TIDMCCH
RNS Number : 5827N
Coca-Cola HBC AG
10 May 2018
FIRST QUARTER 2018 TRADING UPDATE
CONTINUING TO DELIVER BALANCED REVENUE GROWTH
Coca-Cola HBC AG, a leading bottler of the brands of The
Coca-Cola Company, today announces its 2018 Q1 trading update.
First quarter highlights
-- Solid performance to start the year, delivering 4.5%
FX-neutral revenue growth through a balance of volume growth and
price/mix improvements
-- Volumes increased by 2.3% in the quarter, with very strong
growth in the Developing segment and another quarter of expansion
in the Established segment. Innovation in Sparkling drinks helped
drive 2.8% growth in the category.
- Established segment volumes grew 1.1%, aided by improved
volumes in Ireland and Switzerland and continued good growth in
Greece.
- Developing segment volumes expanded 11.8%, driven by very
strong growth in Poland which was helped, in part, by the timing of
Easter.
- Emerging segment volumes were broadly stable, as continued
strong growth from our medium-sized countries offset volume
declines in Nigeria and to a lesser extent, Russia.
-- FX-neutral revenue per case increased by 2.1%, with the
rollover effect of 2017 price increases and mix improvements in the
Emerging and Established segments, partly offset by some mix
deterioration in the Developing segment.
- In the Established segment, positive category and pack mix
drove a 0.8% improvement in FX-neutral revenue per case.
- In the Developing segment, FX-neutral revenue per case
declined by 1.3%. A very strong Easter volume performance in the
segment led to negative package and channel mix effects, which were
partly offset by better category mix.
- In the Emerging segment, the 4.5% improvement in FX-neutral
revenue per case was largely a result of the rollover effect of
2017 price increases, supported by better category and pack
mix.
Net sales revenue per
Q1 2018 vs. Q1 2017 Net sales revenue Volume unit case
growth (%) FX-neutral(1) Reported FX-neutral(1) Reported
--------------------- -------------- --------- ------- -------------- ---------
Total Group 4.5 -1.7 2.3 2.1 -4.0
Established markets 1.9 0.1 1.1 0.8 -1.0
Developing markets 10.3 12.6 11.8 -1.3 0.8
Emerging markets 4.4 -8.4 -0.1 4.5 -8.3
--------------------- -------------- --------- ------- -------------- ---------
(1) For details on Alternative Performance Measures ('APMs')
refer to 'Alternative Performance Measures' and 'Definitions and
reconciliations of APMs' sections.
Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG,
commented:
"We are pleased to report a good start to the year in line with
our expectations.
"Product innovation and our ongoing revenue growth management
initiatives continue to deliver balanced growth through volume and
price/mix improvements. With strong commercial plans in place and
anticipated gradual economic recovery in Russia and Nigeria, we
expect our revenue growth to accelerate as the year
progresses."
Trading
In a mixed trading environment we are pleased to report a solid
performance in line with our expectations.
Group volume increased by 2.3%, helped by the shift in the
timing of Catholic Easter to the first quarter. This shift is
estimated to account for 70 basis points of the overall volume
growth. Excluding the Easter effect, volumes grew in most of our
Established markets, and were strong across our Developing markets
and the medium-sized Emerging markets, while volumes were weak in
Nigeria and to a lesser extent, Russia.
We started executing a number of new product and flavour
launches in the quarter, a key one being the launch of FUZE Tea in
27 countries. We also continued to drive other revenue growth
management initiatives, which enabled us to make good progress in
category and package mix. As a result, the Group improved
FX-neutral net sales revenue per unit case by 2.1% in the quarter,
despite a deterioration in channel and package mix in the
Developing segment due to increased volumes in the organised
trade.
Net sales revenue declined by 1.7%, after a 6.2% adverse
currency impact, mainly from the depreciation of the Nigerian Naira
and the Russian Rouble.
Established markets segment
Established markets volumes grew by 1.1% in the quarter,
compared to a 2.2% decline in the prior-year quarter. Growth was
largely driven by the sparkling drinks category, while still drinks
declined in most of the countries in the segment. The shift of the
Catholic Easter to the first quarter this year contributed
positively to volumes in Italy, Austria and Ireland.
Volume in Italy was broadly stable, with growth in Energy and
Ready-to-Drink Tea (RTD Tea) being offset by declines in Sparkling,
Water and Juice. Within the Sparkling category, Trademark Coca-Cola
grew, while Fanta and Sprite declined.
Volume in Greece continued to make good progress and grew by mid
single digits amid still challenging macroeconomic conditions. All
categories grew, apart from RTD Tea. In Sparkling, the positive
performance was driven by Trademark Coca-Cola, especially Coke Zero
and Coca-Cola without calories and with Stevia, which was launched
in March last year.
