Coca-Cola Bottlers Japan Holdings Inc.
Full-Year 2018 Earnings Presentation
February 15, 2019

Tamio Yoshimatsu, President
Vikas Tiku, Vice President & Chief Financial Officer(Posted to CCBJH website on February 14, 2019)Forward-looking statements
The plans, performance forecasts, and strategies appearing in this material are based on the assumptions and judgment of the management ofCoca-Cola Bottlers Japan Holdings Inc. (CCBJH or Company) 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”.
• 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 of assets, 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 2018 earnings presentation

Summary of leadership & organizational announcements

Full-year 2018 business summary & financial results
Full-year 2019 outlook
Q&A3

Summary of leadershipand organizational
announcements

Background and Overview of Recent Announcements
 Good progress on integration, but we face new challenges
 Right time for new leadership to lead the next phase of transformation
New representative
director & president,
Calin Dragan
New representative
director, vicepresident & CFO,
Bjorn Ulgenes

Evolution of Board of
Directors, focused on:
GovernanceIndependence
Diversity
Experience tosupport strategic
agendaOrganizational
restructuring,
including voluntary
retirement programEliminatedmanagement layers
Reduced number of
Executive Officers**Announced January 28, 20195

Good progress on integration; Facing new challenges
Organize for growth, operate as one enterprise• Integration and reorganization of subsidiaries and Coca-Cola system related companies• Growth Roadmap for 2020 and Beyond; Corporate philosophy “THE ROUTE”• Announced first price increase in 27 years
Leverage scale• Shared services (BSO) and CokeONE ERP system• Expansion of Shinsei logistic optimization project• Cumulative 12 billion yen in synergies
Financial framework for value creation• New dividend policy; Share repurchases• Shift to International Financial Reporting Standards (IFRS)Facing new challenges• Significant capital investments required to address rapid changes in consumer
preference impacting channel, packaging mix• Higher commodity, distribution and labor cost trends expected to continue• Revenue growth remains a priority, requiring portfolio and pricing discipline

Growth Roadmap for2020 and Beyond

6Announcement of new leadership
Calin Dragan, Representative Director & President*• Extensive experience in Japan, including leadership of Transformation andIntegration at Coca-Cola West and Coca-Cola East Japan, as well as ininternational operations across the Coca-Cola system• Currently president of The Coca-Cola Company’s Bottling Investment Group(BIG), overseeing diverse bottling operations across 15 countries,
representing a quarter of the world’s population

Bjorn Ulgenes, Representative Director, Vice President and CFO*
• Joined CCBJH in October 2018, serving as Head of Finance andRepresentative Director and President of Coca-Cola Bottlers Japan Business
Services Inc.
• Deep experience in finance leadership roles in The Coca-Cola system acrossEurope, the Middle East, Africa and Japan*Pending approval at the company’s Annual Shareowners’ Meeting, March 26, 20197

Evolving the board of directors in line with best practices• Governance: Focus on strategy andoversight• Six outside directors and four independent
directors• Four Audit and Supervisory Committee (ASC)members are all outside directors• Establishment of Compensation and
Nomination committees (non-statutory) underconsideration• Diversity in gender, nationality, etc.
• Relevant and extensive Experience tosupport CCBJH strategic agenda

New Board of Directors Nominees
Representative
Director

Representative
Director

ChairmanCalin Dragan
Representative Director

Bjorn Ulgenes
Representative Director

Tamio Yoshimatsu

Hiroshi Yoshioka*

Hiroko Wada*

Celso Guiotoko*

Irial Finan

Jennifer MannASC

Nami Hamada**Independent directors / Nominees for Audit and Supervisory Committee in red

8

Accelerating transformation for recovery and growth• Organizational restructuring• Reduced number of executive officers from 33 to 18• Eliminated organizational and management layers toward lean and flatorganization• Implementing voluntary retirement program• Eligibility: Employees over 45 years old.
• Expected Size: 700 employees• Program includes special retirement allowance and outplacement support• First to announce new price increase, effective April 2019. First
price increase in 27 years.
9Full-year 2018business summary

Full-year 2018 review• Beverage volume down 2%, driven by loss of product supply capacity due to flooding and rapidly
shifting consumer preference for aseptic PET products.

