Solid Second Quarter Benefiting from
Favourable Weather, Increasing Full-Year Outlook
Coca-Cola European Partners plc (CCEP) (ticker symbol: CCE)
today announces its interim results for the six months ended 30
June 2017 and increases full-year 2017 outlook.
Highlights
- First-half diluted earnings per
share were €0.91 on a reported basis or €0.98 on a comparable
basis, including a negative currency translation impact of
€0.03.
- First-half reported revenue totalled
€5.4 billion, up 3.0 percent on a comparable basis, or up 5.0
percent on a comparable and fx-neutral basis. Volume grew 3.0
percent on a comparable basis.
- First-half reported operating profit
was €635 million; comparable operating profit was €688 million, up
14.0 percent on a comparable basis, or up 17.0 percent on a
comparable and fx-neutral basis.
- Second-quarter diluted earnings per
share were €0.61 on a reported basis or €0.67 on a comparable
basis, including a negative currency translation impact of
€0.02.
- CCEP increases full-year guidance
for 2017 including comparable and fx-neutral diluted earnings per
share growth in a 10 percent to 12 percent range when compared to
2016 comparable results; at recent rates, currency translation
would reduce diluted earnings per share by approximately 2
percent.
- 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
€0.21 per share.
“We delivered a strong second quarter as we continue to make
solid progress in building our new company and realising our
planned synergies,” said Damian Gammell, Chief Executive Officer.
“These results reflect the successful execution of our sales and
marketing plans, as well as favourable weather throughout the
quarter.
“Importantly, our results also continue to support the strategic
rationale for creating CCEP,” Mr. Gammell said. “Looking forward,
we remain focused on our long-term business growth through
expanding our portfolio, creating value with our customers, and
improving in-market execution, all to generate strong cash flow and
drive long-term value for our shareholders.”
Key Financial Measures
Unaudited, fx impact calculated by
recasting current year results at prior year rates
Second Quarter Ended 30 June 2017 € million
% change
As
Reported
Comparable
Fx-Impact
As
Reported
Comparable Fx-Impact
Comparable
Fx-Neutral
Revenue 3,054 3,054 (52 ) 40.5 % 5.5 %
(2.0 )% 7.5 % Cost of sales 1,853 1,845 (31 ) 36.0 % 5.0 %
(2.0 )% 7.0 % Operating expenses 785 749 (10 ) 31.0 % 2.0 % (1.5 )%
3.5 % Operating profit 416 460 (11 ) 99.0 % 15.5 % (3.0 )% 18.5 %
Profit after taxes 298 326 (8 ) 97.5 % 19.5 % (3.0 )% 22.5 %
Diluted earnings per share (€) 0.61 0.67
(0.02 ) 35.5 % 19.5 % (3.0 )%
22.5 %
Key Financial Measures
Unaudited, fx impact calculated by
recasting current year results at prior year rates
Six Months Ended 30 June 2017 € million %
change
As
Reported
Comparable Fx-Impact
As
Reported
Comparable Fx-Impact
Comparable
Fx-Neutral
Revenue 5,436 5,436 (94 ) 53.5 % 3.0 %
(2.0 )% 5.0 % Cost of sales 3,321 3,324 (56 ) 49.0 % 3.5 %
(1.5 )% 5.0 % Operating expenses 1,480 1,424 (19 ) 47.5 % (2.0 )%
(1.0 )% (1.0 )% Operating profit 635 688 (19 ) 102.0 % 14.0 % (3.0
)% 17.0 % Profit after taxes 445 478 (14 ) 112.0 % 18.0 % (3.5 )%
21.5 % Diluted earnings per share (€) 0.91
0.98 (0.03 ) 23.0 % 18.0 % (3.5
)% 21.5 %
Operational Review
First-half 2017 diluted earnings per share were €0.91 on a
reported basis, or €0.98 on a comparable basis. Currency
translation had a negative impact of €0.03 on first-half 2017
comparable diluted earnings per share. First-half 2017 reported
operating profit totalled €635 million, up 102.0 percent driven by
the inclusion of Germany, Iberia, and Iceland. Comparable operating
profit was €688 million, up 14.0 percent on a comparable basis, or
up 17.0 percent on a comparable and fx-neutral basis.
