Investor Relations 2016
Coca-Cola FEMSA has traveled to become the largest franchise bottler in the world, in terms of volume, operating in two of the most attractive regions for its industry ~ 27 Bn Transactions (1) 10 years CAGR (1) ~ 4 Bn Unit Cases (1) +8% US$ ~10 Bn in Revenues (1) +12% US$ ~ 2 Bn in EBITDA (1) +11% Industry growth CAGR 14-19 (2) Southeast LATAM Asia +3% +7% Volume Southeast Asia (3) Value +4% +6% (1) Figures reflect LTM 3Q 2016 including the Philippines on a proforma basis (2) Source Euromonitor, NARTD industry (3) We operate the Philippines through a joint venture with The Coca-Cola Company 2
Our footprint… Mexico and Central America division product mix by category % of volume of total beverages LTM 3Q16 NCB's Volume (MMUC) 2,022 6% Water 20% Transactions (Millions) 11,380 CSD's Revenues (USD Billions) ~4.4 74% EBITDA Margin 22.9% product mix by package % of volume of sparkling beverages Non-Returnable 63% (1) Returnable 37% Population served (millions) 93.8 product mix by size % of volume of sparkling beverages Points of sale 996,773 Multi Single Plants 22 Serve Serve 63% 37% Distribution centers 174 Product Innovation (1) Figures reflect FY 2015 3
Our footprint… South America division product mix by category % of volume of total beverages NCB's LTM 3Q16 Water 7% Volume (MMUC) 1,375 10% Transactions (Millions) 8,806 CSD's 83% Revenues (USD Billions) ~4.0 EBITDA Margin 16.8% product mix by package *Including Venezuela % of volume of sparkling beverages Non-Returnable 82% Returnable 18% product mix by size % of volume of sparkling beverages (1) Multi Single Serve Serve 77% 23% Population served (millions) 162 Points of sale 1,006,206 Product Innovation Plants 22 Distribution centers 100 *Including Venezuela (1) Figures reflect FY 2015 4
Our footprint… Asia division (1) product mix by category % of volume of total beverages LTM 3Q16 NCB's Water Volume (MMUC) 565 2% 10% Transactions (Millions) 6,444 CSD's 88% Revenues (USD Billions) ~1.1 EBITDA Margin ~10% product mix by package % of volume of sparkling beverages. Excluding Fountain Non-Returnable 40% Returnable 60% product mix by size % of volume of sparkling beverages. Excluding Fountain Multi Single Serve Serve 55% 45% (2) Population served (millions) 101.8 Product Innovation Points of sale 806,369 Plants 19 Distribution centers 53 (1) We operate the Philippines through a joint venture with The Coca-Cola Company (2) Figures reflect FY 2015 5
Despite a very challenging environment we continue to generate a solid set of comparable results across our markets Comparable Average Revenue growth Price/Case In the last twelve months we have generated close to growth +1.4% +5.0% +5.5% Transaction 20 billion transactions, outperforming volume growth growth in our key markets Volume growth Leveraging on pricing and transaction growth to + 0.6 % deliver solid top line performance in local currencies across operations Mexico Mexico We continue to strengthen our market position , Flavors NCB’s +4pp +1pp maintaining or gaining market share in sparkling beverages and NCB’s in key territories Argentina Brazil NARTD NARTD Expanding comparable EBIT margins despite +1pp +2pp currency, raw material volatility and a very challenging consumer environment in South America +10bps Comparable EBIT margin growth (1) Comparable means, with respect to a year-over-year comparison, the change in a given measure excluding the effects of (i) mergers, acquisitions and divestitures, (ii) translation effects resulting from exchange rate movements and (iii) the results of hyperinflationary economies in both periods. From our operations, only Venezuela qualifies as a hyperinflationary economy. 6
Our Strategic Framework continues to be the guide for our business Become a multi-category beverage leader with global footprint CATEGORIES: Protect and grow Sparkling, while diversifying aggressively in Stills, Dairy and new categories GEOGRAPHIES: Expand footprint in LatAm & Asia, monitoring other opportunities within TCCC System Winning Portfolio Operating Model Cultural Buildup Transformation Evolution Disciplined Capital Allocation Business Sustainability Strategic M&A Accretive relationship with KO 7 7
