TIDMCCH
RNS Number : 9809V
Coca-Cola HBC AG
09 November 2017
THIRD QUARTER 2017 TRADING UPDATE
CONTINUING TO DELIVER EXCELLENT REVENUE GROWTH
Coca-Cola HBC AG, a leading bottler of the brands of The
Coca-Cola Company, today announces its 2017 Q3 trading update.
Third quarter highlights
-- Excellent revenue performance, with FX-neutral revenue growth of 6.0%
-- Strong quarter for volume growth, up 3.4%, with good
broad-based improvements from all three segments
- Established markets segment volume increased by 2.2% driven by
our Southern European countries and supported by good weather
- Developing markets segment volume increased by 5.1%, with
particularly strong growth in Hungary and the Czech Republic and
stabilisation in Poland
- Emerging markets segment volume increased by 3.5%, with strong
growth in Romania, Serbia and Ukraine. Volumes were stable in
Russia, while Nigeria declined following significant price
increases
-- FX-neutral revenue per case growth of 2.5% in the quarter,
with continuing progress in all three segments
- Established markets FX-neutral revenue per case grew by 1.1%,
supported by our continued focus on growing revenue faster than
volume and the emergence of a more inflationary environment
- In the Developing markets, FX-neutral revenue per case grew by
2.1%, with a moderation from the first half price/mix trends as
expected
- Emerging markets FX-neutral revenue per case grew by 4.2%,
driven by price increases taken earlier in the year and
improvements in category and package mix
Q3 2017 vs. Net sales revenue
Q3 2016 Net sales revenue Volume per unit case
growth (%) FX-neutral(1) Reported FX-neutral(1) Reported
-------------------- -------------- --------- ------- -------------- ---------
Total Group 6.0 5.0 3.4 2.5 1.5
Established
markets 3.3 2.5 2.2 1.1 0.2
Developing markets 7.3 9.1 5.1 2.1 3.8
Emerging markets 7.9 5.6 3.5 4.2 2.0
-------------------- -------------- --------- ------- -------------- ---------
(1) For details on Alternative Performance Measures ('APMs')
refer to 'Alternative Performance Measures' and 'Definitions and
reconciliations of APMs' sections.
Michalis Imellos, Acting CEO and Group CFO, commented:
"We are very pleased with the strong revenue delivery in the
quarter, well balanced between broad-based volume growth and
substantial price/mix improvement. We go into the final quarter
encouraged by our progress and confident in delivering on our
expectations for the full year."
In memory of Dimitris Lois
It was with great sadness that we announced the sudden death of
our CEO, Dimitris Lois, on the 2nd of October this year. Dimitris
enjoyed an outstanding career at Coca-Cola HBC and his contribution
over 10 years leaves a lasting legacy on the company and its
people. Appointed Chief Executive Officer in 2011, he led Coca-Cola
HBC with distinction and utmost dedication through a defining
period in the company's history and touched the lives of thousands
of colleagues across our territory. We are united in our gratitude
and committed to continuing to build our business on the values he
stood for.
The Board of Directors has a succession plan for the CEO
position and there is a thorough process under way. Further
announcements will be made in due course.
Trading
We are pleased to report a strong set of results for the
quarter, demonstrating the excellent performance of our
increasingly consumer-centric portfolio in the market. 3.4% volume
growth in the quarter is a testament to the strength of our
execution in a broad range of countries. Incremental volumes in a
number of markets in the Emerging and Developing segments and a hot
summer in Southern Europe have supported volume growth, while
Russia and Poland were stable and Nigeria declined.
A key pillar of our strategy is to focus on our chosen
consumption occasions and prioritise the more valuable categories,
packages and channels within each occasion. The ongoing roll-out of
revenue growth initiatives, combined with price increases taken
earlier in the year, resulted in price/mix improvements in all
three segments, with Group FX-neutral revenue per unit case 2.5%
ahead of the prior-year quarter. Net sales revenue growth was 6.0%
on a currency-neutral basis and 5.0% on a reported basis compared
to the prior-year quarter.
Established markets segment
Established markets volume grew by 2.2% in the quarter, compared
to a 2.5% decline in the prior-year quarter. This year's strong
performance benefited from a good tourist season and exceptionally
warm summer weather in Italy and Greece. Low-calorie Sparkling
drinks are advancing in line with our strategy, while full-sugar
variants have declined.
