TIDMCCEP
RNS Number : 0497L
Coca-Cola European Partners plc
28 April 2020
LONDON, 28(th) April 2020
COCA-COLA EUROPEAN PARTNERS
First-Quarter ended 27 March 2020 & COVID-19 Update
CHANGE VS Q1 2019
REVENUE VOLUME REVENUE COMPARABLE REVENUE FX-NEUTRAL REVENUE
(UNIT CASES(1) PER UNIT VOLUME(3,4) PER UNIT REVENUE(3)
) CASE(2) CASE(2)
========== ================ ========== ============= ========== ============ ========
EUR2,478m 521m EUR4.77 (4.0)% 1.5% (4.0)% (4.0)%
DAMIAN GAMMELL, CHIEF EXECUTIVE OFFICER, SAID:
"This crisis has touched every community where we operate, and I
would like to thank everyone who is working to keep us safe.
"Throughout the pandemic, we are prioritising the wellbeing of
our people, serving our customers, supporting our communities and
protecting the long-term future of our business. The situation is
having a fundamental impact on the way people consume our products,
particularly in the away from home channel. We are working closely
with our customers who continue to trade, providing access to the
brands and packs they need at this time, and we are adapting to
focus more on the home channel including the growth in online.
"We are confident about the post-crisis future of our business.
We have strong fundamentals built upon great brands,
routes-to-market, customer relationships and of course great
people. While we take action to respond to the immediate crisis and
provide relief to communities, we are also preparing for how we
enable recovery and then sustained growth. We will accelerate our
planning based on the global consumer insights and experience of
our brand partners like The Coca-Cola Company.
"Before the crisis took hold in our markets, we saw good
momentum in the first quarter, including progress on our
sustainability agenda. Despite the uncertainty that surrounds us
today, our confidence in the future of our business is driving us
to take the right actions to protect our performance, conserve cash
and lay the foundations for recovery, all underpinned by a strong
balance sheet. We are committed to helping society rebuild and
recover, creating sustainable value and a better future for people
and the planet."
1. A unit case equals approximately 5.678 litres or 24 8-ounce servings
2. Fx-neutral
3. Refer to "Note Regarding the Presentation of Alternative
Performance Measures" for further details
4. Adjusted for selling day shift. Reported volume (5.0)%
Q1 HIGHLIGHTS & COVID-19 UPDATE(1)
Q1 Revenue (-4.0%)
-- Comparable volume(2) -4.0% reflecting challenging
comparables, some customer disruption as a result of our planned
pricing strategy & the initial impact of the COVID-19 pandemic
across our markets, partially offset by innovation; Transactions(3)
outpaced volume
-- Revenue per unit case(4) +1.5% benefiting from favourable
price & promotions offset by negative channel & pack mix,
particularly in March, given emerging AFH(5) closures
-- Value share gains across measured channels(6) driven by our Stills portfolio
COVID-19
-- Total volume declines for the COVID-19 impacted weeks to date
(5 weeks ending 17 April 2020) in a range of c.-20% to -40% (AFH:
range of -45% to -85%; Home: range of +5% to -10%) across our
markets
Other
-- Dividend:
FY19 dividend of EUR1.24 per share fully paid during 2019
The Board continues to recognise the importance of cash returns
to shareholders. However, given the significant uncertainty of the
effect of the ongoing pandemic, the Board has determined to defer
consideration of its 2020 H1 dividend until visibility has
improved, thus preserving flexibility until a better, informed
decision as to appropriate quantum can be made
-- Share buyback: repurchased c.EUR130m (3m shares) of the
EUR1bn programme announced Feb 2020 (suspended until further notice
as previously announced)
-- Successfully issued EUR600m senior unsecured note due 2026
-- Sweden became first 100% recycled PET market, eliminating the
use of 3,500 tons of virgin plastic per year. Launched 2020
long-term incentive plan incorporating inaugural GHG(7) reduction
target
1. Refer to "Note Regarding the Presentation of Alternative
Performance Measures" for further details
2. Adjusted for selling day shift; Reported volume (5.0)%
