SHAREHOLDER REVIEW 2009

Transcription

1 SHAREHOLDER REVIEW 2009

2 EARNINGS BEFORE INTEREST & TAX $A million 10.3% INCREASE IN EBIT $A million NET PROFIT 11.1% INCREASE IN NET PROFIT 1 percent (%) RETURN ON AVERAGE CAPITAL EMPLOYED 24.0% INCREASE IN ROCE OF 1.6 POINTS 1 2 cents per share DIVIDENDS PER SHARE 11.5% INCREASE IN DIVIDENDS PER SHARE 1. Before significant items.

3 DEAR SHAREHOLDER, 2009 was another successful year for Coca-Cola Amatil (CCA) in which the Company achieved a record profit result in challenging trading conditions. The significant investments made by the Company over the last three years in production capacity, operational capability and cold drink coolers, as well as successful new product launches and innovative new packaging, continues to distinguish the performance of CCA from its food and beverage peer group. THE HIGHLIGHTS OF THE RESULT INCLUDED STRONG PERFORMANCES BY THE AUSTRALIAN, INDONESIAN & PNG BEVERAGE BUSINESSES AND STRONG EARNINGS GROWTH OF MORE THAN 20% FROM THE FOOD & SERVICES DIVISION. The Australian beverage business result was driven by successful new product and package innovation, increased cold drink availability and higher levels of customer service, while in Indonesia the continued growth in higher value one-way packs (PET bottles and aluminium cans) helped the business deliver strong volume, revenue and earnings growth. The decision to maintain CCA s up-weighted capital investment program through the global financial crisis in order to reduce operating costs and materially improve customer service levels has again provided the platform for increased business, leading to higher returns for CCA s shareholders. CCA s strong earnings performance is confirmation that the Company s organic growth strategy is on track and that demand for our products remains robust. The Company will continue to innovate, expand its premium brand portfolio and to increase product availability. In doing so, CCA will aim to further extend its market-leading position in each of its markets, by refreshing, hydrating and energising its consumers all day, every day. Terry J. Davis Group Managing Director 3

4 YEAR IN REVIEW IN 2009, CCA DELIVERED A RECORD NET PROFIT AFTER TAX OF $449.0 MILLION, AN INCREASE OF $44.7 MILLION OR 11.1% ON FOR THE PAST FIVE YEARS, CCA HAS DELIVERED AVERAGE GROWTH IN NET PROFIT AFTER TAX OF 10.4% PER ANNUM 1, WHILE EARNINGS PER SHARE HAS INCREASED BY AN AVERAGE OF 9.2% PER ANNUM 1. Improved pricing and product mix, successful new product launches and the continued realisation of cost savings and customer service improvements from CCA s major infrastructure and supply chain capital investment program, Project Zero, all contributed to the record result. The strong operating performance has enabled the Board to increase the final dividend from 22.0 cents to 25.0 cents per share fully franked, representing an increase of 13.6%. For the full year, the total fully franked dividend was 43.5 cents a share, an 11.5% increase on 2008, representing a payout ratio of 72.3% of net profit Before significant items. 4

