2005 investor day - south korea website version · 2020-07-05 · 1 october 2005 1 south korea...
TRANSCRIPT
1
1October 2005
South Korea
Peter KellyRegional Director - Asia
13 October 2005
2October 2005
Introduction
Management experience over 18 yearsTCCC roles in Planning and Field OperationsState Roles as Sales Manager and State Operations ManagerNational Key Accounts & General Manager, SupermarketsDirector, Business DevelopmentDirector, Operations and Logistics
Initial Observation
The markets are tough but with the right focus the opportunity is clearly there
2
3October 2005
Korea
New Executive Team, focused on the simple drivers of growth that will turn the business around
The key issues are being addressed
Results in Qtr 3 are very encouraging – best Qtr for growth since the start of 2004
CCA and TCCC are confident that investments being made in Korea will deliver improved performance
4October 2005
Our expectations for Korea in the 2nd half…
2005 2nd Half Volume Growth 5-7%
2005 2nd Half EBIT KRW broadly in line with last year
Examples of trade execution for full year 2005
Net New Outlets 16,000+
Net Coolers placed 21,000+
Minute Maid 15% of 100% Juice segment
3
5October 2005
Consumer Spending and CCA sales are highly Correlated – both are returning to growth
-1%
2%
-1%
8%5%
123122
140144
122
-5%
3%
11%
19%
27%
35%
2001 2002 2003 2004 2005 June
Perc
enta
ge
90
102
114
126
138
150
Mill
ion
Uni
t Cas
es
Consumer Spending
Source : The Bank of Korea
Sales Volume
6October 2005
Consumer confidence appears to be recovering
Source : Korea National Statistical Office
80
90
100
110
120
Jul 99 Jan 00 Jul Jan 01 Jul Jan 02 Jul Jan 03 Jul Jan 04 Jul Jan 05 Jul
Inde
x
Korean Consumer Confidence Index
4
7October 2005
GDP per capita growth, at 18% is growing faster than both consumer confidence and spending
7,355
9,438
10,841
10,160
11,499
12,720
14,162
16,740
3000
6000
9000
12000
15000
18000
1998 1999 2000 2001 2002 2003 2004 2005 (E)
GDP per capita
(Uni
t: M
illio
n U
S$)
Source : The Bank of Korea, 2005(E) from Economic Intelligence Unit
(Unit: %
)
+18.2%
+11.3%
+10.6%
+13.2%-6.3%
+14.9%
+28.3%
8October 2005
Competitors show 10% EBIT margins are achievable
Biggest competitor, Lotte H105 results
Revenue declined by -9%
EBIT Margin at 10% down from 16%
EBIT Margin decline driven by un-recovered COGS
Operating income down by 45%
Implication for CCA Korea – we believe an opportunity exists to improve pricing and recover COGS increases, however we will not be uncompetitive
5
9October 2005
It’s a competitive market – CCA is holding share
24.4% 25.2%24.9% 25.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
June / July YTD JJ
2004 2005
(Source: AC Nielsen)
CCA NARTD Share
10October 2005
Recap - CCA Performance in the 1st Half
Brand Coke related volume/pricing accounts for 2/3rds of our EBIT decline. (Coke 1st Half -10% vs Qtr 3 +4%)
We will be managing both our costs and pricing tightly in an effort to recover COGS inflation
There is a lag in getting the benefits from our increased investments in Direct Marketing Expense and Coolers
HY 05 HY 04 % Chg
Volume (m unit cases) 63 64 -1%
Sales revenue / case KRW 3,859 3,902 -1%EBIT KRW (m) 346 10,581 -97%
6
11October 2005
Significant increase in TCCC marketing investment
2005 TCCC direct marketing investment is double 2004 levels
CCA expects at least this level of brand investment to continue for 2006
Both companies are aligned around fewer, bigger activities on the core brands 2006
12October 2005
Excellent Main Media on air since April
Eg Supporting our E&D Focus
7
13October 2005
Minute Maid - We are now in all the major categories
0%
3%
6%
9%
12%
15%
Cola Flavoured CSD Cider Fruit Juice100%
Fruit Juice -Non 100%
Sports
Perc
enta
ge o
f NA
RTD
Mar
ket
CCA Category
Korea Key Categories
(Source: AC Nielsen)
14October 2005
Update on the activation of the 5 Pillars
Our trade execution results are on track for 2005 across the 5 pillars
1. Product and pack innovation
2. Non-carbonated beverage and food expansion