• Business income* ahead of revised forecast. Pro-forma business income down 41% versus prior year,
due to volume decline, higher logistics expenses and negative channel mix. Reported operating
income down 60% due to asset write-offs after flood damage.
• Integration-related synergies and cost savings of 8 billion yen, in line with 2018 plan

• Speedy decision to relocate damaged Hongo plant to new Hiroshima facility. Progressively expanding
manufacturing capacity by adding total of seven new production lines nationwide by Spring 2020.
• Completed deployment of back-office ERP system across all territories• Implementing price hike of Large PET products as of April 2019, the first in 27 years, in response tohigher distribution expense and raw materials cost inflation• Announced 25 billion yen share-buyback program in November in addition to 55.9 billion yen buybackin the first half. Annual dividend per share 50 yen, an increase of 6 yen per share, in line with plan.
*Business Income: Key measure of recurring profits under IFRS

11

2018: Navigating a tough year, progress on integration
Initiatives in 2018 Plan

National scale,
local presence

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

Results• Community-focused, customer-centric
market execution by 6 regions• Regional/channel exclusive products• Recovery from disaster by leveraging
CCBJI-wide supply chain network• Successful new product launches

Innovation“Beverages for Life” product portfolio
Enhanced engagement with customers andconsumers, driven by insights
Leveraging digital technology across value chain• Georgia Japan Craftsman “mizudashi” coffee
and Grand Bito in SOT can• THE TANSAN sparkling water• CRAFTEA, orange and peach flavors• Ayataka Chaba no Amami green tea• Lemondo, first-ever alcoholic beverage• CokeON Walk (step count) & CokeON Pay(cashless) vending apps, Coke mini vending

Synergies

Continued disciplined synergy capture
Prioritizing big bets
Fuel to re-invest for sustainable growth• 8 billion yen net synergies, in line with plan
• CokeOne ERP back-office rollout complete• Shared services organization (BSO) in place

12Full-year 2018 channel and category volume performance
Volume down 2%, driven by flood loss of manufacturing plant and aseptic supply constraints
Revenue per case improved in SM, D&D mainly driven by customer suspension of “chirashi” promotions and lower large-size package
volume. Newly launched products contributed to improvement in vending
By channel, volume grew in D&D and CVS due to new product launches, slight decline in SM impacted by fewer promotions. Vending
volume declined as we prioritized continuity of supply to customers in Q3 after flooding
By category, sparkling and non-sugar tea growth led by new products Coca-Cola Peach, THE TANSAN STRONG and Ayataka Chaba no
Amami. Coffee volume flat in Q4 driven by winter product campaigns as well as launch of Georgia Japan Craftsman. Full-year coffee
volume declined, impacted by vending decrease. Premium iLohas natural mineral water volume grew while flavored water and largepackage water volume decreased.

By channel

Vs. PY

Others
1%

R&F
23%

VM
24%

SM
23%
D&D
13%
CVS
16%

VolumeRevenue percase (Yen)Supermarket (SM)

-1%

+17

Drug & Discounter (D&D)

+2%

+18

Convenience Store(CVS)

+1%

-1

Vending (VM)

-7%

+3

Retail & Food (R&F)

-1%

-7

By category
Juice
7%

Coffee20%

Others8%

Sparkling27%

Non-sugar
tea
Water
20%
9% Sports
9%Vs. PY

VolumeSparkling+3%

Non-sugar tea

Even

Sports

-5%

Water

-10%

Coffee

-3%

Juice

-1%

Note: Differences in the pro-forma number provided in past presentations may be expected as a result of review and standardization of integration estimates.
Sales volume doesn’t include alcohol. Revenue per case doesn’t include DFR (deduction from revenue)

13

Full-year 2018 OTC market share and retail price trends
OTC Market ShareOTC Retail Price
Unit: JPY per bottle

Vs. Market
Average

Market Share (vs. PY, PP)

Value

Volume

Q4

-0.5

-1.3

Small PET

+2.5

-0.7

Full-year 2018

-0.1

-0.7

Large PET (2L PET)

+19.8

+1.5

Value

VolumeValue and volume share impacted by flooding &supply constraints; Minimized value share decline

