REG - Coca-Cola EP PLC - Results for the six months ended 30 June 2023
02/08/2023 07:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230802:nRSB0408Ia&default-theme=true
RNS Number : 0408I Coca-Cola Europacific Partners plc 02 August 2023
COCA-COLA EUROPACIFIC PARTNERS
Results for the six months ended 30 June 2023
Strong first half, raising FY guidance
H1 2023 Metric( 1 ) As Reported Comparable ( 1 ) Change vs H1 2022
As Reported Comparable Comparable FXN ( 1 )
( 1 )
Total CCEP Volume (M UC)( 2 ) 1,631 1,631 1.0% 1.0%
Revenue (€M) 8,977 8,977 8.5% 8.5% 10.5%
Cost of sales (€M) 5,707 5,701 8.0% 7.5% 10.0%
Operating expenses (€M) 2,153 2,111 6.5% 9.5% 11.5%
Operating profit (€M) 1,170 1,165 21.0% 11.0% 13.0%
Profit after taxes (€M) 854 847 26.5% 14.0% 16.5%
Diluted EPS (€) 1.86 1.85 27.5% 14.5% 17.0%
Revenue per UC( 2 ) (€) 5.62 10.0%
Cost of sales per UC( 2 ) (€) 3.57 9.0%
Free cash flow (€M) 850
H1 Interim dividend per share( 3 ) (€) 0.67
Europe Volume (M UC)( 2 ) 1,307 1,307 2.5% 2.5%
Revenue (€M) 7,105 7,105 10.0% 10.0% 12.0%
Operating profit (€M) 887 924 19.5% 12.0% 14.0%
Revenue per UC( 2 ) (€) 5.52 9.0%
API Volume (M UC)( 2 ) 324 324 (5.5)% (5.5)%
Revenue (€M) 1,872 1,872 2.5% 2.5% 7.0%
Operating profit (€M) 283 241 25.0% 6.5% 11.0%
Revenue per UC( 2 ) (€) 6.03 13.0%
DAMIAN GAMMELL, CHIEF EXECUTIVE OFFICER, SAID:
"Today, we are excited to announce the proposed joint acquisition of Coca-Cola
Beverages Philippines, Inc. with Aboitiz Equity Ventures Inc., one of the
leading conglomerates in the local market. This offers us a great opportunity
to acquire an established, well-run business with attractive profitability and
growth prospects. This would be a natural next step for CCEP, creating a more
diverse footprint within our existing API business segment, support
Indonesia's transformation journey and underpin our strategic mid-term
objectives.
"We are also very pleased to have delivered a great first half, achieving
strong top and bottom-line growth and generating impressive free cash flow.
Our performance reflects great in-market execution, strong customer
relationships allowing our consumers to continue to enjoy our portfolio of
leading brands across a broad pack offering. This resulted in solid volume
growth across our developed markets, whilst our volume in Indonesia reflected
the execution of our long-term transformation strategy. Our focus on revenue
and margin growth management, along with our price and promotion strategy,
drove solid gains in revenue per unit case with transactions outpacing volume.
"Looking ahead, we remain confident in the resilience of our categories,
despite the ongoing dynamic outlook. We have fantastic activation plans to
build on our momentum, including the Women's World Cup, to engage customers
and consumers. We also continue to actively manage our pricing and promotional
spend to remain affordable and relevant to our consumers. Given our strong
first half, we are raising revenue, operating profit and free cash flow
guidance( 1 ) for FY23. This demonstrates the strength of our business and
ability to deliver continued shareholder value. This is all underpinned by our
progress on sustainability, our talented and engaged colleagues, and our
strong relationships with The Coca-Cola Company, our other brand partners, and
our customers, who continue to share in our success."
