2015 CAGNY. Muhtar Kent, Chairman & CEO Kathy Waller, EVP & Chief Financial Officer FEBRUARY 20, 2015

Transcription

1 2015 CAGNY Muhtar Kent, Chairman & CEO Kathy Waller, EVP & Chief Financial Officer FEBRUARY 20, 2015

2 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 concerns; water scarcity and poor quality; evolving consumer preferences; increased competition and capabilities in the market place; product safety and quality concerns; increased demand for food products and decreased agricultural productivity; changes in the retail landscape or the loss of key retail or foodservice customers; an inability to expand operations in emerging and developing markets; fluctuations in foreign currency exchange rates; interest rate increases; an inability to maintain good relationships with our bottling partners; a deterioration in our bottling partners' financial condition; increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters; increased or new indirect taxes in the United States or in other major markets; increased cost, disruption of supply or shortage of energy or fuels; increased cost, disruption of supply or shortage of ingredients, other raw materials or packaging materials; changes in laws and regulations relating to beverage containers and packaging; significant additional labeling or warning requirements or limitations on the availability of our products; an inability to protect our information systems against service interruption, misappropriation of data or breaches of security; unfavorable general economic conditions in the United States; unfavorable economic and political conditions in international markets; litigation or legal proceedings; adverse weather conditions; climate change; damage to our brand image and corporate reputation from negative publicity, even if unwarranted, related to product safety or quality, human and workplace rights, obesity or other issues; changes in, or failure to comply with, the laws and regulations applicable to our products or our business operations; changes in accounting standards; an inability to achieve our overall long-term growth objectives; deterioration of global credit market conditions; one or more of our counterparty financial institutions default on their obligations to us or fail; an inability to realize additional benefits targeted by our productivity and reinvestment program; an inability to renew collective bargaining agreements on satisfactory terms, or we or our bottling partners experience strikes, work stoppages or labor unrest; future impairment charges; multi-employer plan withdrawal liabilities in the future; an inability to successfully integrate and manage our Company-owned or -controlled bottling operations; 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 for the year ended December 31, 2013 and our subsequently filed Quarterly Reports on Form 10-Q, 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 U.S. GAAP Financial Information The following presentation may include certain "non-gaap financial measures" as defined in Regulation G under the Securities Exchange Act of A schedule is posted on the Company's website at (in the Investors section) which reconciles our results as reported under Generally Accepted Accounting Principles and the non-gaap financial measures included in the following presentation. 2

3 Agenda 2014 Performance Strategic Overview Areas of Focus for 2015 Q&A 3

4 Performance

5 Progress in a Challenging Year 2014 Full-Year Performance Challenges and Progress NARTD Value Share Net Revenue* Operating Income* EPS** 3% 6% 5% Macro environment Continued currency headwinds Strategic initiatives to accelerate growth Evolving and strengthening our distribution system New investments and partnerships focused on innovation and new occasions 5 * Comparable currency neutral, excluding the impact of structural items ** Comparable currency neutral

6 Strategic Initiatives to Accelerate Growth Drive efficiency through aggressive productivity Streamline and simplify organization Disciplined brand and growth investments Segmented market roles Focus on core business model 6

7 Our Strategic Initiatives Drive Business Transformation and Growth Streamline, Simplify and Save Balanced Investment and Flexibility Focus Our System KO: Dynamic Brand Portfolio, Great Marketing and System Leadership Bottling Partners: Superior Execution New Partners: Expanding Beverage Occasions and Capabilities Revenue, Profit & Returns 7

8 Strategic Overview

9 Our Economic Profit Model Is Based on Growth 70% of EP Growth 30% of EP Growth Economic Profit Growth* Revenue Growth Revenue Margin Growth Capital Expansion Efficiency Target CAGR 10% + * Currency neutral 9

10 Our Growth Story Begins With Our Participation in a High-Growth Industry Long-Term Target of Mid Single-Digit Growth* Key Drivers of Revenue Growth Revenue Growth Industry Growth Share Revenue Gains Share Growth Gains Price Realization *Comparable currency neutral 10

11 Our Growth Story Begins With Our Participation in a High-Growth Industry Long-Term Target of Mid Single-Digit Growth* Key Drivers of Revenue Growth Revenue Growth Industry Growth Share Revenue Gains Share Growth Gains Price Realization *Comparable currency neutral 11

