2013 Full Year Result Terry Davis Group Managing Director John Murphy - PDF document

2013 Full Year Result Terry Davis Group Managing Director John Murphy Managing Director Australian Beverages Nessa O’Sullivan Group Chief Financial Officer 18 February 2014 1 2013 Result Overview  Difficult trading conditions in the Australian grocery channel resulted in a 9.3% decline in Australian beverage earnings  >10% volume growth in Indonesia. However, input cost inflation, currency depreciation and continued economic challenges in PNG impacted segment earnings  Strong return to growth in New Zealand with over 10% local currency EBIT growth  Strong cash flow generation and the continued strength of the balance sheet and financial ratios supports the maintenance of full year ordinary dividends in line with last year. Total dividends, including the special dividend, declined by 1.7%  Ongoing impact of the high Australian dollar on SPCA and the associated impact on the business’ competitiveness against imported packaged fruit and vegetable products led to the $404 million write down of SPCA intangibles and other assets 2

Australia Lower than target price recovery due to difficult trading conditions in the Australian grocery channel led to a 9.3% decline in Australian beverage earnings $Am FY13 FY12 Change Trading revenue 2,947.2 3,027.9 (2.7%) Revenue per unit case $8.71 $8.67 0.5% Volume (million unit cases) 338.2 349.3 (3.2%) EBIT 566.0 624.0 (9.3%) EBIT margin 19.2% 20.6% (1.4) pts 3 Non-Grocery business continues to grow volume and earnings driven by increases in shelf share and the continued growth of frozen beverages Australian Beverages Volume Growth 2013 4% 2.3% 2% 0% Volume Growth vs LY (%) Driven by aggressive -2% competitor pricing & reduction in level of -4% warehouse inventories by -6% retailers during the year -8% -8.2% -10% Non-Grocery Grocery Source: Internal Systems 4

Cold drink shelf share increased through ongoing investment in product, technology and equipment innovation CCA Cold Drink Shelf Share 62.5% 62.0% 62.0% 61.5% Shelf Share (%) 61.0% 60.7% 60.5% 60.0% 2012 2013 Source: Shelf Share for total IC (National and Operational accounts) based on our new Trax system. (2012 equivalent 65%) 5 Using Business Intelligence capability to identify and target growth opportunities for our key account customers Outlet A Early morning trade Outlet B Lunch focus Sales Outlet C Late night food Time of Day Source: Internal Systems: BI 6

Frozen category increased 5 fold since 2004 with ~159m serves sold during 2013 driven by continued innovation in flavour variants Frozen Beverages Serves 180 ~159m 160 140 Frozen Beverage Serves (millions) ~120m 120 100 ~85m 80 60 40 ~30m 20 0 2004 2008 2012 2013 7 Grocery channel materially affected by aggressive competitor pricing and retailer de-stocking Australian Beverages Volume Growth 2013 4% 2.3% 2% 0% Volume Growth vs LY (%) Driven by aggressive -2% competitor pricing & reduction in level of -4% warehouse inventories by -6% retailers during the year -8% -8.2% -10% Non-Grocery Grocery Source: Internal Systems 8

Carbonated beverages in the grocery channel materially impacted by a 6 pt increase in the price gap to the major competitor TCCC Soft Drinks Price Premium to Pepsi Schweppes in Grocery 50% 49% 49% TCCC Soft Drink Price Premium to Pepsi Schweppes 48% 47% +6pts 46% 45% 44% 43% 43% 42% 41% 40% Year 2012 Year 2013 Source: Aztec Grocery excludes 600ml 9 Non-CSD beverages grew volume by 10% in the grocery channel driven by Mount Franklin Water and continued momentum with convenience and portion control offerings Mount Franklin Cold Drink Beverages Portion Control Packs 10

Continued shift to premium offerings. Mini-can volumes grew by ~70% in 2013 – targeting 120m cans in 2014 Mini-Cans Sold 140m 120m 120m Individula Mincans Sold (m) 100m 85m 80m 60m 50m 40m 20m 0m 2012 2013 2014 Target Source: Internal Systems 11 2014: Strong focus on building category trust and increasing focus on portion control and low calorie Leading with the facts Mini-sized refreshment Making diets cool 12

2014: Focus on reconnecting with and recruiting consumers through novel product forms and sampling; working even more closely with customers on bespoke solutions Recruiting via novel product Recruiting via >1 “Only Coke can do” bespoke forms and packages million samples customer programmes 13 2014: Building our other power brands and power brands of the future Continuing to set the standard Capturing the adult Revitalising old in premium water soft drink opportunity favourites 14

