TIDMCCH
RNS Number : 6205E
Coca-Cola HBC AG
05 November 2015
THIRD QUARTER 2015 TRADING UPDATE
STRONG VOLUME GROWTH
Coca-Cola HBC AG, a leading bottler of the brands of The
Coca-Cola Company, today announces its 2015 Q3 trading update.
Third quarter highlights
-- Volumes gathered momentum with 5.4% growth in the third
quarter; the initiatives that delivered good growth in the first
half were further helped by good weather and favourable
comparatives in parts of our footprint
-- Established markets volumes bounced back well into growth
territory in the quarter, particularly in Italy and Austria; the
strong Swiss Franc helped revenue growth, while mix was negatively
impacted by increased Water volume
-- Developing markets continued to generate very good volume
growth, led by Poland and Hungary with all categories posting
positive performance; revenue grew at a slower pace reflecting
adverse mix
-- In Emerging markets, exceptional volume growth in Romania,
Nigeria and Ukraine, mainly in the Sparkling category, more than
offset the decline in Russia; currency movements remain a strong
headwind impacting revenue
-- FX-neutral net sales revenue per unit case was stable
compared to the prior-year quarter; our pricing initiatives
remained focused on those Emerging markets most impacted by
currency headwinds, while in Established and Developing markets
affordability measures, deflationary environment and the adverse
category mix restrained the FX-neutral net sales revenue per case
improvement
FX-neutral net
Net sales revenue sales revenue
Q3 2015 vs. Q3 Volume Net sales per unit case per unit case
2014 growth (%) revenue (%) (%) (%)
--------------------- ------- ------------- ------------------ ---------------
Total Group 5.4 -2.7 -7.8 -
Established markets 7.4 6.4 -1.0 -3.5
Developing markets 10.4 6.8 -3.3 -3.0
Emerging markets 2.4 -13.0 -15.1 4.0
--------------------- ------- ------------- ------------------ ---------------
Dimitris Lois, Chief Executive Officer of Coca-Cola HBC AG,
commented:
"Our commercial initiatives and a hot summer in parts of Europe
contributed to a strong volume performance in the quarter, with
growth in all segments and increased momentum in the business. As
the year has progressed we have been encouraged by gradually
improving market conditions in our European countries, where
economic activity has been depressed for many years. We have also
benefitted from buoyant trading in many of our emerging
markets.
"In the remainder of the year, we will continue to manage the
conditions in each of our market segments with the right mix of
pricing initiatives, affordability focus and consumer offering,
although the four fewer selling days will impact our volumes.
Overall, we are confident that in 2015 we will grow volumes across
our reporting segments as well as expand Group operating
margin."
Trading
Trading conditions in our markets remained broadly unchanged in
the quarter. The actions we took to offset some of the
macroeconomic headwinds were successful, and when combined with
favourable weather during the summer months and easy comparatives,
delivered strong results.
Volume growth reached 5.4% in the quarter compared to a 4.8%
decline in the prior-year quarter. Price initiatives, the majority
of which we implemented in the first half of the year to offset
currency headwinds in Emerging markets, combined with deflationary
pressures and adverse category mix in Established and Developing
markets, resulted in stable FX-neutral net sales revenue per unit
case for the quarter. The adverse currency impact on net sales
revenue accelerated to c.8% in the quarter, resulting in a 2.7%
decline in net sales revenue compared to the prior-year
quarter.
Established markets segment
Established markets volumes increased by 7.4% in the quarter
compared to a 9.6% decline in the prior-year quarter. Our
investment in initiatives such a Meals with Coke and the glass
contour bottle campaign, supported by in-store execution and
favourable weather in most of the countries in the segment,
contributed to the delivery of strong results. While all key
categories performed well, Water exceeded our expectations with
mid-teens volume growth.
Italy volumes increased by low teens, cycling a mid-teens
decline in the prior-year quarter. Successful initiatives such as
the glass contour bottle campaign, relevant marketing programmes
and good weather resulted in very strong performance in all
categories. We saw encouraging trends in the quarter including
improved consumer confidence and the expectation of modest GDP
growth this year.
Greece volumes continued their growth trajectory, increasing by
low single digits despite cycling a similar growth rate in the
prior-year quarter. Water drove most of the growth while Juice and
Sparkling were also positive contributors. Although it is
encouraging to see that the actions we put in place in a difficult
trading environment with capital controls have paid off, we are not
complacent, as ongoing and new austerity measures in the country
will continue to act as a headwind for our business.