Italy volume grew by low single digits, supported by the warm
weather in July and August. The main driver of the growth was
Water, following the successful implementation of our strategy to
focus on our two main brands, Lilia and Sveva. Coca-Cola Zero was
the only brand which grew in the otherwise declining sparkling
drinks category. Energy continued to grow, driven mainly by
Monster's good performance in the organised trade channel.
Volume in Greece increased by high single digits, supported by
warm weather and the higher number of tourists visiting the
country. Water continued its positive momentum and low-calorie
Sparkling drinks grew, further helped by the launch of the new
Coca-Cola with Stevia and no calories. Fanta, Schweppes and Monster
performed well. Macroeconomic conditions remain challenging, with
some positive developments in the retail market.
Austria volume increased by low single digits, mainly driven by
growth in Water and Energy. Sparkling drinks posted declines, with
only Coca-Cola Zero and Fanta delivering a positive
performance.
In Switzerland, volume declined marginally, with declines across
most key categories. Good growth in the low-calorie variants,
mainly Coca-Cola Zero and Fanta, was not enough to offset declines
in Coca-Cola Regular and Water.
Net sales revenue in Established markets increased by 2.5% in
the quarter. Volume growth and favourable pricing and package mix
more than offset the negative impact from the higher contribution
of Water, adverse channel mix and adverse FX impact due to the
weaker Swiss Franc and British Pound. FX-neutral net sales revenue
per case grew by 1.1% in the quarter.
Developing markets segment
Volume in Developing markets increased by 5.1%, compared to a
4.2% decline in the prior-year quarter, led by Sparkling and
Water.
Volume in Poland was broadly stable, following a mid
single-digit decline in the prior-year quarter. In a declining
underlying market for Sparkling drinks, our portfolio achieved
marginal growth in the quarter led by double-digit growth in Coke
Zero, positive growth in Coca-Cola Regular and high single-digit
growth in Fanta. Water volume increased by high single digits and
Energy was extremely strong, helped by the increased distribution
of Monster. Meanwhile Ready-to-Drink Tea declined in the mid-teens
in an intensely competitive market.
In Hungary, volume was up high single digits compared to a mid
single-digit decline in the prior-year period. All categories grew
volume, with strong performance from Sparkling, up mid single
digits, led by an extremely strong performance from Coke Zero and
low-teens growth from Fanta. Water cycled weaker performance in the
prior-year period with a mid-teens growth rate this quarter.
Ready-to-Drink Tea showed very strong growth led by green tea and
sugar-free flavours.
Volume in the Czech Republic grew by high single digits driven
by low double-digit growth in Sparkling, with strong performance
from Coca-Cola Regular, Coke Zero and Fanta.
Net sales revenue in Developing markets grew by 9.1% in the
quarter where we benefited from strong volume, positive price and
category mix and from the strengthening currencies in Poland, the
Czech Republic and Hungary. FX-neutral net sales revenue per case
improved by 2.1%.
Emerging markets segment
Emerging markets volume increased by 3.5% as very strong growth
in Romania, Serbia and Ukraine, along with stable volumes in
Russia, more than offset the decline in Nigeria. Growth was led by
mid single-digit growth in Sparkling and Water.
In Russia, volume was flat in the quarter, following a mid
single-digit decline in the prior-year period. The rate of decline
in the underlying non-alcoholic ready-to-drink (NARTD) market is
decelerating in Russia, despite an unseasonably cold summer, and
this has helped us stabilise our volume. Sparkling showed good
growth, led by Coca-Cola Regular, Coke Zero, Sprite and Schweppes.
Energy also contributed to growth, aided by the expanded
distribution of Monster. These areas of positive performance were
offset by Water, where we saw intense competitive activity from
some local brands. Ready-to-Drink Tea saw a decline, as our focus
on a smaller package size, supporting our value accretion efforts,
had a negative impact on volume.
Nigerian volume declined mid single digits compared to an
increase of 11% in the prior-year period. The level of volume
decline in the quarter was in line with our expectations and
reflects price increases, in excess of 30%, taken in the last
twelve months, which have had an amplified effect during the low
season in Nigeria. The PET packages of 35cl and 60cl launched in
the second quarter at key price points are performing well and
helping to preserve volume. Water continued its mid single-digit
volume growth. Juice volume declined double digits in a difficult
consumer environment.