5 2009 BUSINESS PRIORITIES IN 2009, CCA CONTINUED TO DELIVER ON ITS KEY BUSINESS PRIORITIES. THESE WERE AS FOLLOWS: To continue to grow CCA s share of non-alcoholic beverages in each of its markets Innovation in new products remains a fundamental part of CCA s business model and further extends the Company s market leadership in non-alcoholic beverages and strengthens its relationship with its customers was another year of successful new product launches. In Australia, Mother energy drink more than doubled in size due to continued strong single-serve growth and the successful launch of Mother Surge in July, while Goulburn Valley flavoured milk was also successfully launched on the east coast of Australia in September. To accelerate CCA s cold drink cooler placement program in order to grow share of the cold drink market CCA spent over $113 million, or approximately 36% of total Group capital expenditure, on cold drink coolers in 2009 in order to increase the availability of higher margin, single-serve beverages. In Indonesia, for example, higher demand for one-way packs supported by accelerated cold drink cooler placement resulted in strong volume growth of over 30% in the modern food store channel and an increase in cold drink shelf space in Indonesia by almost 30%. To deliver significant cost savings and efficiency gains through Project Zero CCA s major infrastructure capital investment program, Project Zero, continued to deliver on its cost savings and customer service improvement targets in Major projects completed during the year included the Eastern Creek automated distribution centre in NSW, as well as various manufacturing efficiency projects in Australia and New Zealand. Cost savings from Project Zero delivered 22% of Australia s 2009 earnings growth. To step-change CCA s technology operating platform through the successful delivery of Project OAisys The second phase of Project OAisys (One Amatil Information System) was successfully delivered in Australia with the implementation of key systems including finance, human resources, call centre, equipment service, payroll and demand planning systems. In addition, CCA s major Australian Supply Chain manufacturing and distribution execution systems went live during August without any negative impact on customer service levels. The OAisys technology platform is already providing significantly enhanced internal and external customer service capability. To continue to rapidly grow the Indonesian business In Indonesia, capital expenditure was directed toward the completion of a number of major capacity and infrastructure projects including new production lines for aluminium cans and PET bottles and a plant in Jakarta for the self-manufacture of carbon dioxide, as well as the continued roll-out of cold drink coolers and ice chests. The expansion of the brand portfolio continued to deliver strong market share gains in both carbonated and non-carbonated beverages, with the highlight for the year being the very strong volume growth of over 25% in non-carbonated beverages, led by Frestea and Minute Maid Pulpy Orange Juice. To increase CCA s market share in premium beer in Australia and New Zealand Pacific Beverages continued to invest in building its brands and growing its market share of the Australian and New Zealand premium alcoholic beverages market. Pacific Beverages beer brands delivered strong volume growth of almost 50% and now account for over 9% of the Australian premium packaged beer market by volume and value. Pacific Beverages annual volume growth rate is now three times that of the Australian premium beer market. The new Bluetongue Brewery in NSW is due to be commissioned during May and will provide Pacific Beverages with a significant increase in local production capacity and capability for draught and packaged beer. 5

6 2009 OPERATIONS REVIEW CCA DELIVERED EARNINGS BEFORE INTEREST AND TAX (EBIT) OF $787.3 MILLION, AN INCREASE OF $73.5 MILLION, OR 10.3% 1, ON 2008 WHILE CCA S RETURN ON AVERAGE CAPITAL EMPLOYED (ROCE) CONTINUED TO IMPROVE, INCREASING FROM 22.4% IN 2008 TO 24.0% % INCREASE AUSTRALIAN EBIT AUSTRALIA delivered a record result with full year EBIT growth of 9.5% to $549.9 million on strong volume growth of 3.3%. The business continued to benefit from successful new product and package innovation, increased availability and higher levels of customer service. CCA s premium alcoholic beverages business, together with the cost savings from Project Zero, contributed over 30% of Australia s full year earnings growth. NEW ZEALAND & FIJI delivered an improved result in the second half, with the New Zealand business achieving local currency earnings growth of 9.5% in the second half as the economy started to recover after a prolonged period of negative GDP growth. Fiji delivered solid volume growth and local currency earnings growth for the year, which was a significant achievement given the continued economic and political uncertainty. INDONESIA & PNG achieved a record result, with EBIT increasing by 22.1% to $61.8 million on strong revenue growth of 21.9% and volume growth of 9.2%. Indonesia continued to focus on targeting more affluent consumers with a wider range of beverages available in one-way-packs while also continuing to invest in growing its more traditional returnable glass bottle business. PNG also delivered a strong result due to the increased placement of cold drink coolers and ice chests. FOOD & SERVICES delivered an excellent result, with EBIT 1 growth of 23.6% on trading revenue growth of 3.6%. SPC Ardmona delivered strong full year earnings growth as a result of increased sales of higher margin branded packaged fruit and vegetable products and the realisation of the cost savings from the restructure of the manufacturing operations in the Goulburn Valley. 22.1% INCREASE INDONESIA & PNG EBIT 1. Before significant items. 6

7 10.3% INCREASE GROUP EBIT % INCREASE FOOD & SERVICES EBIT 1 50% INCREASE VOLUME GROWTH PACIFIC BEVERAGES PACIFIC BEVERAGES JV continued to invest in building consumer preference for its brands and growing its market share of the Australian premium alcoholic beverages market. Pacific Beverages beer brands delivered strong volume growth of almost 50% for the year, and now account for over 9% of the Australian premium packaged beer market by volume and value. The new Bluetongue Brewery in NSW is due to be commissioned during May and will provide Pacific Beverages with a significant increase in local production capacity and capability for draught and packaged beer. STRONG FINANCIAL POSITION The Company remains in a very strong financial position with the ratings agencies, Moody s and Standard & Poors both reaffirming CCA s credit ratings at A3 and A- respectively. As at 31 December 2009, CCA s net debt was over $1.6 billion and the Company had total committed debt facilities of approximately $2.8 billion with an average maturity of 4.7 years. This includes the pre-funding for around $600 million of debt maturing in CCA is now fully funded for all of its debt due to mature in 2010 and has minimal debt to refinance in 2011 and In addition, CCA s EBIT interest cover 1 increased from 4.7 times last year to 5.9 times for Before significant items. 7

