Coca-Cola European Partners plc (CCEP) (ticker symbol: CCE)
today provides a 2017 business update and 2016 full-year
outlook.
Highlights
- CCEP now expects full-year 2016
results to include approximately 1 per cent revenue growth, modest
mid-single-digit operating profit growth, and diluted earnings per
share growth in a mid-teen range, all on a pro forma comparable and
fx-neutral basis. After including an expected negative currency
impact of approximately 4.5 per cent, pro forma comparable diluted
earnings per share is expected to be at the high end of or just
above the previously stated range of €1.86 to €1.90.
- CCEP provides full-year guidance for
2017 including comparable and fx-neutral diluted earnings per share
growth in a high single-digit range when compared to 2016 pro forma
comparable outlook; at recent rates, currency translation would
reduce diluted earnings per share by approximately 1 per
cent.
- CCEP remains on track to achieve
pre-tax savings of €315 million to €340 million through synergies
by mid-2019.
- CCEP declares quarterly dividend of
€0.17 per share.
“Throughout the year, we have maintained a diligent focus on
delivering our operating objectives for 2016, even as we worked to
successfully complete our merger earlier this year,” said John F.
Brock, chief executive officer. “The launch of CCEP creates a
strong company that is better positioned to meet the challenges of
today’s marketplace, all with a goal of continuing to drive
shareowner value.”
Mr. Brock will retire and be succeeded by Damian Gammell,
currently chief operating officer, effective 28 December 2016.
“As we complete 2016 and begin to execute our plans for 2017, we
will continue to focus on brand and package innovation,
strengthening execution and customer service, and further improving
operating effectiveness,” said Mr. Gammell. “In addition, we will
work to build on continued revenue growth and improve core
operating profit growth while simultaneously achieving our synergy
objectives.
“We are leveraging the strengths of our brands and benefitting
from solid marketplace execution driven by the dedication of our
people,” Mr. Gammell said. “These efforts are enabling growth with
successful brand initiatives, including the introduction of
Coca-Cola Zero Sugar, and innovation in still beverages and
packaging.
“The creation of CCEP provides the right platform for growth and
will enable us to build on a legacy of value creation,” Mr. Gammell
said. “We will work to continue driving increasing value for our
stakeholders and shareowners.”
2016 Outlook
For 2016, CCEP now expects approximately 1 per cent revenue
growth, with operating profit growth in a modest mid-single-digit
range, and mid-teens diluted earnings per share growth. All of
these items are on a pro forma comparable and fx-neutral basis. Pro
forma comparable diluted earnings per share is expected to be at
the high end of or just above the previously stated range of €1.86
to €1.90, including a negative currency translation impact of
approximately 4.5 per cent. In addition to operating profit growth,
full-year 2016 diluted earnings per share growth is benefiting from
differences in interest and tax rates between pro forma comparable
2015 figures and our 2016 outlook.
Weighted average cost of debt is expected to be approximately 2
per cent and the pro forma comparable effective tax rate for 2016
is expected to be approximately 25 per cent. CCEP does not expect
to repurchase shares in 2016.
2017 Outlook and Synergy
Update
For 2017, CCEP expects modest low single-digit revenue growth,
with operating profit and diluted earnings per share growth to be
up high single-digits. Excluding synergies, CCEP expects core
operating profit growth to modestly exceed revenue growth. Each of
these growth figures are on a comparable and fx-neutral basis when
compared to the 2016 pro forma comparable outlook. At recent rates,
currency translation would reduce 2017 full-year diluted earnings
per share by approximately 1 per cent.
The Company expects 2017 free cash flow in a range of €700
million to €800 million, including the expected benefit from
improved working capital offset by the impact of restructuring,
integration, and deal costs. Capital expenditures are expected to
be in a range of €575 million to €625 million, including €75
million to €100 million of capital expenditures related to
synergies. Weighted-average cost of debt is expected to be
approximately 2 per cent. The comparable effective tax rate for
2017 is expected to be in a range of 24 per cent to 26 per cent.
CCEP does not expect to repurchase shares in 2017.
CCEP remains on track to achieve pre-tax run-rate savings of
€315 million to €340 million through synergies by mid-2019.
Further, CCEP expects to exit 2017 with run-rate savings of
approximately one-half of the target. Restructuring cash costs to
achieve these synergies are now expected to be approximately 2 1/4
times expected savings and includes cash costs associated with
pre-transaction close accruals. Given these factors, currency
exchange rates, and our outlook for 2016 and 2017, CCEP now expects
year-end net debt to EBITDA for 2016 to be approximately 3 1/4
times and for 2017 to be under 3 times.
Dividend and Long-Term
Targets
The CCEP Board of Directors declared a regular quarterly
dividend of €0.17 per share. The dividend is payable 13 January
2017 to those shareholders of record on 30 December 2016. The
Company is pursuing arrangements to pay the dividend in euros to
shares held within Euroclear Netherlands. Other publicly held
shares will be converted into an equivalent US dollar amount using
exchange rates issued by WM/Reuters taken at 16:00 GMT on 15
December 2016. This translated amount will be posted on our
website, www.ccep.com, under the Investor/Shareowner Information
section.
CCEP is committed to providing regular returns to shareholders
through quarterly dividends. The Board of Directors is also
committed to driving shareowner value through long-term, profitable
growth whilst maintaining an efficient and optimal capital
structure. Through disciplined investment and a continued focus on
free cash flow growth, CCEP targets low single-digit revenue
growth, mid-single-digit operating profit growth, mid-to-high
single-digit diluted earnings per share growth, and an increase in
return on invested capital (ROIC) of 20 basis points or more
annually over the long term.
Conference Call
CCEP will host a conference call with investors and analysts
today at 15:00 GMT, 16:00 CET and 10:00 a.m. EST. The call can be
accessed through the Company’s website at www.ccep.com.
