Solid Start to 2018 and On-Track to Deliver
Full-Year Outlook
Coca-Cola European Partners plc (CCEP) (ticker symbol: CCE)
today announces its interim results for the first-quarter ended 30
March 2018, and affirms full-year 2018 outlook.
Highlights
- First-quarter diluted earnings per
share were €0.25 on a reported basis or €0.33 on a comparable
basis, including a negligible impact from currency
translation.
- First-quarter reported revenue
totalled €2.4 billion, flat versus prior year, or up 1.0 percent on
a comparable and fx-neutral basis. Volume was down 2.5 percent on a
comparable basis.
- First-quarter reported operating
profit totalled €187 million, or €239 million on a comparable
basis, up 12.5 percent or up 13.0 percent on a comparable and
fx-neutral basis.
- CCEP affirms full-year guidance for
2018 including comparable and fx-neutral diluted earnings per share
growth of between 6 percent and 7 percent when compared to 2017
comparable results.
- CCEP declares quarterly interim
dividend of €0.26 per share.
“Our first-quarter results reflect our continued focus on
improving our in-market execution and driving profitable revenue
growth through strong price and mix realisation,” said Damian
Gammell, Chief Executive Officer. “While pleased with our overall
performance, volume growth was impacted during the quarter by
unfavourable weather, customer challenges, and the effect of some
of our brand realignment decisions.
“We remain confident that we are making the right strategic
decisions for the long term and this is reflected in our 2018
outlook, which we have affirmed today,” Mr. Gammell said. “To
achieve this outlook, we are focused on executing our plans over
the key summer selling season while navigating through a dynamic
trading environment.”
Key Financial MeasuresUnaudited, fx
impact calculated by recasting current year results at prior year
rates
First-Quarter Ended 30 March 2018 € million
% change
As Reported
Comparable Fx-Impact
As Reported
Comparable Fx-Impact
Comparable Fx-Neutral
Revenue 2,378 2,378 (24 ) — %
— % (1.0 )% 1.0 % Cost of sales
1,491 1,462 (15 ) 1.5 % (2.5 )% (1.0 )% (1.5 )% Operating expenses
700 677 (8 ) 0.5 % 1.0 % (1.0 )% 2.0 % Operating profit 187 239 (1
) (14.5 )% 12.5 % (0.5 )% 13.0 % Profit after taxes 124 162 (1 )
(15.5 )% 15.5 % (1.0 )% 16.5 % Diluted earnings per share (€)
0.25 0.33 —
(16.5 )% 14.0 % —
% 14.0 %
Operational Review
First-quarter 2018 diluted earnings per share were €0.25 on a
reported basis, or €0.33 on a comparable basis. Currency
translation had a negligible impact on first-quarter comparable
diluted earnings per share. First-quarter 2018 reported operating
profit totalled €187 million, down 14.5 percent versus prior year.
Comparable operating profit was €239 million, up 12.5 percent, or
up 13.0 percent on a comparable and fx-neutral basis.
Key operating profit factors in the quarter include modest
revenue growth driven by strong revenue per unit case growth. This
was offset by a 2.5 percent decline in volume as we continue to
optimise promotional effectiveness, focus on smaller pack formats
and exit lower margin brands. Operating margins improved as we
expanded our gross margin and continued to realise post-merger
synergy benefits.
Revenue
First-quarter 2018 reported revenue totalled €2.4 billion, flat
versus prior year, or up 1.0 percent on a comparable and fx-neutral
basis. Revenue per unit case was up 3.5 percent on a comparable and
fx-neutral basis driven by favourable price, promotion and package
mix. First-quarter volume decreased 2.5 percent on a
comparable basis, reflecting unfavourable weather conditions; the
impact from customer disruptions, notably in France; and some of
our strategic decisions regarding our portfolio, principally in the
water segment.
On a territory basis for the first quarter, Iberia revenues were
down 0.5 percent, with a decline in volume partially offset by
revenue per unit case growth, supported by favourable channel mix.
Revenue in Germany was up 1.5 percent, with strong revenue per unit
case growth driven by the impact of pricing and promotional plans,
partially offset by volume declines. Revenue in Great Britain
grew 3.0 percent with solid gains in revenue per unit case
reflecting an ongoing focus on promotional effectiveness and
favourable package mix. Revenue in France was down 4.5 percent with
modest growth in revenue per unit case more than offset by a
decline in volume owing primarily to the impact from customer
disruptions as we focus on price realisation and reduction of
promotional activity. Revenue in the Northern European territories
(Belgium, Luxembourg, the Netherlands, Norway, Sweden, and Iceland)
was flat, led by growth in the Netherlands and Sweden.
On a brand basis for first-quarter 2018, volume for sparkling
brands was down 1.0 percent. Coca-Cola trademark brands decreased
2.0 percent, with growth of 8.5 percent in Coca-Cola Zero Sugar
offset by declines in other trademark brands. Sparkling flavours
and energy grew 1.0 percent led by energy brands and Schweppes.
Still brands decreased 9.0 percent, with water brands down 10.5
percent and juices, isotonics, and other down 8.0 percent mainly
due to strategic decisions regarding our brand portfolio.