___________________________
Note: All footnotes included after the 'About CCEP' section
H1 & Q2 HIGHLIGHTS( 1 )
Revenue
H1 Reported +8.5%; H1 Fx-neutral +10.5%( 4 )
• 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)( 5 )
• NARTD YTD value share gains( 5 ) across measured channels both
in-store (+10bps) & online (+90bps)
• Comparable volume +1.0%( 6 ) (Europe: +2.5%; API: -5.5%)
driven by good underlying demand in developed markets & solid in-market
execution offset by strategic SKU rationalisation as part of our long-term
transformation in Indonesia
◦ Away from Home (AFH) channel comparable volume: +0.5%( 6 )
(+0.5% vs 2019) with good underlying demand, ahead of pre-pandemic levels
◦ Home channel comparable volume: +1.0%( 6 ) (+8.5% vs 2019)
reflecting resilient growth as at-home occasion trends continue
• Transactions outpaced volume growth in Europe, Australia &
NZ
• Revenue per unit case +10.0%( 2 , 4 ) (Europe: +9.0%; API:
+13.0%) reflecting the annualisation of last year's headline price increases,
& this year's headline price increases across most of our markets,
alongside favourable pack & brand mix
Q2 Reported +5.5%; Q2 Fx-neutral +8.0%( 4 )
• Comparable volume -1.5%( 6 ) (Europe: +0.5%; API: -11.0%)
reflecting good underlying demand in developed markets & tough comparables
(Q2 22 pro forma comparable volume: +10.5%) offset by the timing of Ramadan
& the strategic SKU rationalisation in Indonesia
◦ AFH channel comparable volume: -3.0%( 6 ) reflecting last
year's rebound following the removal of restrictions & recovery of
tourism, & favourable weather in Europe
◦ Home channel comparable volume: -1.0%( 6 )
• Revenue per unit case +10.0%( 2 , 4 ) (Europe: +9.5%; API:
+13.0%) driven by positive headline price increases & promotional
optimisation alongside favourable pack & brand mix
H1 Operating profit
Reported +21.0%; Fx-neutral +13.0%( 4 )
• Cost of sales per unit case +9.0%( 2 , 4 ) reflecting
increased revenue per unit case driving higher concentrate costs, &
inflation in commodities & manufacturing
• Comparable operating profit of €1,165m, +13.0%( 4 )
reflecting strong top-line, our efficiency programmes & continuous efforts
on discretionary spend optimisation
• Comparable diluted EPS of €1.85, +17.0%( 4 ) (reported
+27.5%)
Dividend
• First half interim dividend per share of €0.67( 3 )
(declared at Q1 & paid in May), calculated as 40% of the FY22 dividend
• Reaffirming guidance for an annualised total dividend payout
ratio of approximately 50%( 7 )
( )
Proposal to jointly acquire Coca-Cola Beverages Philippines, Inc. with Aboitiz
Equity Ventures Inc.
• See separate release on Investors section of our website for
more detail
(https://ir.cocacolaep.com/financial-reports-and-results/financial-releases)
Other
• Free cash flow: Generated strong free cash flow of €850m
reflecting strong performance (net cashflows from operating activities of
€1,307m), supporting our journey to return to our target leverage range of
Net debt:Adjusted EBITDA( 1 ) of 2.5x-3x. At the end of 2022, Net
debt:Adjusted EBITDA( 1 ) was 3.5x
• Strategic portfolio choices:
◦ Australia & NZ Spirits & ARTD( 8 ) category: CCEP
plans to maximise its extensive knowledge in the attractive & fast growing
ARTD category by launching new scalable offerings aligned with The Coca-Cola
Company. In this context, CCEP & Beam Suntory will move forward
independently. Effective from the date of contract expiry (30 June 2025 in
Australia & 31 December 2025 in NZ)
◦ Capri Sun: Following a successful sales & distribution
partnership in Europe, CCEP & Capri Sun will move forward independently,
consistent with their respective strategies. Will come into effect during 2024
enabling an orderly transition
◦ Insignificant impact on CCEP volume, revenue & operating
profit( 4 , 9 ) from the above
SUSTAINABILITY HIGHLIGHTS
• Retained MSCI AAA rating, inclusion on Carbon Disclosure
Project's A Lists for Climate & Water, & inclusion on the Bloomberg
Gender Equality index
• Progressed our packaging initiatives
