Coca-Cola Bottlers Japan Holdings
First Quarter 2018
Earnings Presentation
May 14, 2018

Tamio Yoshimatsu, President

Vikas Tiku, CFO
Head of Transformation(Released on May 11, 2018)

Q1 2018

Forward-looking statements
The plans, performance forecasts, and strategies appearing in this material are based on the assumptions and judgment of themanagement of Coca-Cola Bottlers Japan Holdings Inc. (CCBJH) 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 “YukaShoken Houkokusho”.

••
••••
•

Agreements with The Coca-Cola Company and Coca-Cola (Japan) Company Limited.
The quality and safety of products
Market competition
Natural environment, such as climate, disaster, water resources, etc.
Legal environment
Leakage or loss of information

Change of economic conditions, such as personal consumption, currency exchange rates, prices of raw materials, fair value ofassets, etc.

• Business integration, streamlining and optimization of business processes, etc.
• 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 an investment
in our securities.
CCBJH 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

Coca-Cola Bottlers Japan Holdings Inc. (CCBJH)First quarter (Q1) 2018 earnings presentation

Q1 2018 summary and business update
Q1 2018 financial results & integration progress
Outlook for the rest of the year
Q&A
3

CCBJHQ1 2018 summary andbusiness update42018: Pivoting from integration focus to growth mindset

Q1 2018

Still early but gaining traction; Consistent focus on sustainable growth

National scale,
local presence

Executing segmented channel and category strategies
tailored for each region
Community-focused and customer-centric commercial
activities, leveraging the scale of CCBJH

Innovation“Beverages for Life” product portfolio
Enhanced engagement with customers and consumers,
driven by insights
Leveraging digital technology across the value chain

Synergies

Continued disciplined synergy capture toward 2020
Prioritizing big bets
Fuel to re-invest for sustainable growth5

Q1 2018 results highlights

Q1 2018

Volume growth and strong synergy capture, yet competition intensifying
First quarter volume growth of 1%. Solid start to the second quarter withencouraging April results.
Market share growth in both value and volume terms, with value share
growth ahead of volume. Consistently improving trends since integration.
Reported revenue increased 116% due to the April 2017 integration.
Pro-forma revenue declined 2%, due to negative channel mix and competitive
pricing environment

Reported operating income grew 46% versus prior year.
Pro-forma operating income decreased 14%, primarily due to 1.4 billion yen
goodwill amortization in Q1. Without integration-related goodwill amortization,
pro-forma operating income growth was positive.

6

Q1 2018 integration progress

Q1 2018

Integrating with speed, implementing financial framework initiatives
Generated 4 billion yen net integration synergies, mainly from supply chain
and procurement – slightly ahead of plan
On-track to deliver full-year synergy target of at least 8 billion yen. Integration
investments to ramp up during year-to-go period.

Solid progress in implementing financial framework for value creation
Completed share repurchase of 8.28% of total outstanding shares
Announced new dividend policy
Introduced performance-oriented equity-based compensation program fordirectors and executive officers.

Continued to simplify organizational and legal entity structure.
Number of legal entities down from 25 on Day One to 14 on April 1, 2018.
7

Q1 2018

Strong Q1 Product and Marketing Schedule
Strategic innovation supporting our pivot from integration to growth
Big bets in Q1• Coca-Cola Peach:First in the world• Chaba no Amami:
Cold brew, mild taste
AyatakaTM green tea• Kochakaden Craftea:
Premium black tea withhoney and juice fromMinute Maid oranges

January
New Year Promo.

February
Coke ON Cross Brand Promotion
2018 Winter Olympic Promotion

GEORGIA Fan Selection
VM Lucky Cap Promotion

ILohas Mileage Promotion
Aquarius Promo.

MarchFIFA World Cup Coke ON Promo.

GEORGIA OTC Channel Promo. / GEORGIA Open Promo.

ILohas Promo.
Girl’s Festival Qoo Promo.

GEORGIA Coke ON Promo.

Ayataka Promo.

Craftea Promo.
Real Gold Promo.

