REG - Coca-Cola EP PLC - Q3 Trading Update & Interim Dividend Declaration
01/11/2023 07:15
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RNS Number : 9437R Coca-Cola Europacific Partners plc 01 November 2023
1 November 2023
COCA-COLA EUROPACIFIC PARTNERS
Trading update for the third quarter ended 29 September 2023 & Interim
Dividend Declaration
Solid performance, reaffirming FY guidance
Change vs 2022
Revenue Volume Revenue per UC( 1 , 2 , 3 ) Comparable( 2 , 8 ) Volume Revenue per UC( 1 , 2 , 3 ) FXN( 2 , 3 ) revenue Revenue
(UC)( 1 )
Q3 2023 Europe €3,956m 705m €5.65 (4.0)% 9.0% 4.5% 3.5%
API €851m 141m €6.74 (7.0)% 10.5% 3.0% (8.0)%
CCEP €4,807m 846m €5.83 (4.5)% 9.0% 4.0% 1.5%
YTD 2023 Europe €11,061m 2,012m €5.57 0.0% 9.0% 9.0% 7.5%
API €2,723m 465m €6.25 (6.0)% 12.0% 5.5% (1.0)%
CCEP €13,784m 2,477m €5.69 (1.0)% 9.5% 8.5% 6.0%
Damian Gammell, Chief Executive Officer, said:
"2023 continues to be a strong year for CCEP reflecting great brands, solid
in-market execution and strong customer relationships. Our focus on revenue
and margin growth management, along with our price and promotion strategy,
drove solid gains in revenue per unit case. Transactions outpaced volume and
we grew both share and household penetration across our markets. Given our
strong year to date performance, we are reaffirming our full year guidance and
declaring a full year dividend up almost 10% on last year. This demonstrates
the strength of our business and ability to continue to deliver shareholder
value.
"In the third quarter, we also delivered top line growth despite mixed summer
weather across Europe and the ongoing execution of our long-term
transformation strategy in Indonesia. We delivered fantastic activation,
including during the Women's World Cup, supporting strong underlying volume
growth in Australia and New Zealand.
"Looking to next year and beyond, we remain confident in the resilience of our
categories, despite ongoing macroeconomic and geopolitical volatility. We
continue to actively manage our pricing and promotional spend to remain
affordable and relevant to our consumers, alongside our focus on productivity
and free cash flow. All supported by our talented and engaged colleagues, and
our strong relationships with our brand partners and customers. Finally, we
have been working closely with The Coca-Cola Company and Aboitiz( 4 ) on the
proposed acquisition of Coca-Cola Beverages Philippines( 5 ), aligned with our
aim of driving sustainable and stronger growth through diversification and
scale. We remain on track to close early next year and look forward to sharing
more in due course."
Note: All footnotes included after the 'About CCEP' section
Q3 & YTD HIGHLIGHTS( 2 )
Revenue
Q3 Reported +1.5%; Fx-neutral +4.0%
• Delivered more revenue growth YTD for our retail customers than
any of our FMCG peers in Europe & our NARTD peers in Australia & New
Zealand (NZ)( 6 )
• NARTD YTD value share gains( 6 ) across measured channels both
in-store (+10bps) & online (+100bps), & increased household
penetration in Europe (+50bps)( 7 )
• YTD transactions ahead of volume growth in Europe, Australia &
NZ
(• ) Q3 comparable volume -4.5%( 8 )
◦ By geography:
▪ Europe -4.0%( 8 ) reflecting solid in-market execution offset by
mixed summer weather & cycling strong comparables (Q3'22 comparable volume
+12.0%)
▪ API -7.0%( 8 ) solid in-market execution driving continued volume
growth in Australia & NZ offset by the strategic SKU portfolio
rationalisation & softer consumer spending in Indonesia
◦ By channel: Away from Home (AFH) -5.0%( 8 ) & Home -4.5%( 8 )
both in line with volumes
• Strong revenue per unit case +9.0%( 1 , 3 ) (Europe: +9.0%; API:
+10.5%) driven by positive headline price increases & promotional
optimisation alongside favourable brand mix
Dividend
• Declaring second half interim dividend per share of €1.17 (to be
paid in December 2023)
• Resulting in full year dividend per share of €1.84, +9.5% vs
2022, maintaining annualised total dividend payout ratio of approximately
50%( 9 )
( )
Proposal to jointly acquire Coca-Cola Beverages Philippines, Inc. with Aboitiz
Equity Ventures Inc.
