Coca-Cola Bottlers Japan Holdings Inc

TSE:2579

Earnings Call Transcript 2024-Q1

[Calin Dragan, executive]

Hello, everyone. This is Calin Dragan, President of Coca-Cola Bottlers Japan Holdings. I would like to share with you the results of our first quarter 2024 earnings. For detailed information, please visit our IR website to listen to the earnings webcast and the question-and-answer session. We are pleased to have had a good start to the year, an important first year of our strategic business plan, Vision 2028.

In the first quarter, top line growth from our profitability-focused initiatives made a significant contribution with an increase in business income of JPY 1.6 billion over the previous year. We are on track to achieve our ambitious income target of JPY 10 billion for the full year of 2024.

Sales volume remained flat from the previous year due to effective and disciplined commercial activities that capture demand from continued traffic recovery. This was despite the negative impact of price revisions implemented last year in October and poor weather conditions this March.

Revenue grew 2.5% year-on-year with the effects of price revision leading to improved wholesale revenue per case along with an improved channel and package mix. In addition to cost savings from transformation in the supply chain and back office areas, one of the further drivers of the improved profitability is that by leveraging the benefits of the global Coca-Cola system, we were able to control increased costs from the previous fiscal year caused by higher commodity and utility prices. Transformation is progressing steadily to achieve our target of JPY 6 billion in annual cost savings.

Another crucial element of profitability improvement has been our price revisions implemented on schedule starting with May 1, shipments for certain small, packaged products.

We have also recently announced further price revisions for this October, which is the sixth since the 2022. We are confident that these initiatives will contribute to sustainable future profit growth.

In the second quarter, we will position ourselves to maximize benefits during the peak summer demand period as well as smoothly implement the price revisions. We will continue profitability-focused commercial activities by executing collaborative growth strategies within the 3 channels of vending, OTC and food service. And such strategies include new product launches such as Ayataka's full renewal and sales space expansion.

In the supply chain, we achieve low-cost and high-quality supply operations by developing the local production for local consumption model and improving the sales and operation process accuracy.

We have positioned 2024 as the year of strong profit buildup. This year, despite the cycling of last year's heat wave and continued challenging cost environment, we believe that achieving our full year target, it is feasible after a good start of the first quarter.

We will continue to work together as one team towards sustainable growth and increased corporate value, realizing our mission of delivering happy moments to everyone while creating value.

Thank you for your interest in our business, and we appreciate your ongoing understanding and support. [Foreign Language]