◦ Boosted recycled content in Indonesia by switching to 100%
rPET bottles
◦ Installed a PET plastic grinder in Papua New Guinea to support
the supply of rPET
◦ Transitioned Sprite from green to clear bottles across API,
making them easier to recycle
• Introduced electric trucks in Luxembourg, Belgium & Spain
to reduce carbon emissions from our logistics
• Partnered with The Coca-Cola Company, other bottlers &
Greycroft, a seed-to-growth venture capital firm, to create a
sustainability-focused venture capital fund
FY23 GUIDANCE & OUTLOOK( 1 )
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 200 basis
points for the full year
Revenue: comparable growth of 8-9% (previously 6-8%)
• Headline pricing successfully implemented across most of our
markets without disruption. Germany & the Netherlands to be implemented in
the third quarter
• Continued focus on promotional optimisation & revenue
growth management initiatives
Cost of sales per unit case: comparable growth of ~8% (unchanged)
• Higher concentrate costs reflecting increased revenue per unit
case
• Commodity inflation expected to be ~8% (previously ~10%)
• FY23 hedge coverage at >95%
• Low overall FX transactional exposure (<10%)
Operating profit: comparable growth of 12-13% (previously 6-7%)
• Increased top-line performance
• Continued focus on delivering efficiency programmes &
optimising discretionary spend
Comparable effective tax rate: ~24% (previously ~23%)
• Primarily due to change of geographic profit mix
Free cash flow: at least €1.7bn (previously at least €1.6bn)
Capital expenditure: 4-5% of revenue excluding leases (unchanged)
Dividend payout ratio: c.50%( 7 ) (unchanged)
SECOND QUARTER & FIRST HALF REVENUE PERFORMANCE BY GEOGRAPHY( 1 )
All values are unaudited, changes versus equivalent 2022 period
Second-quarter First-half
Fx-Neutral Fx-Neutral
€ million % change % change € million % change % change
Great Britain 881 9.5% 12.0% 1,570 7.5% 11.5%
France( 10 ) 665 20.0% 20.0% 1,200 18.0% 18.0%
Germany 799 8.5% 8.5% 1,458 12.5% 12.5%
Iberia( 11 ) 886 7.0% 7.0% 1,541 12.5% 12.5%
Northern Europe( 12 ) 729 1.0% 5.0% 1,336 2.5% 6.0%
Total Europe 3,960 8.5% 10.0% 7,105 10.0% 12.0%
API( 13 ) 863 (6.5)% 0.5% 1,872 2.5% 7.0%
Total CCEP 4,823 5.5% 8.0% 8,977 8.5% 10.5%
France
• Q2 volume growth reflects continued strong momentum across both
channels supported by great execution.
• Coca-Cola Original Taste, Coca-Cola Zero Sugar, Monster &
Flavours performed well. Fuze Tea outperformed, achieving significant volume
growth in both Q2 (+74.0%) & H1 (+57.0%).
• H1 revenue/UC( 14 ) growth driven by headline price increase
implemented at the end of the first quarter.
Germany
• Q2 volume growth reflects solid trading in the Home channel
supported by great execution & evidence of consumers shifting to
Hypermarkets & Discounters. AFH channel volume broadly flat.
• Continued strong growth in Coca-Cola Zero Sugar, whilst Monster,
Fuze Tea & Powerade achieved double-digit volume growth in both Q2 &
H1.
• H1 revenue/UC( 14 ) growth driven by favourable price from the
annualisation of the second headline price increase last year & positive
brand mix (e.g. Monster volume +30.5%).
Great Britain
• Q2 volume growth reflects sustained trading momentum across both
channels. Record temperatures in June supported strong volume growth towards
the end of the quarter.
• Coca-Cola Zero Sugar & Monster realised double-digit volume
growth in both Q2 & H1.
• H1 revenue/UC( 14 ) growth driven by headline price increase
implemented at the end of the second quarter.
Iberia
• Q2 volume decline reflects tough comparables, cycling the rebound of
the AFH channel, favourable weather & buy-in ahead of second headline
price increase last year & anticipated transportation disruption. H1
growth driven by the recovery of the AFH channel in the first quarter (cycling
covid restrictions).
• Coca-Cola Original Taste, Coca-Cola Zero Sugar & Aquarius
performed well in H1. Monster achieved double-digit volume growth in both Q2
& H1.