• On track to close early next year, updates to follow in due course
Other
• Re-affirming FY23 guidance (see below)
• Recognised as Top Employer in Europe by the Top Employers
Institute
• Appointed Deutsche Numis as house brokers to CCEP in September
2023
SUSTAINABILITY HIGHLIGHTS
• Received approval from the Science Based Targets initiative (SBTi)
of CCEP's long-term 2040 net zero and 2030 greenhouse gas reduction targets
• Entered into CCEP Ventures partnership with Swansea University to
explore CO₂ upcycling technology for the creation of ethylene, a key
component of plastic bottle caps
• Achieved carbon neutral certification for a further six
manufacturing sites (five in Iberia and one in NZ), now a global total of 13
sites
FY23 GUIDANCE( 2 )
The outlook for FY23 reflects our current assessment of market conditions.
Unless stated otherwise, guidance is on a comparable & FX-neutral basis.
FX is expected to decrease FX-neutral guidance by approximately 250 basis
points for the full year (previously ~200 basis points)
Revenue: comparable growth of 8-9% (unchanged)
Cost of sales per unit case: comparable growth of ~8% (unchanged)
• Commodity inflation expected to be ~8% (unchanged)
• FY23 hedge coverage at >98%
Operating profit: comparable growth of 12-13% (unchanged)
Comparable effective tax rate: ~24% (unchanged)
Free cash flow: at least €1.7bn (unchanged)
Third-Quarter & Year-To-Date Revenue Performance by Geography( 2 )
Note: All values are unaudited and all references to volumes are on a
comparable basis. All changes are versus 2022 equivalent period unless stated
otherwise
Q3 YTD
Fx-neutral Fx-neutral
€ million % change % change € million % change % change
Great Britain 853 3.0 % 3.0 % 2,423 5.5 % 8.5 %
France( 10 ) 586 3.0 % 3.0 % 1,786 12.5 % 12.5 %
Germany 800 9.0 % 9.0 % 2,258 11.5 % 11.5 %
Iberia( 11 ) 1,029 6.0 % 6.0 % 2,570 10.0 % 10.0 %
Northern Europe( 12 ) 688 (4.5) % (1.0) % 2,024 0.0 % 3.5 %
Total Europe 3,956 3.5 % 4.5 % 11,061 7.5 % 9.0 %
API( 13 ) 851 (8.0) % 3.0 % 2,723 (1.0) % 5.5 %
Total CCEP 4,807 1.5 % 4.0 % 13,784 6.0 % 8.5 %
France
• Q3 volume decline reflects strong comps & mixed summer weather
this year.
• Fuze Tea continued to perform well achieving double-digit volume
growth (+26%). Monster, Sprite & Powerade also outperformed.
• Revenue/UC( 14 ) growth driven by headline price increase
implemented in the first quarter.
Germany
• Q3 volume growth reflects continued strong trading in the Home
channel supported by great execution.
• Continued growth in Coca-Cola Zero Sugar & Fanta. Monster, Fuze
Tea & Powerade achieved double-digit volume growth.
• Revenue/UC( 14 ) growth driven by favourable price from the
annualisation of the second headline price increase last year & further
price implemented in Q3. Positive brand mix also contributed to the growth
e.g. Monster volume +42.0%.
Great Britain
• Q3 volume decline reflects strong comps & mixed weather during
key summer months (July & August).
