Coca Cola HBC continued to grow on an organic basis in the first half, with a balanced contribution from sales volume and product and price mix.
In particular, net sales revenue increased by 19.4% on an organic basis and by 29.6% on a published basis, reaching 4.2 billion euros. Excluding Russia and Ukraine, net sales growth was 25.2% on an organic basis, while sales volume increased 12.1%.
Net sales revenue per case increased 14.0% on an organic basis, benefiting from pricing policy and targeted actions to improve mix, further boosted by a recovery in out-of-home consumption.
Broad-based volume growth momentum is maintained, excluding Russia and Ukraine, driven primarily by the company’s strategic priorities. The integration of Egypt is progressing well, adding 7 percentage points to net revenue growth on a reported basis.
There were further increases in market share in terms of value and volume of ready-to-drink non-alcoholic beverages and carbonated beverages.
Comparable operating profit on an organic basis increased by 23.0% to €462.5 million, with profit margins increasing by 30 basis points on an organic basis to 11%, benefiting from pricing policy, improved mix and effective cost management.
Qualitative growth in net sales underpinned the underlying earnings expansion, while operating expenses as a percentage of net sales improved, driven by operating leverage and cost savings. Marketing spend, excluding Russia and Ukraine, increased 9%.
The company’s comparable net profits amounted to 316.9 million euros compared to 235.6 million euros in the corresponding period of the previous year, showing an increase of 34.5%.
Net cash flow increased by €55.4 million to €332.9 million.
Commenting on the half-year figures, the company’s CEO, Mr. Zoran Bogdanovic, emphasized: “We achieved a strong performance in the first half as we continued to implement our growth strategy with focus and discipline, making progress on our sustainability commitments. I would like to thank our people for their outstanding contributions on a daily basis.I am also particularly grateful for our strong partnership with customers and suppliers during this volatile period.
The quality of our 24/7 consumer product portfolio, our ability to manage net revenue growth and the excellent execution of our growth strategy have allowed us to take full advantage of the post-pandemic recovery in all our markets and continue to gain significant market share . I am pleased that we achieved strong organic growth, with a balanced contribution from sales volume and revenue per case. Our pricing policy, mix and cost optimization actions helped us offset raw material cost increases, ensuring the successful translation of net sales growth into earnings and liquidity.
Our consistent investments over the past several years in high-performing opportunities, our prioritized capabilities, and our capacity drive growth today. We will continue targeted investments aimed at growth.
We are confident that the close cooperation with our customers, our strong portfolio as well as the capabilities of our people will allow us to continue to create value even in the midst of a period of macroeconomic and geopolitical uncertainty. We are revising our estimates for 2022 and expect comparable operating profit to be in the range of €740m to €820m.
Russia weighs on emerging markets
The company showed strong momentum in developed and developing markets, but the emerging market picture was affected by declines in Russia. Particularly:
Developed Markets: Net sales revenue increased 19.1% on an organic basis, with well-balanced expansion in volume and revenue per case. Operating profit increased 26.5% on an organic basis, while profit margins increased 60 basis points.
Emerging Markets: Net sales revenue increased 33.6% on an organic basis, driven primarily by significant market share growth. Operating profits increased 63.8% on an organic basis, while margins increased 120 basis points.
Emerging Markets: Net sales revenue increased 14.2% on an organic basis, driven by strength in markets excluding Russia and Ukraine. Operating profits increased 15.5% on an organic basis, while margins increased 20 basis points.
Update on Ukraine and Russia
Regarding the Ukraine and Russia markets, the company said the safety of its people and their families affected by the unspeakable tragedy in Ukraine remains its priority. On February 24, 2022, it temporarily closed its factory in Ukraine and stopped production for security reasons. Since May, it has gradually restarted production in Ukraine and is currently distributing and selling soft drinks where it is safe to do so. During the second quarter, sales volumes in Ukraine fell by 45%.
On March 8, it stopped orders for Coca-Cola branded product concentrate in Russia and worked closely with The Coca-Cola Company to implement its decision to suspend its business in the region.
It also stopped investing in Russia and said it would not inject new capital into the market. In Russia, there was a 46% drop in sales volume in the second quarter, with further declines expected in the second half of the year.
In addition, a significantly smaller presence in Russia is expected focused on local brands, which will be immediately self-sufficient from an operational and financial point of view.
The company has recognized non-cash charges of €188 million and cash charges of €2 million. These charges will be recognized as items affecting comparability, and therefore will affect operating profit and earnings per share only on a published basis. He will start fully integrating Multon from August 11.
Source: Capital
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