Shares in Coca-Cola HBC (CCH) improved 11.5p to £21.49 on Wednesday as the soft drinks bottler reported forecast-beating third quarter sales.
‘Strongly improved trading’ for the quarter was driven by a recovery in the out-of-home channel, accounting for just over 40% of the London and Athens-listed firm’s sales, and by further growth in the at-home channel as markets continued to re-open following local and national lockdowns.
EMERGING MARKETS FIZZ
An internationally-diversified drinks business, serving consumers across 28 countries on 3 continents, Coca-Cola HBC is a strategic bottling partner of 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.
During the third quarter, Coca-Cola HBC’s emerging market segment proved the best performer on a like-for-like basis, boosted by growth in two of the beverages giant’s five largest markets, namely Nigeria and Russia.
Hot on its heels was the developing market segment where half of the markets returned to volume growth in the quarter.
The group’s established market segment saw the fastest recovery of volumes between the second and third quarter; however, as more countries in the segment earn a higher proportion of their revenues from the out-of-home channel and are exposed to international tourism, volumes still declined in the quarter.
WEATHERING THE STORM
In today’s well-received update, Coca-Cola HBC increased its previous €100 million full year cost savings target by €20 million.
The drinks giant also stressed its strong balance sheet and ‘adequate liquidity position’, combined with ‘leading market shares and excellent customer relationships and route to market’, would allow it to ‘weather this crisis and put us, our customers, and our partners in a strong position to capitalise on the opportunities we are seeing.’
Encouraged by the strong improvement in trading, chief executive Zoran Bogdanovic insisted the group’s performance ‘demonstrates our ability to adapt to the fast-changing market environment. Looking into Q4, as we cycle a very strong volume comparator and see the renewal of lockdown restrictions in some markets, we are encouraged by the consistent growth we have seen in the at-home channel, which will be especially important for this final quarter.’
Combined with the benefits from cost savings, this should ‘allow us to continue to deliver good profitability in a severely disrupted year.’