In Romania, volume grew high single digits with all categories
contributing positively except for Energy, where volume was broadly
flat. Sparkling saw strong growth led by Coke Zero and Coca-Cola
Regular. In Serbia volume grew low double digits with positive
contributions from all categories.
Net sales revenue increased by 5.6% with positive contributions
from volume, price, package and category mix, as well as a stronger
Russian Rouble. This was partially offset by the impact of the
weakening Nigerian Naira. FX neutral net sales revenue per case
increased by 4.2%. The decline in the pace of growth from 8.6% in
the first half is the result of cycling price increases taken at
the end of the second quarter in 2016.
Category highlights
The third quarter, which represents the summer months in all
markets except for Nigeria, saw the culmination of our efforts to
accelerate innovation in products, flavours and packages. The new
recipe for Coke Zero was well received and we supported Trademark
Coke further with new variants such as Coke Zero Lemon, Coca-Cola
Regular Lime and Coca-Cola with Stevia and no calories. In Fanta,
we had the launch of the Fanta slider bottle, Fanta Instamix and
the ongoing roll out of limited edition flavours in many of our
countries. Schweppes Pomegranate in Russia proved a popular
addition to the range. We continue to evolve our recipes and reduce
our sugar footprint, while taking advantage of the biggest and most
profitable consumption occasions for our diverse portfolio of
sparkling and still beverages.
In Sparkling beverages, our volume was up 2.7%, following 1.1%
growth in the prior-year period. All Developing and Emerging
markets with the exception of Nigeria performed well, with
significant contributions from Russia, Ukraine, Romania, Serbia and
the Czech Republic.
Water volume grew by 7.4%, with high single-digit growth in all
three segments. Good summer weather, a strong tourist season in
Greece and our new streamlined water business in Italy helped to
deliver this excellent result, which follows an 8.0% decline in the
prior-year period. Juice volume declined by 1.8% in the quarter.
While we have positive underlying trends for Juice in most of our
markets, declines in Nigeria and Russia, and some product
eliminations in Ireland have offset the growth achieved elsewhere.
Energy continued its growth momentum and posted an increase of
24.1%. We continue to build Monster volume, which grew by 39.3%
organically, and 43.8% including new market launches.
Ready-to-Drink Tea declined in the third quarter by 5.9%, with
declines in all three segments. Major drivers of the decline were
Russia, Ukraine, Poland and Greece, while Romania, Hungary and
Serbia posted volume growth.
Single-serve contribution improved in the quarter, up 10 basis
points. Established and Developing market segments improved their
package mix as did most of the Emerging markets, although Nigeria
impacted the latter negatively.
Supplementary information
Third Third Nine Nine
quarter quarter % months months %
Group 2017 2016 Change 2017 2016 Change
Volume (m unit
cases) 591.0 571.6 3.4% 1,611.9 1,578.9 2.1%
Net sales revenue
(EUR m) 1,822.0 1,735.3 5.0% 5,035.4 4,779.2 5.4%
Net sales revenue
per unit case
(EUR) 3.08 3.04 1.5% 3.12 3.03 3.2%
FX-neutral net
sales revenue
(EUR m) 1,822.0 1,719.3 6.0% 5,035.4 4,761.4 5.8%
FX-neutral net
sales revenue
per unit case(1)
(EUR) 3.08 3.01 2.5% 3.12 3.02 3.6%
Established markets
Volume (m unit
cases) 179.0 175.1 2.2% 478.2 472.0 1.3%
Net sales revenue
(EUR m) 693.9 677.3 2.5% 1,896.0 1,869.9 1.4%
Net sales revenue
per unit case
(EUR) 3.88 3.87 0.2% 3.96 3.96 0.1%
FX-neutral net
sales revenue
(EUR m) 693.9 671.7 3.3% 1,896.0 1,862.4 1.8%
FX-neutral net
sales revenue
per unit case(1)
(EUR) 3.88 3.84 1.1% 3.96 3.95 0.5%
Developing markets
Volume (m unit
cases) 111.3 105.9 5.1% 299.9 293.0 2.4%
Net sales revenue
(EUR m) 345.1 316.3 9.1% 902.5 843.1 7.0%
Net sales revenue
per unit case
(EUR) 3.10 2.99 3.8% 3.01 2.88 4.6%
FX-neutral net
sales revenue
(EUR m) 345.1 321.6 7.3% 902.5 856.2 5.4%
FX-neutral net
sales revenue
per unit case(1)
(EUR) 3.10 3.04 2.1% 3.01 2.92 3.0%
Emerging markets
Volume (m unit
cases) 300.7 290.6 3.5% 833.8 813.9 2.4%
Net sales revenue
(EUR m) 783.0 741.7 5.6% 2,236.9 2,066.2 8.3%
Net sales revenue
per unit case
(EUR) 2.60 2.55 2.0% 2.68 2.54 5.7%
FX-neutral net
sales revenue
(EUR m) 783.0 726.0 7.9% 2,236.9 2,042.8 9.5%
FX-neutral net
sales revenue
per unit case(1)
(EUR) 2.60 2.50 4.2% 2.68 2.51 6.9%
(1) For details on APMs refer to 'Alternative Performance
Measures' and 'Definitions and reconciliations of APMs'
sections.