• High single digit growth in Coca-Cola Zero Sugar & Monster
achieved double-digit growth.
• Revenue/UC( 14 ) growth driven by headline price increase
implemented at the end of the second quarter. Positive brand mix also
contributed to the growth e.g. Monster volume growth +10.0% & launch of
Jack Daniel's & Coca-Cola.
Iberia
• Q3 volume decline reflects strong comps & strategic de-listings
within Spain's bulk water portfolio. AFH benefiting from strong tourism,
trending ahead of pre-pandemic levels.
• Coca-Cola Zero Sugar, Sprite & Monster performed well. Royal
Bliss achieved double-digit growth (+43%), supported by launch in Portugal.
• Revenue/UC( 14 ) growth driven by headline price, implemented in the
first quarter & positive mix.
Northern Europe
• Q3 volume decline reflects strong comps (cycling double-digit volume
growth) & mixed summer weather this year.
• Monster, Powerade & Aquarius outperformed achieving double-digit
volume growth.
• Revenue/UC( 14 ) growth driven by headline price increase
implemented across the markets this year (Netherlands in Q3).
API
• Australia & NZ grew Q3 volumes despite strategic de-listings
within Australia's bulk water portfolio, supported by solid execution,
including great Women's World Cup activation. Overall volume decline reflects
the strategic SKU rationalisation & softer consumer spending in Indonesia.
• Coca-Cola Zero Sugar, Monster & Powerade outperformed.
• Encouraging start to the launch of Coca-Cola Zero Sugar & Sprite
Zero in Indonesia.
• Revenue/UC( 14 ) growth driven by headline price increase
implemented across all markets during the first half.
Third-Quarter & Year-To-Date Volume Performance by Category( 2 , 8 )
Note: All values are unaudited and all references to volumes are on a
comparable basis. All changes are versus 2022 equivalent period unless stated
otherwise
Q3 YTD
% of Total % Change % of Total % Change
Sparkling 84.0 % (3.5) % 84.5 % (0.5) %
Coca-Cola® 58.0 % (4.0) % 58.5 % (0.5) %
Flavours, Mixers & Energy 26.0 % (3.0) % 26.0 % 0.0 %
Stills 16.0 % (10.0)% 15.5 % (6.0) %
Hydration 8.0 % (13.5)% 8.0 % (8.0) %
RTD Tea, RTD Coffee, Juices & Other( 15 ) 8.0 % (6.5) % 7.5 % (3.5) %
Total 100.0 % (4.5) % 100.0 % (1.0) %
Coca-Cola®
• Q3 Europe -4.5% reflecting tough comps & mixed summer
weather. API growth +1.0% supported by strong in-market activation of Women's
World Cup across Australia & NZ.
• Q3 Coca-Cola Original Taste -4.0% reflecting tough comps &
mixed summer weather in Europe.
• Coca-Cola Zero Sugar continued to grow (+1.0%) across our
markets in Q3 & gained value share( 6 ) of Total Cola +50bps, led by GB
+140bps.
Flavours, Mixers & Energy
• Q3 Fanta -6.0% cycling tough comps (Q3'22 +20%( 16 )) &
mixed summer weather in Europe.
• Q3 Energy +12.0% led by Monster, continuing to gain
distribution & share through exciting innovation, e.g. launch of Monster
Green Zero Sugar in GB.
Hydration
• Q3 Water -21.5% driven by strategic portfolio choices (SKU
rationalisation in Indonesia, the exit of large PET packs in Germany (Vio)
& Iberia (Aquabona), & Mount Franklin bulk pack in Australia). Mixed
summer weather in Europe also contributing.
• Q3 Sports +5.5% growth in Powerade across all markets( 17 ).
RTD Tea, RTD Coffee, Juices & Other( 15 )
• Q3 Juice drinks -12.0% reflecting strategic SKU
rationalisation in Indonesia & mixed weather impacting Capri Sun in GB
& France.
