Coca-Cola Bottlers Japan Holdings
Full-Year 2017
Earnings Presentation
February 14, 2018

Tamio Yoshimatsu, President

Vikas Tiku, CFO
Head of Transformation(Released on February 13, 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)
Full-year 2017 earnings presentation, February 14, 20182017 summary and business update2017 financial results & integration progress2018 strategy and business plan
Q&A3CCBJH
2017 summary andbusiness update42017 Full-year results
Disciplined approach to drive profitability, with rapid integration progress

Full-year pro-forma operating income up +4% vs. prior year, inline with plan. Net income grew +62%.
Net synergies of 4 billion yen, in-line with plan.
Pro-forma free cash flow up 17.5 billion yen; ROE grew from
2.6% to 4.2%.
Operating structure optimized; Number of legal entities
decreased from 25 to 16.
Vending business and coffee continue to be a top priority.
5

2017 Integration update
Transforming with speed, establishing a foundation for growth
New commercial structure:
6 regional sales organizations
Integrated sales planning for key customers

Logistics & distribution network optimization expansion – Project Shinsei
Continued deployment of CokeOne+ ERP system across legacy CCEJ withplans in place to deploy in legacy CCW
Optimized & simplified organizational structure, ahead of plan
Adopting IFRS from Q4 2018 reporting6

2017 Commercial highlights
Putting our growth agenda into action while addressing market challengesFocus
On ValueTransform
Vending Business

Significant in-store execution
improvement across all channels

End-to-end vendingtransformation project on track,with initiatives being piloted to
grow top-line and improve
operational efficiency

Balancing value and volume
share across channels andcategories
Keeping focus on selling pricediscipline. Revenue per casegrowth across channels
Addressing challenges; coffee,
water and sports

Evolving Coke ON platform
Continuous good performanceof Coke ON machines
6.5M free products delivered in2017 through Coke ON
More than 210K Coke On VMs,
over 7M app downloadedEnrichInnovation Pipeline
Launched 7 FOSHU &FFC products in 2017

Focused on IC
packages to improvemix
11 different SKUs ofCoke slim bottles in2017
Seasonal, regional,channel exclusive
launches led by CCBJI

7FOSHU: Food for Specific Health Usage (Government approved); FFC: Food for Functional Claim2017 Market share and OTC retail price trends
Sequential value share improvement, value share even in Q4
Market ShareOTC Retail Price
Unit: PPMarket Share(vs. PY)

Q2

Q3

Q4

YTD
2017

Value-0.8-0.3+0.0-0.5

Volume-0.9-0.6-0.3-0.7

Unit: JPY per bottle

OTC Retail Price (YTD 2017)

Vs. Market
AverageVs. PY

Small PET

+1.7

+1.3

Large PET (2L PET)

+16.9

-1.0

Disciplined approach to market, focus on
improving value in transformation year

Small PET trend continued to improve;
Large PET reflects overall market pricing

FOSHU and FFC products contributed toimproving trend in value-share

Source: Intage SRIFOSHU: Food for Specific Health Usage (Government approved); FFC: Food for Functional Claim8

2017 Channel volume performance (Pro forma)
Value focus, revenue per case improvements continue
Supermarket, Drug & Discounter•

Full-year volume -1%•Others
1%

R&F
23%

vs. PYSM23%

D&D
13%
VM
25%

CVS
15%

VolumeRevenueper Case(Yen)

Growth of sparkling and non-sugar tea led by FOSHU &functional (FFC).
Mix improvement led by growth of small PET and valueadd products contributed to grow per case profitability

Convenience StoreSupermarket (SM)Even+17•

Drug & Discounter
(D&D)

+2%

+29

•

Convenience Store(CVS)

Even+18

Vending

Vending (VM)

-6%

+27

Retail & Food
(R&F)

+1%-5••

Increased competitive intensity. Growth of sparkling andnon-sugar tea led by FOSHU and FFC
Selling price and mix improvement contributed to growper case profitability

Impacted by poor weather in 2H, mainly in outdoorlocation.
Selling price and mix improvement thanks to vending
exclusive and high value-added products.

Retail & Food•

Growth in food service negatively impacted per caserevenue.

9Note: 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 with Functional Claim2017 Category volume performance (Pro forma)
FOSHU, FFC, premium adding value; Soft performance in coffee, water
Full-year volume -1%
vs. PY

Juice
4%

Others11%

Sparkling26%

Coffee
20%

Water
10%

Nonsugar tea
20%
Sports9%

VolumeSparkling+5%

Non-sugar tea+2%

Sports-6%

Water

-9%

Coffee-5%

Juice+1%• Coca-Cola Plus, regional limited design slim bottles andribbon bottle offerings contributed to volume growth ofCoca-Cola in sparkling• Growth of functional products including Sokenbicha
Barley and Karada Meguricha Advance drove
non-sugar tea growth• Sports category impacted by poor weather in peaksummer season. Aquarius trending in line with category.
• Premium iLohas water volume lower due to cycling prioryear new products and ongoing competition. 2L PET
volume impacted by strategic pull-back in discount water• Coffee category performance impacted by weakvending.

