Corporate Presentation

Transcription

1 Corporate Presentation 1

2 Disclaimer During this presentation management may discuss certain forwardlooking statements concerning Arca Continental s future performance that should be considered as good-faith estimates made by the Company. These forward-looking statements reflect management expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, which could materially impact Arca Continental s actual performance. 2

3 A solid partnership with Coca-Cola since YEARS Pioneers of the in Mexico system 3

4 Current ownership structure Arca Continental Control Group 68% Float Mexican Stock Exchange: AC* 19% The Coca-Cola Company 9% Lindley Family 4% 4

5 An institutional company Balanced Board of Directors: 21 members 6 of them are independent Majority shareholders only at Board level Audit Committee comprised of independent members only No transactions with related parties The Coca-Cola Company appoints one member of the Board 5

6 Sustainable and profitable growth 1% Exports 13% 10% % Mxp$13 billion CAGR 15% 7.0x 55% 3Q16 LTM 15% 7% Snacks Mexico Beverages Exports and Vending Mxp$ 91 billion Mexico Ecuador Argentina Peru Snacks 6

7 based on strong organic growth and an excellent M&A track record 2002 ARCA Merger 2007 Snacks Mexico 2008 Argentina & Jugos del Valle 2010 Ecuador 2011 CONTAL Merger 2012 Snacks International & Santa Clara 2014 Tonicorp 2015 Peru 7

8 Delivering solid results in a challenging environment MXP$ billion Sales $91* EBITDA $20* $76 $17 $51 $56 $60 $62 $11 $13 $14 $ *Last twelve months as of 3Q EBITDA Margin 18.9% 20.1% 21.3% 22.0% 21.9% 21.6% 8

9 Highest credit rating among Mexican companies Global Scale Net Debt / EBITDA 1.9 A2 National Scale A Aaa Aaa.mx Global Investment Grade above Mexico s sovereign rating e Financial flexibility and low leverage ratio 9

10 Consistent value creation (MXP$ billion) +179% $191 $18 $ % $48 $12 $60 $75 Contal $16 Arca Market Cap Arca Dec '02 Market Cap Arca Dec '10 Dividend '02 - '10 Total Value Dec '10 Market Cap Arca+Contal Dec '10 Market Cap Dec '16 Dividend '11 - '16 Total Value Dec '16 10

11 based in our strategic core pillars Value Creation Operational Strengths Execution (ACT) Segmentation Price-pack architecture Service models Supply Chain Management Supply network design Operational Excellence Sustainability Finance & IT Solid financial profile Standard and streamlined business process State of the art IT platform Talent development Organizational capabilities People & Organization Culture Social Responsibility 11

12 A model that connects the entire organization in order to reach the perfect execution Segmentation RGM RTM Fundamentals Market tools Sales School Innovation Collaboration Commitment Innovation Standardization 12

13 Balanced business portfolio New sparkling beverage franchises Snacks, vending machines and exports CSDs Emerging still categories + Value added dairy Core NARTD Adjacencies SSDs NARTD: Non-Alcoholic ready to drink 13

14 Arca Continental: beverage operations Mexico Start date: 1926 Sales volume (MUC) 1,078 % KO volume 30% Population served (MM) 30 Ecuador Start date: 2010 Sales volume (MUC) 156 % of KO volume 100% Population Served (MM) 15 Peru Start date: 2015 Sales volume (MUC) 292 % of KO volume 100% Population served (MM) 31 Argentina Start date: 2008 Sales volume (MUC) 143 % of KO volume 21% Population Served (MM) 9 14

15 An extensive brand portfolio to satisfy every consumption occasion +28Brands SKUs + 50 Brands ,200 SKUs 15

16 Strategic franchise location in Mexico Nogales The dawn of a new era of growth CDF AC Active participation in the consolidation of the KO System in Mexico Nayar Colima Rica KOF Bepensa Further opportunities for synergies and find better ways to serve 16

17 Mexico 2% Vending 7% 10% S-Markets 11% On Premise Flavors Channel 13% C-Stores 8% Other 17% Jug 6% Stills Category 5% Water 60% Traditional 61% Colas Format 48% Single-serve 52% Multi-serve 37% Returnable 63% Non Returnable Package 17

18 Argentina: Investing in core capabilities and increasing profitability EBITDA margin expansion from 10% to 20% in 7 years Increasing cooler coverage and reaching a 48% cooler coverage Standardized operational processes and replicating best practices such as ACT 22

19 Argentina 21% S-Markets 2% On Premise 1% C-Stores 29% Other 25% Flavors 3% Stills 10% Water Channel Category 8% Single-serve 47% Traditional Format 62% Colas 92% Multi-serve Package 44% Returnable 56% Non Returnable 19