• Q3 RTD Tea/Coffee -2.0% reflecting strategic SKU
rationalisation in Indonesia, partially offset by continued growth in Fuze Tea
across Europe (+14.5%).
• Jack Daniel's & Coca-Cola performing well, e.g. now #1
ARTD( 18 ) value brand in GB( 19 ) after launch 6 months ago.
Conference Call
• 1 November 2023 at 12:00 GMT, 13:00 CEST & 8:00a.m. EDT;
accessible via www.cocacolaep.com
• Replay & transcript will be available at
www.cocacolaep.com as soon as possible
Dividend
• The CCEP Board of Directors declared a second half interim
dividend of €1.17 per share
▪ The interim dividend is payable 5 December 2023 to those
shareholders of record on 17 November 2023
▪ CCEP will pay the interim dividend in euros to holders of shares
on Euronext Amsterdam, the Spanish Stock Exchanges & London Stock Exchange
▪ Other publicly held shares will be converted into an equivalent US
dollar amount using exchange rates issued by WM/Reuters taken at 16:00 GMT on
1 November 2023. This translated amount will be posted on our website here:
https://ir.cocacolaep.com/shareholder-information-and-tools/dividends
Financial Calendar
• Q4 & FY Results 2023: 20 February 2024
• Financial calendar available here:
https://ir.cocacolaep.com/financial-calendar/
Contacts
Investor Relations
Sarah Willett Awais Khan Raj Sidhu
sarah.willett@ccep.com awais.khan@ccep.com raj.sidhu@ccep.com
Media Relations
ccep@portland-communications.com
About CCEP
Coca-Cola Europacific Partners is one of the world's leading consumer goods
companies. We make, move and sell some of the world's most loved brands -
serving 600 million consumers and helping 2 million customers across 30
countries grow.
We combine the strength and scale of a large, multi-national business with an
expert, local knowledge of the customers we serve and communities we support.
The Company is currently listed on Euronext Amsterdam, the NASDAQ Global
Select Market, London Stock Exchange and on the Spanish Stock Exchanges,
trading under the symbol CCEP.
For more information about CCEP, please visit www.cocacolaep.com & follow
CCEP on Twitter at @CocaColaEP.
___________________
1. A unit case equals approximately 5.678 litres or 24 8-ounce
servings
2. Refer to 'Note Regarding the Presentation of Alternative
Performance Measures' for further details & to 'Supplementary Financial
Information' for a reconciliation of reported to comparable results; Change
percentages against prior year equivalent period unless stated otherwise
3. Comparable & FX-neutral
4. Aboitiz Equity Ventures Inc.
5. Coca-Cola Beverages Philippines, Inc.
6. External data sources: Nielsen & IRI Period 9 YTD
7. Increased households (+50bps) P9 YTD for GB, Germany,
Spain, France, Netherlands, P8 YTD for Belgium
8. No selling day shift in Q3 or YTD; CCEP reported volume
-4.5% in Q3 & -1.0% in YTD
9. Dividends subject to Board approval
10. Includes France & Monaco
11. Includes Spain, Portugal & Andorra
12. Includes Belgium, Luxembourg, the Netherlands, Norway, Sweden
& Iceland
13. Includes Australia, New Zealand & the Pacific Islands,
Indonesia & Papua New Guinea
14. Revenue per unit case
15. RTD refers to ready to drink; Other includes Alcohol &
Coffee
16. Pro-forma & comparable basis
17. In all listed markets, Powerade not listed in Indonesia
18. ARTD refers to alcohol ready to drink
19. Combined portfolio of Jack Daniels & Coca-Cola and Jack
Daniels & Coca-Cola Zero Sugar, external data source Nielsen last 4 weeks
ending 9 September 2023
Forward-Looking Statements
This document contains statements, estimates or projections that constitute
"forward-looking statements" concerning the financial condition, performance,
results, guidance and outlook, dividends, consequences of mergers,
acquisitions, joint ventures, and divestitures, including the proposed joint
venture with Aboitiz Equity Ventures Inc. (AEV) and acquisition of Coca-Cola
Beverages Philippines, Inc. (CCBPI), strategy and objectives of Coca-Cola
Europacific Partners plc and its subsidiaries (together CCEP or the Group).
