Full-year 2019
Earnings Presentation
February 14, 2020

Coca-Cola Bottlers Japan Holdings Inc.
Calin Dragan, President
Bjorn Ulgenes, Vice President & Chief Financial Officer(Posted to CCBJH website on February 13, 2020)

Forward-looking statements
The plans, performance forecasts, and strategies appearing in this material are based on the assumptions and judgment of the managementof Coca-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 inour 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 2019 earnings presentation

Full-year 2019 financial results
Full-year 2020 outlook, strategy & initiatives

Q&A

3

Presentation highlights
Full-year Business Income (BI) roughly in-line with plan. Core beveragebusiness BI ahead of plan despite underachievement of health care & skin carebusiness
Q4 revenue grew 1%, 1% decline full-year in beverage businessQ4 beverage volume grew 1%, down 2% full-year, driven by July weather andApril wholesale price increase on large PET packages
Improving market share; Q4 value share growth ahead of volume share led bycoffee, tea, sports. New products contribute to price/mix and value share
growthStrong commitment to investing for growth; 90 billion yen capex in 2019
Major transformation ongoing as planned. “Business as usual is not an option”.
Starting 2020 with a solid foundation for the new five-year strategic plan.
4

Our progress
Areas of focus(as announced in Aug. 2019)“Business as usual” is not
an option

Vending transformation
Enablers

Financials
Way we work

Current status & deliverables✓ Change in board of directors; wholesale price hike- first in 27 years; voluntary
retirement program; shared services (BSO) expansion; new organization structure;
Lemon-dou alcohol brand nationwide launch; WWW (World Without Waste) packaging
commitments; Tokyo-area Commercial transformation; 7 sales centersclosed/consolidated in 2019
✓ One vending business unit; piloting operational optimization; initial signs of moderating
trend in vending business✓ Four new lines and two new warehouses as of 2/14; CokeONE ERP completion; Mega
DC under construction; new corporate Mission, Vision & Values and related people
strategies; Coca-Cola University Japan✓ 2019 BI roughly in-line with plan; 150B yen bond issuance with sustained credit rating;stable per-share dividends in 2019 & 2020

✓ Deeper and agile collaboration across Coca-Cola system; initial progress on fewer big
bets; diversity & inclusion recognition; “Sawayaka Style” work environment

Execution and tracking✓ Creation of Business Transformation function reporting to President; variable equitylinked executive compensation; testing pay-for-performance for salespeople
5Full-year 2019financial results

Full-year 2019 results vs. 2018

Beverage Business Income ahead of revised plan; offsets weak health & skin care results.
Operating & net loss include 62B yen goodwill impairment in Q2
IFRS

Full-year 2019

Revenue

Full-year 2018

YoY

914,783

927,307

-1.4%

503

515

-2%

COGS

473,723

475,156-0.3%

Gross Profit

441,060

452,151

-2.5%

SG&A

423,685

426,195-0.6%

Business Income

15,042

23,276-35.4%

Operating Income (Loss)(55,389)

14,682-

Net income (loss) attributable to owners of parent(57,952)

10,117-

Beverage Business Sales Volume (Million Cases)*

YoY

Health Care & Skin
Care Business

899,863-1.1%

17,939-36.2%

Full-year
2019

Full-year
2018

Revenue

890,009

Business Income

11,447

Beverage Business

Unit: Million JPY

Full-year
2019

Full-year
2018

Revenue

24,77427,444-9.7%

Business Income

3,595

5,337

-32.7%

YoY*Beverage business sales volume doesn’t include alcohol which company-wide launch on October 2019. The alcohol sales volume was 1.9M cases in 2019.
Some inconsistencies with the volume data provided in past presentations may
be expected as a result of standardization of volume and revenue calculation.

7

Full-year 2019 Drivers of Business Income
Topline improvement in 2H shows benefit of product launches, including expansion of Lemon-dou alcohol brand,
after cool & rainy weather in July, large PET wholesale price rise in April, expense control
Beverage volume YoY(Excluding alcohol)

23.3

Q1

Q2

Q3

Q4

FY

-2%

-7%

-1%

+1%

-2%

-8.4
+0.2

+1.1
• FY NARTD
volume -2%,
• Q4 volume +1%• Nation-wide
alcohol launch in
Oct. 2019

Full-year 2018
Business
IncomeVolume,Price & Mix*

-2.6

• Appropriately
managed DME
spend while
increasing Q3
DME spend for
new launches,
alcohol
expansion

DME

+3.2

Commodity

Lower
manufacturing
efficiencies due toless volume andstill-recovering
supply network.
Improved in Q4
supported byvolume growth

Elevated logistic &distribution,
increased sales
equipment
depreciations
offset by lower
labor costs, etc.

