TIDMCCEP
RNS Number : 1265D
Coca-Cola European Partners plc
26 October 2020
LONDON, 25 October 2020
COCA-COLA EUROPEAN PARTNERS
Trading Update for the Third-Quarter ended 25 September 2020
& FY20 Dividend Declaration
Resilient and agile performance despite challenging backdrop
however outlook remains uncertain
CHANGE VS 2019
===========================================
REVENUE VOLUME REVENUE COMPARABLE REVENUE FX-NEUTRAL REVENUE
(UNIT PER UNIT VOLUME(3) PER UNIT REVENUE(3)
CASES(1) CASE(2) CASE(2)
)
========= ========= ========= ========= ========== ========= =========== =======
Q3 2020 EUR3,179m 665m EUR4.80 (4.0)% 1.0% (3.0)% (3.0)%
YTD 2020 EUR8,016m 1,705m EUR4.73 (10.0)%(4) (1.0)% (11.5)% (12.0)%
DAMIAN GAMMELL, CHIEF EXECUTIVE OFFICER, SAID:
"Today, we are very excited to announce a non-binding proposal
to acquire Coca-Cola Amatil Limited (CCL), one of the largest
bottlers and distributors of ready to drink beverages and coffee in
the Asia Pacific region. This is a unique and tremendous
opportunity to combine two of the world's best bottlers, creating a
broader and more balanced geographic footprint, including one of
the most attractive and populous emerging markets, doubling our
consumer reach to 600 million. This larger platform would enable us
to scale up even faster than before and solidify our position as
the largest Coca-Cola bottler by revenue, further strengthening our
strategic partnership with The Coca-Cola Company. This, combined
with today's dividend announcement, reflects our confidence in the
future and our ultimate goal of driving increased shareholder
value.
"We're also providing an update on our third-quarter
performance. We continue to demonstrate the resilience of our
business and our ability to operate with agility in such a rapidly
changing environment. I am proud of how our colleagues have
continued to support our customers, consumers and communities. Our
performance over the summer months was encouraging. Volumes
significantly improved compared to the second-quarter of the year,
mirroring outlet re-openings in the away from home channel, solid
demand in the home channel, where we continued to take share, as
well as favourable weather across most markets. While the
reintroduction of restrictions and local lockdowns has resulted in
continued uncertainty about the duration and impact of the
pandemic, we continue to believe that the second quarter will be
the most impacted.
"In the meantime, the meaningful actions that we talked to
earlier in the year continue to protect our performance and we
remain confident that we will emerge from this crisis as a stronger
business. We continue to adapt to changes in consumer behaviour by
focusing on the core brands that our consumers love, leveraging and
advancing our digital capabilities, and concentrating even more on
the home channel, particularly in the run up to the key Christmas
trading period."
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 (10.5)%
HIGHLIGHTS(1)
Q3 Revenue (-3.0%) (2)
-- NARTD value share gains across measured channels(3) both in
store (YTD +0.3pts) & online(4) (YTD +1.4pts)
-- Comparable volume -4.0%(5) driven by the continued impact of
the COVID-19 pandemic across our markets
Improvement in away from home (AFH) volumes (-17.5%) vs Q2
(-50%) reflecting the easing of lockdown measures but with some
outlets still closed or operating at reduced capacity
Solid Home channel volumes (+6.0%) vs Q2 (-3.5%) driven by the
outperformance of future consumption (FC) packs (e.g. more large
PET & multipack cans) and the resolution of a recent customer
negotiation, partially offset by weaker IC trends
Improvement in August and September total volumes due to the
reopening of AFH outlets and the improvement in the Home channel,
as well as favourable weather (July -10%; August +1%; September
-2%)
-- Revenue per unit case +1.0%(2,6) benefitting from an
improvement in AFH volumes, fewer promotions in the home channel,
as well as favourable brand mix
FY20
-- We continue to be unable to provide FY20 financial guidance given COVID-19 uncertainty
-- On track to deliver previously announced measures to protect our business:
Opex reduction: reducing discretionary spend in areas such as
trade marketing, promotions, merchandising, incentives & travel
- amounting to a potential FY20 reduction of c.EUR200-250m
Capital expenditure(1) : FY20 total capex(1) of c.EUR350m(7)
Dividend
-- Declaring 2020 FY dividend per share of EUR0.85, representing
a dividend payout ratio of c.50% based on current consensus
expectations(8) for comparable diluted earnings per share
Proposal to acquire Coca-Cola Amatil Limited (CCL):
-- Separate announcement regarding a non-binding proposal to
acquire CCL, one of the largest bottlers and distributors of
ready-to-drink non-alcoholic and alcoholic beverages and coffee in
the Asia Pacific region. See separate release on the Investors
section of our website for more detail (
https://ir.cocacolaep.com/financial-reports-and-results/financial-releases
)
Other
-- Launched Costa Proud to Serve & Smart Café machines in Berlin & Cologne in Germany
-- Awarded AAA rating by MSCI ESG Research for the fifth year in a row
-- Netherlands & Norway will transition to 100% rPET by
2021. Great Britain will fully transition to 50% rPET by the end of
2020
1. Refer to "Note Regarding the Presentation of Alternative
Performance Measures" for further details
2. Comparable & FX-neutral
3. NARTD (non-alcoholic ready to drink) Nielsen Data to w/e IS
06.09.20, GB 26.09.20, ES PT DE FR BE NL SE & NO 27.09.20
4. NARTD Nielsen Data to w/e GB 26.09.20, ES FR NL 27.09.20, GB - Retailer EPOS
5. No selling day shift in Q3, reported YTD volume -10.5%
6. A unit case equals approximately 5.678 litres or 24 8-ounce servings
7. Excluding payments of principal on lease obligations
8. Latest Vuma FY20 consensus for comparable diluted EPS as of
10th September 2020. CCEP does not endorse, confirm or express a
view on the consensus estimates, see
https://www.cocacolaep.com/investors/analyst-estimates-and-coverage/consensus-estimates/
THIRD-QUARTER & YEAR-TO-DATE REVENUE PERFORMANCE BY
GEOGRAPHY
Unaudited, changes versus 2019
Q3 YTD
================================ ================================
REVENUE REVENUE FX-NEUTRAL REVENUE REVENUE FX-NEUTRAL
% CHANGE REVENUE % CHANGE REVENUE
% CHANGE % CHANGE
======================== ========= ========= ========== ========= ========= ==========
Great Britain EUR612m (2.0)% (2.0)% EUR1,638m (8.0)% (7.5)%
France (France &
Monaco) EUR500m 6.0% 6.0% EUR1,308m (9.0)% (9.0)%
Germany EUR670m 3.0% 3.0% EUR1,684m (7.5)% (7.5)%
Iberia (Spain, Portugal
& Andorra) EUR739m (16.0)% (16.0)% EUR1,656m (23.5)% (23.5)%
Northern Europe(1) EUR658m -% 1.5% EUR1,730m (8.5)% (6.5)%
------------------------ --------- --------- ---------- --------- --------- ----------
Total EUR3,179m (3.0)% (3.0)% EUR8,016m (12.0)% (11.5)%
------------------------ --------- --------- ---------- --------- --------- ----------
1. Belgium, Luxembourg, Netherlands, Norway, Sweden &
Iceland
Great Britain
-- Adverse away from home (AFH) volumes in Q3 given reduced
capacity in HoReCa(1) outlets, albeit an improvement vs. Q2. This
was partially offset by strong growth in the home channel led by
future consumption (FC) (e.g. large PET +5.0% & multipack cans
+23% in Q3). Coca-Cola Zero Sugar, Dr Pepper, Lilt, Monster &
Schweppes all grew volumes during Q3
-- Revenue/UC(2) negatively impacted by the outperformance of
the home channel & in particular the growth in FC packs.
Immediate consumption (IC) weakness in both channels also impeded
revenue/UC
France
-- Q3 volumes driven by strong growth in the Home channel
following the resolution of recent customer negotiations as well as
higher footfall as lockdown restrictions were lifted. AFH volumes
also improved as outlets reopened and domestic tourism increased
aided by favourable weather, particularly in August. Coca-Cola
Classic, Coca-Cola Zero Sugar & Monster all outperformed
-- Q3 Revenue/UC(2) benefitted from stronger AFH volumes,
particularly in August, as well as lower promotions in the Home
channel.
Germany
-- Q3 volumes driven by favourable weather, restocking in the
Home channel following the resolution of recent customer
negotiations & the additional border trade business. This was
partially offset by AFH weakness due to reduced capacity and outlet
closures, albeit an improvement vs Q2. Coca-Cola Classic, Coca-Cola
Zero Sugar, Fanta & Monster outperformed while Vio &
Apollinaris underperformed given the brands' exposure to AFH &
IC
-- Q3 Revenue/UC(2) driven by the growth in cans due to the
additional border trade business as well as lower promotions in the
home channel, offset by adverse channel mix given AFH outlet
closures
Iberia
-- Q3 volumes, whilst improved vs Q2, were still impacted by
significant exposure to the AFH channel & weaker tourism
trends, particularly in Spain where we over-index in exposure to
HoReCa(1) . The home channel also suffered from weakness in the
cash & carry channel(3) . Coca-Cola Zero Sugar & Monster
outperformed
-- Revenue/UC(2) significantly impacted by channel mix given the
closure of HoReCa(1) outlets in addition to negative pack mix (e.g.
glass -34.0% in Q3)
Northern Europe
-- Q3 growth in the home channel led by Norway and the
Netherlands and helped by favourable weather; offset by negative
AFH volumes reflecting reduced outlet capacity (varied by market).
Coca-Cola Zero Sugar, Monster & Burn all grew volumes during
Q3
-- Q3 Revenue/UC(2) growth positively impacted by country, brand
& pack mix (e.g. can volumes +8.5%, post-mix -16.0% in Q3)
1. HoReCa = Hotels, Restaurants & Cafes
2. Revenue per Unit Case
3. Cash & Carry included in home channel for Iberia (12.5%
of 2019 Iberia volume), elsewhere included in AFH channel
Note: All values are unaudited, changes versus equivalent 2019
period; comparable volumes
THIRD-QUARTER & YEAR-TO-DATE VOLUME PERFORMANCE BY
CATEGORY
Comparable volumes, changes versus 2019
VOLUME % CHANGE
Q3 YTD(1)
======================================= ======== =======
Sparkling (0.5)% (7.5)%
Coca-Cola(TM) 0.5% (6.5)%
Flavours, Mixers & Energy (3.5)% (10.0)%
Stills (20.5)% (27.0)%
Hydration (27.5)% (32.5)%
RTD Tea, RTD Coffee, Juices & Other(2) (9.0)% (17.5)%
---------------------------------------- -------- -------
Total (4.0)% (10.0)%
---------------------------------------- -------- -------
Coca-Cola (TM)
-- Q3 transactions -1.5%(3) , reflecting a decline in small
glass & PET, partially offset by the growth in cans & large
PET
-- Q3 Classic -2.0%; Lights +3.5%, reflecting the continued
solid performance of Coca-Cola Zero Sugar (+8.0%)
-- France and Germany outperformed given favourable weather
trends as well as the resolution of a recent customer
negotiation
Flavours, Mixers & Energy
-- Q3 Fanta -6.5% driven by the impact of COVID-19 on away from
home (AFH), offset by modest growth in Home
-- Q3 Energy +15.0% reflecting growth in both channels led by Monster (+18.5%)
-- Q3 Schweppes sparkling +5.0% in GB reflecting the growth in
mixers in the home channel as AFH occasions switched into the home.
Schweppes mixers gaining YTD value share in GB(4)
Hydration
-- Continued soft performance in Q3 reflecting the impact of
COVID-19 & its exposure to instant consumption (IC) across both
channels
RTD Tea, RTD Coffee, Juices & Other (1)
-- Q3 Fuze Tea -8.0% reflecting soft IC performance due to reduced on-the-go consumption
-- Costa Coffee RTD gaining YTD value share in GB(5)
-- Q3 Juice drinks -6.0% reflecting exposure to on-the-go
occasions, offset by solid growth in Capri-Sun in France
1. Adjusted for selling day shift
2. RTD refers to Ready To Drink
3. 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. Nielsen Data YTD to w/e GB 27.09.2020
5. Nielsen Data YTD to w/e GB 3.10.20
Note: All values are unaudited, changes versus equivalent 2019
period; comparable volumes
CONFERENCE CALL (with presentation)
-- 25 October 2020 at 22:00 GMT / 23:00 CET / 6:00pm ES T ; accessible via www.cocacolaep.com
-- Replay & transcript will be available at www.cocacolaep.com as soon as possible
DIVIDS
-- The CCEP Board of Directors declared a FY20 interim dividend of EUR0.85 per share
-- The interim dividend is payable 1 December 2020 to those
shareholders of record on 17 November 2020
-- CCEP will pay the FY20 interim dividend in euros to holders
of shares on Euronext Amsterdam, the Spanish Stock Exchanges and
London Stock Exchange
-- 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 26 October 2020. This translated
amount will be posted on our website here :
https://ir.cocacolaep.com/shareholder-information-and-tools/dividends/
FINANCIAL CALAR
-- Preliminary unaudited full-year 2020 results: 11 February 2021
-- Financial calendar available here: https://ir.cocacolaep.com/financial-calendar/
OTHER
-- Pleased to announce the appointment of BNP Paribas as corporate brokers with immediate effect
CONTACTS
Investor Relations
Sarah Willett Claire Michael Joe Collins
+44 7970 145 218 +44 7528 251 033 +44 7583 903 560
Media Relations
Simon Evan (Portland Communications)
+44 7812 590 682
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"), CCEP's proposed acquisition (the "Acquisition") of
Coca-Cola Amatil Limited and its subsidiaries (together "CCL") and
the integration of CCL into CCEP. 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 and
CCL's historical experience and present expectations or
projections, including with respect to the Acquisition. 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:
1. those set forth in the "Risk Factors" section of CCEP's 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 Red 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, and
any associated economic downturn, may have on our financial
results, operations, workforce and demand for our products;
2. those set forth in the "Principal Risks" section of CCEP's
2019 Integrated Report / Annual Report on Form 20-F, as updated in
CCEP's Results for the six months ended 26 June 2020 & COVID-19
update and including principal risks under the additional headings:
Business continuity; People; and Stakeholders; and
3. risks and uncertainties relating to the Acquisition,
including the risk that the businesses will not be integrated
successfully or such integration may be more difficult,
time-consuming or costly than expected, which could result in
additional demands on CCEP's resources, systems, procedures and
controls, disruption of its ongoing business and diversion of
management's attention from other business concerns; the
possibility that certain assumptions with respect to CCL or the
Acquisition could prove to be inaccurate; the failure to receive,
delays in the receipt of, or unacceptable or burdensome conditions
imposed in connection with, all required regulatory approvals,
shareholder approvals and the satisfaction of closing conditions to
the Acquisition; ability to raise financing; the possibility that
CCEP and CCL fail to agree upon a scheme implementation agreement;
the potential that the Acquisition may involve unexpected
liabilities for which there is no indemnity; the potential failure
to retain key employees of CCEP and CCL as a result of the proposed
Acquisition or during integration of the businesses and disruptions
resulting from the proposed Acquisition, making it more difficult
to maintain business relationships; the potential if the
Acquisition is not completed in a timely manner or at all for (i)
negative reaction from financial markets, customers, regulators,
employees and other stakeholders, (ii) loss of time spent on an
unsuccessful Acquisition, and (iii) litigation related to the
Acquisition.
The full extent to which the COVID-19 pandemic will negatively
affect CCEP and/or CCL and the results of their operations,
financial condition and cash flows will depend on future
developments that are highly uncertain and cannot be predicted,
including the scope and duration of the pandemic and actions taken
by governmental authorities and other third parties in response to
the pandemic.
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
forward-looking statements (including those issued by CCL prior to
the Acquisition). These risks may also adversely affect CCEP's
share price. Additional risks that may impact CCEP's future
financial condition and performance are identified in filings with
the United States Securities and Exchange Commission ("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. Furthermore, 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
public statements (whether prior or subsequent to the Acquisition)
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 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 document, 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 year.
Unless otherwise stated, percent amounts are rounded to the
nearest 0.5%.
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