• H1 revenue/UC( 14 ) growth driven by headline price, implemented in
the first quarter, & positive channel & pack mix led by growth in the
AFH channel e.g. small glass +6.5%.
Northern Europe
• Q2 volume decline reflects tough comparables, cycling double-digit
volume growth last year following the late removal of restrictions. H1 growth
driven by continued recovery of the AFH channel.
• Fuze Tea, Powerade & Aquarius outperformed achieving
double-digit volume growth in H1.
• H1 revenue/UC( 14 ) growth driven by headline price increase
implemented during the first half & positive pack mix led by the recovery
of the AFH channel e.g. small glass +7.0%.
API
• Q2 volume decline reflects phasing of Ramadan, & strategic SKU
rationalisation in Indonesia, with industry-wide supply constraints early in
the quarter in Australia.
• Coca-Cola Zero Sugar & Monster continued to outperform in both
Q2 & H1.
• H1 revenue/UC( 14 ) growth driven by headline price increase
implemented across all markets during the first half & promotional
optimisation in Australia.
___________________________
Note: All values are unaudited and all references to volumes are on a
comparable basis.
SECOND QUARTER & FIRST HALF VOLUME PERFORMANCE BY CATEGORY( 1 , 6 )
Comparable volumes, changes versus equivalent 2022 period.
Second-quarter First-half
% of Total % Change % of Total % Change( 5 )
Sparkling 85.0 % (1.0) % 85.0 % 1.5 %
Coca-Cola® 58.5 % (1.0) % 58.5 % 1.5 %
Flavours, Mixers & Energy 26.5 % (1.5) % 26.5 % 1.5 %
Stills 15.0 % (5.0) % 15.0 % (3.5) %
Hydration 7.5 % (8.0) % 7.5 % (4.5) %
RTD Tea, RTD Coffee, Juices & Other( 15 ) 7.5 % (1.5) % 7.5 % (2.5) %
Total 100.0 % (1.5) % 100.0 % 1.0 %
Coca-Cola®
Q2: -1.0%; H1: +1.5%
• Strong underlying demand with tough comparables in the second
quarter, cycling the rebound of the AFH channel & tourism, &
favourable weather in Europe last year.
• Coca-Cola Zero Sugar continued to grow (+5.5%) across all key
markets in H1 supported by targeted campaigns & innovation.
• Coca-Cola Zero Sugar gained value share( 5 ) of Total Cola +20bps.
Flavours, Mixers & Energy
Q2: -1.5%; H1: +1.5%
• Strong underlying demand with tough comparables in the second
quarter, cycling the rebound of the AFH channel & tourism, &
favourable weather in Europe last year.
• Fanta Q2: -2.0%; H1: +2.0%, reflecting the above with growth
supported by flavour extensions.
• Energy Q2: +14.5%; H1: +15.0% led by Monster, continuing to gain
share & drive distribution through exciting innovation.
Hydration
Q2: -8.0%; H1: -4.5%
• Water Q2: -14.5%; H1: -10.0% as a result of strategic portfolio
choices, with SKU rationalisation in Indonesia, the exit of Vio large PET in
Germany & Mount Franklin bulk pack in Australia.
• Sports Q2: +7.0%; H1: +10.5%, with growth in Aquarius & Powerade
driven by continued consumer trends in this category.
RTD Tea, RTD Coffee, Juices & Other( 15 )
Q2: -1.5%; H1: -2.5%
• Juice drinks Q2: -5.5%; H1: -6.5% reflecting strategic SKU
rationalisation in Indonesia.
• RTD Tea/Coffee Q2: +4.5%; H1: +3.5% driven by Costa RTD in GB
(+21.5%) & Fuze Tea in Europe (+27.0%).
• Encouraging start for Jack Daniel's & Coca-Cola now launched in
GB, Spain & the Netherlands.
___________________________
Note: All values are unaudited and all references to volumes are on a
comparable basis.
