JP Morgan Conference
[Panamco Logo]
New York, November 4-5, 2002
Forward Looking Statements
This presentation includes forward looking statements which reflect
management's current analysis and expectations, based on reasonable
assumptions. Actual results may differ materially from the statements made
depending on a variety of factors, including business climate, economic and
competitive uncertainties, higher operating costs, reduced levels of beverage
consumption in the overall market, risks in developing new products and
technologies, foreign exchange rates, and adverse changes in economic and
political climates around the world.
This presentation does not constitute an offer to sell, an offer to purchase
or a solicitation of an offer to purchase any securities.
TABLE OF CONTENTS
o Panamco Overview
o Latin American Operations
o Principles
o Strategic Imperatives
o Growth Drivers
- Pricing Strategy
- Packaging
o Managing for the Long-Term
o Innovation and Growth
o Financial Performance
o Strategic View
PANAMCO OVERVIEW
o LARGEST SOFT DRINK BOTTLER in Latin America and third largest Coca-Cola
bottler in the world
o ANCHOR BOTTLER with 60-Year relationship with Coca-Cola; 25%
shareholder
o COUNTRIES: presence in 8 countries in Latin America
o SHARE OF SALES: 80% colas, 45% flavors, 36% water
o VOLUME: 1.2 billion unit cases in 2001; 0.9 billion unit cases as of
September 2002
o NET SALES: $2.6 billion in 2001; $1.8 billion as of September 2002
o PUBLICLY TRADED: in NYSE, ticker PB
VAST OPERATIONAL EXPERIENCE IN LATIN AMERICA
ANDEAN REGION
-------------
NOLAD REGION COLUMBIA
- ------------
AND
MEXICO
[MAP OF LATIN AMERICA] VENEZUELA
AND
CENTRAL AMERICA
GUATEMALA
NICARAGUA BRAZIL
COSTA RICA ------
PANAMA
VAST OPERATIONAL EXPERIENCE IN LATIN AMERICA
2002 DATA MEXICO CENTRAL ANDEAN BRAZIL COMPANY
AMERICA*
Franchise Population (MM) 18 14 67 25 124
CSD 8oz Per Capita Consumption 377 123 107 220 171
CSD Share of sales 79% 64% 66% 56% 66%
Cold drink equipment per 10,000 pop 77 47 46 32 48
Cooler Penetration 65% 50% 51% 67% 55%
YTD as of September 2002
- ------------------------
Volume (MMUC) 362 58 262 221 903
Net Revenue ($MMUS) $ 810 $176 $548 $278 $1,811
Net Revenue Per Unit Case ($US) $2.24 $3.02 $2.09 $1.26 $2.01
*Central America excludes data from Panama, since it was incorporated in
October 2002
Panama 2002 Data Panama 2001 Data
- ---------------- ----------------
Population (MM) 3
CSD Per Capita Consumption 247 Volume (MMUC) 19
Share of Sales 60% Net Revenue ($MMUC) $62
Cold Drink Equipment per 10K pop 32 Net Revenue
Cooler Penetration 60% Per Unit Case ($US) $3.29
PRINCIPLES
o Managing the business for the long-term
o Protecting and increasing share of sales
o Maximizing profitability in a consistent way
o Improving operational performance in difficult macroeconomic environments
STRATEGIC IMPERATIVES
o Single-serve growth
o Profitable take-home growth
o Productivity and cost control
o Flawless execution
GROWTH DRIVERS
o Price/Value Management
o Channel & Mix Management
o Cost Control
o Execution
PRICING STRATEGY
o BY CHANNEL
o Growing volume and share [arrow graphic] o BY PACKAGE
o Maximizing revenues o BY BRAND
o BY TERRITORY
Volumes Trend Local Currency Rev/Case Growth
8.0%-| [Y= YTD] 20.0%|- [Y= YTD] 16.6%
| 6.0% [3Q= 3Q02] | [3Q= 3Q02] 15.2%__
6.0%-| __ 4.1% | __|3Q|
| |Y |__ [3Q= 3Q02] 15.0%|- |Y | |
4.0%-| | |3Q| | 11.4% 11.0% | | |
| | | | 0.3% 0.1% | __ __ | | |
2.0%-| | | | __ __ 10.0%|- |Y |8.4% |Y |8.5% | | |
| | | | |3Q| |3Q| | | |__ | |__ | | |
0.0%-|------------------------------------------ | | |3Q| | |3Q| | | |
| | |3Q| | | | | 5.0%|- 1.6% | | | | | | | | |
-2.0%-| | |__| | | | | | __ | | | | | | | | |
| | |-1.6% | | | | | |3Q| | | | | | | | | |
-4.0%-| |Y | | | | | 0.0%|-----------------------------------------
| |__| | | |Y | | |Y |
-6.0%-| -5.1% | | |__| | |__|
| |Y | -6.9% -5.0%|- -1.4%
-8.0%-| |__|
| -8.7%
- -10.0%-|
Mexico Colombia Venezuela Brazil Mexico Colombia Venezuela Brazil
* % growth vs. same period last year * % growth vs. same period last year
CHANNEL AND MIX MANAGEMENT
1. Single Serve Growth
2. Profitable Take-Home Growth
[down arrow]
Upsizing and increasing coolers
Marketplace investments
Promotions
Single Serve Mix (%) NOLAD COLOMBIA VENEZUELA BRAZIL
42% 53% 38% 31%
Cooler Penetration NOLAD COLUMBIA VENEZUELA BRAZIL
59% 44% 62% 67%
IN CONCLUSION...
