Second Quarter & YTD 2014
Earnings Presentation
Calin Dragan, Chief Executive Officer
Michael Coombs, Chief Financial Officer
August 8, 2014
(posted to CCEJ website August 6)

Forward-Looking Statements
The plans, performance forecasts, and strategies appearing in this material are based on the assumptions and judgment of the
management of Coca-Cola East Japan Co. Ltd. (CCEJ) in view of data obtained as of the date this material was released. These
forecasts may differ materially from actual performance due to risks and uncertain factors such as those listed below.
Risks and uncertain factors are not limited to the items listed below. They are also included in our annual securities report, or“Yuka Shoken Houkokusho”.

•
•
•
•
•
•
•

Intensification of price competition in the marketplace
Change in economic trends surrounding our business
Major fluctuations in capital markets
Fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen and the U.S. dollar
Increases in prices of raw materials
Change in the tax environment
CCEJ's ability to realize production efficiencies and to implement capital expenditures at the levels and times planned bymanagement;• CCEJ's ability to market and distribute effectively• Uncertain factors other than those above
The information in this presentation is provided for informational purposes and should not be construed as a solicitation of aninvestment in our securities.
CCEJ undertakes no duty to update any statement in light of new information or future events. You should rely on your own
independent examination of us before investing in any securities issued by our company.

2

Ice-Cold Summer Refreshment
Coca-Cola Ice Bottle TV commercial

3

Q2 & 1H 2014 Earnings Presentation
Introduction• Key Messages• Our
Roadmap for Sustainable Growth

Delivering Results in 2014
• Rapidly and Actively Integrating• Q2 & 1H 2014 Results

Additional Details• Details on Change to Accounting Policy and Estimates• Funding Options, Shareholder Returns, Q3 Milestones
4Coca-Cola East Japan
Starting Peak Season from a Position of Strength One full year of operations since integration on July 1, 2013
 Solid and sequentially improving top-line performance in a quarter marked by the
consumption tax increase Volume growth of +3% year-to-date and +2% in the second quarter Third consecutive quarter of share gains. Q2 value share ahead of volume share growth Regaining momentum in coffee and convenience stores with successful “big bet”
campaigns and product launches Q2 & YTD revenue growth include -1% impact of divesting non-core assets (Mikuni Wine) Continuing to capture supply chain synergies
 Q2 operating income growth of 28% includes the benefit of previously announced changein accounting policy for depreciation. OI quarterly phasing in line with historic seasonality
 No change to full-year estimates5One+ Roadmap for Growth
2014: A Year of Transition
Q2: Consumption Tax RiseOI Margin+1 pt
2013-20142012-2013

Storming

Forming

Define & deploy
new bus. model

Speed ofintegration: 250+
projects

Identifying
synergies &positioning for
growthOI Margin+1-2 pts
2014-2015

Norming
Refine &optimize new
business modelOI Margin+1-2 pts
2015-20172017- Tokyo Olympic
Games & Beyond

Accelerating

Performing
Approaching
global bottler
performancelevelsProcess re-engineering
Exploiting new& launch of ERP systemarchitecture as
while delivering firstcompetitive
results
advantage to drivesynergies & growth

Meet & exceed
world-classbottler levels

A world-class
Japanese bottler
on the world stage

6

DELIVERINGRESULTS IN
2014

Rapidly and Actively Integrating in 1H
Delivering on our Commitments

 Roll-out of new pricing and packaging for consumption tax increase completed
on-plan Legal integration of 3 Logistics and 4 Equipment subsidiary companies into
Coca-Cola East Japan Products (CCEJP) completed on-plan Four new production lines and two new in-line PET blowers installed New Route-to-Market deployment on track Call center consolidation from six to two Second employee voluntary separation plan complete Kick-off of Team GOLD with concrete targets related to gender diversity81H: Steady Quarterly Volume Growth
Sequential Improvement during Q2 after Tax Rise
Q2 Volume Growth
By Month

1H Volume Growth
By Quarter

Q2 Highlights

+6.7%
+3.4%
+2.0%
April
Q1

Q2

-2.6%
1H +2.6%• Volume decline in April
after tax rise
• Consumer behavior
recovery during quarter• Vending price rollout
complete end of June

