Revenue growth initiatives, cost efficiencies lift Coca-Cola HBC profit

Coca-Cola HBC, the parent company of Nigerian Bottling Company (NBC) reported its full-year results on Thursday for the 2016 financial year, with revenue falling 2% to €6.2bn ($6.6bn) despite a 1% volume increase.

The company which is the Coca-Cola anchor bottler in 28 mostly European countries and Nigeria said that adverse currency movements caused the decline.

The soft drinks bottler noted that volumes declined 2.3% in established markets, with Italy and Austria having the biggest impact. Developing markets saw 1.3% volume lift in a strong quarter, helped by one extra selling day, while volume rose 1.2% in emerging markets, driven by double-digit growth in Nigeria and high single-digit growth in Romania. Volume fell by 8% in Russia in a continued challenging market condition, it notes.

The soda giant said it initiated pre-buy contracts for EU sugar and Russian beet sugar, which had a favourable effect on sugar costs in the year. It further notes that the rise in world sugar prices which had an effect in the company’s Nigerian operation was offset by declines in the price of PET resin, resulting in a stable FX-neutral input cost per unit case for the year.

Coca-Cola HBC said that Nigeria grew strongly, delivering 11% volume growth across all categories. In the sparkling category, the trademark Coca-Cola and the 35cl glass pack performed phenomenally well. Sprite and Fanta also performed well with volumes helped by drop in violence in the Northeast of the country. In the still category, juice grew mid-single digits, boosted by the launch of Pulpy in a new 40cl PET pack. It also notes that water grew double-digits.

Net profit for the soft drinks maker rose 22.5% to €343.5, from €280.3 due to growth initiatives and cost efficiencies implemented by the company.

Looking ahead, the company said it expects slightly better economic conditions in 2017 to support volume growth. It sees a more stable oil price, improving activity in Russia and modest growth prospects in Nigeria.

The Coke bottler plans to continue with planned pricing actions in markets impacted by foreign currency depreciation and markets where deflationary pressures are moderating.

It added that it expects input costs per case to rise in the high single-digits due to uncertainties surrounding a potential further devaluation of the Nigerian naira or possible volatility in the Russian rouble.

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