Bottling company Coca-Cola HBC (CCH) fizzed up 4.3% to £21.20 on Wednesday as the London and Athens-listed firm insisted it was seeing early recovery signs amid lockdown easing measures.
The encouraging outlook accompanied news of a sharp decline in first-half profit as the Covid-19 pandemic took its toll on the internationally-diversified drinks business, which serves consumers across 28 countries on 3 continents.
PLENTY OF BOTTLE
‘Coca-Cola Hellenic Bottling Company’ is a strategic bottling partner of one of our recent Great Ideas picks, The Coca-Cola Company. It purchases concentrate from the Coke brand parent company to convert to finished products and receives funds to help market Coke products.
For the six months ended 26 June 2020, Coca-Cola HBC’s operating profit crashed the best part of 30% to €202.9 million as sales fell 14.7% to €2.83 billion. Despite its enviable geographic diversity, volumes were down 9.2% due to the severity of the lockdowns necessitated by the global pandemic.
This had a ‘significant impact on the out-of-home channel, leading to lower volumes, the vast majority of which came from single-serve package formats, in turn adversely impacting price/mix,’ according to the beverages bottler.
CALLING THE COVID BOTTOM
Yet as hotels, restaurants and cafes in its markets have been gradually reopening, trading has steadily recovered with sequential improvements seen in revenue since April’s steep 36% slump and the sales decline moderating to a mere 5% in July.
‘Our fast, decisive actions ensured that our supply chain was uninterrupted, and our profitability protected during a very challenging Q2,’ explained chief executive Zoran Bogdanovic, who has identified €100 million of cost savings for 2020.
He insisted Coca-Cola HBC is ‘a resilient business, well-positioned to adapt as markets reopen, emerge even stronger and win in the new normal.’
In terms of the outlook, Coca-Cola HBC said ‘the best available evidence suggests that Q2 should have been the trough of performance caused by Covid-19.
‘Our current trading continues to confirm sequential improvement. There is, however, a great deal of uncertainty on the nature, duration, extent and effectiveness of social distancing and other measures as we emerge from the withdrawal of lockdown across our territories.’
