Annual Report 2017 Coca-Cola Andina #goPaperless A R G B R A C HI P A R – 2 – 2017 #goPaperless Report • Annual Coca-Cola Andina Coca-Cola We are happy to tell you that our 2017 Annual Report and Sustainability Report will only be available in digital version. Reducing the consumption of paper without affecting our readers is the challenge, we understand that it is for the benefit of all and that is why we want you to join us in this decision. With just a click you will be able to navigate according to your interests. B R A P A R C HI We are a great company, A R G where happiness has no borders. – 4 – Table of 2017 Contents Additional Our Information 39 Report • Annual Company 5 Coca-Cola Andina Coca-Cola Embotelladora Andina S.A. Open Stock Corporation Chilean Tax ID: 91.144.000-8 Address: Miraflores 9153, Comuna de Renca, Santiago. The contour Coca-Cola bottle design, elements of Coca-Cola marketing campaigns, the logos and all references to the trademarks of The Coca-Cola Company contained in this Annual Report are the property of The Coca-Cola Company. All artwork and photographs contained in this annual report are the property of Embotelladora Andina S.A. Corporate Office Av. Miraflores 9153, Piso 7, Renca. Santiago de Chile Tel. (56 2) 2338 0520 www.koandina.com Our Investor Relations: Paula Vicuña Businesses [email protected] 37 Tel (562) 2338 0520 Argentina Ruta Nacional 19 – Km. 3,7 Córdoba Tel. (54 351) 496 8800 Brazil Rua Andre Rocha 2299, Taquara, Jacarepaguá, Rio de Janeiro. Tel. (55 21) 2429 1530 24 Chile Av. Miraflores 9153, Renca. Santiago de Chile 65 Tel. (56 2) 2611 5838 Paraguay Acceso Sur Km 3,5 San Lorenzo, Asunción Tel. (595 21) 959 1000 Our Company – 6 – Attitude 2017 Focused on our customers Integrity • Annual Report • Annual Values Andina Coca-Cola Austerity Team Oriented work on results Mission Vision Add value growing sustainably, Lead the beverage market, refreshing our consumers and sharing being recognized for our management moments of optimism with our clients. excellence, people and welcoming culture. – 7 – Letter from the During 2017 2017 we showed Chairman of the Board positive financial results in all four Report • Annual of the company’s operations, despite Andina Coca-Cola the complex n behalf of the Board of Directors I effect of the appreciation of the Brazilian macroeconomic O preside, I am pleased to present the real regarding the Chilean peso in the scenario faced Annual Report, Sustainability Report and consolidation of figures to the reporting Financial Statements for the fiscal year 2017. currency and by price increases, which by the countries was partially offset by the 6.5% decrease During 2017 we showed positive financial in sales volume. The economy in Brazil is in which results in all four of the company’s operations, still very weak, especially in the state of Rio despite the complex macroeconomic scenario de Janeiro, which affects the demand for we operate. faced by the countries in which we operate. our products. The EBITDA generated by These results are the consequence of a the operation reached Ch $111,690 million, constant review of our pricing and packaging an increase of 15.2% over the previous year. strategy, which has allowed us to achieve EBITDA margin reached 18.5%, its highest benefits in each of our markets, along with level in 7 years, expanding 207 basis points. a continuous search for improvement in the efficiency of our processes. Net sales of our operation in Chile were Ch $551,873 million, an increase of 2.1%, Our operation in Argentina closed the year despite the 0.5% decrease in sales volume. Volume with net sales of Ch $553,788 million, a EBITDA of the Chilean operation reached 7.1% growth over the previous year. Sales Ch$115,579 million, a 2.7% over the previous 28% 33% 30% 9% volume decreased by 3.4%, which is mainly year, and EBITDA margin reached 20.9%, Argentina Brazil Chile Paraguay explained by macroeconomic factors. For an expansion of 13 basis points. its part, the EBITDA generated by the Sales company in Argentina reached Ch $79,471 Our operation in Paraguay increased million, growing 11.5% over the previous volume by 4.8%, explained in part by 30% 32% 30% 8% year. EBITDA margin showed an expansion the increase in market share of 120 basis Argentina Brazil Chile Paraguay of 56 basis points, reaching 14.4%. points, in addition to the reactivation of the cross-border trade. Net sales grew 7.0% EBITDA Our operation in Brazil closed the year and reached Ch$141,277 million. EBITDA with net sales of Ch $603.898 million, generated was Ch$36,370, a 2.9% growth 23% 32% 34% 11% a 2.3% growth, explained by the positive and EBITDA margin was 