12 An Industry Fueled by Favorable Demographics and Highly Correlated to PCE Growth in Middle Class Growth Source: IHS Global Insight million * in Personal Consumption (PCE) Growth Source: IHS Global Insight trillion * NARTD Retail Value Growth 12 Source: Source: Internal Euromonitor estimates and internal estimates *Projected growth NARTD excludes white milk and bulk water billion *

13 YOY Increase Volatility in Emerging Markets Has Blurred the Underlying Growth Story Global NARTD Value Growth * by Market Type 20% 15% 10% 5% Industry deceleration driven by emerging markets Focused on driving revenue growth based on segmented market roles 0% Developed Markets Developing Markets Emerging Markets 13 * Growth based on internal estimates. NARTD excludes white milk and bulk water

14 YOY Increase But Take a Step Back and the Growth Story Comes into Focus Global NARTD Value Growth * 10% Industry deceleration not category specific 5% Estimated industry value growth of ~5% between 2015 and % NARTD Industry Value Growth Sparkling Value Growth Still Emerging Value Markets Growth Sparkling retail value has grown in emerging, developing and developed markets each year since * Growth based on internal estimates. NARTD excludes white milk and bulk water

15 Winning in the Marketplace We Will Grow Faster Than the Industry Through Share Gains and Price Realization Long-Term Target of Mid Single-Digit Growth* Key Drivers of Revenue Growth Revenue Growth Industry Growth Share Gains Share Gains Price Realization *Comparable currency neutral 15

16 Utilizing Our Greatest Assets and Capabilities to Outpace Industry Growth DYNAMIC BRAND PORTFOLIO Disciplined portfolio decisions Expand consumption occasions GREAT MARKETING Quality Quantity SUPERIOR EXECUTION Unparalleled distribution system Capabilities and investments 16 16

17 We Have the Most Valuable Portfolio of Brands 20 Billion-Dollar Brands... including three new brands! 17

18 Our Portfolio Holds Leadership Positions in Key Categories and Markets Europe North America #1 in Sparkling and Juice & Juice Drinks #2 Sports Drinks and Water Latin America #1 in Sparkling and Sports Drinks #3 in Juice & Juice Drinks #1 in total NARTD in 25 of top 32 markets #1 in Sparkling, Juice & Juice Drinks, RTD Coffee and Sports Drinks #3 in Water Asia Pacific 18 #1 in Sparkling, Juice & Juice Drinks, RTD Tea and Water #2 in Sports Drinks #1 in Sparkling, Juice & Juice Drinks and Sports Drinks #2 in Water Eurasia & Africa

19 Continuously Strengthening Our Portfolio Industry Growth Through 2020 ($ Billions) Innovations and Investments KO Value Position Core Sparkling #1 Value-Added Dairy Juice and Juice Drinks Packaged Water Energy Drinks RTD Tea NM #1 #2 #2 * #3 All Other Source: Internal Estimates and Canadean $- $50 $ *Estimated global position upon closing of the transactions with Monster Beverage Corporation NM: Not Meaningful

20 Expanding Consumption Occasions and Capabilities Access new technologies, segments and assets through equity investments Utilize unique assets and relationships of each partner to maximize value Preserves cash and limits capital investment 20

21 The Coca-Cola Bottle Centennial CELEBRATE A BIRTHDAY LEVERAGE IT FOR GROWTH 21

22 Driving Transactions, Recruitment and Brand Love 22 22

23 Continuing to Strengthen Our Distribution System in Key Markets North America 21 st Century Beverage Partnership Model Africa Coca-Cola Beverages Africa Indonesia Coca-Cola Amatil Indonesia Roadmap to retain ~1/3 of the U.S. bottler-delivered business by end of 2017 Creation of the largest African Coca-Cola bottler and 10 th largest worldwide Joint venture to capture growth in this fast-growing emerging market 23

24 Our 21 st Century Beverage Partnership Model Is Moving Forward Progress Completed territory transfers with strong and aligned bottling partners Transferred territories represent 5% of U.S. bottler-delivered business Completed initial pilots for common IT platform (Coke One) Developing transition handbook to scale success Learnings and Implications Start Slow Scale Fast System is transitioning AND growing Customer feedback remains positive Capabilities in place to accelerate Coke One enabling transition AND improving legacy performance Opportunity for CCR and expanding bottlers 24

25 Evolving Our Bottling System in Africa to Seize the Tremendous Growth Opportunity Coca-Cola Beverages Africa (CCBA) will produce and distribute in 12 countries across Southern and East Africa Over 30% of Sub-Saharan population lives in CCBA markets Provides greater choice, availability and value to capture the tremendous opportunity 25