Second-quarter 2017 diluted earnings per share were €0.61 on a
reported basis, or €0.67 on a comparable basis. Currency
translation had a negative impact of €0.02 on second-quarter
comparable diluted earnings per share. Second-quarter reported
operating profit totalled €416 million, up 99.0 percent versus
prior year driven by the inclusion of Germany, Iberia, and Iceland.
Comparable operating profit was €460 million, up 15.5 percent on a
comparable basis, or up 18.5 percent on a comparable and fx-neutral
basis.
Key operating factors in the second quarter include the benefits
from our sales and marketing initiatives, country mix, favourable
weather, as well as favourable prior year comparables. Additional
factors include a modest gross margin increase as revenue per unit
case offset increases in costs of sales per unit case, ongoing
operating expense management, and post-merger synergy benefits.
Revenue
First-half 2017 reported revenue totalled €5.4 billion, up 53.5
percent, driven by the inclusion of Germany, Iberia, and Iceland
versus prior year. Comparable revenue was up 3.0 percent, or
up 5.0 percent on a comparable and fx-neutral basis.
Second-quarter 2017 reported revenue totalled €3.1 billion, up
40.5 percent, driven by the inclusion of Germany, Iberia, and
Iceland versus prior year. Comparable revenue was up 5.5
percent, or up 7.5 percent on a comparable and fx-neutral basis.
Revenue per unit case was up 3.0 percent on a comparable and
fx-neutral basis driven by favourable price, promotion, and package
mix. Second-quarter volume increased 4.5 percent on a
comparable basis, reflecting the benefits of marketing and brand
initiatives, solid execution, and favourable weather
conditions.
On a territory basis for the second quarter, Iberia revenues
were up 8.5 percent, benefiting from solid execution, with strong
growth of Coca-Cola Zero Sugar and sparkling flavours, combined
with favourable channel and package mix. Revenue in Germany was up
7.0 percent, given strong volume and revenue per unit case growth
driven by the impact of pricing and promotional plans and
favourable package mix. Great Britain had strong revenue
growth on an fx-neutral basis with gains in both revenue per unit
case and volume, driven by solid growth in Coca-Cola trademark,
Fanta, and energy. On a reported basis, Great Britain revenues were
down 0.5 percent, driven by a decline of the British pound versus
the Euro of approximately 9.0 percent. Revenue in France was up 3.5
percent, with strong volume growth and slightly negative revenue
per unit case growth, driven in part by solid results in the cold
channel, including the impact from new post mix
business. Revenue in the Northern European territories
(Belgium, Luxembourg, the Netherlands, Norway, Sweden, and Iceland)
was up 9.0 percent, benefiting 3.5 percent from the inclusion of
Iceland and 5.5 percent growth in previously existing territories.
Growth in Northern Europe was led by Belgium, Luxembourg, and the
Netherlands, offset by a decline in Norway.
On a brand basis for the second quarter, sparkling brands were
up 4.0 percent. Coca-Cola trademark brands increased 3.5 percent,
led by double-digit Coca-Cola Zero Sugar growth and modest growth
in Coca-Cola Classic. Sparkling flavours and energy grew 7.0
percent with solid growth from Fanta and energy brands. Still
brands grew 6.5 percent. Water brands were up 5.0 percent, led by
growth in Aquabona and Chaudfontaine, and juices, isotonics and
other were up 7.5 percent with growth from Capri-Sun, Aquarius, and
teas, notably in Spain.
Cost of Sales
First-half 2017 reported cost of sales were €3.3 billion, up
49.0 percent, driven by the inclusion of Germany, Iberia, and
Iceland versus prior year. Comparable cost of sales were €3.3
billion, up 3.5 percent on a comparable basis, or up 5.0 percent on
a comparable and fx-neutral basis.