Outlook

+1.1%
May

June

Many
product
launches

Good
execution,strongshare gains• Tough prior year volume
cycling in July; 2014
rainy season into July
• Gaining share in July
• Q3 peak season forbottling business9

Q2: Continuing Signs of Progress
Value Share Growing Faster than Volume Share
Q2 Market Share*(NARTD Beverages)

vs. Prior Year
Q2
YTD

Strong share gains in colas, coffee, teas & water

Volume+0.7+0.6

Balanced growth of immediate consumption (IC) &future consumption (FC) packaging

Value

+0.9

+0.6

Volume composition: IC 74% vs. FC 26%

Volume Share vs. Prior Year

Value Share vs. Prior Year

*Source: Intage, OTC channel

1Q2: Normalizing Trends after Tax Rise
Innovation Drives CVS Growth, VM Pricing Complete
Channel Volume Growth

Q2 2014 Volume By Channel(% of total volume)
Other
11%

Vending
30%

Q2 VM volume impacted as
pace of c-tax price rollout wasahead of industry

Supermarket
22%

Eating &Drinking
13%

Drug &
Discount
11%
CVS

13%
FOSHU tea, sparklingwater launches

Total BAPC* Pro-Forma
Volume Growth• Q2 2014 +2.0%• YTD 2014 +2.6%

vs. prior
year

CVS

D&D

Nat’l SM

Local SM

VM

Eat & Drink

Q2 2014

+12%

+10%

+2%

+2%

-2%

-3%

YTD 2014

+4%

+12%

+8%

+5%

-1%

-1%

* BAPC (Bottler Actual Physical Cases)11

Q2: Balanced Growth Across Categories
Advancing our Tea Momentum, Recovery in Coffee
Q2 2014 Volume by Category(% of total volume)

Category Volume Growth

Juice 5%

Q2 coffee +7% in
CVS; +2% in VM

Sparkling
27%
Tea
21%

Other
11%

Sports11%

Coffee
15%
Water
10%
Q2 water mix
61% IC, 39% FC

Total BAPC* Pro-Forma
Volume Growth• Q2 2014 +2.0%• YTD 2014 +2.6%

Q2 BrandCoke +4%

vs. prior
year

NST

Water

SSD

CoffeeSportsJuice

Q2 2014

+9%

+6%

+2%

+4%

-1%

-8%

YTD 2014

+9%

+8%

+3%

+1%

+2%

-7%

* BAPC (Bottler Actual Physical Cases)12Q2: Innovating Ahead of Peak Season
Strong launches; Focus on Immediate Consumption
Emerald
Mountain
Premium
250ml
burn small can
RefreshEnergyShare-a-Coke FIFA World(name bottles)
Cup TM
Schweppes
Grapefruit
Passion
Fanta
Pineapple

Canada Dry
Club Soda

Canada Dry
Spicy ZeroGA European
Bottle Can

Luana newflavors

Premium
Café au Lait &Café Latte

Sairyusaisai
Barley Tea

Kochakaden
Ice Royal Teas
170g small can
KaradaSukoyakacha W(FOSHU tea)

Ayataka
Mild
Green Tea

525ml upsize
for C-tax
Taiyo noMegumi from
Aquarius

KaradaMeguricha
JasmineTea

Ilohasmulti-packIlohassparklingwatersglaceauvitaminwater
Coco Refresh

Aquarius
Ice Refresh
Coca-Cola
Lemon

Kuat

Canada Dry
Sparkling
Peach

POWERADEFUEL X
Berry Ice

Real
Spark

13

New Product Volumes Are Growing
Driving Share Gains and Advancing Momentum into Q3% of Volume Related to New Products

Q2

100

YTD

SKUs

66

SKUs

18%

11%
2013

107
SKUs

69

SKUs

14%

7%
2014

2013

2014
SKU: Stock Keeping Unit

14

Accelerating New Business Development
Building Customer Relationships for the Long-Term
Net Full-Service Vending
Machine Placements

Net Cooler Placements• Indoor locations• Cashless functionality• “Peak Shift” low energy use

Coolers help to grow ourstrong IC base over time

Equal
to
2013
total
June YTD

Over
2X
plan

June MTD

1.7X
2013
total

June YTD

New Customer Outlets
Implementing pilot
program for local
market development
and activation

2X
Plan

June YTD

+25%
vs PY

+18%
vs
plan

June YTD

June YTD

15

Q2 & YTD 2014
FINANCIALRESULTSQ2 2014 Results
Solid Performance in a Quarter Marked by Consumption Tax Rise
• Sequential revenue mix improvement reflects growth in value share ahead of volume share.
• Consolidated revenue includes -1% impact of divesting non-core businesses (Mikuni Wine)• COGS increase driven by higher costs due to product launches and elimination of unrealized gain in stock• SG&A includes 1.9 billion yen benefit due to changes in accounting policy related to depreciation.