Strategic Imperatives Ensure operational stability Accelerate performance to exploit market leadership w ith distinctive capabilities • T ackle current labor challenges • Focus on Analytics and a streamlined RTM. • Sustain margins despite the economic environment • Compensate incidence increase through pricing and CoE initiatives Capture transformational opportunities Turnaround focus • Turnaround in Panama • Improve POS execution and exploit Coolers as a • Structural changes in Guatemala driver for growth • Costa Rica’s volume growth into profit growth • Vonpar Integration & Leao Transformation • Improve capacity in Nicaragua to maintain growth Create basis for sustainable Ensure business continuity and profitable grow th • Rescale business to continue operating • Maintain labor stability • Adjust cost structure & recover margins • Continue developing affordable CSD’s portfolio • Keep improving our RTM capabilities Accelerate turnaround • Leverage volume growth to offset cost 8
Portfolio initiatives - Maximizing value in each segment through innovation and affordability Dairy CSD’s NCB’s Water Innovation Juices Innovation Innovation - A portfolio for each segment Sport Drinks Low -calorie - Market leadership in Mexico Neo natural Affordability Energy Drinks - Returnable - MS & SS
Continued focus on improving execution across our territories In Brazil KOF is the bottler with the largest growth in the national execution index +20pp Our refrigeration platform continues to be a benchmark for the industry Number of new coolers installed across our territories +200,000 +165,000 +160,000 +150,000 2014 2015 2016 2017
Transformation of our operating model… Become a multi-category beverage leader with global footprint CATEGORIES: Protect and grow Sparkling, while diversifying aggressively in Stills, Dairy and new categories GEOGRAPHIES: Expand footprint in LatAm & Asia, monitoring other opportunities within TCCC System Operating Model Winning Cultural Transformation Portfolio Evolution Buildup Disciplined Capital Allocation Business Sustainability Strategic M&A Accretive relationship with KO 11 11
… driven by our centers of excellence Current transformational Through our centers of efforts: excellence to scale growth: Kofmmercial Digital Commercial Platform Supply Chain Supply Chain Planning Innovation Digital Distribution IT Global Business Services Finance Procurement Facing a more complex management model 12
Commercial Center of Excellence transformational efforts Advanced Analytics Trade Marketing SalesForce for Revenue Next Generation Automation Transformation Sales Quota Progress Segmentation Agile & user friendly tool ICE Score POS Benchmark Internal & External variables Coverage Commercial Lever Granular segments creation Assign Targeted Initiatives (Priority Portfolio) jssOptimization Targeted Activities Portfolio & Pricing by segment Faster Order Entry POS Potential Complete Integration Promo-Push Scenario Planning with back office More than 7,000 KPIs End-to-End organization analyzed by POS Feedback Enablers Transform Commercial & BackOffice Processes 13
Driving results through an agressive deployment Implementation progress over 5 month Results after implementation in period five territories Volume growth of • +4% • Value growth of • + 5% 5 473 K 2,607 KDP territories vs not implemented territories Customers Routes 81% of volume • • Rollout Pilot and rollout • Next steps: covered 2016 2017 2018 14
Integrated supply chain transformational efforts Centralize the Supply Chain Planning Organization to increase customer service and optimize costs and capital by leveraging KOF’s scale and expertise ... Continuous Order Global Vision End-to-End Processing Continuous Operation KOFmercial 63 Plants Materials Digital 327 DCs T2 Platform 16,650 Trucks Economies of Scale Operational Savings Warehouse Production T1 Process simplification and standardization. • Optimal technological tools to support our processes on Cloud. • Organizational design with new capabilities and competencies. • 15
Distribution & Logistics Center of Excellence – Digitalizing distribution Digital Distribution Live WEB Mobile App Telematics Platform + Systemic Management Distribution Model • Service level improvement Increased client & KOF connectivity • Time optimization due to remote settlement • Resource optimization : routes, maintenance, fuel consumption • New operational management culture • • Quality of life improvement : 1 hour per day reduction of working time 16
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