Coca-Cola Amatil 2007 Annual Report
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Managing Director’s Review
2007 has been a successful year for CCA, marked by the
delivery on all of the primary business drivers that were
identified in our strategic review in April 2007.
These primary business drivers included:
1.
Grow CCA’s share of non-alcoholic beverages by continued expansion of
the product portfolio;
2.
Broaden the beverage portfolio into the highly profitable alcoholic
beverages market in Australia and New Zealand;
3.
Actively review ownership options for the South Korean business, while
maintaining its commitment to Indonesia, PNG and Fiji; and
4.
Undertake a major IT infrastructure development to re-engineer
business processes and create a world-class operating system.
We have continued to expand our non-alcoholic beverage portfolio with a
number of successful new product launches, including Goulburn Valley
premium juice, smoothies and fresh flavoured milk, the Kirks Sugar Free
range, Pumped flavoured water and new Powerade Isotonic flavours.
In alcohol, we launched our three core premium beers in New Zealand in
October. Miller Chill was launched in Australia in November, the first
significant beer innovation in Australia for many years, and we also
successfully launched Jim Beam & Zero Sugar Cola in September.
CCA’s rapidly-growing alcohol business generated over $300 million in
revenue1 in 2007 from the sale of Pacific Beverages’ premium beers and
the Maxxium spirits portfolio. The business also delivered solid incremental
earnings to CCA including contract manufacturing revenue on the Jim
Beam alcoholic ready-to-drink range, various Maxxium sales incentives and
the premium beer sales by Pacific Beverages. In addition, CCA’s overheads
were spread over a larger revenue base.
Additional capital investment of approximately $14 million in Indonesia in
the last two years in new can, PET and hot-fill capacity continued to drive
profitable growth in the modern food store channel.
The integration of CCA’s Australian and New Zealand beverage businesses
delivered savings in 2007 of over $10 million from improved revenue
management initiatives and procurement savings. Further opportunities
have been identified in raw materials and indirect expenses procurement,
joint new product development and the sharing of best-practice technical
innovation, all of which will be accelerated in 2008.
CCA’s investment in a new technology platform across Australia and New
Zealand is expected to deliver many process and operating efficiencies.
The development, with implementation commencing later in 2008, will be
phased in over a number of years and is expected to materially lower CCA’s
cost of doing business and deliver operating efficiency gains as the
platform for the introduction of shared services across the CCA group.
Operations Review
Australia achieved an excellent result with EBIT growth of 12.3% on
strong trading revenue and volume growth of 9.1% and 2.6% respectively.
The result was achieved by the continued focus on new product and
package innovation and price realisation, and on initial contribution from
the emerging alcohol business. CCA’s continued investment in new higher
value premium products and packages such as Brand Coke in 385ml glass
and slim line cans, Powerade Isotonic, and Pumped flavoured water
delivered strong growth for the year as consumers responded positively to
CCA’s increased range of premium brand and pack combinations.
New Zealand & Fiji recovered from a difficult 2006 trading year to
deliver a record EBIT growth of 19.5% on revenue growth of 9.1% and
volume growth of 1.5%. This was an excellent result given the business
was cycling the successful launch of Coca-Cola Zero in New Zealand in the
first half of 2006.
Indonesia & PNG – The region more than doubled EBIT to $36.8 million,
with strong volume growth of 7.2% and revenue growth of 4.5% as the
economic recovery in Indonesia that commenced in the second half of 2006
continued throughout 2007.
Food & Services delivered EBIT growth of 5.1% on revenue growth of
5.5%, which was a solid result and was achieved despite the continuing
impact on SPC Ardmona of the drought, increased commodity prices and
increased competition from imported packaged fruit and vegetable
products.
Pacific Beverages JV – Pacific Beverages achieved strong penetration
with its premium beer brands particularly Peroni Nastro Azzurro and Miller
Genuine Draft, achieving volume growth of more than 150% over 2006
when the brands were under other distribution arrangements.
Includes Maxxium revenue which is not reported in CCA accounts
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