10
Note: 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CCBJH2017 financial results
and integration progress11Full-year 2017 pro-forma results
Revenue declined -2%, primarily driven by vending channel mix, partially offset by revenue percase growth across channels
4% Operating Income growth due to diligent cost management and synergy captureFree cash flow increased +17.5 billion yen, ROE improved to 4.2%
2017 (pro forma)

2016 (pro forma)

991.6

1,012.7

-2%

961.8

980.6

-2%

Operating Income (OI)

42.1

40.4

+4%

Coca-Cola business OI38.937.6+4%

Net Income

25.8

16.0+62%

EBITDA

89.7

84.5+6%

Free Cash Flow

+34.2

+16.7+17.5

ROE

4.2%

2.6%+160bps

OI Margin

4.2%

4.0%

+20bps

Unit: B JPYRevenue
Coca-Cola business revenue

Net Income: Net income attributable to owners of parent.
YoY increase of net income reflects impact of prior year extraordinary losses.

YoY12

Pro-forma 2017 full-year operating income drivers
Steady underlying synergy generation; Pro-forma OI grew 1.7B yen YoY, in line with plan
VolumePrice & Mix

Other Opex

• Volume -1%,impacted by poorweather• Pricing and mix
improvements
driven by highvalue added
products (FOSHUand FFC)

40.4
-6.1

Manufacturing••

Procurement andsynergy savings
Strong performanceacross both CCWand CCEJ business

Healthcare& Skincare
Business OI••DME• Investment grewin Q4 for 2018
• Full-year also
reflects lower
volumes andrelated review ofactivities

+5.2

+0.4

•

+6.4

Decrease in
distribution,
labor,depreciation(accountingharmonization),
etc. offset byintegration
expenses.

Controlling sales
promotion
expenses
Prior year pullback of FOSHU
products

Goodwill,etc.

Unit: B JPY

-4.3

42.1

+0.1
2016
Pro-forma
CCBJH OI

• 4B net integration synergies & benefits• Coca-Cola Business OI grew 1.3B yen

FOSHU: Food for Specific Health Usage (Government approved); FFC: Food for Functional Claim

2017
Pro-forma
CCBJH-OI

13

2017 results (Reported)
Consolidated CCEJ from Q2. Prior year CCW consolidated
2017

2016

YoY

Revenue872,623

460,455+89.5%

COGS

422,373

221,844+90.4%

450,249

238,611+88.7%

409,669

217,467+88.4%

Operating Income

40,57921,143+91.9%Income Before Tax

39,24012,707+208.8%Net Income

25,244

5,245+381.3%

EPS

144.2648.05

JPY +96.21

Gross Profit
SG&A

Coca-ColaBusiness2017

2016

YoY

Health Care & Skin
Care Business2017

2016

YoY

Revenue

842,885

428,394+96.8%

Revenue

29,73732,061-7.2%

Operating Income

37,422

18,369+103.7%

Operating Income

3,156

2,774+13.8%

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

14

CCBJH
2018
business strategy

15

2018: Pivoting from integration focus to growth mindset
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 growth16Local presence on a national scale
Regional sales organizations executing community-focused & customer-centriccommercial strategies, leveraging the scale of CCBJH

April 2017
CCBJI
inception

January 2018
6 regionalsales organization
Segmented channel & category
strategies tailored for each region

EastWestCentral

Kinki/Shikoku

Tokyo
Kanto

Go-toMarket Strategy
SM/DDVending

Areax
Channel

CVS

HORECA

Community-focused

Sparkling

Teas

Areax
Category

Water

CoffeeCustomer-centric17

Beverages for Life
Innovations across the portfolio to drive value
CoffeeSparklingQ1 plans, with more to come!
Georgia European
Decafe Black
Flavor of the Year
BrazilVending Exclusive

Georgia Emerald
Mountain
Seasonal Spring
DesignHydration
iLohasGeorgia CaféExpand
brewed cup
coffeeBig bets in Q1
Aquarius
Campaign to win 15 design bottles featuring
the official mascots for PyeongChang 2018.

18

Enhancing engagement with customers and consumers
Leveraging unique Coca-Cola partnerships and assets
Global partnerships

Vending

Step change proprietary
Coke ON platform
Agile prototyping toenhance interactions
with consumers
Leverage health/fitness
trends
Improve operational efficiencies
Better route planningalgorithms, based on AI
Streamline end-to-end
filling process

New vending machine
now in place offering
more than 40SKUs, tooffer consumers morechoices and improve
operation efficiency

19

Ongoing steady capture of synergies; 8 billion yen in 2018
Supply Chain will continue to be the main engine of synergies

Synergy drivers
Manufacturing and logistics network optimization
Coke One+ ERP system
Digital supply chain
Reduce and standardize legacy IT systems

Establish Business Services Organization (BSO)
Embed kaizen culture

20

CCBJH
2018
business plan21

2018 business plan2017 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%-EPS

141.0--3.26

2018 Plan

2017 Results

YoYRevenue

Coca-Colabusiness2018 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%
22Unit: B JPY except EPS
Net Income: Net income attributable to owners of parent.