25.7%. Argentina Brazil Chile Paraguay – 8 – 2017 We have focused on continuing to develop Report • Annual our portfolio, Thus, although during the present year sugar-reduced products, where we are consolidated sales volume reached 756.3 benchmarks and leaders. A clear example accompanying our Andina Coca-Cola million unit cases, which represented a of this were the reformulations of Fanta 2.9% decrease when compared with the and Sprite that we conducted in Chile at previous year, the company’s consolidated the end of August 2017, which involved not consumers’ sales reached Ch$1,848,879 million, only a cost optimization, but also that both representing a 4.0% growth over 2016. These products are incorporated into the already needs. were driven by the growth of net sales in all large portfolio of low-calorie products we've our operations and the positive impact of been developing. In addition, in the last the 4.9% appreciation of the Brazilian real two years in Chile we have reformulated 32 against the Chilean peso and were partially products and currently 65% of the portfolio offset by the negative impact of the 14.5% is made up of low-calorie and zero-calorie depreciation of the Argentine peso on the products. On the other hand, in all our Chilean peso. The company's consolidated franchises we carried out the launching of EBITDA reached Ch$337,890 million, an the Full Red Coca-Cola campaign, refreshing clear example that initiatives such as the Together with the portfolio development, we increase of 8.6% over the previous year, the image of the Coca-Cola trademark launching of the new 220 cc cans in Chile have continued to search for efficiencies in with which EBITDA margin was 18.3%, family of products, and starting to serve and Brazil, as well as the 250 cc cans in all our processes, focusing on production an expansion of 78 basis points. Finally, the market with Sugar-free Coca-Cola. This Argentina, since the end of 2016, have had and logistics. Our new plant in Duque de income attributable to the controllers of is a unique product, which maintains the the impact we expected. Caxias, which began operating in early 2018 the company was Ch$117,836 million, a original Coca-Cola flavor, which allows us in Brazil, and which implied an investment growth of 30.2%. Dividends distributed by to accompany the choice of people who Lastly, we continue on the path to expand of approximately USD110 million, is a the company during 2017 reached Ch$75, want to continue enjoying the flavor of our portfolio of non-carbonated beverage clear example of this. The new plant will 536 million, increasing 11.8% over the the original Coca-Cola, but without sugar. products, reaffirming our commitment to add approximately 30% to the installed previous year. this line of business that has great growth capacity that we have today in that country, In addition, we expanded the immediate potential. During 2017 we started distributing allowing us to more than double the installed In order to capture the many opportunities consumption portfolio, which enhances AdeS products in our four franchises and in capacity that we have for returnable formats, and challenges offered by each of the the transactions of our products, capturing January 2018 we executed the Guallarauco and, we can begin to serve the mineral markets where we operate, we have focused profitable volume and increasing the supply purchase and sale agreement. AdeS is water market with water bottled in Rio de on continuing to develop our portfolio, of flavors and categories to consumers in new a soy-based beverage, which opens new Janeiro. It will also help us to be closer to accompanying our consumers’ needs. and diverse occasions to enjoy our products, development opportunities for the portfolio our customers in the northeastern part of such as sports, entertainment, offices, etc., of vegetable protein-derived beverage Rio de Janeiro, thus improving our service We have continued to work on the leading and refreshing consumers in new segment. For its part, Guallarauco is a level. It is worth mentioning that this project, development of the soft drink category, lifestyles. Thus, although the company’s leading company in the premium juice which involved the commitment and work focusing on low-calorie, sugar-free and consolidated volume dropped by 2.9% segment in Chile and will also allow us to of many of our collaborators in Brazil, was compared to the year 2016, consolidated incorporate new categories such as frozen carried out in compliance with the highest 1. Unit Case or “UC”, equivalent to 5.678 liters transactions decreased 2.1%, which is a fruits, ice creams and ready-to-eat desserts.