- Coca-Cola bottling partner reinstates guidance
- Organic sales growth excluding Russia/Ukraine up 25%
- Generates €332.9 million of free cash flow
Soft drinks giant Coca-Cola HBC (CCH) served up strong organic growth during a turbulent half ended 1 July and has reinstated its 2022 guidance in a show of confidence that sent shares in the Coca-Cola bottling partner bubbling 2.3% higher to £20.26.
Although first half results revealed a 34% drop in net profit to €152.9 million due to the costs involved in exiting Russia, Coca-Cola HBC stressed its markets outside of Russia and Ukraine continue to show ‘strong momentum’.
Despite facing macroeconomic and geopolitical uncertainty, the consumer goods goliath with a geographically diversified distribution footprint said it expects to generate positive organic sales growth at the group level this year.
There was also relief as Coca-Cola HBC reinstated guidance for 2022, pulled in March following Russia’s invasion of Ukraine, with comparable earnings before interest and tax (EBIT) expected to be in the range of €740 million-to-€820 million.
FREE CASH FLOW KING
During the half, price increases helped Coca-Cola HBC to mitigate the impact of input cost increases, while the company also wowed investor with news of a 20% (€55.4 million) free cash flow increase to €332.9 million.
Organic revenue excluding Russia and Ukraine fizzed up 25.2% in the half, with volume growth of 12.1%. Coca-Cola HBC booked a €188 million non-cash charge in the half due the restructuring of its Russian business.
The firm stopped taking orders in Russia in March, which meant volumes plunged 46% in the second quarter, and further declines are anticipated in the second half.
Going forward, Coca-Cola HBC expects to have a significantly smaller presence in Russia focused on local brands which will be ‘immediately operationally and financially self-sufficient’.
EXECUTION EXCELLENCE
Chief executive Zoran Bogdanovic commented: ‘We delivered strong performance in the first half as we continued to execute our growth strategy with focus and discipline, including making progress on our sustainability commitments.
‘The quality of our 24/7 brand portfolio, revenue growth management capabilities and execution excellence allowed us to take full advantage of post-pandemic recovery across our markets and to continue to gain significant share.’
Bogdanovic said he was ‘pleased we achieved strong organic growth, balanced between volume and revenue per case. Pricing, mix and cost efficiencies helped to mitigate input cost increases, underpinning successful conversion of revenue growth into profits and cash flow.’