• THE TANSAN:
Leveraging growing
consumer preference forsparkling water. Highest
CO2 gas volume in Japan
Coca-Cola history8

Q1 2018 OTC market share and retail price trends

Q1 2018

Sequential share improvement, value share focus in line with strategy
OTC Market ShareOTC Retail Price
Unit: JPY per bottle

Market Share (vs. PY, PP)

Value

VolumeQ1 2018

+0.4

+0.2

Value

OTC Retail Price (YTD 2017)

VolumeVs. Market
AverageVs. PY

Small PET

+0.5-0.9

Large PET (2L PET)

-1.6-3.9

Steady improvement since integration;
Consistent focus on value over volume
Sparkling, teas, sports driving share gains

Tougher near-term outlook due to newproducts and cycling strong growth
initiatives from 2017
FOSHU and FFC supported small PET
premium versus market average
Strategic focus on value growth remains
unchanged

Source: Intage SRIFOSHU: Food for Specific Health Usage (Government approved); FFC: Food for Functional Claim

9Strategic product portfolio and pricing segmentation

Q1 2018

Strongly committed to this strategy, but still a work-in-progress
Profitability & competitivenessProtect & maintain value of Core, with meeting
competitive environment by-area, by-channel.
Consistent focus on profitability.

Increase profitability byacquiring more Teiban shelfpresence of higher-value
SKUs (FOSHU & FFC)

Overall Category
Improvement

Core×

Subs
Competition

Protect & maintainprofitability

Teiban expansion

CompetitivenessProfitability

Pricing & assortment
in vending
Segmentation depending on
consumer needs &competitive landscape

10
FOSHU: Food for Specific Health Usage (Government approved); FFC: Food for Functional ClaimChannel volume performance (pro-forma)

Q1 2018

Growth in OTC channels; Cycling Q1 2017 per-case revenue improvement
Supermarket, Drug & DiscounterQ1 2018 volume +1%
Others
1%

R&F
23%

VM
26%

vs. PY
Supermarket
(SM)

SM
22%

D&D
12%
CVS
16%

Volume+6%

Revenueper Case
(Yen)

-25

• Volume growth in major categories led by tea,sparkling, water• Growth in future consumption packages

Convenience Store• Growth led by sparkling, non-sugar teas, FOSHU andFFC.

Drug &Discounter
(D&D)

+12%

-16

Convenience
Store (CVS)+3%+8Vending

Vending (VM)

-6%

-4

• Solid growth of sparkling, non-sugar teas and sports
categories offset by weakness in coffee and water

Retail & Food(R&F)-1%-1

Retail & Food

• Coffee volume recovered to flat with improving sellingprice• Revenue per case improved in food service, withvolume decline

11Note: Some inconsistencies with the data provided in past presentations may be expected as aresult of standardization of volume and revenue calculation.
FOSHU: Food for Specific Health Usage (Government approved); FFC: Food for Functional Claim

Q1 2018

Vending transformation
Holistic end-to-end actions to address short- and long-term trends
Short-term
Selective priceoptimization oncompetitiveenvironment
Assortment – New
launches, vendingexclusive, high-value
products based on
consumer needs
Machineplacement/locations

Mid to Long-term
Digitalized
Retail ModelDeveloping
Connected
Consumers

Innovation ofFilling Operation

Deploying pilot actions tosupport VPM

Leveraging Coke ON app tocreate new value

Initial proof-of-concept
underway

Automated picking

Data analytics

Next-generation
communications

12

Category volume performance (pro-forma)

Q1 2018

Growth in sparkling, tea, sports; Increased competition in coffee and water
Q1 2018 volume +1%
Juice7%vs. PY
Others10%

Sparkling
26%Coffee
22%Water
9% Sports
6%

Nonsugar tea
20%

VolumeSparkling+6%

Non-sugar tea+6%

Sports+4%

Water-3%

Coffee-7%

Juiceeven• Coca-Cola Peach and Coca-Cola Plus contributed tovolume growth of Coca-Cola in sparkling. TheTANSAN Strong and Lemon launched in firstquarter• Launch of Ayataka Chaba no Amami drove nonsugar tea growth across major channels• Sports category grew in D&D, CVS and VM
supported by PyongChang Olympic campaign, etc.
• Premium iLohas water volume lower due to cycling
prior year new products and ongoing competition. 2L
PET volume increased, cycling prior year declines• Coffee category performance impacted by weak SOT(Stay on tab) can packages

13
Note: Some inconsistencies with the data provided in past presentations may be expected as aresult of standardization of volume and revenue calculation.

