KO 2020 Strategy
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KO 2020 Strategy

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KO 2020 Strategy KO 2020 Strategy Presentation Transcript

  • Financial Vision Gary Fayard Executive Vice President, Chief Financial Officer
  • Forward-Looking Statements This presentation may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward- looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Coca-Cola Company’s historical experience and our present expectations or projections. These risks include, but are not limited to, obesity and other health concerns; scarcity and quality of water; changes in the nonalcoholic beverages business environment, including changes in consumer preferences based on health and nutrition considerations and obesity concerns; shifting consumer tastes and needs, changes in lifestyles and competitive product and pricing pressures; impact of the global credit crisis on our liquidity and financial performance; our ability to expand our operations in developing and emerging markets; foreign currency exchange rate fluctuations; increases in interest rates; our ability to maintain good relationships with our bottling partners; the financial condition of our bottling partners; our ability and the ability of our bottling partners to maintain good labor relations, including the ability to renew collective bargaining agreements on satisfactory terms and avoid strikes, work stoppages or labor unrest; increase in the cost, disruption of supply or shortage of energy; increase in cost, disruption of supply or shortage of ingredients or packaging materials; changes in laws and regulations relating to beverage containers and packaging, including container deposit, recycling, eco-tax and/or product stewardship laws or regulations; adoption of significant additional labeling or warning requirements; unfavorable general economic conditions in the United States or other major markets; unfavorable economic and political conditions in international markets, including civil unrest and product boycotts; changes in commercial or market practices and business model within the European Union; litigation uncertainties; adverse weather conditions; our ability to maintain brand image and corporate reputation as well as other product issues such as product recalls; changes in legal and regulatory environments; changes in accounting standards and taxation requirements; our ability to achieve overall long-term goals; our ability to protect our information systems; additional impairment charges; our ability to successfully manage Company-owned bottling operations; the impact of climate change on our business; global or regional catastrophic events; and other risks discussed in our Company’s filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Coca-Cola Company undertakes no obligation to publicly update or revise any forward-looking statements. Reconciliation To US GAAP Financial Information The following presentation includes certain “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934. A schedule is posted on the Company’s website at thecoca-colacompany.com (in the “investors” section) which reconciles the non-GAAP financial measures included in the following presentation to the most directly comparable financial measures calculated and presented in accordance with Generally Accepted Accounting Principles.
  • Delivering High-Quality Growth Today Sept 2009 YTD 9% Despite a Perfect Storm • Developed market slowdown • Developing market volatility 5% • Emerging market uncertainty • FX headwinds 2% Volume Net Revenue* Operating Income** *Ongoing, currency neutral excluding structural changes ** Ongoing, currency neutral
  • Economics 101 Recessions Do End
  • Pace Of Consumer Recovery Will Vary Reset Rapid Recovery China Europe India USA Brazil Delayed Recovery Volatility / Double-Dip Russia Japan Ukraine
  • Our Long-Term Targets Remain Appropriate Long-Term Growth Targets* Our Beliefs High Single • Appropriate over the long-term Digit with quarter-to-quarter volatility 6-8% • Our internal picture of success is to exceed these targets 5-6% • We remain constructively discontent 3-4% Our Metrics • Share gains • Consistent revenue growth • Expanding operating margins Volume Net Revenue OI EPS • Cash flows * Ongoing, currency neutral
  • How Do We Double System Revenues By 2020? “The US market is going flat and foreign sales won’t make up for it.”
  • How Do We Double System Revenues By 2020? “The US market is going flat and foreign sales won’t make up for it.” - Financial World, Report On The Coca-Cola Company, 1977
  • Track Record Of Profitable Growth Growth Since 1977 22X 16X 13X 9X 6X 4X Net Revenue Operating Income Net Revenue Operating Income Net Revenue Operating Income United States* Rest of World Total World *Includes Puerto Rico
  • Making Profitable Businesses Bigger KO Mexico Servings KO Spain Operating Income Stills % of Per Capita Per Capita KO Portfolio 635 +267 2.7X +14% 22% 368 8% 1997 2008 1997 2008 1997 2008 Capturing The Opportunities • Demographic trends • Personal consumption • Per capita consumption expansion • Ready-to-drink conversion