2014: Commencement of review of the cost of doing business 1 2 Additional Project Zero 3 Sales Force Productivity Project Phoenix Benefits 4 Support Services 5 6 Equipment Services Logistics Savings Productivity Efficiencies 15 Alcoholic Beverages: Successful re-building of a beer and cider capability ST E P 1 / / ST E P 2 / / ST E P 3 / / ST E P 4 / / ST E P 5 / / Ac quir e d Pa r a dise Grow F iji Se c ure L oc a l Se c ure Re - e ntry Be ve ra g e s in Busine ss Produc tion Inte rna tiona l Re c o mme nc e F iji/ Pa c ific Cre ate E xpo rt Ca pa bility par tne r s se lling Be e r and o ppo rtunitie s ABC JV with Case lla I nte rnatio nal Be e r Cide r in Australia Distributio n fro m F iji, le d by and Cide r 17 De c e mbe r 2013 agre e me nts fo r Rum and Be e r partne rs fo r Australia Corona Ca rlsbe rg a nd Mo lso n Co o rs Molson Coors in F iji and Pac ific / PNG Bo sto n Be e r Re ko rde rlig 16

The new beer and cider portfolio is well positioned in growth segments of the market MAT to 1/12/13 17 More new brands to be introduced over the coming months 18

Initial highlights of the return to the Australian beer and cider market  Ranging achieved in over 2,500 outlets  Re-order rates well ahead of target  Consumer take-up of new products exceeding forecast with Coors sales rate at same levels as other long established comparable beers in the market in one large customer chain  The brewery is producing high quality product including Beam draught products, Alehouse, ARVO, Blue Moon draught, Rekorderlig draught and Pressmans cider  Targeting around 1% of incremental EBIT growth from alcoholic beverages in 2014 19 New Zealand & Fiji In AUD, New Zealand & Fiji delivered 18.0% earnings growth driven by improved performances from both New Zealand and Fiji as well as a currency benefit on translation from the appreciation of the New Zealand dollar. Local currency regional EBIT increased by around 10% FY13 FY12 Change $Am Trading revenue 452.5 402.8 12.3% Revenue per unit case $7.36 $6.72 9.5% Volume (million unit cases) 61.5 59.9 2.7% EBIT 82.7 70.1 18.0% EBIT margin 18.3% 17.4% 0.9 pts 20

New Zealand & Fiji New Zealand  Solid recovery with a return to growth following a strong summer trading season  Momentum improved throughout the year as a result of a number of successful new product launches as well as benefitting from the improved economic conditions  Highlights for the year included the relaunch of Lift Plus driving energy drink volume growth of 11% and Keri Pulpy was successfully launched in February driving total Keri juice growth of over 11%  The successful implementation of Project Zero initiatives continues to reduce the cost base in New Zealand Fiji  Strong volume and earnings growth as it cycles the impact of major floods last year and continues to benefit from the strong growth of Minute Maid Pulpy 21 Indonesia & PNG While strong volume momentum continued for the Indonesian business, rapid cost inflation, currency depreciation and continued economic challenges in PNG impacted segment earnings FY13 FY12 Change $Am Trading revenue 919.2 948.2 (3.1%) Revenue per unit case $5.14 $5.66 (9.2%) Volume (million unit cases) 178.7 167.4 6.8% EBIT 91.6 105.5 (13.2%) EBIT margin 10.0% 11.1% (1.1) pts 22

Indonesia & PNG Indonesia  Volumes grew by >10% with local currency EBIT growth of 5% driven by the successful launch of a number of new products and the rapid growth of the water business. Significant wage and fuel inflation in the second half however limited local currency earnings growth  OWPs grew 20% with both the modern food store and general trade performing well supported by the acceleration of cold drink cooler placements, improved in-market execution, new products and packs and a strong promotional programme  Highlights include strong growth of single serve carbonated beverages in OWP, OWP Frestea grew over 15%, successful launch of Minute Maid Aloe Vera and Minute Maid Nutriboost and water volumes growth of over 50% PNG  The PNG business experienced a significant decline in volumes and earnings due to a slowdown in economic activity caused by falling commodity prices, reduced mining activity, increased competition and increased unemployment levels 23 Alcohol, Food & Services Alcohol, Food & Services earnings declined by 2.2% with the growth in earnings from alcoholic beverages more than offset by the decline in earnings from SPCA FY13 FY12 Change $Am Trading revenue 717.5 718.5 (0.1%) EBIT 1 93.0 95.1 (2.2%) 1. before significant items 24