CCBJHQ1 2018 financial results
and integration progress14

Q1 2018

Q1 2018 results vs. Q1 2017 pro forma

Revenue declined -2%, driven by channel mix and cycling strong revenue-per-case growth in 2017
Operating Income declined 14% mainly due to goodwill amortization; Excluding this impact, OI grew
25% with a strong focus on operational efficiency to generate synergies.
Net income grew 2%, cycling extraordinary integration expenses from before Day One (April 1, 2017)
Q1 2017

Q1 2018

YoY(pro forma)

213,828

218,081-2.0%

206,588

210,584-1.9%111110+1%

Operating Income (OI)

3,162

3,690

-14.3%

Beverage business OI

2,272

2,843

-20.1%Net Income

1,530

1,498

+2.1%

EBITDA

15,295

15,681-2.5%

Revenue
Beverage business revenue
Beverage business sales volume (M cases)

15
Unit: B JPY
Net Income: Net income attributable to owners of parent.

Q1 2018

Q1 2018 operating income drivers

Price/mix pressure offset by strong synergy delivery; Ex-Goodwill, pro-forma OI +0.8B-0.3

VolumePrice &Mix

Integration
expenses

3.7-2.8

Manufacturing

DME

Q1 2017
Pro-forma
CCBJH OI

Healthcare& Skincare
BusinessOI

4.5
Q1 2018
OI before
goodwill-1.4

Goodwill,
etc.

3.2

Manufacturing
efficiencies,
procurement
synergies, etc..

• Volume +1%• Cycling prioryear low DME
spending
Growth inOTC
channeloffset by
decline ofprofitablevending
volume, etc.

+3.9+0.04

OtherOpex-1.7
Commodity,etc.

-0.7

+2.4

• Decrease oflabor• Cycling of prioryear accounting
harmonization(residual valuewrite off), etc.

• 4B net synergies
Unit: B JPY, rounded off less than unit

Q1 2018
CCBJH OI

16

Q1 2018

Integration synergies, CAPEX, depreciation
Generating synergies and investing with focus on 2018 OI plan

Integration synergies

CAPEX and depreciation• 4B yen net synergies generated in Q1• Investing for sustainable growth• Supply chain• Procurement, etc.

• Expect higher CAPEX investment
levels in rest of year relative to Q1• Q1 results slightly ahead of plan to deliver at
least 8 B yen of full-year synergies• Investments for synergy generation
expected to ramp up from Q2Q1 2018
Actual

FY 2018
PlanCapex

7.3

65.9

Depreciation

10.3

43.5

Unit: Billion JPY
Pro-forma depreciation doesn’t include amortization of goodwill, etc.

17

Q1 2018

Solid progress implementing financial framework for value creation
Dividend policy
Prioritize paying a stable dividend whileallowing shareowners to benefit from profit
growthFrom 2019, after implementation of IFRS,target dividend payout ratio of 30% ormore
2018 expected full-year dividend 50
JPY/share, up 6 yen per share vs. 2017

Equity-based incentive aligned with CCBJH’s mid- tolong-term performance targets
Three-year stock-based compensation plan for
executive directors and executive officers
Performance share units (PSU) based on achievementof revenue growth and ROE targets
Variable grant ratio depending on level of achievement
Targets:
Revenue growth: 2.0% (2017 to 2020 CAGR)
2020 ROE: 6.6%Share repurchase
Completed share buyback of 17,075,239 shares(8.28% of total shares outstanding), amounting 55.9B
yen as of settlement date, April 13, 201818

Q1 2018

Q1 2018 results (Reported)

Consolidated CCEJ into CCBJI from Q2 2017. First quarter 2017 CCW standalone.
Q1 2018

Q1 2017

YoYRevenue

213,828

99,141+115.7%

COGS

103,31747,179+119.0%110,51151,962+112.7%

107,348

49,794+115.6%

Operating Income

3,162

2,167

+45.9%

Income Before Tax

3,042

1,470+106.9%

Net Income

1,530942+62.4%

EPS

7.49

8.63

-1.14Gross Profit
SG&A

Beverage
Business

Q1 2018

Q1 2017

YoY

Revenue

206,588

91,644+125.4%

Revenue

2,272

1,320+72.1%

Operating Income

Operating Income

Unit: Million JPY except EPS
Net Income: Net income attributable to owners of parent.

