benefits from investment and

R&D allowances in Australia

A$m FY11 FY10 % chg EBIT (before significant items) 868.9 844.9 2.8% Net finance costs (127.8) (134.4) (4.9%) Profit before tax

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741.1 710.5 4.3% Taxation expense

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(209.1) (203.9) 2.6% NPAT (before significant items) 532.0 506.6 5.0% Significant items – after tax 59.8 (9.3)

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NPAT (reported) 591.8 497.3 19.0%

1. Before significant items 2. Non-cash taxation charge arising from change in NZ tax legislation

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2011 Significant Items

Net after tax gain of $59.8 million comprising $170.3m from the agreement to sell Pacific Beverages to SABMiller in Dec11, net of $110.5m in restructuring and associated costs for the SPC Ardmona business

Pacific Beverages

  • No cash proceeds received in 2011
  • Cash proceeds received on 13 January 2012 and will be reflected in H1 2012 accounts

SPC Ardmona Restructure

  • Comprising $80.5m in H1 and $30.0m in H2
  • Largely non-cash in nature, comprising write-down of inventories to net realisable value,

redundancies and other restructuring costs

  • Around $20m of the 2011 Significant Item will result in a cash outlay in 2012, mainly relating to

redundancies and the completion of the Mooroopna production move scheduled for May

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ROIC

Substantial growth in ROIC since 2006

1. EBIT before significant items

Key drivers:

  • Earnings growth
  • High-returning capital investment

programmes

  • ROIC at a significant premium to WACC

with returns on future investments expected to continue to significantly exceed WACC

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Capital Expenditure

Delivering strong returns on capex programme with the pipeline of high returning capital projects extending out to the end of 2015

Key projects in 2011:

  • Project Zero & capacity: PET bottle self-

manufacture in Australia, NZ, PNG and Indonesia, preform plants in Australia and Indonesia

  • Cold drink equipment: Continued

investment in Australia and NZ with additional capex in Indonesia to increase fleet size

  • Infrastructure : IT projects, warehousing
  • etc. Final phases of OAisys technology

platform rollout in Australia with Indonesian implementation to commence in late 2012

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Capital Employed

Increase in capital employed largely due to up-weighted capital investment program and revaluation of investment in Pacific Beverages

A$m FY11 FY10 $ chg Working capital1 856.7 938.4 (81.7) Property, plant & equipment 1,772.1 1,595.3 176.8 IBAs & intangible assets 1,507.2 1,488.7 18.5 Deferred tax liabilities (153.8) (190.8) 37.0 Derivatives – non-debt (45.3) 31.1 (76.4) Other net assets / (liabilities) (159.7) (339.9) 180.2 Capital employed 3,777.2 3,522.8 254.4

1. 2011 working capital excludes $24.5m loan to Pacific Beverages

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Cash Flow

Free cash flow increased by $64.3m driven by higher earnings, improved cash management, partly offset by higher cash tax payments and impact of SPCA cash significant items

A$m FY11 FY10 $ chg EBIT (before significant items) 868.9 844.9 24.0 Depreciation & amortisation 205.2 191.9 13.3 Change in working capital (36.7) (28.2) (8.5) Net interest paid (118.4) (136.8) 18.4 Taxation paid (206.2) (177.1) (29.1) Other (46.6) (109.3) 62.7 Operating cash flow (before significant items) 666.2 585.4 80.8 Significant items (24.4)

  • (24.4)

Operating cash flow (reported) 641.8 585.4 56.4 Capital expenditure (361.2) (372.8) 11.6 Proceeds from sale of PPE & other 3.6 7.3 (3.7) Free cash flow 284.2 219.9 64.3

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Net Debt & Interest Cover

Continued strengthening of the balance sheet with EBIT interest cover increased from 4.0x to 6.8x since 2006

* Before significant items

  • Marginal increase in year end net debt to $1.74bn

despite: – >$55m in additional funding for dividend payments due to the Aug10 removal of the DRP discount – Up-weighted capital investment programme – Working capital investment in Indonesia, PNG and spirits businesses

  • Lower net finance costs with lower effective

interest rates and strong cash management

  • Strong interest cover of 6.8x, up from 6.3x in 2010
  • Refinanced all debt maturities up to Apr14 at

attractive credit margins

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Outlook for 2012

Non-Alcoholic Beverage COGS

  • Expect 2012 beverage COGS per unit case increase of 3.5-4% (constant currency and

excluding Indonesia) driven by higher commodity costs

  • Indonesia – expect around 10% growth in COGS per unit case from ongoing high inflation,

higher commodity prices as well as the mix impact of higher value, higher cost products Capital Expenditure

  • 2012 capex expected to increase by ~$100 million to $450-470m

Net Debt

  • Expect 2012 net debt to be maintained at around $1.8bn

– $300m proceeds from Pacific Beverages sale received in Jan12 – ~$100m in up-weighted capital expenditure – Up to $200m on acquisition of Fosters spirits assets in 2012 Dividends

  • Payout ratio – targeting the middle of the 70-80% payout range for 2012

Tax Rate

  • Effective tax rate for 2012 is expected to be ~29%
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22 February 2012

2011 Full Year Result

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Priorities & outlook for 2012

  • Up-weighted Project Zero programme

– Additional projects will see capital expenditure increase by ~$100m to $450-470m – The pipeline of infrastructure and technology projects now extends out to the end of 2015

  • Australia

– Expect to deliver both volume and revenue growth in 2012 – Weak consumer spending environment remains a concern – Solid promotional programme in the lead up to the Olympics, with Coca-Cola a key sponsor

  • Indonesia & PNG

– Up-weight investment to ~$120m as the growth outlook for both businesses continues to be favourable – Expect to deliver around a 10% increase in our one-way-pack production capacity and >10% increase in cold drink cooler fleet

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Q&A

2011 Full Year Result

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Disclaimer

CCA advises that these presentation slides contain forward looking statements which may be subject to significant uncertainties outside of CCA’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 undue reliance on any forward looking statement.