Manufacturing

Others(Direct Marketing

Expense, fixed only)

Unit: B JPY(Rounding off less than unit)*Volume, Price & mix includes variable costs related to commercial activities and adjustment for IFRS, etc.

NARTD: Non-alcoholic ready-to-drink-1.7
Sales decline
partially offset bycost efficiencies.
Less bad resultsin Q4 comparedto Q1 to Q3

Healthcare &SkincareBusiness
Income15.0

Full-year 2019
Business
Income8Full-year 2019 NARTD channel & category volume performance
Volume decline moderated to -2% full-year, +1% in Q4. Revenue per case improvement driven
by April wholesale price increase, new product launches in 2H.
By channel
Vs. PY1%

23%

Wholesale
Volume revenue
per case

23%

13%
25%

15%

Supermarket (SM)-3%

+44 YenDrug & Discounter (D&D)-2%+54 YenConvenience Store (CVS)-4%+24 Yen

Vending (VM)

-1%

-35 Yen

Retail & Food (R&F)-1%-3 YenImproved revenue per case in SM & D&D-- volume decline reflects Q2
price rise. Second half reflects cycling of prior-year flooding and supply
constraints as well as moderating impact of the price increase. CVS
volume decline reflects July weather and weak new launches/renewals
in first half, partially offset by NST & coffee recovery in Q4. VM
performance supported by expanded coverage of Georgia Japan
Craftsman and initiatives to drive purchase transactions. VM volume
even in Q4.

By category

Vs. PY
Sparkling

10%

7%

26%
20%

Sports20%

8%Non-sugar tea (NST)

9%

Water
CoffeeJuice

Volume

-5%
-1%
-3%
-8%
Even
Even

Coffee volume supported by expanding coverage of Georgia Japan
Craftsman across all channels and 170g can offering in VM.
Sparkling declines driven by the April price rise, partially offset by
newly launched Coca-Cola Energy. NST and Sports largely driven
by large PET decline in Q2 by the price hike and rainy/coolweather, partially offset by recovery in Q4. Water impacted by 2L
package decrease and cycling prior year flavor launches, slightly
positive in Q4 driven by iLohas plain water.

NARTD: Non-alcoholic ready-to-drink
Note: Volume doesn’t include alcohol. Revenue per case doesn’t include DFR (deduction
from revenue). Some inconsistencies with the volume data provided in past presentations
may be expected as a result of standardization of volume and revenue calculation.

9

NARTD Channel/category/package volume performanceQ4 2019 Volume: +1%

By package

By channel

Wholesale
Volume revenue
per case

Vs. PY

1%

21%
24%

Supermarket (SM)+3%+28 YenDrug & Discounter (D&D)+4%+66 Yen

Full-year 2019
3%
7%
13%

39%
4%

12%

Convenience Store (CVS)

26%

+2%
Even

-67 Yen

Retail & Food (R&F)-3%-7 Yen13%

Vs. PY

Volume

2%

11%

8%
26%

21%
21%
8%

21%

Q4 2019

By category
7%+19 Yen

16%

Vending (VM)

vs PY

6%

Sparkling-1%

Non-sugar tea (NST)+2%Sports

+3%

Water

+1%

Coffee

-3%

Juice

Even

13%

39%

5%
13%

Note: Volume doesn’t include alcohol. Revenue per case doesn’t include DFR (deduction
from revenue). Some inconsistencies with the volume data provided in past presentations
may be expected as a result of standardization of volume and revenue calculation.