Austria delivered a low single-digit volume decline, as adverse
weather in March reversed the positive performance in the first two
months of the year and limited the positive impact of the Easter
timing. Water and Energy grew, while the other categories
declined.
In Switzerland, volume grew by low single digits, as good growth
in Sparkling offset the negative performance in other categories,
mainly RTD Tea and Water.
Volume in Ireland grew by mid single digits, with very good
growth in Sparkling and Energy offsetting declines in Still drinks.
The favourable impact of the Easter shift along with increased
orders ahead of the implementation of the sugar tax contributed to
this positive result.
Net sales revenue in Established markets grew marginally by 0.1%
in the quarter. The benefit of higher volume and favourable mix
impacts was offset by adverse currency movements, mainly in
Switzerland and to a lesser extent in Northern Ireland. FX-neutral
net sales revenue per case increased by 0.8% in the quarter.
Developing markets segment
Volume in the Developing markets grew by 11.8%, compared to a
3.6% decline in the prior-year period, in part due to the shift in
the timing of Easter.
Volume in Poland grew by mid teens, maintaining the good
momentum of the previous quarter. The underlying market growth was
strong, particularly in the organised trade, supported by the
impact of the Easter shift. Our growth was largely driven by
Sparkling, with double-digit growth rates in all brands, as well as
Water, which was supported by several promotional activations ahead
of the peak season. RTD Tea was the only category that declined in
the period.
In Hungary, volume increased by high single digits, in part due
to the Easter shift, with growth in all categories apart from
Water. In Sparkling, the high single-digit growth was supported by
new flavour launches in brand Coca-Cola Zero and Fanta. Our
dual-brand strategy helped drive RTD Tea volume growth by double
digits.
Volume in the Czech Republic grew by mid single digits driven by
growth in all categories except for Water and Juice. A good
performance in Trademark Coke, particularly Coca-Cola Zero, and
Fanta, more than offset declines in Sprite and Coca-Cola Light. RTD
Tea also grew well.
Net sales revenue in the Developing markets grew by 12.6% in the
quarter, driven by significant volume growth. However, FX-neutral
net sales revenue per case declined by 1.3% as a result of adverse
channel and package mix in most of our markets, mainly driven by
the Easter phasing effect.
Emerging markets segment
Emerging markets volume was 0.1% lower compared to the
prior-year quarter, as growth in the medium-sized countries,
predominantly Romania, Serbia and Ukraine, largely offset volume
declines in Nigeria and Russia. Sparkling and Energy drinks volumes
grew, while Water, Juice and RTD Tea declined.
In Russia, our volume declined marginally in the quarter, with
growth in Sparkling and Energy drinks more than offset by declines
in Water, RTD Tea and Juice. In an environment of intense price
competition, we prioritised profitability and long-term brand
equity. As we look to the remainder of the year, the Russian NARTD
market, which has reversed its declining trend in the first
quarter, is forecast to grow further with improved consumer
confidence and a decline in unemployment rates. This, combined with
our product innovations and market activation for the FIFA World
Cup, gives us optimism for growth in the full year.
Volume in Nigeria declined in the quarter in line with our
expectations that volume recovery would begin after the first
quarter. The decline of 10% was a result of the tough comparative,
both in volume and price compared to the prior-year quarter, and
availability issues in certain packs. The underlying economy
continues to recover, but the consumer remains under pressure due
to high unemployment and inflation.
In Romania, volume increased by high single digits with a
positive performance across the brands. Double-digit growth in
January and February was followed by weaker but still positive
growth in March, with the slowdown mainly due to colder weather in
the month. Good execution in the market, strong promotional plans
and innovations such as the launch of all Sparkling brands in
'sleek' cans supported volume growth.
Volume in Ukraine maintained its positive momentum and grew by
high single digits in the first quarter despite bad weather
conditions in March and the roll out of price increases. Sparkling
drinks were the clear driver of the performance. Juice, RTD Tea and
Energy declined.
Net sales revenue declined by 8.4%. Benefits of price increases,
as well as improved category and package mix, were more than offset
by adverse currency movements, predominantly from the Nigerian
Naira and the Russian Rouble, and slightly worse channel mix.
FX-neutral net sales revenue per case growth moderated as expected
to 4.5%.
Category highlights
A combination of revenue growth management initiatives, strong
commercial plans and innovative new brands and flavour extensions
delivered good results in the quarter.
Sparkling drinks grew by 2.8% with growth coming from all three
segments, despite a significant decline in Nigeria. Coke Regular,
Coke Zero and Fanta were particularly strong as a result of various
initiatives including flavour extensions such as Coca-Cola Zero
Cherry, Coca-Cola Zero Lemon and Fanta Pear, Shokata, Dragonfruit
and Grape.