About CCEP
Coca-Cola European Partners plc (CCEP) is a leading consumer
packaged goods company in Europe, selling, producing and
distributing an extensive range of nonalcoholic ready-to-drink
beverages and is the world’s largest independent Coca-Cola bottler
based on revenue. Coca-Cola European Partners serves a consumer
population of over 300 million across Western Europe, including
Andorra, Belgium, continental France, Germany, Great Britain,
Iceland, Luxembourg, Monaco, the Netherlands, Norway, Portugal,
Spain and Sweden. The Company is listed on Euronext Amsterdam, the
New York Stock Exchange, Euronext London and on the Spanish stock
exchanges, and trades under the symbol CCE. For more information
about CCEP, please visit our website at www.ccep.com and follow
CCEP on Twitter at @CocaColaEP.
Forward-Looking Statements
This document may contain statements, estimates or projections
that constitute “forward-looking statements”. Generally, the words
“believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,”
“plan,” “seek,” “may,” “could,” “would,” “should,” “might,” “will,”
“forecast,” “outlook,” “guidance,” “possible,” “potential,”
“predict” and similar expressions identify forward-looking
statements, which generally are not historical in nature.
Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from Coca-Cola European Partners plc’s (“CCEP”) historical
experience and its present expectations or projections. These risks
include, but are not limited to, obesity concerns; water scarcity
and poor quality; evolving consumer preferences; increased
competition and capabilities in the marketplace; product safety and
quality concerns; perceived negative health consequences of certain
ingredients, such as non-nutritive sweeteners and
biotechnology-derived substances, and of other substances present
in its beverage products or packaging materials; increased demand
for food products and decreased agricultural productivity; changes
in the retail landscape or the loss of key retail or foodservice
customers; an inability to expand operations in emerging or
developing markets; fluctuations in foreign currency exchange
rates; interest rate increases; an inability to maintain good
relationships with its partners; a deterioration in its partners’
financial condition; increases in income tax rates, changes in
income tax laws or unfavourable resolution of tax matters;
increased or new indirect taxes in its tax jurisdictions; increased
cost, disruption of supply or shortage of energy or fuels;
increased cost, disruption of supply or shortage of ingredients,
other raw materials or packaging materials; changes in laws and
regulations relating to beverage containers and packaging;
significant additional labeling or warning requirements or
limitations on the availability of its products; an inability to
protect its information systems against service interruption,
misappropriation of data or breaches of security; unfavourable
general economic or political conditions in the United States,
Europe or elsewhere; litigation or legal proceedings; adverse
weather conditions; climate change; damage to its brand images and
corporate reputation from negative publicity, even if unwarranted,
related to product safety or quality, human and workplace rights,
obesity or other issues; changes in, or failure to comply with, the
laws and regulations applicable to its products or business
operations; changes in accounting standards; an inability to
achieve its overall long-term growth objectives; deterioration of
global credit market conditions; default by or failure of one or
more of its counterparty financial institutions; an inability to
timely implement its previously announced actions to reinvigorate
growth, or to realise the economic benefits it anticipates from
these actions; failure to realise a significant portion of the
anticipated benefits of its strategic relationships, including
(without limitation) The Coca-Cola Company’s relationship with
Monster Beverage Corporation; an inability to renew collective
bargaining agreements on satisfactory terms, or it or its partners
experience strikes, work stoppages or labour unrest; future
impairment charges; an inability to successfully manage the
possible negative consequences of its productivity initiatives;
global or regional catastrophic events; and other risks discussed
in the CCEP prospectus approved by the UK Listing Authority and
published on 25 May 2016, the registration statement on Form F-4,
which was filed with the SEC by CCEP, and the interim results for
the first six months ended 1 July 2016, published on 22 September
2016. You should not place undue reliance on forward-looking
statements, which speak only as of the date they are made. CCEP
does not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise. CCEP assumes no responsibility for the
accuracy and completeness of any forward-looking statements. Any or
all of the forward-looking statements contained in this filing and
in any other of its public statements may prove to be
incorrect.
Note Regarding the Presentation of
Financial Information
Unless otherwise noted, the financial information included in
this release is provided on a pro forma comparable basis to allow
investors to better analyse CCEP’s business performance and allow
for greater comparability. To do so, we have given effect to the
Merger as if it had occurred at the beginning of the periods
presented, thereby including the financial results of Coca-Cola
Enterprises, Inc. (“CCE”), Coca-Cola Erfrischungsgetränke GmbH
(“Germany”, “CCEG”) and Coca-Cola Iberian Partners S.A.U.
(“Iberia”, “CCIP”) and acquisition accounting adjustments for the
full periods presented. We have also excluded items affecting the
comparability of year-over-year financial performance, including
merger and integration costs, restructuring costs, the
out-of-period mark-to-market impact of hedges and the inventory
step-up related to acquisition accounting. See the Supplementary
Financial Information for a full reconciliation of our reported
results to our pro forma comparable results.
For purposes of this review, the following terms are defined as
follows:
‘Pro forma’ includes the results of CCE, Germany and
Iberia as well as the impact of the additional debt financing costs
incurred by CCEP in connection with the Merger for all periods
presented, as if the Merger had occurred at the beginning of the
period presented.
‘Pro forma Comparable’ represents the pro forma results
excluding the items impacting comparability during the periods
presented for CCE, Germany and Iberia.
‘Fx-Neutral’ represents the pro forma comparable results
excluding the impact of foreign exchange rate changes during the
periods presented.
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Coca-Cola European Partners plcInvestor
Relations:Thor Erickson, 678-260-3110orMedia
Relations:Ros Hunt, +44 (0) 7528 251 022
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