Coca-Cola HBC half-year profit hit by poor weather, challenging prior year comparable

Coca-Cola HBC on Thursday reported a 10.1% decline in profit for the first half of the year ending on 30th June 2019, adversely impacted by unseasonably wet and cold weather conditions in the second quarter as well as a challenging comparable from the previous year when Coca-Cola was one of the main sponsors of the FIFA World Cup tournament and benefitted immensely from the sales promo.

The company which is the parent company of the Nigerian Bottling Company (NBC) reported profit of €195.1m, down from €216.9m in the prior year.

Net sales revenue grew by 3.8% to €3.4bn on a 2.2% volume lift. Total unit case volumes sold rose to 1,090.4 billion cases, from 1,067.4 billion cases in 2018. The soft drinks giant said that its revenue also benefitted from favourable currency movement of the Swiss Franc and the Nigerian Naira.

The company’s emerging markets segment saw sales growth of 4.8%, supported by good momentum and strong volume growth of 3.4%, as well as price increases, improved category and package mix, and favourable currency impact from the Naira. Sparkling volumes grew marginally in Nigeria, while water and Energy drinks saw double-digit growth.

“We have widened the pack/price architecture across our Sparkling brands and this, along with the work we have done to evolve and strengthen our route to market, is delivering results amid a very competitive market environment,” the company said of its activities in Nigeria.

The company noted that the pace of growth moderated in Russia and the rest of the emerging market segment, impacted by poor weather and the cycling of the FIFA World Cup.

Developing market saw sales growth of 4.2% on 1.4% volumes in the first half, while cycling a very strong volume growth of 8.9% in the prior-year, which benefited from very warm weather, while this year’s weather has been much cooler.

Established markets grew sales by 2.5%, helped by 0.4% volume growth, which was mainly driven by activities in Ireland, Greece and encouraging progress in Italy.

Commenting on the results, Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC, said: “We are pleased with this solid first half given the challenging combination of tough comparators and unseasonably cold and wet weather. We grew revenue and volume across all three segments of our business and delivered further growth in comparable margins.

Looking forward to the second half, “We expect to deliver FX-neutral revenue growth within the range of 5-6%, with another year of margin expansion,” he said.

Updated: 2:21PM August 8, 2019

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