Austria posted mid-teens volume growth with good performance
across all categories, following a low-teens decline in the
prior-year period. Volumes in Switzerland increased by mid single
digits driven by Water and Trademark Coke, albeit slightly hindered
by the appreciation of the Swiss Franc which impacted consumers'
habits, driving cross-border shopping activity. Ireland on the
other hand, was weak mainly due to competitive pressures and poor
summer weather.
Overall, good volume growth coupled with strong currencies,
primarily the Swiss Franc, drove net sales revenue growth of 6.4%.
FX-neutral net sales revenue per case deteriorated by 3.5% due to
the combination of deflationary pressures, a category mix shift to
Water and our efforts to maintain the affordability of our
products.
Developing markets segment
Volumes in Developing markets increased by 10.4%, compared to a
10.6% decline in the prior-year quarter, continuing the positive
momentum in this segment. With the exception of the Baltics, all of
the countries in the segment demonstrated strong growth,
benefitting from rising consumer spending and low unemployment
rates as well as good weather during the summer months.
Volumes in Poland grew by high single digits, following a
low-teens decline in the prior-year quarter. The positive
performance was mainly driven by the Water category, which
benefitted from flavoured waters and good growth in the organised
trade channel. Sparkling beverages also contributed strongly. We
are encouraged by the economic conditions in the country, which
continue to improve.
Volumes grew in the Czech Republic by high single digits
compared to mid-teens decline in the prior-year quarter. Still
beverages category growth, predominantly driven by Water, more than
offset the decline in Sparkling.
Hungary continued to demonstrate stellar performance, helped in
part by favourable weather. High-teens volume growth in the country
follows mid single-digit decline in the prior-year quarter. Every
category posted positive growth, led by excellent performance in
Water further supported by good Sparkling growth, which benefitted
from the additional listings of our new 1.25L pack and our
continuing focus on OBPPC - marketing the right brand, in the right
pack, at the right price, sold through the right channel and for
the right occasion.
Net sales revenue in the Developing markets grew by 6.8% in the
quarter. The volume growth contribution was partly offset by the
3.0% deterioration in FX-neutral net sales revenue per case - the
result of deflationary pressures limiting pricing actions in the
region and unfavourable mix, mainly due to strong Water
volumes.
Emerging markets segment
Emerging markets volumes increased by 2.4% in the quarter,
following 0.8% growth in the prior-year period. Strong performances
from most of the countries in the segment were partly offset by
volume decline in Russia, which accounts for a third of the
segment's volumes.
Russia volumes deteriorated from the trends seen in the first
half. Continued difficult trading conditions and the tougher
comparatives due to the cycling of the addition of the Moya Semya
juice brand to the portfolio were exacerbated by poor summer
weather. This resulted in c.10% volume decline, following a low
single-digit decline in the prior-year period. As things stand, we
continue to believe that we can limit volume decline to mid single
digits in the year.
Nigeria continued its positive momentum for the sixth
consecutive quarter with low-teens volume growth, despite cycling
high single-digit growth in the prior-year period. Additional PET
bottle production capacity and innovations in Juice complemented
with increased distribution coverage supported the delivery of
volume growth, and continue to give us confidence for the remainder
of the year.
Volumes continue to grow very well in Romania where the
macroeconomic environment remains stable and consumer confidence is
improving. Successful execution of initiatives such as the
Coca-Cola KISS campaign, increased marketing investment, a tailwind
from VAT reduction and good weather contributed to the mid-teens
growth rate in the quarter. A good performance was seen across our
portfolio and the 1.3 percentage point package mix improvement was
particularly encouraging.
(MORE TO FOLLOW) Dow Jones Newswires
November 05, 2015 02:00 ET (07:00 GMT)
Overall, net sales revenue was under considerable pressure from
foreign exchange headwinds, ending the quarter with 13.0% decline.
A 4.0% improvement in FX-neutral net sales revenue per case as a
result of our pricing initiatives only partly offset the impact of
adverse currency movements on revenue.
Category highlights
We started the year with very strong plans for in-store
execution in the organised trade channel, involving OBPPC
initiatives to take advantage of occasions such as meals and
socialising as well as meeting the needs of our consumers who are
shopping with 'small baskets'. Our plans were complemented with
relevant and targeted marketing initiatives. These actions have
delivered well in the quarter, improving single-serve mix.
