COCA-COLA EUROPACIFIC PARTNERS
Results for the six months ended 30 June 2023
Strong first half, raising FY guidance
| H1 2023 Metric[1] | As Reported | Comparable [1] | Change vs H1 2022 | ||||
| As Reported | Comparable[1] | Comparable FXN [1] | |||||
| Total CCEP | Volume (M UC)[2] | 1,631 | 1,631 | 1.0% | 1.0% | ||
| Revenue (€M) | 8,977 | 8,977 | 8.5% | 8.5% | 10.5% | ||
| Cost of sales (€M) | 5,707 | 5,701 | 8.0% | 7.5% | 10.0% | ||
| Operating expenses (€M) | 2,153 | 2,111 | 6.5% | 9.5% | 11.5% | ||
| Operating profit (€M) | 1,170 | 1,165 | 21.0% | 11.0% | 13.0% | ||
| Profit after taxes (€M) | 854 | 847 | 26.5% | 14.0% | 16.5% | ||
| Diluted EPS (€) | 1.86 | 1.85 | 27.5% | 14.5% | 17.0% | ||
| Revenue per UC[2] (€) | 5.62 | 10.0% | |||||
| Cost of sales per UC[2] (€) | 3.57 | 9.0% | |||||
| Free cash flow (€M) | 850 | ||||||
| H1 Interim dividend per share[3] (€) | 0.67 | ||||||
| Europe | Volume (M UC)[2] | 1,307 | 1,307 | 2.5% | 2.5% | ||
| Revenue (€M) | 7,105 | 7,105 | 10.0% | 10.0% | 12.0% | ||
| Operating profit (€M) | 887 | 924 | 19.5% | 12.0% | 14.0% | ||
| Revenue per UC[2] (€) | 5.52 | 9.0% | |||||
| API | Volume (M UC)[2] | 324 | 324 | (5.5)% | (5.5)% | ||
| Revenue (€M) | 1,872 | 1,872 | 2.5% | 2.5% | 7.0% | ||
| Operating profit (€M) | 283 | 241 | 25.0% | 6.5% | 11.0% | ||
| Revenue per UC[2] (€) | 6.03 | 13.0% | |||||
DAMIAN GAMMELL, CHIEF EXECUTIVE OFFICER, SAID:
“Today, we are excited to announce the proposed joint acquisition of Coca-Cola Beverages Philippines, Inc. with Aboitiz Equity Ventures Inc., one of the leading conglomerates in the local market. This offers us a great opportunity to acquire an established, well-run business with attractive profitability and growth prospects. This would be a natural next step for CCEP, creating a more diverse footprint within our existing API business segment, support Indonesia’s transformation journey and underpin our strategic mid-term objectives.
“We are also very pleased to have delivered a great first half, achieving strong top and bottom-line growth and generating impressive free cash flow. Our performance reflects great in-market execution, strong customer relationships allowing our consumers to continue to enjoy our portfolio of leading brands across a broad pack offering. This resulted in solid volume growth across our developed markets, whilst our volume in Indonesia reflected the execution of our long-term transformation strategy. Our focus on revenue and margin growth management, along with our price and promotion strategy, drove solid gains in revenue per unit case with transactions outpacing volume.
“Looking ahead, we remain confident in the resilience of our categories, despite the ongoing dynamic outlook. We have fantastic activation plans to build on our momentum, including the Women’s World Cup, to engage customers and consumers. We also continue to actively manage our pricing and promotional spend to remain affordable and relevant to our consumers. Given our strong first half, we are raising revenue, operating profit and free cash flow guidance[1] for FY23. This demonstrates the strength of our business and ability to deliver continued shareholder value. This is all underpinned by our progress on sustainability, our talented and engaged colleagues, and our strong relationships with The Coca-Cola Company, our other brand partners, and our customers, who continue to share in our success.”
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Note: All footnotes included after the ‘About CCEP’ section
| H1 & Q2 HIGHLIGHTS[1] |
Revenue
H1 Reported +8.5%; H1 Fx-neutral +10.5%[4]
• Delivered more revenue growth YTD for our retail customers than any of our FMCG peers in Europe & our NARTD peers in Australia & New Zealand (NZ)[5]
• NARTD YTD value share gains[5] across measured channels both in-store (+10bps) & online (+90bps)
• Comparable volume +1.0%[6] (Europe: +2.5%; API: -5.5%) driven by good underlying demand in developed markets & solid in-market execution offset by strategic SKU rationalisation as part of our long-term transformation in Indonesia
◦ Away from Home (AFH) channel comparable volume: +0.5%[6] (+0.5% vs 2019) with good underlying demand, ahead of pre-pandemic levels
◦ Home channel comparable volume: +1.0%[6] (+8.5% vs 2019) reflecting resilient growth as at-home occasion trends continue
• Transactions outpaced volume growth in Europe, Australia & NZ
• Revenue per unit case +10.0%[2],[4] (Europe: +9.0%; API: +13.0%) reflecting the annualisation of last year’s headline price increases, & this year’s headline price increases across most of our markets, alongside favourable pack & brand mix
Q2 Reported +5.5%; Q2 Fx-neutral +8.0%[4]
• Comparable volume -1.5%[6] (Europe: +0.5%; API: -11.0%) reflecting good underlying demand in developed markets & tough comparables (Q2 22 pro forma comparable volume: +10.5%) offset by the timing of Ramadan & the strategic SKU rationalisation in Indonesia
◦ AFH channel comparable volume: -3.0%[6] reflecting last year’s rebound following the removal of restrictions & recovery of tourism, & favourable weather in Europe
◦ Home channel comparable volume: -1.0%[6]
• Revenue per unit case +10.0%[2],[4] (Europe: +9.5%; API: +13.0%) driven by positive headline price increases & promotional optimisation alongside favourable pack & brand mix
H1 Operating profit
Reported +21.0%; Fx-neutral +13.0%[4]
• Cost of sales per unit case +9.0%[2],[4] reflecting increased revenue per unit case driving higher concentrate costs, & inflation in commodities & manufacturing
• Comparable operating profit of €1,165m, +13.0%[4] reflecting strong top-line, our efficiency programmes & continuous efforts on discretionary spend optimisation
• Comparable diluted EPS of €1.85, +17.0%[4] (reported +27.5%)
Dividend
• First half interim dividend per share of €0.67[3] (declared at Q1 & paid in May), calculated as 40% of the FY22 dividend
• Reaffirming guidance for an annualised total dividend payout ratio of approximately 50%[7]
Proposal to jointly acquire Coca-Cola Beverages Philippines, Inc. with Aboitiz Equity Ventures Inc.
• See separate release on Investors section of our website for more detail (https://ir.cocacolaep.com/financial-reports-and-results/financial-releases)
Other
• Free cash flow: Generated strong free cash flow of €850m reflecting strong performance (net cashflows from operating activities of €1,307m), supporting our journey to return to our target leverage range of Net debt:Adjusted EBITDA[1] of 2.5x-3x. At the end of 2022, Net debt:Adjusted EBITDA[1] was 3.5x
• Strategic portfolio choices:
◦ Australia & NZ Spirits & ARTD[8] category: CCEP plans to maximise its extensive knowledge in the attractive & fast growing ARTD category by launching new scalable offerings aligned with The Coca-Cola Company. In this context, CCEP & Beam Suntory will move forward independently. Effective from the date of contract expiry (30 June 2025 in Australia & 31 December 2025 in NZ)
◦ Capri Sun: Following a successful sales & distribution partnership in Europe, CCEP & Capri Sun will move forward independently, consistent with their respective strategies. Will come into effect during 2024 enabling an orderly transition
◦ Insignificant impact on CCEP volume, revenue & operating profit[4],[9] from the above
| SUSTAINABILITY HIGHLIGHTS |
• Retained MSCI AAA rating, inclusion on Carbon Disclosure Project’s A Lists for Climate & Water, & inclusion on the Bloomberg Gender Equality index
• Progressed our packaging initiatives
◦ Boosted recycled content in Indonesia by switching to 100% rPET bottles
◦ Installed a PET plastic grinder in Papua New Guinea to support the supply of rPET
◦ Transitioned Sprite from green to clear bottles across API, making them easier to recycle
• Introduced electric trucks in Luxembourg, Belgium & Spain to reduce carbon emissions from our logistics
• Partnered with The Coca-Cola Company, other bottlers & Greycroft, a seed-to-growth venture capital firm, to create a sustainability-focused venture capital fund
| FY23 GUIDANCE & OUTLOOK[1] |
The outlook for FY23 reflects our current assessment of market conditions. Unless stated otherwise, guidance is on a comparable & FX-neutral basis. FX is expected to decrease FX-neutral guidance by approximately 200 basis points for the full year
Revenue: comparable growth of 8-9% (previously 6-8%)
• Headline pricing successfully implemented across most of our markets without disruption. Germany & the Netherlands to be implemented in the third quarter
• Continued focus on promotional optimisation & revenue growth management initiatives
Cost of sales per unit case: comparable growth of ~8% (unchanged)
• Higher concentrate costs reflecting increased revenue per unit case
• Commodity inflation expected to be ~8% (previously ~10%)
• FY23 hedge coverage at >95%
• Low overall FX transactional exposure (<10%)
Operating profit: comparable growth of 12-13% (previously 6-7%)
• Increased top-line performance
• Continued focus on delivering efficiency programmes & optimising discretionary spend
Comparable effective tax rate: ~24% (previously ~23%)
• Primarily due to change of geographic profit mix
Free cash flow: at least €1.7bn (previously at least €1.6bn)
Capital expenditure: 4-5% of revenue excluding leases (unchanged)
Dividend payout ratio: c.50%[7] (unchanged)
| SECOND QUARTER & FIRST HALF REVENUE PERFORMANCE BY GEOGRAPHY[1] |
All values are unaudited, changes versus equivalent 2022 period
| Second-quarter | First-half | ||||||
| Fx-Neutral | Fx-Neutral | ||||||
| € million | % change | % change | € million | % change | % change | ||
| Great Britain | 881 | 9.5% | 12.0% | 1,570 | 7.5% | 11.5% | |
| France[10] | 665 | 20.0% | 20.0% | 1,200 | 18.0% | 18.0% | |
| Germany | 799 | 8.5% | 8.5% | 1,458 | 12.5% | 12.5% | |
| Iberia[11] | 886 | 7.0% | 7.0% | 1,541 | 12.5% | 12.5% | |
| Northern Europe[12] | 729 | 1.0% | 5.0% | 1,336 | 2.5% | 6.0% | |
| Total Europe | 3,960 | 8.5% | 10.0% | 7,105 | 10.0% | 12.0% | |
| API[13] | 863 | (6.5)% | 0.5% | 1,872 | 2.5% | 7.0% | |
| Total CCEP | 4,823 | 5.5% | 8.0% | 8,977 | 8.5% | 10.5% | |
France
• Q2 volume growth reflects continued strong momentum across both channels supported by great execution.
• Coca-Cola Original Taste, Coca-Cola Zero Sugar, Monster & Flavours performed well. Fuze Tea outperformed, achieving significant volume growth in both Q2 (+74.0%) & H1 (+57.0%).
• H1 revenue/UC[14] growth driven by headline price increase implemented at the end of the first quarter.
Germany
• Q2 volume growth reflects solid trading in the Home channel supported by great execution & evidence of consumers shifting to Hypermarkets & Discounters. AFH channel volume broadly flat.
• Continued strong growth in Coca-Cola Zero Sugar, whilst Monster, Fuze Tea & Powerade achieved double-digit volume growth in both Q2 & H1.
• H1 revenue/UC[14] growth driven by favourable price from the annualisation of the second headline price increase last year & positive brand mix (e.g. Monster volume +30.5%).
Great Britain
• Q2 volume growth reflects sustained trading momentum across both channels. Record temperatures in June supported strong volume growth towards the end of the quarter.
• Coca-Cola Zero Sugar & Monster realised double-digit volume growth in both Q2 & H1.
• H1 revenue/UC[14] growth driven by headline price increase implemented at the end of the second quarter.
Iberia
• Q2 volume decline reflects tough comparables, cycling the rebound of the AFH channel, favourable weather & buy-in ahead of second headline price increase last year & anticipated transportation disruption. H1 growth driven by the recovery of the AFH channel in the first quarter (cycling covid restrictions).
• Coca-Cola Original Taste, Coca-Cola Zero Sugar & Aquarius performed well in H1. Monster achieved double-digit volume growth in both Q2 & H1.
• H1 revenue/UC[14] growth driven by headline price, implemented in the first quarter, & positive channel & pack mix led by growth in the AFH channel e.g. small glass +6.5%.
Northern Europe
• Q2 volume decline reflects tough comparables, cycling double-digit volume growth last year following the late removal of restrictions. H1 growth driven by continued recovery of the AFH channel.
• Fuze Tea, Powerade & Aquarius outperformed achieving double-digit volume growth in H1.
• H1 revenue/UC[14] growth driven by headline price increase implemented during the first half & positive pack mix led by the recovery of the AFH channel e.g. small glass +7.0%.
API
• Q2 volume decline reflects phasing of Ramadan, & strategic SKU rationalisation in Indonesia, with industry-wide supply constraints early in the quarter in Australia.
• Coca-Cola Zero Sugar & Monster continued to outperform in both Q2 & H1.
• H1 revenue/UC[14] growth driven by headline price increase implemented across all markets during the first half & promotional optimisation in Australia.
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Note: All values are unaudited and all references to volumes are on a comparable basis.
| SECOND QUARTER & FIRST HALF VOLUME PERFORMANCE BY CATEGORY[1],[6] |
Comparable volumes, changes versus equivalent 2022 period.
| Second-quarter | First-half | ||||
| % of Total | % Change | % of Total | % Change[5] | ||
| Sparkling | 85.0 % | (1.0) % | 85.0 % | 1.5 % | |
| Coca-Cola® | 58.5 % | (1.0) % | 58.5 % | 1.5 % | |
| Flavours, Mixers & Energy | 26.5 % | (1.5) % | 26.5 % | 1.5 % | |
| Stills | 15.0 % | (5.0) % | 15.0 % | (3.5) % | |
| Hydration | 7.5 % | (8.0) % | 7.5 % | (4.5) % | |
| RTD Tea, RTD Coffee, Juices & Other[15] | 7.5 % | (1.5) % | 7.5 % | (2.5) % | |
| Total | 100.0 % | (1.5) % | 100.0 % | 1.0 % | |
Coca-Cola®
Q2: -1.0%; H1: +1.5%
• Strong underlying demand with tough comparables in the second quarter, cycling the rebound of the AFH channel & tourism, & favourable weather in Europe last year.
• Coca-Cola Zero Sugar continued to grow (+5.5%) across all key markets in H1 supported by targeted campaigns & innovation.
• Coca-Cola Zero Sugar gained value share[5] of Total Cola +20bps.
Flavours, Mixers & Energy
Q2: -1.5%; H1: +1.5%
• Strong underlying demand with tough comparables in the second quarter, cycling the rebound of the AFH channel & tourism, & favourable weather in Europe last year.
• Fanta Q2: -2.0%; H1: +2.0%, reflecting the above with growth supported by flavour extensions.
• Energy Q2: +14.5%; H1: +15.0% led by Monster, continuing to gain share & drive distribution through exciting innovation.
Hydration
Q2: -8.0%; H1: -4.5%
• Water Q2: -14.5%; H1: -10.0% as a result of strategic portfolio choices, with SKU rationalisation in Indonesia, the exit of Vio large PET in Germany & Mount Franklin bulk pack in Australia.
• Sports Q2: +7.0%; H1: +10.5%, with growth in Aquarius & Powerade driven by continued consumer trends in this category.
RTD Tea, RTD Coffee, Juices & Other[15]
Q2: -1.5%; H1: -2.5%
• Juice drinks Q2: -5.5%; H1: -6.5% reflecting strategic SKU rationalisation in Indonesia.
• RTD Tea/Coffee Q2: +4.5%; H1: +3.5% driven by Costa RTD in GB (+21.5%) & Fuze Tea in Europe (+27.0%).
• Encouraging start for Jack Daniel’s & Coca-Cola now launched in GB, Spain & the Netherlands.