OTC Retail Price (Q4 YTD)

Vs. PY

Continued higher retail price than market averagein both small and large PET

Large PET price improvements continued, driven
by our SKU rationalization and customer
suspension of “chirashi” promotions in 2H

Market share growth in sparkling and coffee
Source: Intage SRI

14

Full-year 2018 results vs. 2017 pro-forma
Declines versus prior year, slight improvement versus revised full-year plan
(IFRS)

2017

2018

Revenue(Pro-forma)

Revised Forecast

YoY(Oct. 2018)927,307

950,732-2%

925,100

512

522

-2%

YoY -2%475,156

484,953-2%

474,100

452,151465,779-3%

451,000

426,195

424,582+0%426,000

Business Income

23,27639,552-41%

23,100Net Income

10,117

21,161

-52%

9,000

Beverage Business Sales Volume (M Cases)
COGS

Gross Profit
SG&A

Beverage Business

2018

2017

Revenue

899,863

920,827

Business Income

17,93934,512

Health Care & Skin
Care Business

2018

2017

-2%

Revenue

27,44429,904-8%-48%

Business Income

5,337

5,040

+6%

YoY

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

YoY

15

2018 Drivers of business income in IFRS

Unit: B JPY(Rounded off less than
unit)

39.6

Net synergies: 8 B
-12.5
-0.8

2017
Pro-formaBusiness
Income-3.8•Volume decreased•Increased in 1H on
by 2%, including -7%
Winter Olympics,
volume in profitable
FIFA World Cup
vending channel
campaigns, etc.
•Variable cost
•Decreased in 2H
decreased due towith pull-back oflower volume
sales promotions• PET, cardboard,aluminuminflation

Volume, Price& Mix*

Commodity
pressure

DME(Fixed DME only)

-4.2

+6.8
• Manufacturing
efficiencies,
procurement
synergies, etc.
• Cost increased
due to alternate
products supply.

Manufacturing*Include variable costs related to commercial activities and adjustment for IFRS, etc.

• Increase oflogistics expense• Decrease oflabor, facilities,
IT, etc.
• Includes
recurring “other”
income/loss
items reported
below OI in
JGAAPOthers

-2.1

+0.3

23.3

• Lower spending
versus initial planby reviewing
initiatives, cost
reductions, etc.

2018
Integration
expenses

Healthcare &Skincare2018
ActualBusiness
Income16

Financial framework: 2018 initiatives
Dividend Growth
2018 annual dividend up 6 yen per share from 2017, as planned
Dividend payout ratio: 94.9%

Share buyback
Announced up to 25 billion yen/10.8 million share-buyback
program in November 2018.
• 18.3 billion yen/5.6 million shares acquired by January 201955.9 billion yen buyback completed in April 2018

Credit Rating
Maintained AA- (JCR) and A+ (R&I) issuer rating (January 21, 2019)2018 Annual Dividend

50
yen/share
InterimYear-end

25

25

yen/shareyen/share

2018 Buyback Amount

68 billion Yen
Credit Rating
JCR

R&I

AA-

A+
17

Full-year 2019 outlook

2019: Transition year focused on recovery and building for future
Leveraging the Coca-Cola system’s
unique partnership assets

Coca-Cola is the official sponsor of
the Japan Rugby National Teams

Tokyo 2020 Olympics

Product launches / renewals in Q1

Marketplace execution• First customer price increase in 27 years (April)• Disciplined pricing and investments to optimize portfolio• Collaborative business planning with key customers• “One System” virtual vending organization with CCJC
Manufacturing capacity and logistics• Investing to restore and grow production capacity; Shinsei
Project toward optimized distribution network• Continued higher manufacturing and transportation costin 2019 until full recovery from flood damage
Streamlined operations• Full company-wide deployment of Coke One ERP system• Leverage ERP system & shared service (BSO) to drive
standardization and efficiency, including RPA (robotic
process automation)• Employee voluntary retirement program & reorganization