Health Care & Skin
Care BusinessQ1 2018

Q1 2017

YoY

7,240

7,497-3.4%

890846+5.1%

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CCBJH
Outlook for the rest ofthe year 201820

Q1 2018

2018 business plan (as announced 2/2018)2017 Results
Pro-forma

2018 Plan
Volume Growth YoY

YoY
Pro-forma

Reported+2%-1%--

1,007.3

991.6+2%+15.4%Operating Income

49.7

42.1+18%+22.5%

Ordinary Income

47.9

41.3+16%+20.2%Net Income

28.8

25.8+11%+14.1%EBITDA

100.4

89.7+12%--+5.402018 Plan

2017 Results

YoYRevenue

EPS

149.66*Beveragebusiness2018 Plan

Pro-forma

YoY(Pro-forma)2017 Results-Healthcare &Skincare business

Revenue

975.7

961.8+1%

Revenue

31.6

29.7+6.3%

OI

46.0

38.9+18%

OI

3.7

3.2+15.8%*EPS forecast changed reflecting movement of the number of average shares due to share buy back.
Unit: B JPY except EPS
Net Income: Net income attributable to owners of parent.

21

Q1 2018

Product launch & marketing calendar ahead of summer
Innovating in new categories, regional limited launches for profitable revenue growthGeorgia
Japan Craftsman Coffee

Coca-Cola
Regional limited slim bottles“Ohenro” and more

THE TANSANApple Mint

Aquarius S-Body(FFC)

Lemondo Chu-Hi
Alcoholic beverage trial
in Kyushu region

Coke ON Walk
Added step-countfeature to get loyalty
pointsiLohas campaign
FOSHU: Food for Specific Health Usage (Government approved); FFC: Food for Functional Claim22

Q1 2018Making steady progress on 2018 goals, but much work remains
Revenue growth

Volume growth, RGM
initiatives, revenuerich innovation

Revenue +2%
Volume +2%

Value share

Improve price/mix withpackaging, innovation,
focus on value

VALUE ahead ofvolume

Net synergies

Steady net synergy
capture to meet 2020
target of 25 billion yen

8 billion yen

Operating income
and OI margin

Growth mindset,
synergy capture,
reinvest in business

Dividend growth

Strong cash flow fromoperations driving
shareholder returns

49.7 billion yen OI
OI margin 4.9%
Full-year 50 JPY/share,up 6 JPY
23

Key takeaways

Q1 2018

Q1 volume growth of 1%. Solid start to Q2.
Taking appropriate competitive countermeasures as and wherenecessary

Improving share trends since integration; value share growthahead of volume
Generated 4 B yen synergies, slightly ahead of plan; on-track todeliver at least 8 B yen for full year.
Making steady progress on the financial framework for value
creation; (share repurchase, equity-based compensation)
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Q&A

25

Appendix

26

We are part of the global Coca-Cola system

Q1 2018

An enduring and effective partnershipCoca-Cola (Japan) Company•••••BrandsInnovation
Global perspective
Consumer focus
Superior insight••••••

Customer focus
Local expertise
Best-in-class execution
Finished goods production
Logistics and distribution
Cost optimization27

Q1 2018

Glossary of key terms
DME

Abbreviation of Direct Marketing Expenses. Sales promotion-related expenses, including advertisement, rebates, sales, salescommissions, etc.

FC

Abbreviation of Future Consumption. Purchase or sell beverage for future consumption in home, etc. It also means theproducts / SKUs for FC (for example, single packages 1L or more and multi-pack of IC packages) and channels that consumers
purchase the beverages for FC. (for example, supermarket, drug & discounter channels, etc.).

HORECA

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

IC

Abbreviation of Immediate Consumption. Purchase or sell beverage for consuming it immediately. It also means the products/ SKUs for IC (for example, single packages less than 1L as well as fountain) and channels that consumers purchase thebeverages for IC (for example, vending machines, convenience store channel, etc.).

OBPPC

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

Pro forma

Assuming the business integration of CCW and CCEJ from January 2017 and estimating the results, or compare 2018 resultswith pro forma 2017 results.

PTC

Abbreviation of Price, Terms and Conditions, an internal guideline for setting appropriate transaction conditions withcustomers, frequently used in conjunction with RGM.

RGM

Abbreviation of Revenue Growth Management, an overall strategy and process to achieve profitable revenue growth.

RTM

Abbreviation of Route-to-Market. A framework, a process, a philosophy, a proven approach for driving profitable growth.

Channel Definitions

Vending

Retail sales to consumers through vending machineSupermarket

Wholesale to supermarket chains customers

Drugstore & Discounter

Wholesale to drugstore and discounter chains customers

Convenience Store

Wholesale to convenience store chains customers

Retail & Food

Wholesale to grocery store, liquor store, eating & drinking establishments(HORECA), online sales channels customers, etc.

OthersWholesale to customers other than above

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Investor Relations
Coca-Cola Bottlers Japan Holdings Inc.
ir@ccbji.co.jp+81-3-5575-3797
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