Coca-Cola HBC: Russian assets may be at risk, but solid Q3 results highlight potential attractions

Coca-Cola HBC is one of Coca-Cola's bottling companies. These are large businesses in their own right, frequently - as here - with quite attractive quality and growth characteristics:

Coca-Cola HBC hit the headlines twice last week for two wildly different reasons, so I'm circling back to take a look at this backlog item.

Here's a quick summary of last week's news.

• Wed 4 Nov 26 - Q3 trading update: Q3 revenue rose by 9.6%, with organic volumes +5.4% and revenue per case +3.4%. The company reported organic revenue growth of between 8% and 9.8% in each of its geographic segments (Established, Developing and Emerging markets).

• Acquisition: remains on track to complete the $2.6bn acquisition of Coca-Cola Beverages Africa by the end of 2026.

• FY26 outlook - modest upgrade: now expects organic revenue growth slightly above the targeted 6% to 7% range (previously: "around the top end of 6% to 7%). Organic EBIT growth in the range of 8% to 10% (unchanged).

So far, so good. CCH shares closed up by 4% on Wednesday. Unfortunately these gains were reversed on Thursday when press reports indicated the company's Russian assets could be seized by a domestic firm.

• Thu 5 Nov 26 - Response to press speculation: CCH management issued a statement on Thursday stating that "Coca-Cola HBC has received no notification from the Russian government of any changes to its operations in Russia".

• CCH notes that its Russian operations have been operated locally on "a self-standing basis" since 2022. The company says it does not rely on income or capital from its Russian business to fund operations outside Russia or service any debt obligations.

• Mon 9 Nov 26 - "Kremlin not aware": the plot has thickened this morning as Reuters has quoted a Kremlin spokesmen saying that the Kremlin is not aware of any request to seize Coca-Cola HBC's Russian assets.

The €1bn question?

Some explanation of the quirky world of Russian asset seizures is required. While some of these situations are apparently driven by the Kremlin (or Putin), sometimes asset seizures are prompted by requests from local firms.

According to press reports, that's what has happened here: a Siberian brewing company whose owner is reportedly known to President Putin is said to have made a request to seize CCH's Russian assets.

A number of multinationals have had their Russian assets seized since the start of the Ukraine war, but the impact has been varied.

In this case, we know that Coca-Cola HBC is not relying on income or cash from Russia to fund its operation. However, I believe profits from Russia are still included in the company's Emerging Markets segment.

The Russian business also appears to be highly cash generative. According to the last two sets of accounts, cash held in Russia was c.€850m at the end of 2025 and had risen to c.€1bn at the end of June 2026. This cash cannot currently be repatriated to the group due to sanction restrictions.

As far as I can see, CCH doesn't break out individual country profits within these three segments. But for some context, total Emerging Markets EBIT in H1 this year was €442m - by far the largest and fastest-growing of the company's three operating segments:

Source: CCH H1 2026 results

High levels of free cash conversion are fairly typical for this type of business. If we assume that the €150m increase in Russian cash in H1 is similar in size to the profits from this region during the first half of the year, then it's easy to see why the market was spooked last week.

Roland's view

If CCH manages to keep hold of its Russian operations, then I can see a number of potential attractions here.

The current valuation (including Russia) looks relatively undemanding to me, with a trailing EBIT/EV yield of around 7% and a well-covered c.3% dividend yield.

Quality metrics are also fairly strong:

However, I don't think we can afford to ignore the risk that CCH will lose a chunk of its profits quite suddenly at some point. While the seizure of the assets hasn't yet been confirmed, it's not hard to see the attraction of a large soft drinks group in such a big market as Russia.

I also have some specific concerns relating to the group's debt situation:

• H1 leverage looked quite modest, at c.1.4x adj EBITDA.

• However, stripping out Russian profits would presumably increase this multiple, even if CCH retained its Russian cash position.

• CCH is also due to pay out c.$2.6bn to acquire a 75% stake in Coca-Cola Africa by the end of the year. At the time this deal was announced, the company planned to fund this with €2.5bn of bridging finance and an equity raise. Completing this deal as planned and losing the group's Russian profits could see debt leverage rise suddenly above the group's target maximum of 2.0x EBITDA.

Markets hate uncertainty and this situation could create an opportunity. But there's also an elevated level of short-term risk, in my view, even if the longer-term prospects for the group remain strong.

I am going to take a neutral view today to reflect this mixed situation. My plan is to continue watching this situation to see how it evolves. I think it's possible that an opportunity to buy could emerge at some point.