Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Coca-Cola Bottlers Japan Holdings Inc (CCOJY, Financial) reported a significant increase in third-quarter cumulative business income, reaching JPY14.7 billion, which is 2.5 times greater than the previous year and surpasses initial forecasts.
- The company has raised its full-year earnings forecast, expecting a business income of JPY11.5 billion, which is 5.7 times higher than the previous year.
- Revenue for the cumulative third quarter rose by 1.9%, driven by higher sales volumes and effective cost management.
- The company successfully implemented a comprehensive shareholder return program, including an updated dividend policy with plans for dividend increases.
- Coca-Cola Bottlers Japan Holdings Inc (CCOJY) has made significant progress in supply chain initiatives, including the introduction of a new aseptic production line and collaboration with partners to build a sustainable supply chain infrastructure.
Negative Points
- Despite the positive financial performance, the company faces challenges from inflation and rising costs, which could impact future pricing strategies.
- The impact of adverse weather conditions, such as heavy rain and typhoons, affected channel and package mix, posing a risk to sales volume.
- Price revisions have led to a decline in sales volume in certain channels, such as supermarkets, where volume decreased by 3%.
- The company is experiencing a negative channel mix impact as consumers shift towards discount channels due to cost-saving behaviors.
- There is uncertainty regarding the long-term impact of recent price revisions on demand and profitability, as it is still early to evaluate the full effects.
Q & A Highlights
Q: From October, you have revised your price. Are you going to raise the price even more in the future? What is the progress in each channel? Also, you mentioned the impact from price revision will be JPY7 billion to JPY10 billion for the year. Is there any chance that you can increase that contribution amount?
A: Alejandro Gonzalez Gonzalez, Executive Officer, President of Retail Company, explained that the positive volumes in October were impacted by favorable weather, and it is too early to assume that volumes reflect the price increase. Bjorn Ulgenes, CFO, stated that the implementation of price increases is going well, and there is no reason to adjust the estimate of JPY7 billion to JPY10 billion impact. They will continue to monitor inflation and evaluate the need for further price increases.
Q: What is your policy on share buybacks in the future, especially considering the expected increase in free cash flow?
A: Bjorn Ulgenes, CFO, stated that share buybacks remain part of their total shareholder return strategy. They are implementing an up to JPY30 billion share buyback now, but there are no plans for future buybacks at the moment. They will continue to monitor this as they progress in their performance.
Q: Can you continuously outperform the market in terms of top-line growth? What gives you confidence in this?
A: Calin Dragan, CEO, emphasized that their strong performance is due to a fundamental transformation in operations, improved processes, and a strong partnership with Coca-Cola Company. They are confident in their ability to lead the market due to their strong brands, execution capacity, and commitment to profitability and shareholder returns.
Q: There is a difference in the growth rate between value and volume market shares. Where do these differences come from?
A: Alejandro Gonzalez Gonzalez explained that they are seeing positive traction on value share growth, particularly in the vending channel and convenience stores. The differences in growth rates are partly due to the mix, with new products and the Ayataka renewal contributing to value share growth.
Q: With consumers becoming more cost-oriented and shifting towards discount channels, what is your future channel strategy?
A: Alejandro Gonzalez Gonzalez stated that they will continue to leverage their Coke ON platform to drive traffic in the vending channel and remain committed to driving profitable growth. They will execute a disciplined strategy by channel to continue top-line and profitable growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
