Contents

Summary

  • Coca-Cola HBC is a growth-focused consumer packaged goods business and strategic bottling partner of the Coca-Cola company.
  • The Coca-Cola Company owns, develops and markets its brands with the end consumer. Coca-Cola HBC is responsible for producing, distributing, and selling these beverages.
  • The company bottle and sell the beverages of The Coca-Cola Company exclusively in its 29 markets.
  • The company serve more than 715 million consumers across a broad geographic footprint of 29 countries on 3 continents.

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Company Overview

Coca-Cola HBC (LSE:CCH) is a growth-focused consumer packaged goods business and strategic bottling partner of the Coca-Cola company

https://www.coca-colahellenic.com/en/about-us/at-a-glance

The company bottle and sell the beverages of The Coca-Cola Company exclusively in its 29 markets. The company also partner with other beverage businesses such as Monster Energy, Edrington, Brown-Forman and Campari to sell their products. The company create value for all its stakeholders by supporting the socio-economic development of the societies in which the company operate and believe building a more positive environmental impact is integral to its future growth.

The company's portfolio is one of the strongest, broadest and most flexible in the beverage industry, offering consumer-leading brands in the sparkling, juice, water, sport, energy, plant-based, ready-to-drink tea, coffee, adult sparkling, snacks and premium spirits categories. The company's products cater to a growing range of tastes with a wider choice of healthier options, premium products and increasingly sustainable packaging.

Along with its customers, the company serve more than 715 million consumers across a broad geographic footprint of 29 countries on 3 continents. This spans from the West Coast of Ireland to the Pacific coast of Russia; from Northern Europe to its most southerly market, Nigeria.

The company foster an open and inclusive work environment with its 36,000 employees. The company share a passion for serving its customers and communities and building a more positive environmental impact.

Partnership with the Coca-Cola Company

The Coca-Cola Company owns, develops and markets its brands with the end consumer. Coca-Cola HBC is responsible for producing, distributing, and selling these beverages. The company work together to ensure that Coca-Cola HBC has the right portfolio for its markets and to ensure excellent, efficient execution.

https://www.coca-colahellenic.com/en/about-us/who-we-are/relationship-with-tccc

The company buy concentrate from The Coca-Cola Company under an incidence-based pricing model. The company also share marketing costs and responsibilities; The Coca-Cola Company undertakes marketing to consumers while the company take responsibility for trade marketing to its customers.

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Company History

Coca-Cola HBC has a rich heritage and an exciting future – from the creation of coca cola in 1886 to being recognised as an industry leader by the DOW JONES sustainability indices today.

https://www.coca-colahellenic.com/en/about-us/who-we-are/history

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Markets

The company manage and report on its business by grouping its geographical markets into three segments: emerging, developing and established markets. These groupings are based on a wide range of criteria, including socio-economic similarities, GDP per capita, consumption of sparkling drinks per capita and the state of development of the local drinks market.

https://www.coca-colahellenic.com/en/about-us/what-we-do/markets

Established Markets

The company operate in the established markets: Austria, Cyprus, Greece, Italy, Northern Ireland, Republic of Ireland and Switzerland.

These countries share a tradition of political and economic stability and similar economic features, not least, high levels of disposable income per capita. This prosperity and economic security supports the affordability of its products, notably its single-serve packages.

Established countries generally show high levels of consumer sophistication. There are signs of activities concentrating in the retail sector – a critical indication for future channel development. A shift in demand towards domestic consumption, reflecting a reduction in disposable income, further supports this trend. In this context, activation at final points of sale is a key focus for its marketing and sales efforts.

Developing Markets

The company operate in the developing markets: Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia.

While developing markets have market-oriented economies, they generally have lower disposable income per capita than its established markets. In addition, these countries can be exposed to periods of economic volatility. Entry to the European Union has resulted in increased political stability, as countries increasingly conform to the EU’s principles, objectives and regulations. 

Emerging Markets

The company operate in the emerging markets: Armenia, Belarus, Bosnia & Herzegovina, Bulgaria, Egypt, Moldova, Montenegro, Nigeria, North Macedonia, Romania, the Russian Federation, Serbia (including the Republic of Kosovo) and Ukraine.

These countries share relatively similar political and economic volatility, with lower per capita GDP than its developing or established segments. As a result, consumer demand is especially price sensitive, making the affordability of Coca Cola HBC’s products even more important. 

The company deliver its products with a strategy of specialised revenue growth management, packaging and promotional programmes – these are the considerations at the core of its response to the nuances of local economic conditions.

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Brands

Coca-Cola HBC is a customer-centric business aiming to provide value to its customers by growing their business and through perfect execution in the marketplace.

The company grow by supporting its customers’ growth. To do this, the company leverage its 24/7 portfolio and segmented sales execution to grow the overall beverage industry, focusing on areas of high value opportunity and executing with excellence.

With over 100 brands covering eight categories – sparkling, water, juices, ready-to-drink tea, energy, plant-based, premium spirits and coffee – Coca-Cola HBC has more opportunities to help its customers delight consumers than ever before, by providing the brands and drinks people want, when and where they want them.

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Financial Highlights

Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG, commented:

https://www.coca-colahellenic.com/en/media/news/financial_news/2022/2021-full-year-results

“The business has delivered a very strong recovery in 2021, with all key metrics above pre-pandemic levels, the result of consistent and disciplined focus on its strategic priorities over the last few years. The company finished the year with strong revenue growth, its highest ever EBIT margin and free cash flow while continuing to gain share. This performance demonstrates the strength of its 24/7 brand portfolio, revenue growth management capabilities and execution excellence in its markets. It is driven by the strong drive and passion of its people, who continue to show great creativity and adaptability in navigating the volatile operating environment while nurturing its culture which embraces change, challenge and care. The company's results and strong future plans are also a reflection of its stronger than ever partnership with The Coca-Cola Company.

2021 also marked 70 years since its early beginnings in Nigeria and I am more excited than ever by the growth potential of its business, further strengthened with the addition of Egypt to its country portfolio.

Revenue growth management actions focused behind both premium and affordable offers, as well as pricing and ongoing productivity improvements have enabled it to continue investing behind its strategic priorities, including in capabilities development, whilst achieving EBIT margin expansion.

Coca-Cola HBC is encouraged by the momentum the company see in the business. The company expect 2022 to be a year of strong sales supported by ongoing volume momentum, pricing actions and beneficial category mix. While mindful of inflationary headwinds and other risks, its track record and continuous focus on efficiencies give me confidence in delivering another year of EBIT growth. Given the positive long-term outlook for the business Coca-Cola HBC is increasing its targeted dividend pay-out range to 40-50%.”

Effective execution in a volatile environment drove strong recovery

FX-neutral revenue growth +20.6% like-for-like1. Reported revenues +16.9%

Business gained momentum in Q4, with FX-neutral revenue closing 10% above 20192 levels for the year like-for-like

Value share gains continued to increase, +80bps in NARTD

Volume growth of 14.0% like-for-like, or 13% on a reported basis, led by the Emerging and Established segments as well as the strategic priorities in its portfolio

Sparkling volume +13.8%, Low/no sugar +47.3%; Adult sparkling +31.8%

Energy volume + 45.3%, driven by the performance of Monster, Burn and Predator

Strength of brand portfolio demonstrated as pricing and other revenue growth management actions drove FX-neutral revenue per case +5.8%, or +3.9% excluding Poland

Consistent investment behind strategic priorities building growth momentum

Costa Coffee now available in 17 markets; Caffè Vergnano launched in Q4, now live in 5 markets

Geographical expansion into Egypt adds exciting growth opportunity, integration on track

Net Zero commitment backed by €250 million investment by 2025

Expanded EBIT margin while increasing marketing investment

Comparable EBIT grew by 23.6% with margins +60bps to 11.6%, including c. 30bps benefit from Cyprus property sale. Reported EBIT grew by 21.0%

Opex as a percent of revenue improved by 2.2pp, driven by operating leverage, cost savings higher than plan; 30 bps benefit from Cyprus property sale

Marketing expenditure +63%, full year spend almost back to pre-pandemic levels

Strong earnings growth, record high free cash flow and increased dividend pay-out target range

Comparable EPS up 33.7% to €1.58 on lower tax rate; free cash flow increased by €104.3 million to €601.3 million

Increased dividend pay-out ratio target to 40-50%, previously 35-45%

Board of Directors to propose ordinary dividend of €0.71 per share, up +10.9% year-on-year

References

Tags: GB:CCH
Created by Asif Farooqui on 2022/06/16 10:31
     
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