Corporate Presentation - Arca · PDF file · 2017-01-17Corporate Presentation 1....
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Corporate Presentation 1
Transcript of Corporate Presentation - Arca · PDF file · 2017-01-17Corporate Presentation 1....
Corporate Presentation
1
Disclaimer
2
During this presentation management may discuss certain forward-
looking statements concerning Arca Continental’s future performance
that should be considered as good-faith estimates made by the
Company.
These forward-looking statements reflect management expectations and
are based upon currently available data. Actual results are subject to
future events and uncertainties, which could materially impact Arca
Continental’s actual performance.
A solid partnership with Coca-Cola since 1926
3
90 YEARS
Pioneers of the system
in Mexico
Current ownership structure
Arca Continental Control Group
68%Float Mexican Stock
Exchange: AC*
19%The Coca-Cola Company
9%Lindley Family
4% 4
An institutional company
• Balanced Board of Directors:
‒ 21 members‒ 6 of them are independent
• Majority shareholders only at Board level
• Audit Committee comprised of independent members only
• No transactions with related parties
5The Coca-Cola Company appoints one member of the Board
99%
1%
2002
Mxp$13 billionMexico Beverages
Exports and Vending Mxp$ 91 billion
Mexico Ecuador Argentina SnacksPeru
7.0x
10%13%
55%
3Q16
LTM15%
CAGR15%
7%Snacks
Exports
Sustainable and profitable growth…
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…based on strong organic growth and an excellent M&A track record
2002ARCA
Merger
2007Snacks
Mexico
2008Argentina &
Jugos del
Valle
2010Ecuador
2011CONTAL
Merger
2012Snacks
International
& Santa
Clara
2014Tonicorp
2015Peru
7
$10
$11
$13 $14
$17
$20*
2011 2012 2013 2014 2015 2016EBITDAMargin 18.9% 20.1% 21.3% 22.0% 21.9% 21.6%
$51 $56
$60 $62
$76
$91*
2011 2012 2013 2014 2015 2016
8
Delivering solid results in a challenging
environment
MXP$ billion
EBITDA Sales
*Last twelve months as of 3Q16
Highest credit rating among Mexican companies
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Financial flexibility and low leverage
ratio
“A2”
Global Investment Grade above
Mexico’s sovereign rating
Global Scale
National Scale
“Aaa”
“A”
“Aaa.mx”
0.5
1.9
1.3
2014 2015 2016e
Net Debt / EBITDA
Consistent value creation…
10
$16
$48
$191
$12 $60$75
$18$209
Market Cap ArcaDec '02
Market Cap ArcaDec '10
Dividend'02 - '10
Total ValueDec '10
Market CapArca+Contal
Dec '10
Market CapDec '16
Dividend'11 - '16
Total ValueDec '16
(MXP$ billion) +179%
+275%
Contal
Arca
…based in our strategic core pillars
• Talent development
• Organizational
capabilities
People &
Organization
• Culture
• Social Responsibility
Execution (ACT)
• Segmentation
• Price-pack architecture
• Service models
Supply Chain
Management
• Supply network design
• Operational Excellence
• Sustainability
Finance & IT
• Solid financial profile
• Standard and streamlined
business process
• State of the art IT platform
Operational Strengths
Value Creation
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A model that connects the entire organization
in order to reach the perfect execution
Segmentation
RGM
RTM
Fundamentals
Market tools
Sales School Innovation
Collaboration Commitment Innovation Standardization12
Balanced business portfolio
CSDs
Adjacencies SSDs
CoreNARTD
New sparkling beverage franchises
Emerging still categories + Value added dairy
Snacks, vending machines and exports
NARTD: Non-Alcoholic ready to drink13
Mexico Ecuador
Argentina
Peru
Arca Continental: beverage operations
Start date: 1926
• Sales volume (MUC) 1,078
• % KO volume 30%
• Population served (MM) 30
Start date: 2008
• Sales volume (MUC) 143
• % of KO volume 21%
• Population Served (MM) 9
Start date: 2015
• Sales volume (MUC) 292
• % of KO volume 100%
• Population served (MM) 31
Start date: 2010
• Sales volume (MUC) 156
• % of KO volume 100%
• Population Served (MM) 15
14
An extensive brand portfolio to satisfy
every consumption occasion
50 Brands+
SKUs1,200+201528Brands+
SKUs128+2006
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Nogales
AC
KOF
Rica
CDF
Nayar
Colima
Bepensa
• The dawn of a new era of growth
• Active participation in the consolidation of the KO System in Mexico
• Further opportunities for synergies and find better ways to serve
Strategic franchise location in Mexico
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63% Non
Returnable
37% Returnable
10% On Premise2%
Vending
60% Traditional
13%C-Stores
8%Other
7%S-Markets 11%
Flavors
6% Stills
61% Colas
17%Jug
5%Water
48% Single-serve
52% Multi-serve
Channel Category
Format
Package
Mexico
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Argentina: Investing in core capabilities and increasing profitability
• EBITDA margin expansion from 10% to 20% in 7 years
• Increasing cooler coverage and reaching a 48% cooler coverage
• Standardized operational processes and replicating best practices such as ACT
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Argentina
56% Non
Returnable
44% Returnable
2% On Premise
47% Traditional
1%C-Stores
29%Other
21%S-Markets
25% Flavors
3%Stills
62% Colas
10%Water
8%Single-serve
92% Multi-serve
Channel Category
Format
Package19
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Ecuador: Successful expansion of best practices
• Deployment of business strategies learned in Mexico to mitigate tax effect
• Increasing cooler coverage from 24% to 45% in the last 5 years