2018 Operating Income planPro-forma OI growth of 7.6 billion yen vs. prior year•Volume +2%,
cycling 2017 poorweather• Continued
pricing/mix
improvement

Unit: B JPY+3.4
Expectedcommodity
pressure

-3.5

+9.9
OI Margin4.2%•Continued
marketinvestment(non-pricepromotions)•In-line withplanned volume
growth42.1
2017Pro-forma
CCBJH OI

+5.4

-2.6

Logistics/dist.,labor savings;
offset by
IT/CokeOne+
expenses,depreciation,etc.

Steady pace ofmanufacturing,procurementsavings-4.0
New
standardized
HR systems,
transformation
projects(RGM, BSO,IFRS)-1.4

OI Margin
4.9%

+0.5

Q1 only49.7• 8 B yen net integration synergies planned• Coca-Cola business OI growth +7.1B
VolumePrice & Mix

DMECommodity
pressure

Manufacturing

OtherOpex

Integration
expenses

Goodwill,etc.

Healthcare &Skincare
Business OI

2018
CCBJH
OI Plan23

Adopting IFRS reporting from Q4 2018
Objective and background• Enhances comparability of our
financial results in global capital
markets• Provides useful financial
information for investors andshareholders• Easier to benchmark results withpeers and global bottlers

Major differences vs. JGAAPNo amortization for goodwill

Differences in accounting treatment
for depreciation expenses

Differences in pension accounting

Re-class marketing expenses
between SG&A and revenue

24Financial framework
Dividend policy and 2018 dividend forecast
Our commitment in 2017 CCBJI Kick-off presentation:
Prioritize stable dividend; Periodically review capital structure & dividend payout ratio to maximize
shareholder return while maintaining flexibility to pursue expansion opportunities

Dividend policy:
Prioritize paying a stable dividend while allowing
shareowners to benefit from profit growth
From 2019, after implementation of IFRS, target
dividend payout ratio of 30% or more2018 Dividend forecast
AnnualInterim

Year-end

502525JPY/share(+6JPY)JPY/share(+3JPY )JPY/share(+3JPY )2017 expected full-year dividend 44 JPY/share2018 expected full-year dividend 50 JPY/share25Capex & depreciation: Investment for sustainable growth
19 billion yen strategic investments planned in 2018
CAPEX & Depreciation (pro forma)
Unit: B JPY

2018
Plan2017
ActualMajor strategic investments in 2018
Manufacturing efficiencies & new
products commercialization

Capex

65.9

49.9

Shinsei logistics network optimization

Depreciation

43.5

41.7

Coke One+ ERP system expansion2017 actual capex decreased 7B vs. plan announced
in 2017 Q3 earnings presentation mainly due to timingof investments

Cold drink equipment (VM, coolers, etc.)

Phasing of strategic investments over mid-term planunder review
Pro-forma depreciation doesn’t include amortization of goodwill, etc.

ERP: Enterprise Resource Planning26

2018: Pivoting to achieve sustainable growth toward 2020
Leveraging unique Coca-Cola partnerships and assets

Our Growth Roadmapfor 2020 & Beyond27

2018 Key metrics and picture of success
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 JPY28

Key takeaways
The heart of the decision to form CCBJH:
Bringing together a proven leadership team committed to growth,
partnering with our customers and communities, anddriving shareholder value

20172018

Rapid pace of integration

Pivot to growth mindset

On-track synergy generation

Steady synergy generation

Solid foundation for futuregrowth

Industry leadership
Operationalize financialframework
29

Q&A

30

Appendix

31

Q4 2017 pro-forma volume performanceQ4 2017 volume: -3%
By Channel
Others
1%

R&F
24%

vs PY

SM
21%

D&D
12%
VM
26%

CVS
16%

VolumeSupermarket (SM)

Even

Drug &Discounter(D&D)+1%

Convenience
Store (CVS)

Even

Vending (VM)

-8%Retail & Food(R&F)-1%

Revenueper Case(Yen)+5

By Category
Juice
5%

Sparkling26%+18+34

Coffee23%+13-8vs PY

Others
11%

Water
9%

Non-sugar
tea
20%Sports6%

VolumeSparkling+4%

Non-sugar tea

Even

Sports

-12%

Water

-8%

Coffee

-5%

Juice

Even

Note: Standardization of volume and revenue calculation is ongoing as a result of the integration. Some inconsistencies
with the data provided in past presentations may be expected.

32We are part of the global Coca-Cola systemAn enduring and effective partnership

Coca-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 optimization
33

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 2016 results using the same standard

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 above34

Investor Relations
Coca-Cola Bottlers Japan Holdings Inc.
ir@ccbji.co.jp+81-3-5575-3797
https://en.ccbj-holdings.com/ir/
facebook: https://www.facebook.com/ccbji/
コカ･コーライーストジャパン株式会社