Coca-Cola HBC Group
Coca-Cola HBC is a leading bottler of The Coca-Cola Company with
an annual sales volume of more than 2 billion unit cases. It has a
broad geographic footprint with operations in 28 countries serving
a population of approximately 595 million people. Coca-Cola HBC
offers a diverse range of primarily non-alcoholic ready to drink
beverages in the sparkling, juice, water, sport, energy, tea and
coffee categories. Coca-Cola HBC is committed to promoting
sustainable development in order to create value for its business
and for society. This includes providing products that meet the
beverage needs of consumers, fostering an open and inclusive work
environment, conducting its business in ways that protect and
preserve the environment and contribute to the socio-economic
development of the local communities. Coca-Cola HBC is ranked
beverage industry leader in the Dow Jones Sustainability World and
Europe Indices and is also included in the FTSE4Good Index.
Coca-Cola HBC has a premium listing on the London Stock Exchange
(LSE: CCH) and its shares are listed on the Athens Exchange (ATHEX:
EEE). For more information, please visit
http://www.coca-colahellenic.com.
Conference call
Coca-Cola HBC's will host a conference call for investors and
analysts to discuss the trading update for the third quarter of
2017 on Thursday, 9 November 2017 at 09:00 am London Time.
Interested parties can access the live, audio webcast of the call
through Coca-Cola HBC's website
(http://coca-colahellenic.com/en/investors/).
Next event
Full-year financial report
14 February 2018 and results announcement
Enquiries
Coca--Cola HBC Group
Basak Kotler
Investor Relations Tel: +44 20 37 444 231
Director basak.kotler@cchellenic.com
Joanna Kennedy
Investor Relations Tel: +44 20 37 444 230
Manager joanna.kennedy@cchellenic.com
Vasso Aliferi
Investor Relations Tel: +30 210 6183 341
Manager vasso.aliferi@cchellenic.com
International media
contact:
Teneo Blue Rubicon Tel: +44 20 7260 2700
Rob Morgan robert.morgan@teneobluerubicon.com
Anushka Mathew anushka.mathew@teneobluerubicon.com
Greek media contact:
V+O Communications Tel: +30 211 7501219
Argyro Oikonomou ao@vando.gr
Special Note Regarding the Information set out herein
Unless otherwise indicated, this trading update and the
financial and operating data or other information included herein
relate to Coca-Cola HBC AG and its subsidiaries ("Coca-Cola HBC" or
the "Company" or "we" or the "Group").
Forward-Looking Statements
This document contains forward-looking statements that involve
risks and uncertainties. These statements may generally, but not
always, be identified by the use of words such as "believe",
"outlook", "guidance", "intend", "expect", "anticipate", "plan",
"target" and similar expressions to identify forward-looking
statements. All statements other than statements of historical
facts, including, among others, statements regarding our future
financial position and results, our outlook for 2017 and future
years, business strategy and the effects of the global economic
slowdown, the impact of the sovereign debt crisis, currency
volatility, our recent acquisitions, and restructuring initiatives
on our business and financial condition, our future dealings with
The Coca-Cola Company, budgets, projected levels of consumption and
production, projected raw material and other costs, estimates of
capital expenditure, free cash flow, effective tax rates and plans
and objectives of management for future operations, are
forward-looking statements. By their nature, forward-looking
statements involve risk and uncertainty because they reflect our
current expectations and assumptions as to future events and
circumstances that may not prove accurate. Our actual results and
events could differ materially from those anticipated in the
forward-looking statements for many reasons, including the risks
described in the 2016 Integrated Annual Report for Coca-Cola HBC AG
and its subsidiaries. Although we believe that, as of the date of
this document, the expectations reflected in
the forward-looking statements are reasonable, we cannot assure
you that our future results, level of activity, performance or
achievements will meet these expectations. Moreover, neither we,
nor our directors, employees, advisors nor any other person assumes
responsibility for the accuracy and completeness of the
forward-looking statements. After the date of this trading update,
unless we are required by law or the rules of the UK Financial
Conduct Authority to update these forward-looking statements, we
will not necessarily update any of these forward-looking statements
to conform them either to actual results or to changes in our
expectations.