  • We Are Confident In Our 2020 Vision KO System Net Revenues (US$ currency neutral) Implied By KO Long-Term Growth Model 2010 2012 2014 2016 2018 2020
  • Leveraging Our Competitive Advantages Brands Healthy Strong Cash and System for Flow and Operational Scale and Disciplined Flexibility Reach Investments
  • Winning In The Global Marketplace #1 #1 #1 #1 #1 #2 #3 Sparkling Juices & RTD RTD Active Sports Packaged Beverages Juice Drinks Coffee Tea Lifestyle Drinks Water 1997 Billion Dollar Retail Brands Current Billion Dollar Retail Brands
  • Tailoring Our Actions By Market Reset Rapid Delayed Volatility/ Recovery Recovery Double-Dip Markets Actions Success Metrics
  • Tailoring Our Actions By Market Reset Rapid Delayed Volatility/ Recovery Recovery Double-Dip Markets Europe USA Segment Actions Offerings Success Share of Value Metrics Commercial Execution
  • Tailoring Our Actions By Market Reset Rapid Delayed Volatility/ Recovery Recovery Double-Dip Markets Europe China USA India Brazil Segment Build Actions Offerings Consumption Share of Value Per Capita Success Metrics Commercial Margin Execution Expansion
  • Tailoring Our Actions By Market Reset Rapid Delayed Volatility/ Recovery Recovery Double-Dip Markets Europe China Japan USA India Brazil Segment Build Reinvigorate Actions Offerings Consumption Growth via Innovation Share of Value Per Capita System Profits Success Metrics Commercial Margin Brand Health Execution Expansion
  • Tailoring Our Actions By Market Reset Rapid Delayed Volatility/ Recovery Recovery Double-Dip Markets Europe China Japan Russia USA India Ukraine Brazil Actions Segment Build Reinvigorate Maximize Offerings Consumption Growth Flexibility via Innovation Share of Value Per Capita System Profits Balanced Volume Success and Value Share Metrics Commercial Margin Brand Health Execution Expansion Manage Price Gaps
  • Productivity Is Embedded In All That We Do Current Productivity Savings Program Cumulative Annual Savings $500 MM Target $310 MM* By End of 2009 By End of 2011 *Targeted
  • Leveraging Our Competitive Advantages Proven Strong Brands Healthy Playbook for Cash Flow and System for Emerging and Operational Scale and Stronger Disciplined Flexibility Reach Investments
  • Healthy System Investing To Grow Higher Margins Improving Profitability Reinvesting → Long-Term EBIT / Revenue* Return on Invested Capital* Capital Expenditures (US$ Currency Neutral) +30 +260 +16% Basis Basis CAGR Points Points 14.9% $6 Bn 14.6% 13.8% $4 Bn 11.2% 2005 2008 2005 2008 2005 2008 * Ongoing, currency neutral as provided by ThomsonReuters (based on KO + 21 publicly traded bottlers)
  • Power Of The Coca-Cola Bottling System Top 8 Bottlers % Of KO 2008 Unit Case Volume 2% 9% 11% 2% 16% 9% 3% 2% *As of December 2008
  • Significant Share Advantage NARTD Share 2008 KO Primary Global Competitor North America International Global 1.3X 3.5X 2.3X NARTD excludes Bulk Water and Dairy/Soy drinks
  • Tremendous Scale Across Operating Groups NARTD Share 2008 KO Primary Global Competitor 4.8X 2.4X 2.8X 4.5X Europe Pacific Latin America Eurasia & Africa % KO Volume 17% 17% 27% 15% KO Net Revenue $ Bn $5.8 $4.7 $3.8 $2.3 KO Operating Income $ Bn $3.2 $1.9 $2.1 $0.8 2008 Data
  • Creating Enormous Economies Of Scale Consumer Customer Franchise Marketing Leadership Leadership 1.6 Bn servings per day 20 MM customers $64 Bn supply chain • 1 MM per minute per week 900+ mfg operations 206 countries 7 MM coolers 8,500 sales centers • More than UN and warehouses 500,000 vehicles
  • Leveraging Our Competitive Advantages Strong Proven Brands Healthy Cash Flow Playbook for and System for and Emerging Operational Scale and Disciplined Stronger Flexibility Reach Investments
  • Strong Cash Flows Would Continue Under Long-Term Growth Targets Cumulative Cash From Operations Approximately $ Bn $130 - $150* Capital $32 - $37 Expenditures Cash $62 Available $13 Capital After Dividends Expenditures Cap-Ex Dividends Acquisitions ~$110 $27 Share Repurchase Share Repurchase $14 Acquisitions / Other $8 1997 - 2008 2009 - 2020 Estimated *Assumes: • Long-Term targets are achieved • Current exchange rates • No structural changes
  • Disciplined Investment In The Business Emerging • Maximize Volume • Investing for Accelerated Growth Developing • Maximizing Value Through Segmentation • Building Consumer Loyalty Developed • Driving Profitable Growth Through Innovation And Productivity KO 2008 Volume
  • Unbroken Track Record Of Dividends Annual Dividend Per Share* $1.64 354 Consecutive Dividends Since 1920 1920 2009 *Annual dividend per share adjusted for stock splits
  • Leveraging Our Competitive Advantages Strong Proven Brands Healthy Cash Flow Playbook for and System for and Emerging Operational Scale and Disciplined Stronger Flexibility Reach Investments
  • Success Measured By Delivering Total Shareowner Returns More than DOUBLE SYSTEM REVENUE while increasing system margins Maximize Company and bottler long-term cash flow Boost system investment in sales and market execution Use our size and expertise to create economies of scale Most efficient & effective business system; build a continuous improvement and cost management culture