20%

Volume

S-PET

+3%

L-PET

-8%

Can

-4%

Bottle Can

-15%

Syrup

-3%

Powder-7%

vs PY

Volume

S-PET

+8%

L-PET

-2%

Can

-10%

Bottle Can

-12%

Syrup

-4%

Powder-39%

S-PET: PET under 600ml/L-PET: PET above 1.5L

10

NARTD OTC market share and retail pricing trend
Positive market share momentum in Q4 with value share growth ahead of volume
NARTD OTC Market Share

Market ShareNARTD OTC Retail Price

Value

Volume

Q4

+0.6

+0.2

Full-year 2019

-0.2

-0.7

(vs. PY, PP)

Value
Q1 2019

Q2 2019

VolumeQ3 2019

Q4 2019

Value share growth ahead of volume in Q4
Market share growth led by growth in coffee, nonsugar tea and sports. Premium-priced new products
contributed to value share growth.
Source: Intage

OTC Retail Price

Vs. Market
AverageVs. PY

Small PET

+2.3

-1.7

Large PET (2L PET)

+23.3

+6.3

(Jan. to Dec. 2019, JPY per
bottle)Continued retail price growth in large PET observed
Observing moderated retail price growth in second
half as we cycle less promotional activities after the
supply disruption last year

NARTD: Non-alcoholic ready-to-drink

11Full-year 2020 outlook

Full-year 2020 forecast
20% Business Income growth; Transformation investments to impact 2020 operating income
2020 Forecast

2019 Actual

YoY

518

505

+3%
(+2% in NARTD)

Revenue

927,200

914,783+1.4%

Business Income

18,00015,042+19.7%

Operating Income (Loss)

14,000(55,389)-

Net Income (Loss) attributable to Owners of Parent

9,000(57,952)-

50.18 Yen

-322.22 Yen+372.40 Yen

79,90071,993+11.0%

Beverage Volume(Million cases, includes alcohol)

EPS
EBITDA (BI base)
Beverage Business

2020
Forecast

2019
ActualYoY

Revenue

900,000

890,009+1.1% Revenue

27,20024,774+9.8%

Business Income

14,00011,447+22.3% Business Income

4,000

3,595

+11.3%

Unit: Million JPY, except for EPS

Health Care & Skin
Care Business

2020
Forecast

2019
ActualYoY

NARTD: Non-alcoholic ready-to-drink

13

2020 Drivers of business income forecast
Recovering supply network before summer, investment for enablers & infrastructure to drive
transformation
-2.7

+1.1
+5.8
BI margin 1.6%

15.0

• Total volume
growth 3% vs PY• Alcohol nationwide launch• 2019 wholesale
price increase
impact in Q1

2019
Business
IncomeVolume, price& mix*

Unit: B JPY(Rounded off less than unit)• Spending for
Olympic & new
launches• Alcohol expansion• Incremental
vending
placement

DME

+0.4
-3.6
+1.9

Commodity• Continued
inefficiencies tillrecovery of
manufacturing
capacity by 1H• Increased
depreciation for 7
new lines• Lower logistic &distribution
partially offsets bylabor, Olympic
operation related
expenses, sales
equipment
depreciation

Manufacturing

Others(Fixed DME only)

BI margin 1.9%

• Recovery ofrevenue and BI
through activating
new launches andweb-basedpromotion

18.0

Healthcare &SkincareBusiness
Income2020
Business
IncomeForecast*Include variable costs related to commercial activities and adjustment for IFRS, etc.

14

Expected quarterly phasing and cycling outlook in 2020
Q1

Q2

Q3

2020 impact- Supply constraints/network inefficiencies till Q2- Higher marketing due to Olympics & new launches

2019 impact- Pension integration(Negative impact in Q1
2020 Labor expenses)- Voluntary retirement
program (Benefit to labor
expenses till Q1 2020)- Wholesale price hikebenefit (Benefit to revenue
per case till Q1 2020)- Voluntary retirement
program- Goodwill impairment

1

4(Cycling 2020)2019
Non-recurring(Below BI)(One time expenses)

Q4- Completion of new Hiroshima plant & other capacity
investments- Tokyo 2020 Olympic and Paralympic games- Bad weather in July
2019

- Alcohol nation-wide
expansion in Oct. 2019
(Benefit to sales
volume till Sep.)

7

102019 vs. 2018
CCBJH monthly
NARTD beveragevolume % trending
2

3

5

6

8

9

11

12

15

Financial framework: 2019 results & 2020 outlook
Balance Sheet/Cash flow

CAPEX & Depreciation• Year-end cash & cash equivalents grew due
to 150 billion yen bond issued Sep. 2019
• Negative cash flow trend expected driven
by upfront investment• Consistent focus on cleaning-up balance
sheet; ~10 billion yen cash-in by selling
fixed assets and investment securities• 13 billion yen share buyback in 2019
• Focus on delivering stable dividend-pershare for 2019 and 2020

• 2019 capex and depreciation weregenerally in-line with the plan,
including impact of IFRS 16• 2020 capex plan includes ~ 50 billion
yen of strategic investment;