19

Full-year 2019 forecast
IFRS

2019 Forecast

Beverage Volume (YoY)2018 Actual

Variance

even

-2%

--

Revenue

936,100

927,307+1%

Business Income

18,50023,276-21%

Operating Income

12,70014,682-14%

Net Income

7,200

10,117-29%

39.97 Yen

52.68 Yen

-12.71 Yen

EPS
Beverage Business2019
Forecast

2018 Actual

Variance

Health Care & Skin
Care Business2019
Forecast

2018 Actual

Variance

Revenue

906,100

899,863+1%

Revenue

30,00027,444+9%

Business Income

13,10017,939-27%

Business Income

5,400

5,337

+1%

Unit: Million JPY, except for EPS and DPS
Net Income: Net income attributable to owners of parent20

2019 Drivers of business income forecast (IFRS)

Unit: B JPY

Significant headwinds in Supply Chain

+4.1

23.3

2018
Business
Income• Price increase• Flat volume
growth• RGM initiatives

Volume, price& mix*(Rounded off less than
unit)

-0.6

-0.7

• Cycling 2018
pull-back of sales
promotion in 2H• Marketing
campaigns
supported byassets (Sports
partnerships)• Raw materials
inflation

DME(Fixed DME only)-2.7• Ongoing higher
cost until Spring2020 due toalternate productsupplyCommodity
pressure

Manufacturing

-5.1
+0.1
• Decrease in laborby voluntary
retirement plan
offsets by higher
logistics costs• Revenue growth
offset by higher
investments in
product andchanneldevelopment

18.5

OthersHealthcare &SkincareBusiness
Income2019
Business
IncomeForecast*Include variable costs related to commercial activities and adjustment for IFRS, etc.

21

Financial framework: 2019
Continued focus on shareholder returns
Investment for recovery and building foundation for growth
Evaluating long-term debt structure as part of Financial Framework

Dividend

Share buyback

Capex/Depreciation

Prioritize stable dividend.
Plan to pay 50 yen per share,same as in 2018
Focus on stable return,
payout ratio 30%+ after IFRSExpect to complete 25
billion yen buyback by endof May 2019

Investment for recovery andbuilding foundation forgrowth2019 Annual DPS
Plan

50 yenInterim

25 yenYear-end

25 yen

DPS: Dividend per share

Continue to evaluate
options, including future
share buybacks, to improveshareholder returns• Manufacturing lines• Shinsei logistic network
optimization project
FY 2019
Forecast

FY 2018
ActualCapex

99.8 B

45.9 B

Depreciation

57.6 B

47.5 B*2019 includes IFRS16 (Lease) adoption

22

2019 Key metrics and picture of success
Revenue growth

Flat volume, first to announce
price increase, RGM initiatives

Revenue +1%
Volume even

Value share

Improve price (wholesale
price)/mix with pricing,packaging, innovation, focus
on value

value ahead ofvolumeCAPEX

Investing to recover and growmanufacturing capacity,
optimize logistics network andcomplete ERP rollout

99.8 billion yen

Business Income(BI)

Recovery, building foundation
for growth. Will reevaluate
mid-term plan targets andtiming with new leadership18.5 billion yen BI

Dividend

Reflecting consistent focus onshareholder returns, despitetransition period for business

Full-year 50 JPY/share23

Wrap-up

Key takeaways• 2019; a period of transition• New management team and Board members• Invest to recover supply and meet changes in
consumer demand• Become a leaner, more efficient organization• Leveraging IT to enhance capability and speed• Portfolio and price discipline• Current mid-term targets to be revised

Milestones
March 1
Calin Dragan will become
Executive Officer & VP

March 26
Annual shareholders
meeting~August 2019
Expect updates to
mid-term targets

25

Q&A

Appendix

Full-year 2018 results (Reported)
Consolidated CCEJ into CCBJI from Q2 2017. First quarter 2017 CCW standalone
IFRS

2018

2017

YoY

Revenue

927,307837,069+10.8%

COGS

475,156

424,287+12.0%

452,151

412,782+9.5%

426,195

371,007+14.9%

Business Income

23,27640,177-42.1%

Operating Income

14,68237,594-60.9%Net Income

10,117

21,967-53.9%

52.68 Yen

125.53 Yen-72.85 Yen

Gross Profit
SG&A

EPS
Beverage Business

2018

2017

YoY

Health Care & Skin
Care Business

2018

2017

YoY

Revenue

899,863807,165+11.5%

Revenue

27,44429,904-8.2%

Business Income

17,93935,137-48.9%

Business Income

5,337

5,040

+5.9%

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

28

Full-year 2018 results vs. pro-forma 2017 in JGAAP
2018

2017

YoY

(Pro-forma)

