global beverage, food and tobacco conference 8 may...
TRANSCRIPT
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Goldman SachsGlobal Beverage, Food and Tobacco Conference
8th May 2001
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This presentation may be deemed to include forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934. It should be read in conjunction with our periodic interim and annual reports and registration statements filed with the Securities and Exchange Commission, copies of which are available from Cadbury Schweppes plc, 25 Berkeley Square, London, W1J 6HB, UK.
SAFE HARBOUR STATEMENT
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John SunderlandChief Executive Officer
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AGENDA
• Overview of business
• Objectives and Strategy
• Growing shareowner value
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CADBURY SCHWEPPES
Dr Pepper1885
Cadbury1824
Schweppes1783
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N.America Beverages33%
Europe Confectionery
31%
2000 SALES - $7bn
BEVERAGES AND CONFECTIONERY
Europe Beverages10%America
Confectionery7%
Asia Pacific12%
Africa, India, Middle East7%
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MANAGING FOR VALUE
Phase One Performance Targets : 1997 - 2000 GROWING SHAREOWNER VALUE
• double digit earnings growth per annum
• £150m free cashflow per annum
• double shareowner value over 4 years
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MFV – PHASE 1 RESULTS : 1997 - 2000
Underlying EPS growth**
Free cash flow
TSR# growth
Trading marginMarketing/sales
ROIC – WACCEconomic Profit* growth
Average
# Total Shareholder Return (capital appreciation plus reinvested dividends)
*before restructuring
**at constant currencies and excluding restructuring and exceptional items
6%c£100m
+9%
12.3%13.7%
nilN/A
1989-1996
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MFV – PHASE 1 RESULTS : 1997 - 2000
Underlying EPS growth**
Free cash flow
TSR# growth
Trading marginMarketing/sales
ROIC – WACCEconomic Profit* growth
Average1997 1998 1999 2000
# Total Shareholder Return (capital appreciation plus reinvested dividends)
*before restructuring
**at constant currencies and excluding restructuring and exceptional items
6%c£100m
+9%
12.3%13.7%
nilN/A
10%£157m+14%
14.9%16.7%
-1.1%+14%
11%£157m+57%
15.6%17.7%
0.0%+8%
8%£292m+2%
16.3%18.1%
1.8%+18%
13%£401m+2%
16.9%19.4%
2.4%+16%
1989-1996 Total
49%£1,007m
+84%
n/a£3,759m
3.1%+68%
Average
11%£252m+16%
16.0%17.6%
0.8%+14%
1997- 2000
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MFV PHASE 2 TARGETS : 2001 - 2004
• double digit earnings growth per annum
• £300m free cashflow per annum
• double shareowner value over 4 years
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THE EPS GROWTH MODEL
VolumePrice / MixOperational GearingEfficiency*Cash GenerationAcquisitionsTotal
2001/22%3%4%-
2%1%12%
* efficiencies net of re-investment in marketing
2003/43%3%4%-
2%-
12%
Underlying Earnings GrowthModel
2%2%4%-
2%2%-5%
12%-15%
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STRATEGY
• Committed to beverages and confectionery:- attractive growth rates- strong brands- ubiquity of distribution- high margin- cash generative
• Seek to develop robust and sustainable positions in regional markets
• Focused on growth:- organically- via acquisition
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ROBUST AND SUSTAINABLE
1997 1998 1999 2000 2001
Disposals: $2.0bn
Beverages: 23xEBITDA
Joint Venture Bottling: 9X EBITDA
Acquisitions: $3.5bn
Confectionery: 7X EBITDA
Beverages: 11X EBITDA
Joint Venture Bottling: 7X EBITDA
La Pie Qui ChanteBim BimJaret
Coca Cola Schweppes Beverages
Beverage brands in 160 markets
American Bottling Co
Wedel
Hawaiian Punch
Dr Pepper Bottling Co
HollywoodWuxi
SnappleLion NathanMauna La’iGrant Lydick
Confectionery Beverages Joint Venture Bottling
Mantecol
Spring ValleyCarteretSlush Puppie
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BEVERAGES – THE FUTURE
• To consolidate our positions in North America, Continental Europe and Australia
• Broaden our participation beyond CSDs into refreshment beverages
• Encourage further route to market consolidation in the US
Continue :
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ColaFlavored CSD
WaterSS Fruit Bev.
RTD TeaSports Drinks
1% 4%
29%5%7%9%
Average Growth 1995 - 2000
-√√√√-√√√√√√√√-
Significant CSPresence
US REFRESHMENT BEVERAGES
Sources: Beverage Marketing and Beverage Digest (1999)* - excludes bulk waters and bulk pure fruit juice; all $ values are wholesale values
Colas
Flavoured CSDs$17.0bn
New Age Beverages
Water$2.3bn
$26.1bn
$5.6bn
Others27%
Cadbury Schweppes33%
Coca-Cola23%
PepsiCo21%
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US BEVERAGE BRANDS
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DR PEPPER SEVEN UP BOTTLING
States of franchise territory
Manufacturing plant
Buena ParkVernon
Irving
Houston
Ottumwa Northlake
Holland
Columbus
Franchise Territories
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EUROPE BEVERAGES
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AUSTRALIA BEVERAGES
• No.2 in CSDs with a share of 25%• Strong brand portfolio• Profit growth 17% CAGR over 5 years• Acquisitions :
- Lion Nathan Bottling- Spring Valley fruit juices- Wave flavoured milk
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CONFECTIONERY
#1 Canada
#1 Nigeria#1 Ghana
#1 South Africa
#1 Kenya
#1 India#1 Egypt #2 China
Malaysia
#1 Australia
#1 New Zealand
#1 Ireland#1 UK
#1 France#1 Poland
Key Cadbury Schweppes Markets
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CONFECTIONERY – THE FUTURE
• Broaden our representation• Invest in emerging markets• Leverage our brands• Drive Innovation• Increase availability
Continue to
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BROADEN REPRESENTATION
• 40% of volumes in sugar confectionery
• An integrated approach
• To leverage our distribution muscle
• And reinvest savings to drive growth
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EMERGING MARKETSPer Capita Consumption (kg/head/pa)
Sources: Euromonitor 2000
South Africa Australia
Malaysia
ChinaIndia
Russia
Egypt
PolandW. Europe
N. America
Latin America
10.3
2.3 2.0
7.96.3 6.5
1.20.1
0.1
1.3
8.0
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BRAND LEVERAGE
The Cadbury Endorsement
Biscuits
Cakes
Desserts Ice-cream
Hot Drinks
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BRAND LEVERAGE
Cadbury Masterbrand
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BRAND LEVERAGE
Russia
UK and Ireland
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INNOVATION
UK and Ireland
New Zealand
Australia
UK and Ireland
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Source: CTB Estimates / IAMCO
1991 1999
No.
of o
utle
ts
6.0k 6.5k
106k75 k
20 k
158 k
1991 19996.5k 6.5k
106k 106k
20 k
No.
of o
utle
ts
Others (eg foodservice)Traditional Impulse/RetailGrocery
GROWTH THROUGH AVAILABILITY
Availability in the UK
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2001 OUTLOOK
• Confident of meeting financial targets for the year
• US beverage volumes up 10% in Q1
• Performing in line with the soft CSD market
• Confectionery volume growth
• Major confectionery markets remain competitive
• Good growth in Emerging Markets
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SUMMARY
• Strong and enduring brands
• Committed to growing value
• Strategically more robust/focused on growth
• Confident of achieving financial objectives
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