Cost of Sales
First-quarter 2018 reported cost of sales were €1.5 billion, up
1.5 percent versus prior year. Comparable cost of sales were €1.5
billion, down 2.5 percent, or down 1.5 percent on a comparable and
fx-neutral basis.
First-quarter cost of sales per unit case increased 1.0 percent
on a comparable and fx-neutral basis, driven by channel, brand and
package mix, as well as year-over-year cost increases in key
inputs, principally concentrate as a result of our incidence model,
and aluminium. This was partially offset by sweetener and benefits
from our synergy programmes.
Operating Expenses
First-quarter 2018 reported operating expenses were €700
million, up 0.5 percent versus prior year. Comparable operating
expenses were €677 million, up 1.0 percent, or up 2.0 percent on a
comparable and fx-neutral basis. This reflects expense timing
and select investments partially offset by synergy benefits and a
continued focus on managing expenses.
Restructuring Charges
During the first-quarter 2018, we recognised restructuring
charges totaling €44 million. These charges principally relate to
proposed restructuring activities under our Integration and Synergy
Programme and our recently announced proposal to close our
manufacturing site in Milton Keynes and distribution centre in
Northampton during the course of 2019.
Outlook
For 2018, CCEP affirms prior guidance, including revenue growth
in a low single-digit range, with both operating profit and
earnings per share growth of between 6 percent and 7 percent. Each
of these growth figures is on a comparable and fx-neutral basis
when compared to 2017 comparable results. This revenue growth
guidance excludes the accounting impact of incremental soft drinks
industry taxes. These taxes are expected to add approximately 2
percent to 3 percent to revenue growth and approximately 4 percent
to cost of goods growth. At recent rates, currency translation
would have a negligible impact on 2018 full-year diluted earnings
per share.
CCEP affirms 2018 free cash flow* in the range of €850 million
to €900 million, including the expected benefit from improved
working capital offset by the impact of restructuring and
integration costs. Capital expenditures are expected to be in the
range of €525 million to €575 million, including approximately €75
million of capital expenditures related to synergies.
Weighted-average cost of debt is expected to be approximately 2
percent. The comparable effective tax rate for 2018 is expected to
be approximately 25 percent.
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 have realised approximately 75 percent of
the target by year-end 2018. 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 2018, CCEP expects year-end net
debt to adjusted EBITDA* for 2018 to be towards the low-end of our
target range of 2.5 to 3 times. As a result, during 2018, CCEP
expects to continue to evaluate returning incremental cash to
shareholders.
* 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 interim
dividend of €0.26 per share. The interim dividend is payable 29 May
2018 to those shareholders of record on 14 May 2018. The Company is
pursuing arrangements to pay the interim 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 26 April
2018. 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-quarter 2018
earnings release on Form 6-K, available within the next 24 hours at
www.morningstar.co.uk/uk/NSM (located under effective date 30 March
2018) and available immediately on our website, www.ccep.com, under
the Investors tab. This document will include comparable income
statements for first-quarter 2018 and 2017. There is also
additional supplemental financial information, such as volume and
per unit case data. The financial details included in this earnings
release and on Form 6-K are unaudited.
About CCEP
Coca-Cola European Partners plc is a leading consumer goods
company in Western Europe, selling, making and distributing an
extensive range of non alcoholic 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” concerning the
financial condition, performance, results, strategy and objectives
of Coca-Cola European Partners plc and its subsidiaries (“CCEP”).
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 that
could cause actual results to differ materially from CCEP’s
historical experience and present expectations or projections. As a
result, undue reliance should not be placed on forward-looking
statements, which speak only as of the date on which they are made.
These risks and uncertainties include but are not limited to those
set forth in the “Risk Factors” section of the 2017 Annual Report
on Form 20-F, including the statements under the following
headings: Risks Relating to Consumer Preferences and the Health
Impact of Soft Drinks; Risks Relating to Legal and Regulatory
Intervention (such as the impact of sugar taxes being implemented
in a number of countries in 2018 and recently announced plans by
the UK Government to consider the introduction of some form of
deposit return scheme in GB); Risks Relating to Business
Integration and Synergy Savings; Risks Relating to Cyber and Social
Engineering Attacks; Risks Relating to the Market; Risks Relating
to Economic and Political Conditions (such as continuing
developments in relation to the UK’s exit from the EU); Risks
Relating to the Relationship with TCCC and Other Franchisors; Risks
Relating to Product Quality; and Other Risks.
Due to these risks and uncertainties, CCEP’s actual future
results, dividend payments, and capital and leverage ratios may
differ materially from the plans, goals, expectations and guidance
set out in CCEP’s forward-looking statements. Additional risks and
uncertainties that may impact CCEP’s future financial condition and
performance are identified in filings with the SEC which are
available on the SEC’s website at www.sec.gov. 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, except as required under applicable
rules, laws and regulations. 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 CCEP’s respective public statements may prove to be
incorrect.
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Coca-Cola European Partners plcInvestor
Relations:Thor Erickson, +1-678-260-3110orMedia
Relations:Shanna Wendt, +44 7976 595 168
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