Dividend per share20192020 Plan• Four aseptic manufacturing lines, including new
Hiroshima factory• Quality vending machine placement• Digital transformation• Optimizing logistic/distribution network(Project Shinsei)(Billion JPY)

2019 Actual2020 Plan

Interim

25 Yen25 Yen

Capex

89.5

96.0

Year-end

25 Yen25 YenDepreciation

57.0

61.9

2020 Capex includes 10B of Right of use assets in IFRS 1616

2020 Key metrics and picture of success
Revenue growth

Fewer big bets, market execution,
RGM initiatives. Value growth
driven by volume growth

Revenue +1.4%
Beverage volume +3%

Value share

Improve price/mix with wholesalepricing, packaging, innovation,
focus on value

Focus onvalue share growth

Cost reduction

Implementing vending operation
process transformation. Net of
upfront strategic investment forcapex and capability development

Net ~5 billion yen

Business Income (BI)Recovery while building
foundation for growth.

18Upbillion
yen
20% vs. PY

CAPEX

Continue significant investment ininfrastructure & capability to drive
growthEBITDA

Reflecting continued investment
to drive reset and transform96 billion yen
80 billion yen

Consistent focus on shareholder
returns despite transition period
for business

Full-year 50 yen/share(BI base)

Dividend

9% EBITDA margin17

Fundamental change driving a return to a growth trajectory

Expand revenue base
Growth from commercial transformation
Cost efficiency & upfront investment

2017-2019
Integration
2019 results
BI: 15 B yen
Roughly in-line with plan
Base for mid-term plan

2020-2022
Reset and transform
2020 target
BI: 18 B yen
CAPEX: 96 B yen

2023-24
Further growth to become
best-in-class in Japan
2024 target
BI: 49 B yen
ROE: 5%-6%18

Full-year 2020
strategy & initiatives

2020: Reset and transform for growth
Leveraging the Coca-Cola system’s
unique partnership assets

Growth mindset
Focus on big bets execution
Vending – Vertical & Horizontal growth to drive transaction
Commercial initiatives to improve space to sell
Improve market execution routine, pay-for-performancewith clear assessment and capability

Drive cost efficiencies

Enhance portfolio edge

Vending operation transformation to improve cost-to-serve
Standardize and optimize processes across the company –Commercial route-to-market, CokeONE ERP system, sharedservices organization (BSO)

Enhancing infrastructure
Supply chain – Supporting growth. Recovery and enhancing
manufacturing capacity including new Hiroshima plantcompletion in-line with plan
Investing in capability, digital transformation, sustainability
20

Review of 2019 Q4 Activity
Lemon-dou National Launch

Vending Machine ProgramHigh engagement with consumers
Gained frequency in vending
National launch results surpassing
Kyushu pilot

21

2020 Marketing Plan
Strengthen the Core

Highly DifferentiatedInnovation
Three tier portfolio
Investment into Big Bets
Big BetGold
Others22

2020 Marketing Plan
Strengthen the Core

Highly DifferentiatedInnovation
Three tier portfolio
Investment into Big Bets
Big BetGold
Others23

Video content
Coca-Cola Shibuya countdown 2019 to 2020 showed in earnings presentation

24

We kicked off the Tokyo 2020 Olympics Year on Jan 1st

25

Core Brands Activation

26

Video content
Three TVCMs showed in earnings presentation.

27

2020 Marketing Plan
Strengthen the Core

Highly DifferentiatedInnovation
Three tier portfolio
Investment into Big Bets
Big BetGold
Others28

Coca-Cola System: Strong Performance of PET Bottle Coffee(Under 500ml, 12 month moving, Revenue)*Source: Coca-Cola (Japan) Company

29

Growth opportunity

New type of coffee drinkers

Café Natives

The same MILKINESS
even in PET Bottle

Prefer the taste of the milkiness of a Latte
rather than the selection of the bean orroast technique
Not satisfied with the milkiness of
package design of RTD coffee

30

Georgia Lattenista
New Latte Experience for Café Natives✔ ジョージア従来品比較、3倍のミルク感*
3 times the milkiness*Compared to existing Georgia PET products

デザイン
Contemporary
Design✔ 洗練されたGeorgia Lattenista
Café Latte & Bitter Latte
March 30th Launch*Comparison of level of fat between Georgia Zeitaku Milk Café au Lait and Georgia Lattenista Café au Lait31