26 Investing in Indonesia for Sustained Growth Population of more than 250 million (4 th largest population in the world) Fast-growing middle class NARTD market has more than tripled in the past decade 26

27 When We Combine the Right Brands, Great Marketing and Superior Execution, We Win in the Marketplace STRONG BRAND PORTFOLIO GREAT MARKETING SUPERIOR EXECUTION 27

28 Improving Trends in North America 6% 4% 2% 0% Retail Dollar Change in Sparkling * Brand Coca-Cola TCCC Industry Refreshment-oriented and value-enhancing price/pack architecture Profitable brand growth: quantity and quality of marketing investments Distinctive value creation with and for customers -2% -4% H H L Bottle 12 oz Can 1.25L Bottle 7.5 oz Mini-Can 8 oz Glass 12 oz Glass 6 pk 500 ml PET Bottle * Nielsen All Measured Channels 28

29 Our Opportunity Remains Bounded Only by Our Imagination The average household globally consumes of these 26 drinks, are KO brands * drinks per day 29 * Includes licensed brands 29

30 Areas of Focus for 2015

31 Driving Long-Term Shareowner Value Through Our Economic Profit Model 70% of EP Growth 30% of EP Growth Economic Profit Growth* Revenue Growth Margin Revenue Capital Expansion Growth Efficiency Target CAGR 10% + * Currency neutral 31

32 Improving Margins and Capital Returns Through Productivity Margin Expansion Capital Efficiency Aggressive Productivity Streamline Organization Disciplined Investments Segmented Market Roles Core Business Model 32 32

33 Aggressively Expanding Our Productivity Program COGS Operating Expenses Marketing TOTAL Spend Spend Base Base $18B $18B $12B $5-$6B $36B Total Savings ~$1.4B ~$1B ~$600M ~$3B In-line blow molding Warehouse automation Light-weighting Network optimization Procurement 15% to 20% savings for non-bottling opex Mid single-digit % savings for bottling opex Streamlining group functions and standardizing business units Marketing spend procurement Reduction in nonmedia DME Focus resources behind most effective investments Zero-based budgeting 33

34 Embedding Productivity into Our Culture Supply Chain Procurement capabilities Product and package optimization In-line blow molding Zero-Based Budgeting Completed phase 1 for Corporate and North America Supported by disciplined management oversight Embedding the process into our culture Streamlining Organization Elimination of a functional layer at the group level Launched process improvement teams 34

35 Improving Margins and Capital Returns Through Disciplined Investment Decisions Margin Expansion Capital Efficiency Aggressive Productivity Streamline Organization Disciplined Investments Segmented Market Roles Core Business Model 35 35

36 Improve OBPPC Capability Improve Quality of Marketing Driving Growth Through Disciplined Investment Decisions Improve ad quality Increase reuse rate Immediate consumption Transaction growth Recruitment Accelerate Global Profitable System Investments Growth Double-digit increase in media in 2014 Disciplined allocation Increase outlets and coolers Right Execution Daily Increase use of photo recognition RED Increase Media Investments Invest in Superior Execution 36

37 Improving Margins and Capital Returns Through Market Segmentation and Focus on Core Business Model Margin Expansion Capital Efficiency Aggressive Productivity Streamline Organization Disciplined Investments Segmented Market Roles Core Business Model 37 37

38 Incentives Linked to Segmented Market Roles Revenue Growth Volume Growth Transactions Price/Mix Incentives Tied to Profitable Revenue Growth Based on Segmented Market Role 38

39 Focused on Our Core Business Model and Improving Returns Expected Impact of North America Refranchising* Operating Margins ROIC Working Capital Capex Invested Capital *Expected impact on consolidated financial statements 39 39

40 We Generate Strong Cash Flows and Reward Shareowners Cash from Operations Over Billion of Value Returned to Shareowners $3.5B $2.6B $3.1B $2.8B Consecutive Years of Annual Dividend Increases $4.3B $4.6B $5.0B $5.4B Dividends Net Share Repurchases * * Received approximately $900 million of cash related to the disposal of certain bottling operations 40

41 We Are Confident in Our Long-Term Growth Algorithm Long-Term Growth Targets* Mid Single Digit 6-8% High Single Digit PCE growth will continue to fuel industry value growth Grow faster than the industry by leveraging: the world s most valuable beverage portfolio; great marketing; and superior execution across our system Drive margin expansion and capital efficiency Net Revenue PBT EPS 41 *Comparable currency neutral

42 Q&A