3. Growing product availability through cold drink placements and outlet expansion
4. Customer service improvement
5. Revenue management and cost discipline
8
15October 2005
New Brands and Packs delivering growth
Our brands are returning to growth and profit for our retailers
Non-Carbonate Innovation
3 New Non-Carb Brands
Minute Maid
Minute Maid Fresh Mix
Powerade Ionade
10 New Non-Carb Brand / Flavour Extensions
Nestea Lemon Green and Ice Rush
Minute Maid Tomato and Grape
Nescafe Mistra (6 flavours)
16October 2005
Non Carbonates - Minute Maid doing well
9.4
15.2
1.1
19
24
3
0
5
10
15
20
25
30
FM05 AM05 JJ05
Sales Share in 100% Fruit Juice Availability
15% Share of 100% Juice after 4 monthsRecord Repeat Purchase levels
(Source: AC Nielsen)
9
17October 2005
Minute Maid – Getting the Key Components Right
Innovative product range and packsHuge sampling campaign 500,000+ ConsumersExcellent advertising and Media weightsExcellent execution and trade support
18October 2005
With Food – Eating & Drinking sales up 28% YTD
Menu boards, branding, staff incentives and Combo mealsBuilding the connection between Korean Food and CSD’s
10
19October 2005
46,712 46,47649,698 50,375
53,94357,219
62,71265,014
76,499
70,106
9.9 9.810.4 10.5
11.211.9
13.013.5
14.5
15.8
0
20,000
40,000
60,000
80,000
100,000
Dec 01 Dec 02 Dec 03 Mar 04 Jun Sep Dec 04 Mar 05 Jun Sep0
2
4
6
8
10
12
14
16
18
Total Cooler in Market (# of unit)
Cooler Penetration per 10k Population
Coolers drive consumption More is required to capture the opportunity
Cold drink – By December 21,000 new coolers
20October 2005
0
30,000
60,000
90,000
120,000
Jan 02 Jul Jan 03 Jul Jan 04 Jul Jan 05 Jul0
4,000
8,000
12,000
By Year end 16,000 more customers than 2004
Total
E&D
Super
Wholesale
M&P
CVSHyper
Active Outlet Numbers
Total Outlets
11
21October 2005
Product availability - Forward inventory drives sales
We have gained forward inventory share of NARTD and are targeting 10% more cases on the shop floor
22.6%
22.3%
10%
20%
30%
Jan 02 Jul Jan 03 Jul Jan 04 Jul Jan 05 Jul
CCA Forward Inventory Share
(Source: AC Nielsen)
22October 2005
Forward Inventory- attractive merchandising
12
23October 2005
Quality availability - 135 Model Markets +35% up
We now have 135 model markets up and running in Korea
They prove again that superior execution can drive incremental beverage sales for all customers in a region
The model markets are a test bed for our trade marketing concepts and training ground for our sales employees
24October 2005
Customer Service Improvements
We are focused on driving customer volume and profit and giving the customer a greater voice in our business
Customer and category business management
Customer Satisfaction Call program
Servicing the needs of smaller outlet
13
25October 2005
Efficiency and Cost Reduction – an opportunity
When benchmarked against comparable CCA operations, Korea has a KRW 20b higher indirect cost base
Through a combination of workplace reform, redeployment and downsizing we can begin to close this gap
Despite the historically difficult industrial relations environment in Korea, there is a general consensus among our employees for the need for change
Our preference is to retrain and redeploy people into market facing roles rather than dramatically downsize the organisation
The success of our suggested workplace reforms will determine the eventual number of employees our business can sustain, any restructuring costs and the associated savings
26October 2005
Korean Nationals now make up 2/3rds of the Executive Team
14
27October 2005
Our expectations for Korea in the 2nd half…
2005 2nd Half Volume Growth 5-7%
2005 2nd Half EBIT KRW broadly in line with last year
28October 2005
Our plans for 2006
Major Investments in Marketing, Trade and Product innovation behind Coke and Minute Maid
1 Major Non-Carbonate New Product Launch
Cooler penetration increasing to 20 per 10K population
CCA executing in 18% of all outlets
Workplace reforms targeting indirect savings
Redeployment of up to 200 people to market facing roles