2014 Q2

2014 Q2

2013 Q2

ActualOne-time
items

Comparable

Comparable
Estimate

Diff%

73,60072,157+1,443+2.0

in million yen

Sales Volume(BAPC) (,000 cases)
Net Revenue

Vs. PY2014 Q2

73,600--136,580--

136,580

135,706

+874

+0.6

74,229*--74,22971,628+2,601+3.6

62,351--

62,35164,078-1,727-2.7

58,640*--58,64061,171-2,531*-4.1

Operating Income

3,711

--

3,711

2,907

+803

+27.7

Profit Before Tax

3,619

224

3,843

2,555

1,288

+50.4

Net Income

2,147

139

2,286

1,550

736

+47.5

COGS

Gross Profit
SG&A* Includes JPY 422 million accounting change benefit in COGS and JPY 1,898 million benefit in SG&A

17

Drivers of Q2 Operating Income
Depreciation Change Positive; New Launches Weigh on OI• Synergies offsetting ongoing mix pressure• OI affected by cycling prior year one-time integration costs and higher expenses
related to successful product launches like FOSHU tea and ilohas sparkling

Q2 2014+803

In million JPY• Benefits expense (OPEX) down due to changes in pension actuarial assumptions

-257
-368
SG&A

+1,521-1,050+2,907
GP impactof mix• Volume +803
• Price/mix -1,854

2013 Q2 Comparable
Operating Income

SCM
synergies• -750 cycling
COGS
extraordinary
Elimination
items fromofprior year
-1,355
unrealized• +780 pension
gains inbenefit due tostockactuarialassumptions• Marketing
Other subs
(DME) +2.4%(logistics,
vs PY
equipment)
higherexpenses due
to productlaunches+2,320+3,711-7
Divestingnon-corebusinesses(MikuniWine, etc.)

Impact ofaccountingchange2014 Q2 Comparable
Operating Income18

1H 2014 Results
A Tale of Two Quarters; Sequential Improvement in Q2• Revenue mix reflects volume growth, tax increase, competitive pricing and mix pressure• Consolidated revenue includes -1% impact of divesting non-core businesses (Mikuni Wine)• COGS increase driven by higher costs related to Q2 product launches and Q1 accounting change• 1H operating income includes negative net 1.1 billion yen impact due to changes in accounting policy

2014 1H

2014 1H

2013 1H

ActualOne-time
items

Comparable

Comparable
Estimate

Diff%

134,031130,619+3,412+2.6

in million yen

Sales Volume(BAPC) (,000 cases)
Net Revenue

Vs. PY2014 1H

134,031--

248,495--

248,495

248,114

+381

+0.2

135,781*--

135,781

132,130+3,651*+2.8

112,714--112,714

115,984-3,270-2.8

114,587*--

114,587

113,836

+751*

+0.7

Operating Income-1,873---1,873

2,148-4,021--

Profit Before Tax-3,274

1,587-1,687

1,584-3,271--Net Income-2,928984-1,944771-2,715--COGS

Gross Profit
SG&A* Includes JPY -439 million accounting change impact in COGS and net JPY -633 million impact in SG&A

19

Drivers of 1H Operating Income
High OI Seasonality in Japan ahead of Peak Season+2,148•

NSR on-track with full-year plan•

OI affected by cycling of prior year onetime integration costs and higher
expenses related to successful productlaunches in Q2•

Net impact of accounting change YTD is-1,072. Will be positive for the full year.