Alternative Performance Measures
The Group uses certain Alternative Performance Measures ("APMs")
in making financial, operating and planning decisions as well as in
evaluating and reporting its performance. These APMs provide
additional insights and understanding to the Group's underlying
operating and financial performance. The APMs should be read in
conjunction with and do not replace by any means the directly
reconcilable International Financial Reporting Standards ("IFRS")
line items.
Definitions and reconciliations of APMs
FX-neutral APMs
The Group evaluates its operating and financial performance on
an FX-neutral basis (i.e. without giving effect to the impact of
variation of foreign currency exchange rates from period to
period). FX-neutral APMs are calculated by adjusting prior period
amounts for the impact of exchange rates applicable to the current
period. FX-neutral measures enable users to focus on the
performance of the business on a basis which is not affected by
changes in foreign currency exchange rates applicable to the
Group's operating activities from period to period.
FX-neutral net sales revenue and FX-neutral net sales revenue
per unit case
FX-neutral net sales revenue and FX-neutral net sales revenue
per unit case are calculated by adjusting prior-period net sales
revenue for the impact of changes in exchange rates applicable in
the current period.
The calculations of the FX-neutral net sales revenue and
FX-neutral net sales revenue per unit case and the reconciliation
to the most directly related measures calculated in accordance with
IFRS is as follows:
Reconciliation of FX-neutral net sales revenue per unit case
(numbers in EUR million unless otherwise stated)
Third quarter 2017
Established Developing Emerging Consolidated
Net sales revenue 693.9 345.1 783.0 1,822.0
Currency impact - - - -
------------- ------------ ---------- -------------
FX-neutral net sales
revenue 693.9 345.1 783.0 1,822.0
Volume (m unit cases) 179.0 111.3 300.7 591.0
------------- ------------ ---------- -------------
FX-neutral net sales
revenue per unit case
(EUR) 3.88 3.10 2.60 3.08
------------- ------------ ---------- -------------
Third quarter 2016
Established Developing Emerging Consolidated
Net sales revenue 677.3 316.3 741.7 1,735.3
Currency impact (5.6) 5.3 (15.7) (16.0)
------------- ------------ ---------- -------------
FX-neutral net sales
revenue 671.7 321.6 726.0 1,719.3
Volume (m unit cases) 175.1 105.9 290.6 571.6
FX-neutral net sales
revenue per unit case
(EUR) 3.84 3.04 2.50 3.01
------------- ------------ ---------- -------------
Nine months 2017
Established Developing Emerging Consolidated
Net sales revenue 1,896.0 902.5 2,236.9 5,035.4
Currency impact - - - -
------------- ------------ ---------- -------------
FX-neutral net sales
revenue 1,896.0 902.5 2,236.9 5,035.4
Volume (m unit cases) 478.2 299.9 833.8 1,611.9
------------- ------------ ---------- -------------
FX-neutral net sales
revenue per unit case
(EUR) 3.96 3.01 2.68 3.12
------------- ------------ ---------- -------------
Nine months 2016
Established Developing Emerging Consolidated
Net sales revenue 1,869.9 843.1 2,066.2 4,779.2
Currency impact (7.5) 13.1 (23.4) (17.8)
------------- ------------ ---------- -------------
FX-neutral net sales
revenue 1,862.4 856.2 2,042.8 4,761.4
Volume (m unit cases) 472.0 293.0 813.9 1,578.9
------------- ------------ ---------- -------------
FX-neutral net sales
revenue per unit case
(EUR) 3.95 2.92 2.51 3.02
------------- ------------ ---------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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