Release Date: August 05, 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 business income by JPY4 billion compared to the previous year.
- The company achieved a 1.8% year-over-year sales revenue increase, driven by volume growth and improved wholesale revenue per case.
- Transformation initiatives delivered cost savings of JPY2.1 billion in the first half, with an annual goal of JPY6 billion in cost savings on track.
- The successful renewal of Ayataka tea resulted in more than 20% year-over-year volume growth for the brand in the second quarter.
- The company maintained a strong market share, with total channel value share growing by 0.3 points from last year.
Negative Points
- Despite overall positive performance, the company faces high hurdles in the second half, particularly in maintaining strong momentum in the third quarter.
- Sales volume in supermarkets declined, mainly in large PET bottles, due to significant impacts from price revisions.
- Other costs rose by JPY3 billion compared to the previous year, driven by higher sales equipment costs and IT-related expenses.
- The impact of commodity market fluctuations, foreign exchange rates, and utility costs remains uncertain.
- The company needs to carefully manage the impact of price revisions planned for October, which could affect volume and channel mix.
Q & A Highlights
Q: What are the reasons for the improvement in business income in the second quarter, particularly regarding volume and price mix?
A: (Bjorn Ulgenes, CFO) Both volume and price increased for the quarter. The volume channel mix impact was positive, over JPY1 billion. The price impact remained very strong, more than JPY3 billion. Investments in our Vending business and Ayataka drove significant positive results, which we believe will continue into Q3.
Q: Is the investment in Q2 expected to yield returns in Q3, and will you achieve the JPY10 billion business income target for the year?
A: (Bjorn Ulgenes, CFO) Yes, we are confident that the investments made in Q2 will yield returns in Q3, and we are on track to achieve our JPY10 billion business income target for the year.
Q: How is Ayataka performing, and what are your plans to maintain its momentum in the future?
A: (Alejandro Gonzalez, President of Retail Company) Ayataka is performing very well, driving significant uplift in volumes and consumer base. We are also seeing great progress in the rest of the portfolio, particularly with Coca-Cola trademark products. We will continue to focus on maintaining and growing Ayataka's momentum.
Q: What is your view on the impact of private brands in the Green Tea category and other categories?
A: (Alejandro Gonzalez, President of Retail Company) While private brands are having an impact, we are still able to drive growth for Ayataka. Our focus remains on building the brand power of our portfolio and driving transactions and value growth in the market.
Q: What are your assumptions regarding the market reaction to the price revision planned for October?
A: (Alejandro Gonzalez, President of Retail Company) We do not see any material changes in consumer behavior and remain confident in our strategy. We will continue to monitor the market and adjust as necessary.
Q: Can you elaborate on the package strategy for Ayataka and its success?
A: (Alejandro Gonzalez, President of Retail Company) The success of Ayataka is due to a comprehensive set of initiatives, including product positioning, new visual identity, and a strategic packaging architecture tailored to each channel. This combination has driven the brand's growth.
Q: How do you evaluate the channel mix and package mix trends, particularly in the Convenience Store channel?
A: (Alejandro Gonzalez, President of Retail Company) We are pleased with the top line growth in Convenience Stores. The impact on mix is due to the listing of I LOHAS 1 liter PET by a major customer, which was critical in driving volume and revenue growth despite affecting the mix.
Q: What is your forecast for the impact of the October price revision?
A: (Bjorn Ulgenes, CFO) We are not changing our outlook for the impact of the October price revision, which we estimate to be JPY7 billion to JPY10 billion annualized. The consumer sentiment remains stable, and we are confident in our execution.
Q: How do you plan to maintain the momentum of Ayataka beyond its current success?
A: (Alejandro Gonzalez, President of Retail Company) We will continue to focus on comprehensive initiatives, including product positioning, new visual identity, and strategic packaging tailored to each channel. This approach has proven successful and will continue to drive growth.
Q: What is your strategy for dealing with the impact of private brands in the market?
A: (Alejandro Gonzalez, President of Retail Company) We will continue to monitor the impact of private brands and focus on building the brand power of our portfolio. Our strategy includes driving transactions and value growth through comprehensive initiatives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