3. Adjusted for selling day shift; Defined as the serving
container that is ultimately used directly by the consumer. It can
be a standalone container or one part of a multipack
4. Fx-neutral
5. Away from home
6. Source: Nielsen YTD to w/e GB 28.03.20; DE Monthly SSD
29.03.20 & NCB 23.02.20; ES PT FR BE NL SE NO 29.03.20
7. GHG = greenhouse gas;15% of the 2020 long-term incentive
award will be based on the extent to which CCEP reduces its
greenhouse gas emissions over the next three years
COVID-19 IMPACT
Trading impacts:
-- Ongoing volatility in both channels (AFH & Home) given uncertainty
-- Sharp declines in AFH volumes with c.75% of the channel
impacted by lockdown measures (which vary by market)
-- Some initial stockpiling in Home has since subsided
-- Immediate consumption & small priority packs
significantly impacted (affects both AFH & Home channels);
Future consumption packs performing better, though varies by
market
-- Total volume decline for the COVID-19 impacted weeks to date
(5 weeks ending 17 April 2020) in a range of c.-20% to -40% (AFH:
range of -45% to -85%; Home: range of +5% to -10%) across our
markets
CCEP response to crisis: Respond, Recover, Sustain
Our rapid response has prioritised our people, customers &
communities whilst protecting our business for the long term.
Measures taken are as follows:
People
-- Implemented comprehensive measures in line with official
guidance from governments & health authorities to keep our
people safe including:
Large scale home working supported by up-weighted digital
support
Additional safety measures to support those in the field or at
manufacturing sites
-- Emotional & mental well-being support of our people through this stressful & uncertain time
-- Motivating & providing workplace security for our people
-- Regular internal communications across the business
Customers
-- Working closely with our suppliers, partners & KO(1) to
ensure we do everything we can to best serve our customers
including:
Continued build of finished goods & raw material
inventory
Shifting production resource to higher demand channels by
prioritising core SKUs(2) , reflecting the shift in brand &
pack mix (e.g. more multipack cans & large PET)
-- Developing comprehensive contingency plans to ensure our
products continue to be available despite any logistical
challenges
Communities
-- Working closely with KO(1) to provide substantial financial
aid through the Red Cross & other local NGOs
-- Donated over 400k unit cases of product so far to foodbanks,
medical & key workers & giving access to our logistics
resources for relief work
-- Volunteering policy to encourage in-community support where it is safe to do so
1. Stock market ticker for The Coca-Cola Company
2. Stock keeping unit
COVID-19 IMPACT (Continued)
Business
Governance
-- Increased cadence of reviews with country leadership teams teams, Board of Directors & KO(1)
-- Incorporating learnings from across the Coca-Cola system
-- Modelling multiple scenarios & risk analyses to regularly stress test our financials
Costs
-- Reducing discretionary spend in areas such as trade
marketing, promotions, merchandising, incentives, seasonal labour,
travel & meetings - amounting to a potential FY20 reduction of
c.EUR200-250m
-- Delaying c.EUR200m of discretionary capital expenditure,
resulting in FY20 total capex of c.EUR350m(2)
Finance
-- Withdrawal of FY20 guidance given significant uncertainty as previously announced
To keep CCEP well positioned given its current financial
position & strong balance sheet (net debt/adjusted EBITDA of
2.7 times(3) ) & to preserve maximum flexibility during this
period:
-- Suspension of share buyback programme until further notice as
previously announced (to date repurchased
-- c.EUR130m of EUR1bn programme announced Feb 2020)
-- FY19 dividend fully paid in 2019; Deferral of 2020 HY1
dividend until visibility has improved
-- Issued 6 year EUR600m bond at 1.75% coupon to add to an
already balanced mix of long-term maturities (with no covenants on
debt or facilities)
-- Received confirmation of eligibility to access UK Government
COVID Corporate Financing Facility (CCFF)
CCEP has strong cash generation & solid position on
liquidity given the following:
-- EUR0.9bn cash & cash equivalents(4) ; EUR1.5bn
sustainability linked committed undrawn RCF(5) ; EUR1.5bn
multi-currency commercial paper programme (EUR0.6bn issued(6) );
unutilised CCFF(7)
1. Stock market ticker for The Coca-Cola Company
2. Excluding payments of principal on lease obligations
3. As at 31 December 2019; Refer to "Note Regarding the
Presentation of Alternative Performance Measures" for further
details
4. As at 27 March 2020
5. RCF = Revolving Credit Facility; Undrawn as at 24 April 2020;
EUR0.2bn drawn as at 27 March 2020
6. As at 24 April 2020; EUR0.5bn issued as at 27 March 2020
7. As at 24 April 2020
FIRST-QUARTER REVENUE PERFORMANCE BY GEOGRAPHY
Unaudited, changes versus Q1 2019
REVENUE REVENUE % FX-NEUTRAL
CHANGE REVENUE %
CHANGE
==================================== ========== ========== ===========
Great Britain EUR495m (6.5)% (7.5)%
France (France & Monaco) EUR413m (6.5)% (6.5)%
Germany EUR517m (2.0)% (2.0)%
Iberia (Spain, Portugal & Andorra) EUR529m (1.5)% (1.5)%
Northern Europe(1) EUR524m (4.0)% (2.5)%
Total EUR2,478m (4.0)% (4.0)%
------------------------------------ ---------- ---------- -----------
1. Belgium, Luxembourg, Netherlands, Norway, Sweden &
Iceland
Great Britain
-- Volumes impacted by strong comparables (pre-Brexit build in
Q1 2019); the proactive delisting of Kia Ora; the impact of
COVID-19 on the AFH channel in March. Coca-Cola Zero Sugar,
Schweppes sparkling, Oasis & Monster all outperformed
-- Revenue/UC(1) supported by category mix (primarily the growth
in Monster & the delisting of Kia Ora) but negatively impacted
by the outperformance of the Home channel, particularly in March
(e.g. cans +9.5% in March)
France
-- Volumes impacted by some initial customer disruption in the
Home channel & the impact of COVID-19 on the AFH channel in
March. Coca-Cola Zero Sugar, Fuze Tea, Monster & Tropico all
outperformed
-- Revenue/UC(1) negatively impacted by channel mix in March,
partially offset by the outperformance of priority small packs(2)
(e.g. small cans +17.0% YTD driven by Coca-Cola light taste
250ml)
Germany
-- Volumes impacted by some initial customer disruption in the
Home channel & the impact of COVID-19 on the AFH channel in
March, partially offset by the additional border trade business.
Strong growth in Fuze Tea helped by the launch of a 1.25L
discounter pack. Coca-Cola Zero Sugar, Coca-Cola Energy &
Powerade also outperformed
-- Revenue/UC(1) growth supported by positive price, pack &
channel mix (e.g. outperformance of AFH, launch of 1L glass bottle
& additional border trade)
Iberia
-- Solid volume growth in January & February more than
offset by a decline in March given the impact of COVID-19 on the
AFH channel. Coca-Cola(TM) , Monster, Aquarius & Appletiser
outperformed
-- Revenue/UC(1) negatively impacted by channel mix (e.g. the
COVID-19 closure of HoReCa(3) outlets) & pack mix (e.g. the
outperformance of large PET)
Northern Europe
-- Outperformance of Belux (-1.0%) & Sweden(4) (-1.5%)
-- Volumes supported by growth in the Home channel but more than
offset by a decline in March given the impact of COVID-19 on the
AFH channel. Coca-Cola Zero Sugar, Monster, Fuze Tea & Tropico
outperformed
-- Revenue/UC(1) growth negatively impacted by channel &
pack mix (e.g. large PET +1.0%)
1. Revenue per unit case
2. PET & Glass < 1litre; Cans <33cl
3. HoReCa = Hotels, Restaurants & Cafes
4. Fx-neutral revenue change vs PY
Note: changes versus Q1 2019; comparable volumes
FIRST-QUARTER VOLUME PERFORMANCE BY CATEGORY
Comparable volumes, changes versus Q1 2019
VOLUME % CHANGE
======================================== ================
Sparkling (3.0)%
Coca-Cola(TM) (2.5)%
Flavours, Mixers & Energy (4.0)%
Stills (9.0)%
Hydration (12.0)%
RTD Tea, RTD Coffee, Juices & Other(1) (4.5)%
Total (4.0)%
----------------------------------------- ----------------
Coca-Cola (TM)
-- Transactions(2) -2.0%, ahead of volume
-- Classic -3.5%; Lights -1.0% with solid growth in Zero Sugar
+5.5% offset by a decline in Diet Coke/Coca-Cola light taste
-- Launched new lights flavours e.g. Diet Coke Sublime Lime & Coca-Cola light taste Goji Berry
Flavours, Mixers & Energy
-- Fanta -6.0% driven by softness in France & Germany in particular
-- Energy +12.0% with strong performance of Monster Mango Loco
& Pacific Punch ranges. New Coca-Cola Energy variants now
available in all markets
-- Appletiser +2.0% driven by recent launch in Iberia
-- Schweppes +0.5% in GB & Royal Bliss +9.0% driven by
distribution gains in Spain pre COVID-19. Coca-Cola Signature
Mixers also performed well
Hydration
-- Reflecting fewer low value promotions & the impact of
COVID-19 on the AFH channel significantly impacting water sales
-- Encouraging initial customer reaction to Aquarius Enhanced Water
-- Isotonic drinks +1.0% led by growth of Aquarius in Iberia & Powerade in Germany
RTD Tea, RTD Coffee, Juices & Other (1)
-- Solid share gains in the RTD tea category driven by Fuze Tea
+12.0%, including launch of 1.25L discounter pack in Germany
-- Decline in juices due to the proactive delisting of our squash brand, Kia Ora in GB
-- Tropico continued to grow strongly in France & Belux
-- Costa Coffee RTD growing distribution in GB. Monster Espresso also performed well
1. RTD refers to Ready To Drink
2. Adjusted for selling day shift; Defined as the serving
container that is ultimately used directly by the consumer. It can
be a standalone container or one part of a multipack
CONFERENCE CALL (with presentation)
-- 28 April 2020 at 12:00 BST, 13:00 CEST & 7:00 a.m. EDT; accessible via www.cocacolaep.com
-- Replay & transcript will be available at www.cocacolaep.com as soon as possible
FINANCIAL CALAR
-- First-half 2020 results: 5 August 2020
-- Financial calendar available here: https://ir.cocacolaep.com/financial-calendar/
CONTACTS
Investor Relations
Sarah Willett Claire Michael Joe Collins
+44 7970 145 218 +44 7528 251 033 +44 7583 903 560
Media Relations
Shanna Wendt Nick Carter
+44 7976 595 168 +44 7976 595 275
About CCEP
Coca-Cola European Partners plc is a leading consumer goods
company in Western Europe, making, selling & distributing an
extensive range of non-alcoholic ready to drink beverages & is
the world's largest 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 & Sweden. The Company is
listed on Euronext Amsterdam, the New York Stock Exchange, London
Stock Exchange & on the Spanish Stock Exchanges, trading under
the symbol CCEP.
For more information about CCEP, please visit www.cocacolaep.com
& follow CCEP on Twitter at @CocaColaEP.
Forward-looking statements
This document contains 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 (together
"CCEP" or the "Group"). Generally, the words "believe," "expect,"
"intend," "estimate," "anticipate," "project," "plan," "seek,"
"may," "could," "would," "should," "might," "will," "forecast,"
"outlook," "guidance," "possible," "potential," "predict,"
"objective" 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 include but are not limited to those set forth in the
"Risk Factors" section of the 2019 Integrated Report / Annual
Report on Form 20-F, including the statements under the following
headings: Packaging (such as marine litter); Perceived health
impacts of our beverages and ingredients, and changing consumer
preferences (such as sugar alternatives); Legal, regulatory and tax
change (such as the development of regulations regarding packaging,
taxes and deposit return schemes); Market (such as disruption due
to customer negotiations, customer consolidation and route to
market); Cyber and social engineering attacks; Competitiveness and
transformation; Climate change and water (such as net zero emission
legislation and regulation, and resource scarcity); Economic and
political conditions (such as continuing developments in relation
to the UK's exit from the EU); The relationship with TCCC and other
franchisors; Product quality; and Other risks, such as widespread
outbreaks of infectious disease including the adverse impact that
the COVID-19 pandemic and related social distancing measures
implemented in many of our markets may have on our financial
results, operations, workforce and demand for our products. In
particular, the extent to which the ongoing COVID-19 pandemic and
measures taken in response impact our business, operations and
financial results will depend on future developments, which are
highly uncertain and cannot be predicted.
Due to these risks, 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 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.
Note Regarding the Presentation of Alternative Performance
Measures
We use certain alternative performance measures (non-GAAP
performance measures) to make financial, operating and planning
decisions and to evaluate and report performance. We believe these
measures provide useful information to investors and as such, where
clearly identified, we have included certain alternative
performance measures in this document to allow investors to better
analyse our business performance and allow for greater
comparability. To do so, we have excluded items affecting the
comparability of period over period financial performance as
described below. The alternative performance measures included
herein should be read in conjunction with and do not replace the
directly reconcilable GAAP measure. For further information, please
refer to pages 26-33 of the 2019 Integrated Report / Annual Report
on Form 20-F.
For purposes of this document, the following terms are
defined:
"As reported" are results extracted from our consolidated
financial statements.
"Comparable" is defined as results excluding items impacting
comparability, such as restructuring charges, out of period
mark-to-market impact of hedges and net tax items relating to rate
and law changes. Comparable volume is also adjusted for selling
days.
"Fx-neutral" is defined as comparable results excluding the
impact of foreign exchange rate changes. Foreign exchange impact is
calculated by recasting current year results at prior year exchange
rates.
"Capex" or "Capital expenditures" is defined as purchases of
property, plant and equipment and capitalised software, plus
payments of principal on lease obligations, less proceeds from
disposals of property, plant and equipment. Capex is used as a
measure to ensure that cash spending on capital investment is in
line with the Group's overall strategy for the use of cash.
"Free cash flow" is defined as net cash flows from operating
activities less capital expenditures (as defined above) and
interest paid. Free cash flow is used as a measure of the Group's
cash generation from operating activities, taking into account
investments in property, plant and equipment and non-discretionary
lease and interest payments. Free cash flow is not intended to
represent residual cash flow available for discretionary
expenditures.
"Adjusted EBITDA" is calculated as Earnings Before Interest,
Tax, Depreciation and Amortisation (EBITDA), after adding back
items impacting the comparability of year over year financial
performance. Adjusted EBITDA does not reflect cash expenditures, or
future requirements for capital expenditures or contractual
commitments. Further, adjusted EBITDA does not reflect changes in,
or cash requirements for, working capital needs, and although
depreciation and amortisation are non-cash charges, the assets
being depreciated and amortised are likely to be replaced in the
future and adjusted EBITDA does not reflect cash requirements for
such replacements.
"Net debt" is defined as the net of cash and cash equivalents
less currency adjusted borrowing. We believe that reporting net
debt is useful as it reflects a metric used by the Group to assess
cash management and leverage. In addition, the ratio of net debt to
adjusted EBITDA is used by investors, analysts and credit rating
agencies to analyse our operating performance in the context of
targeted financial leverage.
"ROIC" is defined as comparable operating profit after tax
divided by the average of opening and closing invested capital for
the year. Invested capital is calculated as the addition of
borrowings and equity less cash and cash equivalents. ROIC is used
as a measure of capital efficiency and reflects how well the Group
generates comparable operating profit relative to the capital
invested in the business.
"Dividend Payout Ratio" is defined as dividends as a proportion
of comparable profit after tax.
Additionally, within this report, we provide certain
forward-looking non-GAAP financial Information, which management
uses for planning and measuring performance. We are not able to
reconcile forward-looking non-GAAP measures to reported measures
without unreasonable efforts because it is not possible to predict
with a reasonable degree of certainty the actual impact or exact
timing of items that may impact comparability throughout the
year.
Unless otherwise stated, percent amounts are rounded to the
nearest 0.5%.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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