Revenue

968,439

991,564-2%

COGS

472,993

482,467-2%

495,446

509,097-3%

467,330

466,992+0%

Operating Income

28,116

42,105-33%

EBITDA

77,20589,741-14%

Net Income

10,94825,836-58%

Gross Profit
SG&A

Beverage Business

2018

2017

Revenue

940,899

961,826

Operating Income

24,37938,948

Health Care & Skin
Care Business

2018

2017

-2%

Revenue

27,54029,738-7%-37%

Operating Income

3,737

3,157

+18%

YoY

YoY

Note: Differences in the pro-forma number provided in past presentations may be expected as a result of review and standardization of integration estimates.
Unit: M JPY
Net Income: Net income attributable to owners of parent.

29

2018 Drivers of operating income (JGAAP)
Unit: B JPY(Rounded off less than
unit)

42.1
-15.5
+3.4

DME

+0.6

+6.3

-4.2

VolumePrice & Mix

-1.4

28.1

-1.1

2017
Pro-forma
CCBJH OI

-2.1

Commodity
pressure

Manufacturing

Other
Opex

2018 Integration
expenses

8 billion yen net synergies

Goodwill,
etc.

Healthcare &SkincareBusiness OI

2018
CCBJH
OI

30

Q4 (October to December) channel/category volume performanceQ4 2018 volume: -1%
By Category

By Channel
Others
1%
R&F
25%
VM
25%

vs PY

SM
21%

D&D
12%
CVS
16%

VolumeRevenueper Case(Yen)

Supermarket (SM)

-3%

+29

Drug &Discounter
(D&D)

+2%

+14

Convenience Store
(CVS)

even

+10

Vending (VM)

-5%

+24

Retail & Food (R&F)

+2%

-2

vs PY

Juice
7%

Coffee23%

Others9%

Sparkling27%

Non-sugar
tea
Water Sports 20%
5%9%VolumeSparkling+1%

Non-sugar tea+1%

Sports

-8%

Water

-9%

Coffee

Even

Juice

+5%

Note: Differences in the pro-forma number provided in past presentations may be expected as a result of review and standardization of integration estimates.
Sales volume doesn’t include alcohol
Revenue per case doesn’t include DFR (deduction from revenue)

31

Volume by package
FY 2018
Volume:-2%
Powder3%

Q4
Volume:-1%

Others
6%

Syrup
13%

vs PY

S-PET
37%

Bottle Can
5%
Can
14%
L-PET
22%

Volume

S-PET

+6%

L-PET

-4%

Can

-9%

Bottle Can

-14%

Syrup

-1%

PowderEven

Powder4%

Others
5%

Syrup
14%

S-PET
36%

Bottle Can
6%
Can
15%

vs PY

L-PET
20%

Volume

S-PET

+7%

L-PET

-4%

Can

Even

Bottle Can

-20%

Syrup

+2%

Powder+10%

S-PET：PET under 600ml
L-PET：PET above 1.5L
Note: Differences in the pro-forma number provided in past presentations may be expected as a result of review and standardization of integration estimates.
Sales volume doesn’t include alcohol32

We are part of the global Coca-Cola system
An 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
Business
IncomeA measure of our underlying or recurring business performance after the adoption of IFRS. Business Income deducts cost of goods and SG&A fromrevenue, and includes other income and expenses which we believe are recurring in nature.

DME

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

FC

Abbreviation of Future Consumption. Purchase or sell beverage for future consumption in home, etc. It also means the products / SKUs for FC (forexample, 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 (forexample, single packages less than 1L as well as fountain) and channels that consumers purchase the beverages for IC (for example, vending machines,
convenience store channel, etc.).

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

Abbreviation of Price, Terms and Conditions, an internal guideline for setting appropriate transaction conditions with customers, frequently used inconjunction 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

34

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