Generally, the words "ambition", "target", "aim", "believe", "expect",
"intend", "estimate", "anticipate", "project", "plan", "seek", "may", "could",
"would", "should", "might", "will", "forecast", "outlook", "guidance",
"possible", "potential", "predict", "objective" and similar expressions
identify forward-looking statements, which generally are not historical in
nature.
Forward-looking statements are subject to certain risks that could cause
actual results to differ materially from CCEP's historical experience and
present expectations or projections. As a result, undue reliance should not be
placed on forward-looking statements, which speak only as of the date on which
they are made. These risks include but are not limited to:
1. those set forth in the "Risk Factors" section of CCEP's 2022 Annual Report
on Form 20-F filed with the SEC on 17 March 2023 and as updated and
supplemented with the additional information set forth in the "Principal Risks
and Risk Factors" section of the H1 2023 Half-year Report filed with the SEC
on 2 August 2023;
2. risks and uncertainties relating to the global supply chain and
distribution, including impact from war in Ukraine and increasing geopolitical
tensions and conflicts including in the Middle East and Asia Pacific region,
such as the risk that the business will not be able to guarantee sufficient
supply of raw materials, supplies, finished goods, natural gas and oil and
increased state-sponsored cyber risks;
3. risks and uncertainties relating to the global economy and/or a potential
recession in one or more countries, including risks from elevated inflation,
price increases, price elasticity, disposable income of consumers and
employees, pressure on and from suppliers, increased fraud, and the perception
or manifestation of a global economic downturn;
4. risks and uncertainties relating to potential global energy crisis, with
potential interruptions and shortages in the global energy supply,
specifically the natural gas supply in our territories. Energy shortages at
our sites, our suppliers and customers could cause interruptions to our supply
chain and capability to meet our production and distribution targets;
5. risks and uncertainties relating to potential water use reductions due to
regulations by national and regional authorities leading to a potential
temporary decrease in production volume; and
6. risks and uncertainties relating to the proposed joint venture with AEV and
acquisition of CCBPI, including the risk that the proposed transactions may
not be consummated on the currently contemplated terms or at all, or that our
integration of CCBPI's business and operations may not be successful or may be
more difficult, time consuming or costly than expected.
Due to these risks, CCEP's actual future financial condition, results of
operations, and business activities, including its results, dividend payments,
capital and leverage ratios, growth, including growth in revenue, cost of
sales per unit case and operating profit, free cash flow, market share, tax
rate, efficiency savings, achievement of sustainability goals, including net
zero emissions and recycling initiatives, capital expenditures, our agreements
relating to and results of the proposed joint venture with AEV and acquisition
of CCBPI, and ability to remain in compliance with existing and future
regulatory compliance, may differ materially from the plans, goals,
expectations and guidance set out in forward-looking statements. These risks
may also adversely affect CCEP's share price. Additional risks that may impact
CCEP's future financial condition and performance are identified in filings
with the SEC which are available on the SEC's website at www.sec.gov. CCEP
does not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise, except as required under applicable rules, laws and
regulations. Any or all of the forward-looking statements contained in this
filing and in any other of CCEP's public statements may prove to be incorrect.
Note Regarding the Presentation of Alternative Performance Measures
We use certain alternative performance measures (non-IFRS performance
measures) to make financial, operating and planning decisions and to evaluate
and report performance. We believe these measures provide useful information
to investors and as such, where clearly identified, we have included certain
alternative performance measures in this document to allow investors to better
analyse our business performance and allow for greater comparability. To do
so, we have excluded items affecting the comparability of period-over-period
financial performance as described below. The alternative performance measures
included herein should be read in conjunction with and do not replace the
directly reconcilable IFRS measures.