20 Ecuador: Successful expansion of best practices Deployment of business strategies learned in Mexico to mitigate tax effect Increasing cooler coverage from 24% to 45% in the last 5 years All CAPEX investments made from its own cash flow 20 20

21 Ecuador 8% S-Markets Channel 13% On Premise 1% C-Stores 11% Other 32% Flavors Category 10% Stills 10% Water 67% Traditional 48% Colas Format 29% Single-serve 21% Returnable 71% Multi-serve Package 79% Non Returnable 21

22 New partnership in South America COLOMBIA ECUADOR Population Currency 2015 Sales volume EBITDA margin Net Debt Collaborators Production facilities 31 million Nuevos soles 292 MUC +17% $380 MMD 3,300 8 Iquitos Sullana Piura BRAZIL PERU Chiclayo Trujillo Callao Lima Cusco Ica BOLIVIA Arequipa Plants (8) Key Population Density: 80-6,

23 Peru: large market with attractive macroeconomic and demographic dynamics Five avenues to reach value creation opportunities of US$25 million at CL 1. Raw Materials 2. Process Innovation and Packaging 3. Supply Chain and Transportation 4. Administration 5. Revenue Expansion Alternatives 23

24 Peru 1% Vending 9% S-Markets 11% On Premise 4% C-Stores 4% Jug 7% Stills 17% Water Channel 8% Other Category 67% Traditional 72% CSDs 41% Single-serve 59% Multi-serve Package 28% Returnable 72% Non- Returnable Format 24

25 RGM strategy: sustain profitability & affordability MX$30 MX$5 12 Oz VR 600 PET 2.0 RP 3.0 NR $5 $5 $10 $13 $20 $25 Low elasticity SKU s Protect affordability (Multi-serve & Returnable) Keep magic prices Leverage on diet & single serve presentations 25

26 Transactions: A way to profitable volume Smaller formats, higher profitability Finding new opportunities and competitive advantages 3 x 600 mls better than 1 x 2 lts 3 transactions 1 transaction Higher price per milliliter Increase single-serve mix Packaging innovation RGM initiatives New consumption occasions 26

27 Growing our Still Beverage Portfolio Very positive trend in Market Share Market Share Total Channels (%) Higher volumes in AC than in the rest of Mexico Surpassed our main competitor in the indicator base of consumption and closing gap in the indicator Favorite Brand Powerade Main Competitor 27 27

28 An extensive brand portfolio to satisfy every consumption occasion Mexico Ecuador Introduced UHT milk in in the traditional channel, 48% growth vs 2015 Leveraging our Direct to Home channel Coverage of 39% in traditional channel More than 3,000 coolers introduced in the last two quarters Founded in 1967, with leading position in high value-added dairy: flavored milk and yogurt 50/50 Joint Venture with TCCC Consolidating AC as one of the most important consumer companies in Ecuador 28

29 Leveraging our capabilities in adjacent business: Salty Snacks rd largest snack brand in Mexico 40 year history Plan to expand nationwide One of the largest distribution networks Over 90 years history Leading regional brand #1 brand in NY metro area USD$7 billion market size in regions served 40 year history Strong position in the Ecuadorian market 2nd largest player at a national level 29

30 and successful development of Direct to Consumer channels Leading innovation with telecommunications to increase profitability Vending Machines ( 000) 31 Vending Mexico Direct to Home Jug Water & DTH currently reach more than 600,000 households DTH Routes

31 Capitalizing on exports to the US $104 MM USD growing market Million Unit Cases Exports to USA Coca-Cola (Nostalgia)

32 Expanding Topo Chico On July, Arca Continental (AC) agreed to transfer the rights of the Topo Chico brand in Mexico to The Coca-Cola Company (TCCC) This will allow the expansion of volume in all the territories operated by Arca Continental. The new territories are the states of Jalisco, Zacatecas, Durango, San Luis Potosí and Aguascalientes We expect a 20% volume increase for Topo Chico 32

33 Our strategic revenue growth target Future Sales MXP$ billion 2x x 25 2x Strategic pillars support our goal to reach Mxp$100 billion in sales by 2017 and sustain our profitable growth momentum beyond 33

34 Our Commitment to Sustainability RECYCLING Mexico 2015 WATER* ENERGY* 34% Of PCR 1.69 Water Lts. / Beverage Lts G CO2/ Beverage Lts. 49,447 Tons 16% Improvement 10% energy reduction of resin produced by PetStar vs 2010 Vs 2010 Mexico is the global leader in recycled resin use *2015 data for AC Consolidated Leader in water reuse technology 17.3% from renewable sources 34

35 Contact us at: 35