8 OUTLOOK FOR 2010 CCA FINISHED 2009 IN A STRONG FINANCIAL AND MARKET POSITION AND IS WELL PLACED TO CONTINUE ITS CONSISTENT OPERATING PERFORMANCE IN The key drivers of the business that delivered the strong 2009 results will again drive CCA s growth in These include: Further expansion of CCA s non-alcoholic beverage portfolio through new product and package innovation and the acceleration of the cold drink cooler replenishment program; To deliver further operating efficiencies and customer service benefits through Project Zero and the OAisys technology platform; To continue to rapidly grow the Indonesian business; and To increase CCA s market share in premium beer in Australia and New Zealand. CCA expects to maintain its focus on organic growth in each of its markets. The decision to maintain our up-weighted capital investment program through the global financial crisis in order to reduce operating costs and materially improve customer service levels has again provided the platform for increased business, leading to higher returns for our shareholders. For 2010, the business has identified a strong pipeline of revenue generating and cost saving capital projects to be implemented over the next three years. All of these projects will drive CCA s short and medium term earnings growth. Capital expenditure is expected to increase to between 8 and 9% of net sales revenue. The major capital projects will include: Additional one-way pack production capacity and infrastructure in Indonesia; Various Project Zero production capability and efficiency projects in Australia and New Zealand; PET bottle self-manufacture in Australia and Indonesia; Phase three of the OAisys technology platform roll-out for Australia and the commencement of the implementation for New Zealand and Pacific Beverages; and Acceleration of the cold drink cooler placement program across the Group. 8

9 CCA GROUP FIVE YEAR FINANCIAL SUMMARY INCOME STATEMENT 1 Trading Revenue $ million 4, , , , ,021.4 EBIT - before significant items $ million Net Profit - before significant items $ million Significant items (net of tax) $ million (18.7) (55.6) (41.1) Net Profit $ million BALANCE SHEET 1 Net Debt $ million 1, , , , ,132.7 Equity $ million 1, , , , ,424.8 Capital Employed $ million 3, , , , ,557.5 KEY RATIOS Capital expenditure to revenue % 7.0% 6.8% 6.8% 6.5% 7.5% Return on Average Capital Employed 2 % 24.0% 22.4% 19.0% 16.3% 17.5% EBIT Interest Cover 2 times 5.9x 4.7x 4.7x 4.0x 4.1x Net Debt to Equity % 103.0% 141.4% 111.6% 141.1% 149.7% PER SHARE INFORMATION Earnings per Share - before significant items cents Earnings per Share cents Dividends per Share cents Level of Franking - Final % Interim % includes results from the South Korean business, which was sold on 24 October Before significant items. 9

10 IN 2009, DURING THE GLOBAL FINANCIAL CRISIS (GFC), CCA S MAJOR PRIORITY WAS ITS PEOPLE. UNDER THE KEEP YOUR MATES IN A JOB CAMPAIGN INITIATED IN EARLY 2009, CCA PLEDGED THAT NO EMPLOYEE WOULD LOSE THEIR JOB BECAUSE OF THE EXTERNAL ECONOMIC ENVIRONMENT CCA IS PROUD TO ANNOUNCE THAT IT KEPT THIS PROMISE. 10 CCA s people responded with a commitment to work leaner and smarter in order to deliver even better results to CCA s customers so they, in turn, were also able to continue to grow their businesses during the GFC. CCA also continued to invest in a number of major capital projects designed to further save water, raw materials and energy in our operations and production processes and to build on the sustainability achievements already made. ENVIRONMENT CCA is investing $45 million in blow-fill technology which will enable the company to design and manufacture its own PET bottles on the production lines, not only saving transport costs, but also enabling CCA to make the lightest PET bottles in Australia. In the first year of operation in Northmead, NSW, the company expects to save approximately 1000 tonnes of PET resin. Pacific Beverages new Bluetongue Brewery has been fitted out with a $6.5 million water treatment plant that will enable the re-use of all water while also providing renewable energy to the brewery. We are partnering with our major customers on public place recycling projects. In 2009, Federal Environment Minister Peter Garrett launched a joint Westfield, Coca-Cola and Packaging Stewardship Forum project which will see 600 tonnes of beverage containers recycled in Westfield shopping centres across Australia. In Indonesia CCA s inaugural Bali Coastal Clean-up event is now a daily beach-cleaning operation where the iconic beaches of Kuta, Legian, Seminyak, Jimbaran and Kedonganan are cleaned with Coke tractors (pictured opposite), three garbage trucks and 60 beach clean-up crew. We re also tackling the polluted Jakarta canals. Partnering with local organisation, called Green Monster, CCA has created the Jakarta Waterways project to educate the community on how to correctly dispose of or recycle waste. We ve harnessed solar energy. In what is one of the largest solar roof-top installations of its kind in Australia, CCA s Eastern Creek Distribution Centre is being powered by 670 solar panels on its roof (pictured opposite), supplying 148 mega-watts of clean, renewable energy each year, or more than 15% of the DC s needs. MARKETPLACE AND WORKPLACE Sustainability September@CCA, a national event to drive sustainable practices and innovation in the workplace, was even more successful in 2009, its second year of operation. Staff participated in three national activities including an E-waste drive which collected 9.5 tonnes of old equipment and a cooler maintenance program where more than 3,000 employees cleaned 4,500 fridges saving 400 tonnes of greenhouse gas emissions. In partnership with Landcare Australia, staff also planted more than 3,000 trees in NSW, Queensland, South Australia and Victoria. In 2009 New Zealand undertook its