Water grew by 0.9% in the quarter, driven by strong growth in
the Developing segment. The category declined in some Emerging
markets, mainly Nigeria and Russia, as well as in Ireland, Italy
and Switzerland. Juice declined by 2.0%, driven by lower volume in
the Emerging and Established segments, partly offset by volume
growth in the Developing segment. The Energy category maintained
its good momentum and grew by 27.8% in the first quarter, with a
continued strong performance from Monster in all three
segments.
In Ready-to-Drink Tea, volume was down 2.5% compared to the
prior-year quarter, broadly in line with our expectations. In
January we launched FUZE Tea in all of our markets apart from
Nigeria and are very pleased with the success of the launch.
Single-serve contribution deteriorated by 40 basis points in the
quarter as a result of the channel shift in the Developing segment
as well as overall volume decline in Nigeria, where single-serve
mix is very high. Excluding Nigeria, single-serve mix improved by
50 basis points. Single-serve mix was 110 basis points lower in
Sparkling, while Water single-serve mix improved by 40 basis
points.
Supplementary information
First First
quarter quarter %
Group 2018 2017 Change
Volume (m unit cases) 453.2 442.8 2.3%
Net sales revenue (EUR m) 1,353.0 1,376.7 -1.7%
Net sales revenue per unit case
(EUR) 2.99 3.11 -4.0%
FX-neutral net sales revenue
(EUR m) 1,353.0 1,295.3 4.5%
FX-neutral net sales revenue
per unit case(1) (EUR) 2.99 2.93 2.1%
Established markets
Volume (m unit cases) 130.5 129.1 1.1%
Net sales revenue (EUR m) 521.7 521.2 0.1%
Net sales revenue per unit case
(EUR) 4.00 4.04 -1.0%
FX-neutral net sales revenue
(EUR m) 521.7 512.2 1.9%
FX-neutral net sales revenue
per unit case(1) (EUR) 4.00 3.97 0.8%
Developing markets
Volume (m unit cases) 87.4 78.2 11.8%
Net sales revenue (EUR m) 255.2 226.6 12.6%
Net sales revenue per unit case
(EUR) 2.92 2.90 0.8%
FX-neutral net sales revenue
(EUR m) 255.2 231.3 10.3%
FX-neutral net sales revenue
per unit case(1) (EUR) 2.92 2.96 -1.3%
Emerging markets
Volume (m unit cases) 235.3 235.5 -0.1%
Net sales revenue (EUR m) 576.1 628.9 -8.4%
Net sales revenue per unit case
(EUR) 2.45 2.67 -8.3%
FX-neutral net sales revenue
(EUR m) 576.1 551.8 4.4%
FX-neutral net sales revenue
per unit case(1) (EUR) 2.45 2.34 4.5%
(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 600 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 Sustainably 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 will host a conference call for investors and
analysts to discuss the trading update for the first quarter of
2018 on 10 May 2018 at 10:00 am Swiss time (9:00 am London, 11:00
am Athens, and 4:00 am New York time). Interested parties can
access the live, audio webcast of the call through Coca-Cola HBC's
website (https://coca-colahellenic.com/en/investors/).
Next event
Half-year financial report and results
9 August 2018 announcement
Enquiries
Coca--Cola HBC Group
Basak Kotler Tel: +44 20 37 444 231
Investor Relations Director basak.kotler@cchellenic.com
Joanna Kennedy Tel: +44 20 37 444 230
Investor Relations Manager joanna.kennedy@cchellenic.com
Vasso Aliferi Tel: +41 44 835 9274
Investor Relations 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 2018 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 2017 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 also 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)
First quarter 2018
Established Developing Emerging Consolidated
Net sales revenue 521.7 255.2 576.1 1,353.0
Currency impact - - - -
------------- ------------ ---------- -------------
FX-neutral net sales revenue 521.7 255.2 576.1 1,353.0
Volume (m unit cases) 130.5 87.4 235.3 453.2
------------- ------------ ---------- -------------
FX-neutral net sales revenue
per unit case (EUR) 4.00 2.92 2.45 2.99
------------- ------------ ---------- -------------
First quarter 2017
Established Developing Emerging Consolidated
Net sales revenue 521.2 226.6 628.9 1,376.7
Currency impact (9.0) 4.7 (77.1) (81.4)
------------- ------------ ---------- -------------
FX-neutral net sales revenue 512.2 231.3 551.8 1,295.3
Volume (m unit cases) 129.1 78.2 235.5 442.8
FX-neutral net sales revenue
per unit case (EUR) 3.97 2.96 2.34 2.93
------------- ------------ ---------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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