For purposes of this document, the following terms are defined:
''As reported'' are results extracted from our consolidated financial
statements.
"Comparable'' is defined as results excluding items impacting comparability,
which include restructuring charges, income arising from the ownership of
certain mineral rights in Australia, gain on sale of sub-strata and associated
mineral rights in Australia, net impact related to European flooding and
acquisition and integration related costs. Comparable volume is also adjusted
for selling days.
''Fx-neutral'' or "FXN" is defined as period results excluding the impact of
foreign exchange rate changes. Foreign exchange impact is calculated by
recasting current year results at prior year exchange rates.
''Capex'' or "Capital expenditures'' is defined as purchases of property,
plant and equipment and capitalised software, plus payments of principal on
lease obligations, less proceeds from disposals of property, plant and
equipment. Capex is used as a measure to ensure that cash spending on capital
investment is in line with the Group's overall strategy for the use of cash.
''Free cash flow'' is defined as net cash flows from operating activities less
capital expenditures (as defined above) and interest paid. Free cash flow is
used as a measure of the Group's cash generation from operating activities,
taking into account investments in property, plant and equipment and
non-discretionary lease and interest payments. Free cash flow is not intended
to represent residual cash flow available for discretionary expenditures.
''Dividend payout ratio'' is defined as dividends as a proportion of
comparable profit after tax.
Additionally, within this document, we provide certain forward-looking
non-IFRS financial Information, which management uses for planning and
measuring performance. We are not able to reconcile forward-looking non-IFRS
measures to reported measures without unreasonable efforts because it is not
possible to predict with a reasonable degree of certainty the actual impact or
exact timing of items that may impact comparability throughout year.
Unless otherwise stated, percent amounts are rounded to the nearest 0.5%.
Supplemental Financial Information - Revenue
Revenue
Revenue CCEP Third-Quarter Ended Nine Months Ended
In millions of €, except per case data which is calculated prior to
rounding. FX impact calculated by recasting current year results at prior year
rates.
29 Sept 2023 30 Sept 2022 % Change 29 Sept 2023 30 Sept 2022 % Change
As reported and comparable 4,807 4,745 1.5 % 13,784 13,025 6.0 %
Adjust: Impact of fx changes 129 n/a n/a 317 n/a n/a
Comparable and fx-neutral 4,936 4,745 4.0 % 14,101 13,025 8.5 %
Revenue per unit case 5.83 5.35 9.0 % 5.69 5.20 9.5 %
Revenue Europe Third-Quarter Ended Nine Months Ended
In millions of €, except per case data which is calculated prior to
rounding. FX impact calculated by recasting current year results at prior year
rates.
29 Sept 2023 30 Sept 2022 % Change 29 Sept 2023 30 Sept 2022 % Change
As reported and comparable 3,956 3,820 3.5 % 11,061 10,271 7.5 %
Adjust: Impact of fx changes 28 n/a n/a 134 n/a n/a
Comparable and fx-neutral 3,984 3,820 4.5 % 11,195 10,271 9.0 %
Revenue per unit case 5.65 5.19 9.0 % 5.57 5.11 9.0 %
( )
Revenue API Third-Quarter Ended Nine Months Ended
In millions of €, except per case data which is calculated prior to
rounding. FX impact calculated by recasting current year results at prior year
rates.
29 Sept 2023 30 Sept 2022 % Change 29 Sept 2023 30 Sept 2022 % Change
As reported and comparable 851 925 (8.0) % 2,723 2,754 (1.0) %
Adjust: Impact of fx changes 101 n/a n/a 183 n/a n/a
Comparable and fx-neutral 952 925 3.0 % 2,906 2,754 5.5 %
Revenue per unit case 6.74 6.11 10.5 % 6.25 5.58 12.0 %
(
)
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