Coca-Cola HBC AG reported its third quarter results on Thursday, with net sales revenue falling 1.9% to €1.74bn ($1.92bn), down from €1.77bn in the prior year. Total volumes declined 1% to 571.6m cases versus 577m cases in the previous year quarter.
The company which bottles Coca-Cola products in 28 countries including Nigeria blamed the declines on tough comparatives in the prior year quarter in established and developing markets, when an exceptionally hot summer in some countries increased the demand for water, the company said.
“Performance in the third quarter was as expected, with lower volume reflecting the exceptional growth we saw in the third quarter of 2015. We are pleased with our commercial initiatives, which delivered an improvement in currency neutral net sales revenue per case. The business is trading well and we remain confident in meeting our expectations for the full year,” said Dimitris Lois, CEO of Coca-Cola HBC.
On a segment basis established market volumes declined by 2.5% in the quarter to 175.1m cases versus 7.4% increase or 179.6m cases in the prior year quarter. The reason was less water was sold in Italy and Austria compared to the prior year quarter when the countries experienced an exceptionally hot summer raising demand for water.
However, a good performance from Coke Zero, Coke Life and Monster Energy drink in the affected countries partly offset declines from water. Net sales revenue in established markets fell 3.6% in the quarter to €677.3m, from €702.5m in the prior year.
Developing markets saw volume decline of 4.2% in the third quarter, to 105.9m cases, compared to 110.6m cases sold in the prior year’s quarter. As in established markets, the decline was due to tough prior-year comparatives driven by demand for water.
Net sales revenue fell 2.3% to €316.3m, from €323.8m in the prior year’s quarter.
Emerging market segment was the bright spot for CCHBC, with volume rising 1.3% to 290m cases versus 286.9m cases in the prior year, driven by growth in Nigeria and Romania and deceleration decline in Russia. All key categories performed well in the quarter with the exception of water, the company said.
Nigeria’s volume grew for the tenth consecutive quarter, with positive performances from all categories, the company said.
CCHBC said it had adjusted its commercial plans in Nigeria to the new reality of high inflation – changing pack sizes and price points to meet consumer needs and addressing their affordability concerns.
And despite a worsening consumer environment, the company is on track to deliver mid to high single-digit volume growth for the year.
The soft drink bottler said that revenue in emerging markets continued to face strong headwind from adverse currency movements. However, the negative impact was offset by price increases, mainly in Russia and Nigeria, as well as improved category and package mix.
Net sales revenue for the segment declined 1% in the third quarter to €741.7m, down from €742.4m in the prior year. The company did not provide information on profits in the third quarter.