Coca-Cola HBC Rises 5.9%, Leads FTSE 100 Higher As Sales Hit Record Levels

The Coca-ColaKO
Hellenic Bottling Company (HBC) share price soared on Tuesday as it announced record sales for the last year.

At £20.56 per share the FTSE 100 firm — which bottles drinks on behalf of The Coca-Cola Company in parts of Europe and Africa — was last trading 5.9% higher on the day. This made it the biggest daily riser on London’s blue-chip index.

Net sales soared to all-time highs of €9.2 billion in 2022, Coca-Cola HBC said, which represented a 28.3% year-on-year increase. Organic revenues per case meanwhile increased 15.9% thanks to price hikes and steady improvements to product mix.

Volumes rose 12.4% to 2.71 billion cases, though on an organic basis these were down 1.5%.

Russian Withdrawal, Cost Inflation Weighs

Excluding sales from Russia and Ukraine, organic revenues leapt 22.7% last year whilst organic volumes rose 8.1%. Coca-Cola HBC suspended its Russian operations last March following the outbreak of war in Eastern Europe.

Operating profit dropped 11.9% last year to €703.8 billion mainly because of impairment charges related to its Russian business.

The FTSE firm’s operating profit margin dropped 350 basis points on-year to 7.7%. And on a comparable basis it was down 150 basis points to 10.1%. This reflected the impact of high cost inflation and the sale of property in Cyprus in 2021.

But free cash flow increased 7.3% year on year to €645.1 million. This encouraged the company to lift the full-year dividend 9.9%, to 78 euro cents per share.

“Strong Performance”

Zoran Bogdanovic, chief executive at Coca-Cola HBC, said that “we delivered a strong performance in 2022 against a challenging backdrop, achieving record levels of revenue, comparable EBIT and free cash flow.”

He added that “the power of our portfolio and consistent investment in our capabilities allowed us to balance pricing and mix enhancements, while also achieving another year of strong share gains.”

Bogdanovic described consumer demand last year as “good” with sales driven by the bottling company’s sparkling, energy and coffee categories.

Volumes of its sparkling drinks (excluding Russia and Ukraine) increased 7.7% in 2022, with sales of its flagship Coca-Cola product rising 9.1%.

Energy volumes meanwhile increased 16.3% last year as “strong momentum in most markets… more than offset declines in Russia and Ukraine.” Coffee volumes jumped 28.2% thanks to “encouraging share gains driven by both rate of sales and distribution increases.”

Looking Ahead

For 2023, Coca-Cola HBC said it expects to grow organic revenues above its 5% to 6% target range. As a consequence the company reckons organic operating profit will range between a 3% year-on-year fall to a 3% increase.

The business added that inflationary pressures will also persist, with its cost of goods sold per case increasing by low-teens percentages. It said too that currency movements will likely create a profit headwind of between €25 million and €35 million.

Royston Wild owns shares in Coca-Cola Hellenic Bottling Company.