In million JPY

1H 2014-4,021-843-2,253+1,986-520-1,228
GP impactof mixSCM

OPEX

synergies • -1,287 cycling
extraordinary• Volume (+2,030)
items from• Price/mix (-4,283)
prior year

2013 1H Comparable
Operating Income

Marketing
(DME)
+3.8%

Other subs
(logistics,
equipment)
Higherexpenses due
to productlaunches in Q2-91
Divestingnon-corebusinesses(MikuniWine, etc.)-1,873-1,072
Net impactof acctg
change2014 1H Comparable
Operating Income

20Good Momentum Ahead of Q3
Positive Signs in June
Positioned well in advance of Q3, which historically canrepresent significant portion of full-year operating income:• Strong operating income performance in June 2014
• Improving gross profit vs. plan and prior year
• Improving revenue mix (spread between volume growth and NSR
growth)• New products launched in Q2 continuing to perform well
• Volume and value share momentum

21Changes to Accounting Policy & Estimates
Aligning with Global Bottler Peers
As part of our investment and operational strategies to ensure assets are productive over their entire
lives and to maximize usage periods, effective January 1, 2014 we revised accounting policies to:• Align depreciation method for all asset classes to straight-line method• Revise estimated useful lives of cold drink equipment from 5-6 years to 9 years• Write-off existing asset salvage values in Q1 and assume zero salvage value going forward
Asset Category

Depreciation Method Useful Life

Building and Structures

Machinery, Equipment and Vehicles
Tools, Furniture and Fixtures
Sales Equipment

No change

Straight-Line
9 years

22

Funding Options
Strong Investment Plans for Growth• Received initial A+ credit rating from R&I July 28• Filed shelf registration for bond issuance July 29
 Up to ¥30 billion over two year period• Investing for growth ¥60 billion in total CAPEX for 2014

• Providing returns to shareowners
 1H 2014 dividend of ¥16 per share approved by BOD
 Expect to pay ¥3.9 billion in dividends in 2014
(Dividend per share: ¥16/share 1H and forecast ¥16/share 2H)23

Q3 2014
MILESTONES

Q3 2014 Milestones
 Focus on core business results during peak summer selling season
 Kicking off additional regional Route-to-Market deployment
 Shutdown of operations at two manufacturing plants25One+ Roadmap for Growth
2014: A Year of TransitionOI Margin+1 pt
2013-20142012-2013

Storming

Forming

Define & deploy
new bus. model

Speed ofintegration: 250+
projects

Identifying
synergies &positioning for
growthOI Margin+1-2 pts
2014-2015

Norming
Refine &optimize new
business modelOI Margin+1-2 pts
2015-20172017- Tokyo Olympic
Games & Beyond

Accelerating

Performing
Approaching
global bottler
performancelevelsProcess re-engineering
Exploiting new& launch of ERP systemarchitecture as
while delivering firstcompetitive
results
advantage to drivesynergies & growth

Meet & exceed
world-classbottler levels

A world-class
Japanese bottler
on the world stage

26

APPENDIX

Glossary
OBPPC

Occasion, Brand, Package, Price, Channel. A segmentation strategy tailored to consumption opportunities
in five areas: occasion, brand, package, price and channel.

IC

Immediate Consumption. Purchase or sell beverage for consuming it immediately. It also means the
products/SKUs for IC (for example, cans and small PET packages under 1L) and channels that consumers
purchase the beverages for IC(for example, vending machine and convenience stores channels).

FC

Future Consumption. Purchase or sell beverage for future consumption in home, etc. It also means the
products/SKUs for FC (for example, large-sized package and multi-pack of small packages) and channels
that consumers purchase the beverages for FC. (for example, supermarket and drug & discounterchannels).

HORECA

Hotel, Restaurants and Cafeteria. Generally means sales channels of these kinds.

CDE

Cold Drink Equipment. Vending machines, coolers and beverage dispensers, etc.

Coolers

The equipment with Coca-Cola’s logos which keep beverages at an appropriate temperature (chilled
and/or hot) for immediate consumption, and ready for selling them at the storefront of retail outlets andrestaurants. It will serve as point-of–sales advertising, too.

Dispenser

The equipment installed in restaurants to serve the consumers a specified amount of beverage in cup
either in chilled or hot.

RTM

Route-to-Market. A framework, a process, a philosophy, a proven approach to growing profitable volume.

28

Example of Coolers and Dispensers
Coolers

Dispensers

29

Thank You
Q2 & YTD 2014
Earnings Presentation
August 8, 2014