11 SUSTAINABILITY A NATIONAL EVENT TO DRIVE SUSTAINABLE PRACTICES AND INNOVATION IN THE WORKPLACE, WAS EVEN MORE SUCCESSFUL IN 2009, ITS SECOND YEAR OF OPERATION. first Sustainability September program. Our people at all sites participated in activities including Keep New Zealand Beautiful Clean Up campaigns and at the Auckland site we offered lunchtime seminars on safety in the home, personal budgeting and climate change. Our Auckland employees also participated in free diabetes and breast checks. CCA s long-term Remote Communities strategy, which is aimed at encouraging healthier lifestyles, has been rolled out across North Queensland, with Indigenous NRL star Matt Bowen urging communities to Choose Water. The program is now being rolled out in Western Australia. Sales figures are showing that people are increasingly choosing low-kilojoule beverages and water for their health and hydration. For example, Northern Territory sales of CCA s non-sugar range has increased by 18% and bottled water by 19% and Queensland sales of CCA s non-sugar range has increased by 46% and bottled water by 74%. COMMUNITY CCA continues to be a significent donor of food and beverages in the wake of natural disasters like bushfires and floods. We also supply large quantities of bottled water to state emergency services and various government departments in the event of water contamination or weather events. Mount Franklin continues its great work in providing awareness and funding for breast cancer research, with donations to the National Breast Cancer Foundation reaching $1 million in Coca-Cola Foundations in Australia, Indonesia and Papua New Guinea continue to fund a broad range of community projects and charities. For more detailed information see the 2010 Sustainability@CCA Report at 11

12 SHAREHOLDER INFORMATION SHAREHOLDER ENQUIRIES Investors seeking information about their shareholding should contact the Company s Share Registry. Shareholders should have their Security Holder Reference Number (SRN) or Holder Identification Number (HIN) available when contacting the Share Registry. SHARE REGISTRY CONTACT DETAILS Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Ph: Fx: registrars@ linkmarketservices.com.au Website: www. linkmarketservices.com.au FOR ENQUIRIES ABOUT AMERICAN DEPOSITARY RECEIPTS (ADR) BNY Mellon Shareowner Services P.O. Box Pittsburgh, PA, Toll Free (domestic): BNY ADRS or ( ) International: Website: shareowner VOTING RIGHTS Ordinary shares entitle the holder to one vote, except on a poll where each share is entitled to one vote. WEBSITE The Annual Report and Shareholder Review are available on the website: HOW TO CONTACT US Coca-Cola Amatil Investor Relations 71 Macquarie Street Sydney NSW 2000 Ph: Fx: aus_investor_relations@ anz.ccamatil.com Website: SHAREHOLDER REVIEW The Shareholder Review has been prepared as a general business overview and does not, and should not be expected to, provide a detailed understanding of Coca-Cola Amatil s financial performance, financial position or financing or investing activities. Financial commentary within this review has been derived from the Coca-Cola Amatil Annual Report for the year ended 31 December YOU MAY OBTAIN A COPY OF THE ANNUAL REPORT FROM CCA S WEBSITE: