Coca-Cola Europacific Partners PLC has tentatively agreed to buy a soft drinks bottler in the Philippines, together with a local partner, from US brand owner Coca-Cola Co, the London-listed company said on Wednesday.

Coca-Cola EP also reported a strong set of half-year results, with profit up by nearly a quarter.

The Uxbridge, England-based company is the bottling partner for Coca-Cola in 29 countries. In 2021, Coca-Cola EP, which already had covered the UK, France, Germany, Spain and Portugal, the Benelux region, and Sweden and Norway, bought Sydney-based Coca-Cola Amatil from its independent shareholders and Coca-Cola. This brought in Australia, New Zealand, Indonesia, Papua New Guinea and Fiji.

Coca-Cola EP said that, together with Aboitiz Equity Ventures Inc, it has signed a letter of intent to buy Coca-Cola Beverages Philippines Inc from Coca-Cola at an enterprise value of $1.8 billion on a debt-free, cash-free basis.

The price tag would be paid in cash and would have a ‘modest impact’ on Coca-Cola EP’s debt, putting a leverage target that the company had set for itself back to 2024 from the end of 2023.

CCBPI had $90 million in pretax profit in 2022 on revenue of $1.7 billion.

Manila-based Aboitiz Equity Ventures is a conglomerate that operates in food, banking, power, infrastructure, and real estate.

Coca-Cola EP would own 60% of CCBPI and Aboitiz 40%. The company said there is no certainty that the deal will go through, but if it does, it should be completed by the end of 2023.

‘This offers us a great opportunity to acquire an established, well-run business with attractive profitability and growth prospects. This would be a natural next step for CCEP, creating a more diverse footprint within our existing API business segment, support Indonesia’s transformation journey and underpin our strategic mid-term objectives,’ said Chief Executive Officer Damian Gammell.

Turning to its interim results, Coca-Cola EP said pretax profit climbed 23% to €1.10 billion in the six months that ended June 30 from €898 million a year before, on revenue of €8.98 billion, up 8.5% year-on-year from €8.28 billion.

The company sold 1.63 billion unit cases of soft drinks, up 1.0% on a year before. A unit case is about 5.7 litres or 24 eight-ounce servings.

Based on the half-year results, Coca-Cola EP raised its 2023 guidance for revenue, operating profit and free cash flow. It now expects comparable revenue growth of 8% to 9%, improved from 6% to 8% previously. Operating profit is seen growing by 12% to 13%, compared to the 6% to 7% previously guided. It expects at least €1.7 billion in free cash flow, improved from €1.6 billion.

In the first half of the year, operating profit was €1.17 billion, up 21% on a year before or 11% on a comparable basis. Free cash flow was €850 million in the first half.

Coca-Cola EP already has paid a €0.67 per share interim dividend. It reaffirmed a 50% payout ratio for all of 2023.

Coca-Cola EP shares were down 0.2% at €57.40 in London early Wednesday.

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