2020 Marketing Plan
Strengthen the Core

Highly DifferentiatedInnovation
Three tier portfolio
Investment into Big Bets
Big BetGold
Others32

Establish sustainable vending business
Recover topline performance and reduce cost-to-serve
Industry environment

Vending revenue& profit decline
Increasing costto-serve
Shortage oflabor
Our vending business
40%~ beverage gross profit~50% coffee volume sold
~700K vending machine

What we started in 2019

What we are accelerating✓Established one
vending business
unit with CCJC
✓TV commercial &campaign focusedon vending✓Focus on coffee✓End-to-end
operation processtransformation+1.3%

Topline growth
Column expansion- Increase # of new machine placement- Alliance with other players

Big bets focus- Coffee- New launches
Dedicated OBPPC- Coke ON smartphone app- One-coin small package offering- Vending exclusive products

Reduce cost-to-serve- Roll-out end-to-end operation processtransformation across CCBJI territory

2019 vending value
share growth

OBPPC: An abbreviation of Occasion, Brand, Package, Price,
Channel. A strategy offers people the right product, in theright pack, at the right price to suit the occasion.

33

Commercial initiatives
Quality revenue growth through price/mix improvement, supported by cost
efficiencies and capability development
Topline growth

Price & mix improvement

Execute big bets, including Lemon-dou
More visibility in space to sell
- Increase net new machine placement- Increasing point of sales in the outlets
More leverage in consumer engagement- Coke ON app, Olympic activation
Whitespace expansion

Sustain large PET wholesale price hike momentum
Focus on IC package; hero in all communications
Revenue growth management; Tokyo-area launchof 350/700 ml Coca-Cola
Continuous revision on Price (wholesale), terms andconditions
Increase value of categories by
havingmore consumer promotion

Cost efficiencies & Capability
Vending end-to-end cost-to-serve &Commercial route-to-market transformation
DME management, focus on ROISalesforce automation & CokeONE ERPBringing best in Japan and across global Coca-Cola system
Invest in recruiting, training, developing best category expert
34

Enhancing infrastructure, capability and people
Supply chain

Back office

Recovery & enhance capacity to support growth• On track to add four new aseptic manufacturinglines through Q2 2020
• Hakushu new line commissioned in January• Zao new line expected to be commissioned in
May and Hiroshima 2 lines in June
• Shinsei logistic/distribution optimization project,
construction ongoing for Saitama mega DC

Streamlining transactional process• Continue to optimize and expand sharedservice (BSO) offerings across the company• Drive digital transformation

Hiroshima plant

People strategy
Investing capability development• Investing people capability with new people
strategy• Coca-Cola University• Commercial on-the-job development

New line under construction
at Zao plant
35

ESG initiatives updates
Non-financial initiatives for sustainable growth and solid governance• Recognition around diversity activities• Inclusion of ESG indices• Executive compensation linked to performance – up to 2/3 variable
incentives, including equity• ESG goals including WWW (World Without Waste) vision target
embedded into 2020 business plan
Collect

Design

New Environmental Targets Toward
Acceleration of Recycling

50% by 2022:
Content of recycled PET in PET bottles
90% by 2030:
100% by 2030: Sustainable PET without fossil fuel use
100% by 2025: Adopt recyclable packaging
35% by 2030: Further light-weighting of PET packaging*Baseline 2015, target year 2025 unless otherwise stated

100% by 2030: Collection % against
sales volumePartner
By 2030: Extensive partnerships
across industry and environmentalorganizations
36

Key takeaway & our commitment
2017-2019
Integration

2020-2022
Reset and transform

2023-24
Further growth to become
best-in-class in Japan

Building strong momentum toward 2024
by achieving 2020 target
Growth mindset and driving cost efficiency

Gaining traction in ourcore beverage businessin 2019, good starting
point for 2024

▪ Quality topline growth▪ End-to-end vending transformation to protect & grow our important business

Strong commitment to invest for enablers andinfrastructure to reset & transform our core business• Focus on capability development and learning culture to become best-in-class• Stable products supply through normalizing supply capacity

ESG initiatives and strong governance embedded in ourbusiness plan
37

Q&A

Appendix

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

40

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 from revenue, andincludes 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 (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 the beverages for IC (for example, vending machines, convenience store channel, etc.).

PTC

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

41

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Investor Relations
Coca-Cola Bottlers Japan Holdings Inc.
ir@ccbji.co.jp
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