In Sparkling beverages, we achieved 4.0% volume growth,
reversing the 5.3% decline in the prior-year quarter. Nigeria,
Romania, and Italy delivered very strong results, more than
offsetting the weakness in Russia, Belarus and Ireland. Within the
category, trademark Coca-Cola grew by mid single digits, with a
stellar performance from Coke Zero driven by the product's launch
in Russia in May.
Water volumes grew by low-teens, with particularly good growth
in Established and Developing markets, helped by good weather. The
juice business maintained its positive trend, albeit at a
decelerating pace, as we have now started cycling the addition of
Moya Semya to the portfolio in the third quarter of 2014, with all
segments registering a good performance. The energy category
increased volumes by low single digits, recording another good
quarter despite being held back by Russia.
Single-serve contribution improved slightly in the quarter as a
result of Sparkling single-serve packs improving by 0.5 percentage
points while Water deteriorated by 0.7 percentage points.
Sustainability highlights
We announced on 3 November that we intend to reduce water use
intensity(1) by 30% and direct carbon emissions intensity(1) by 50%
by 2020 compared to 2010.
Our approach to sustainability was endorsed in September when we
were named beverage industry leader in the Dow Jones World and
Europe Sustainability Indices for the second consecutive year.
(1) Intensity refers to the quantity of water we use or carbon
emissions we emit for the production of one litre of beverage
Supplementary information
Third Third Nine
quarter quarter % months Nine months %
Group 2015 2014 Change 2015 2014 Change
Volume (m unit cases) 577.1 547.6 5.4% 1,583.7 1,517.8 4.3%
Net sales revenue (EUR
m) 1,768.7 1,817.1 -2.7% 4,919.6 5,000.2 -1.6%
Net sales revenue per
unit case (EUR) 3.06 3.32 -7.8% 3.11 3.29 -5.5%
FX-neutral net sales
revenue per unit case
(EUR) 3.06 3.06 - 3.11 3.11 -
Established markets
Volume (m unit cases) 179.6 167.2 7.4% 484.9 473.1 2.5%
Net sales revenue (EUR
m) 702.5 660.4 6.4% 1,939.5 1,888.4 2.7%
Net sales revenue per
unit case (EUR) 3.91 3.95 -1.0% 4.00 3.99 0.3%
FX-neutral net sales
revenue per unit case
(EUR) 3.91 4.05 -3.5% 4.00 4.11 -2.7%
Developing markets
Volume (m unit cases) 110.6 100.2 10.4% 291.4 270.5 7.7%
Net sales revenue (EUR
m) 323.8 303.2 6.8% 852.4 807.9 5.5%
Net sales revenue per
unit case (EUR) 2.93 3.03 -3.3% 2.93 2.99 -2.0%
FX-neutral net sales
revenue per unit case
(EUR) 2.93 3.02 -3.0% 2.93 3.00 -2.3%
Emerging markets
Volume (m unit cases) 286.9 280.2 2.4% 807.4 774.2 4.3%
Net sales revenue (EUR
m) 742.4 853.5 -13.0% 2,127.7 2,303.9 -7.6%
Net sales revenue per
unit case (EUR) 2.59 3.05 -15.1% 2.64 2.98 -11.4%
FX-neutral net sales
revenue per unit case
(EUR) 2.59 2.49 4.0% 2.64 2.53 4.3%
Coca-Cola HBC Group
Coca-Cola HBC is a leading bottler of The Coca-Cola Company with
a 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 590 million people. Coca-Cola HBC
offers a diverse range of 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 third quarter of
2015 on 5 November 2015 at 10:00 am Swiss time (9:00am London,
11:00am Athens, and 4:00am New York). A recording of the call in
downloadable MP3 format and its transcript will be made available
on the Company website
http://www.coca-colahellenic.com/investorrelations/financialresults.
Next event
19 February 2016 Full-year financial statements and results
announcement
Enquiries
Coca--Cola HBC AG
Basak Kotler
Investor Relations Tel: +41 41 726 0143
Director basak.kotler@cchellenic.com
Nikos Efstathopoulos
Investor Relations Tel: +30 210 618 3260
Manager nikos.efstathopoulos@cchellenic.com
International media
contact
StockWell Communications Tel: +44 20 7240 2486
Rob Morgan robert.morgan@stockwellgroup.com
Ben Ullmann ben.ullmann@stockwellgroup.com
Anushka Mathew anushka.mathew@stockwellgroup.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").
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 2015 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 2014 Integrated Annual Report and the Half-yearly
Financial Report for the six months ended 3 July 2015 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.
(MORE TO FOLLOW) Dow Jones Newswires
November 05, 2015 02:00 ET (07:00 GMT)
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