Second-quarter 2017 reported cost of sales were €1.9 billion, up
36.0 percent, driven by the inclusion of Germany, Iberia, and
Iceland versus prior year. Comparable cost of sales were €1.8
billion, up 5.0 percent on a comparable basis, or up 7.0 percent on
a comparable and fx-neutral basis. Second-quarter cost of sales per
unit case increased 2.5 percent on a comparable and fx-neutral
basis.
Operating Expenses
First-half 2017 reported operating expenses were €1.5 billion,
up 47.5 percent, driven by the inclusion of Germany, Iberia, and
Iceland versus prior year. Comparable operating expenses were €1.4
billion, down 2.0 percent on a comparable basis, or down 1.0
percent on a comparable and fx-neutral basis.
Second-quarter 2017 reported operating expenses were €785
million, up 31.0 percent, driven by the inclusion of Germany,
Iberia, and Iceland versus prior year. Comparable operating
expenses were €749 million, up 2.0 percent on a comparable basis,
or up 3.5 percent on a comparable and fx-neutral basis. This
includes the impact of volume growth, partially offset by synergy
benefits, and a continued focus on managing operating expenses.
Outlook
For 2017, CCEP now expects low single-digit revenue growth,
operating profit growth at the top end of the previously stated
high single-digit range, and diluted earnings per share to be up 10
percent to 12 percent. Excluding synergies, CCEP expects operating
profit growth to be broadly in-line with revenue growth. Each of
these growth figures is on a comparable and fx-neutral basis when
compared to 2016 comparable results. At recent rates, currency
translation would reduce 2017 full-year diluted earnings per share
by approximately 2 percent.
CCEP expects 2017 free cash flow* at the high end of the
previous range of €700 million to €800 million, including the
expected benefit from improved working capital offset by the impact
of restructuring and integration costs. Capital expenditures are
expected to be approximately €600 million, including approximately
€100 million of capital expenditures related to synergies.
Weighted-average cost of debt is expected to be approximately 2.0
percent. The comparable effective tax rate for 2017 is expected to
be approximately 25.0 percent. 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 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 2017, CCEP expects year-end net
debt to adjusted EBITDA* for 2017 to be under 3 times.
* Refer to ‘Note Regarding the Presentation of Alternative
Performance Measures’ for further details about these measures.
Dividends
The CCEP Board of Directors declared a regular quarterly
dividend of €0.21 per share. The dividend is payable 11 September
2017 to those shareholders of record on 28 August 2017. 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 BST on 10 August 2017.
This translated amount will be posted on our website, www.ccep.com,
under the Investor/Shareowner Information section.
Conference Call
CCEP will host a conference call with investors and analysts
today at 15:00 BST, 16:00 CEST and 10:00 a.m. EDT. The call can be
accessed through the Company’s website at www.ccep.com.
Financial Details
Financial details can be found in our first-half 2017 filing,
available within the next 24 hours at www.morningstar.co.uk/uk/NSM
(located under effective date 30 June 2017) and available
immediately on our website, www.ccep.com, under the Investors
tab.
About CCEP
Coca-Cola European Partners plc (CCEP) is a leading consumer
goods company in Western Europe, selling, making 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 their 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; 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 respective products; an
inability to protect its respective 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 respective 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 respective products or business operations;
changes in accounting standards; an inability to achieve its
respective overall long-term growth objectives; deterioration of
global credit market conditions; default by or failure of one or
more of its respective counterparty financial institutions; an
inability to timely implement their 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 respective 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 respective partners experience strikes, work
stoppages or labour unrest; future impairment charges; an inability
to successfully manage the possible negative consequences of its
respective productivity initiatives; global or regional
catastrophic events; and other risks discussed in the 2016 Annual
Report on Form 20-F, published on 12 April 2017. 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.
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Coca-Cola European Partners plcInvestor
RelationsThor Erickson, +1 (678) 260-3110orMedia
RelationsRos Hunt, +44 (0) 7528 251 022
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