Price/Value Management Channel/Mix Management
[two arrows pointing diagonally downward]
Drive Top Line Growth
[plus sign]
Execution Cost Control
[two arrows pointing diagonally downward]
Drive Consistent
Profitability
Growth
MANAGING THE BUSINESS FOR THE LONG-TERM IN
DIFFICULT MACROECONOMIC ENVIRONMENTS
o NOLAD: Dynamic pricing architecture to drive top line growth while
maintaining and increasing share vs. new entrants (PBG, Kola Real).
Aggressive cost control which has quarterly improved COP margins.
o COLOMBIA: Reactivating volume growth through an adjusted pricing strategy
(focusing on single serve CSD, priced line with purchasing power).
Strong focus in achieving lower expenses to increase profitability
(adjusting sales and distribution, eliminating outsourcing services).
o VENEZUELA: Pricing at parity, while leveraging infrastructure on
returnable bottles to increase pricing flexibility. Securing low cost
structure to strongly position the Company to reap higher benefits when
conditions improve.
o BRAZIL: Top line improvement through an aggressive pricing strategy and
rebuilding of the sales force. Focus on profitability.
CONTINUOUS INNOVATION AND GROWTH
o PANAMA ACQUISITION:
o Panamco, through the joint-venture, CA Beverages, acquired direct
control of Coca-Cola de Panama.
o Acquisition is expected to be accretive, is strategic, and will
reduce overall risk by adding dollar-denominated profits.
o Coca-Cola de Panama had estimated share of sales of 60% in 2001,
volume sales of 18.9 million unit cases in 2001, and generated
revenues and cash operating profit of $62.1 million and $9.2
million, respectively.
o CONVERTING RISCO BRAND TO CIEL
o Panamco reached agreements with TCCC to convert its Risco water
volume in Mexico to Coca-Cola brand Ciel for a total consideration
of $65 million.
o Growth and profitability will benefit from the marketing and
distribution of a nationally available and advertised water brand in
Mexico.
FINANCIAL PERFORMANCE
YTD 2002 FINANCIAL PERFORMANCE
FINANCIAL STATISTICS -- NINE MONTHS ENDED SEPTEMBER 30, 2002
(all in millions, unless otherwise stated)
2002 Act* 2001 Act* % Change
Volume Growth 1.8%
Sales $1,811.4 $1,944.3 -6.8%
COP $321.2 $401.6 -20.0%
Operating Profit $181.3 $220.5 -17.8%
Net Profit $61.1 $91.7 -33.4%
EPS $0.13 $0.72 -5.4%
* Excludes facilities reorganization and other charges
LONG-TERM VALUE CREATION
An optimal allocation of capital has improved Free Cash Flow
1998 1999 2000 2001
Net Income $120 ($60) ($505) $118
Free Cash Flow Before Investments $409 $211 $220 $355
Capital Expenditures ($427) ($238) $203 ($136)
Investments & Others ($120) ($188) $73 $34
Dividends Paid ($32) ($32) ($32) ($33)
FCF After Investment ($169) ($246) $58 $220
FCF as % of Revenues (6.1%) (10.2%) 2.2% 8.3%
LONG-TERM VALUE CREATION
And allowed us to reduce debt by almost 30% since plan was announced
Q3 2000 Q3 2002 Reduction % Reduction
Total Debt $1,273 $913* $360 -28.3%
Cash &
Equivalents $147 $55 $92 -62.6%
Net Debt $1,125 $858 $267 -23.7%
Note: includes debt from Panamanian transaction
STRATEGIC VIEW
o Criteria for consolidation:
o Accretive to shareholders.
o Contiguous territories that drive synergies.
o On December, Panamco will present strategic and operating plan for Board
of Directors approval.