Coca-Cola HBC ups profit guidance as price hikes offset costs

Coca-Cola Hellenic Bottling Company has boosted its annual guidance following a bumper performance during the first half of the year.

The anchor bottler revealed operating profits more than doubled to €557.3million (£480million) for the six months ending June, despite consumer weakness and higher energy and ingredients costs.

Rising prices helped the firm’s net sales revenue surpass €5billion, with organic revenue growing by 17.8 per cent and a further boost provided by the consolidation of its Russian business.

Drink up: Coca-Cola HBC revealed operating profits more than doubled to €557.3million for the six months ending June despite widespread cost-of-living pressures 

Turnover across all market segments increased by double-digit percentage levels, offsetting unfavourable foreign exchange movements and a drop in organic volumes caused largely by softer demand in the stills category.

It also expects the cost of goods sold per unit case to expand by a high-single-digit percentage, down from an initial forecast in the ‘low teens’. 

Consequently, the group now anticipates full-year organic sales growth in the ‘mid-teens’, compared to a prior forecast of 5 to 6 per cent.

The blue-chip company has maintained its annual earnings outlook, which it raised last month after seeing a ‘stronger than anticipated finish’ to the first-half of the year.

Zoran Bogdanovic, chief executive of Coca-Cola HBC, said on Wednesday: ‘It has been a very good first half of the year with progress across our strategic pillars.’

He added: ‘While some markets continue to face a challenging consumer environment, revenue per case has been improved through careful price and mix management enhanced by data, insights and analytics.

‘At the same time, volumes have remained resilient, which is testament to the quality of our execution.’

Headquartered in Switzerland but listed in London, Coca-Cola HBC packages and sells dozens of brands, such as Fanta, Fuze Tea, Costa Coffee, and Powerade, across 29 countries.

The business traces its origins back to 1950s Nigeria but was forged in its present form in 2000 through the merger of Coca-Cola Beverages and the Hellenic Bottling Company.

Though known mainly for selling soft drinks, the firm has been expanding its presence into the alcoholic drinks sector, recently agreeing to spend $220million (£172million) acquiring Brown-Forman Finland, the owner of premium vodka brand Finlandia.

It believes the takeover will enhance its premium spirits offering and strengthen partnerships with customers in ‘strategically important’ channels, including the hotel, restaurant and catering industries.

Neil Shah, the director of content and strategy at Edison Group, said: ‘The continued consumer demand for Coca-Cola HBC’s products has helped the bottler not only weather the difficult macroeconomic climate of recent months, but thrive in it.

‘Moreover, the company benefits from the ongoing roll-out of new products, such as Jack Daniel’s & Coca-Cola, which enjoy the advantages of immediate brand recognition that isn’t available to other new drinks on the market.’

Coca-Cola HBC shares were 1.5 per cent, or 34p, higher at £22.94 on Wednesday morning and have grown by approximately 19 per cent since the start of the year.