• All CAPEX investments made from its own cash flow
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Ecuador
79% Non
Returnable
21% Returnable
13% On Premise
67% Traditional
1%C-Stores
11%Other
8%S-Markets
32% Flavors
10%Stills
48% Colas
10%Water
29% Single-serve
71% Multi-serve
Channel Category
Format
Package
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Iquitos
Cusco
Trujillo
Ica
Piura
ECUADOR
PERUChiclayo
Sullana
BRAZIL
BOLIVIAArequipa
Plants (8)
80-6,000
25-80
10-25
0-10
Key Population Density:
Lima
Callao
COLOMBIA
New partnership in South America
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• Population 31 million
• Currency Nuevos soles
• 2015 Sales volume 292 MUC
• EBITDA margin +17%
• Net Debt $380 MMD
• Collaborators 3,300
• Production facilities 8
Five avenues to reach value creation opportunities of US$25 million at CL
1. Raw Materials
2. Process Innovation and
Packaging
3. Supply Chain and Transportation
4. Administration
5. Revenue Expansion Alternatives
Peru: large market with attractive macroeconomic and demographic dynamics
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Peru
72% Non-
Returnable
28% Returnable
11% On Premise
67% Traditional
4%C-Stores
8%Other
9%S-Markets
7% Stills
72% CSDs
4%Jug
17%Water
41% Single-serve
59% Multi-serve
Channel Category
Format
Package
1%Vending
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MX$5
MX$30
$5 $10 $13 $20$5 $25
Low elasticity SKU’sProtect affordability
(Multi-serve & Returnable)
Keep magic prices Leverage on diet & single serve
presentations
600 PET
3.0 NR2.0
RP
12 OzVR
RGM strategy: sustain profitability & affordability
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• Higher price per milliliter• Increase single-serve mix• Packaging innovation
• RGM initiatives• New consumption occasions
• Smaller formats, higher profitability• Finding new opportunities and competitive advantages
3 transactions 1 transaction
3 x 600 mls1 x 2 lts
better than
Transactions: A way to profitable volume
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Growing our Still Beverage Portfolio
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11.0
57.5
85.0
39.1
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Market Share Total Channels (%)
Powerade Main Competitor
• Very positive trend in Market Share
• Higher volumes in AC than in the rest of Mexico
• Surpassed our main competitor in the indicator base of consumption and closing gap in the indicator Favorite Brand
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• Founded in 1967, with leading position in high value-added dairy: flavored milk and yogurt
• 50/50 Joint Venture with TCCC
• Consolidating AC as one of the most important consumer companies in Ecuador
Mexico Ecuador
• Introduced UHT milk in in the traditional channel, 48% growth vs 2015
• Leveraging our Direct to Home channel
• Coverage of 39% in traditional channel
• More than 3,000 coolers introduced in the last two quarters
An extensive brand portfolio to satisfy every consumption occasion
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• 3rd largest snack brand in Mexico
• 40 year history
• Plan to expand nationwide
• One of the largest distribution networks
2013
• 40 year history
• Strong position in the Ecuadorian market
• 2nd largest player at a national level
2013
• Over 90 years history
• Leading regional brand
• #1 brand in NY metro area
• USD$7 billion market size in regions served
Leveraging our capabilities in adjacent business: Salty Snacks…
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2007
… and successful development of Direct to Consumer channels
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Leading innovation with telecommunications to
increase profitabilityJug Water & DTH currently reach more than
600,000 households
Vending Direct to Home
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31
2012 2015
Vending Machines
(‘000)
Mexico
163
226
336
532
2012 2013 2014 2015
DTH Routes
2005 2006 2007 2008 2009 2010 2011 2012
2.0 2.94.3 4.4
6.6
9.0
10.6
3.1
3.94.0
4.54.9
5.2
6.4
6.8
6.9
13.0
2013
7.7
13.0
2014
$104 MM USD growing market
2015
8.0
13.0
Capitalizing on exports to the US
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Coca-Cola (Nostalgia)
Exports to USA
Million Unit Cases
Expanding Topo Chico
• On July, Arca Continental (AC) agreed to transfer the rights of the Topo Chico brand in Mexico to The Coca-Cola Company (TCCC)
• This will allow the expansion of volume in all the territories operated by Arca Continental.
• The new territories are the states of Jalisco, Zacatecas, Durango, San Luis Potosí and Aguascalientes
• We expect a 20% volume increase for Topo Chico
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1325
56
100
2002 2008 2012 2017
SalesMXP$ billion
Strategic pillars support our goal to reach
Mxp$100 billion in sales by 2017 and sustain
our profitable growth momentum beyond…
2x
2x
2x
Our strategic revenue growth target
Future
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WATER*RECYCLINGMexico 2015
of resin produced by PetStar
34% Of PCR
49,447 Tons
1.69 Water Lts. /
Beverage Lts.
16% Improvement
ENERGY*
23.5 G CO2/
Beverage Lts.
10% energy reductionVs 2010vs 2010
17.3% from renewable
sources
Leader in water reuse
technology Mexico is the global leader in
recycled resin use
*2015 data for AC Consolidated
Our Commitment to Sustainability
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