Conference Call (with presentation)
• 2 August 2023 at 10:30 BST, 11:30 CEST & 5:30 a.m. EDT;
accessible via www.cocacolaep.com
• Replay & transcript will be available at
www.cocacolaep.com as soon as possible
Financial Calendar
• Third quarter 2023 trading update: 1 November 2023
• Financial calendar available here:
https://ir.cocacolaep.com/financial-calendar/
Contacts
Investor Relations
Sarah
Willett
Awais
Khan
Claire Copps
+44 7970 145 218
+44 7528 251 830
+44 7980 775 889
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 29
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. 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
2. A unit case equals approximately 5.678 litres or 24 8-ounce
servings
3. 25 April 2023 declared first half interim dividend of €0.67
dividend per share, paid 25 May 2023
4. Comparable & FX-neutral
5. External data sources: Nielsen & IRI P6 YTD
6. No selling day shift in Q2 or H1; CCEP reported volume +1.0% in H1
& -1.5% in Q2
7. Dividends subject to Board approval
8. ARTD refers to alcohol ready to drink
9. The discontinuance of the relationship between CCEP & Beam
Suntory will trigger a change in the assigned useful economic life of the
intangible assets effective from the second half of 2023, shortening the
amortization period. See Note 14 for further details
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
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 this document;
2. risks and uncertainties relating to the global supply chain, including
impact from war in Ukraine and increasing geopolitical tension including in
the 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, the results of
the acquisition of the minority share of our Indonesian business, 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
Alternative Performance Measures
We use certain alternative performance measures (non-GAAP 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 GAAP measures.
For purposes of this document, the following terms are defined:
''As reported'' are results extracted from our condensed consolidated interim
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'' 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.
''Adjusted EBITDA'' is calculated as Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA), after adding back items impacting the
comparability of period over period financial performance. Adjusted EBITDA
does not reflect cash expenditures, or future requirements for capital
expenditures or contractual commitments. Further, adjusted EBITDA does not
reflect changes in, or cash requirements for, working capital needs, and
although depreciation and amortisation are non-cash charges, the assets being
depreciated and amortised are likely to be replaced in the future and adjusted
EBITDA does not reflect cash requirements for such replacements.
''Net Debt'' is defined as the net of cash and cash equivalents and short-term
investments less borrowings and adjusted for the fair value of hedging
instruments related to borrowings and other financial assets/liabilities
related to borrowings. We believe that reporting net debt is useful as it
reflects a metric used by the Group to assess cash management and leverage. In
addition, the ratio of net debt to adjusted EBITDA is used by investors,
analysts and credit rating agencies to analyse our operating performance in
the context of targeted financial leverage.
''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-GAAP financial Information, which management uses for planning and
measuring performance. We are not able to reconcile forward-looking non-GAAP
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%.
Supplementary Financial Information - Items impacting comparability - Reported
to Comparable
The following provides a summary of the items impacting
comparability for the first six months ended 30 June 2023 and 1 July 2022:
First Six Months 2023
In millions of € except share data which is calculated prior to rounding Operating profit Profit after taxes Diluted earnings per share (€)
As Reported 1,170 854 1.86
Items impacting comparability
Restructuring charges ( 1 ) 51 42 0.09
Coal royalties ( 2 ) (18) (12) (0.03)
European flooding ( 4 ) (3) (2) -
Sale of sub-strata and associated mineral rights ( 5 ) (35) (35) (0.07)
Comparable 1,165 847 1.85
First Six Months 2022
In millions of € except share data which is calculated prior to rounding Operating profit Profit after taxes Diluted earnings per share (€)
As Reported 967 675 1.46
Items impacting comparability
Restructuring charges ( 1 ) 95 76 0.17
Acquisition and Integration related costs ( 3 ) 1 1 -
European flooding ( 4 ) (12) (9) (0.02)
Comparable 1,051 743 1.61
__________________________
( 1 ) Amounts represent restructuring charges related to business
transformation activities.
( 2 ) Amounts represent royalty income arising from the ownership of certain
mineral rights in Australia. The royalty income is recognised as "Other
income" in our condensed consolidated interim income statement as of the six
months ended 30 June 2023.
( 3 ) Amounts represent cost associated with the acquisition and integration
of CCL.
( 4 ) Amounts represent the incremental expense incurred offset by the
insurance recoveries collected as a result of the July 2021 flooding events,
which impacted the operations of our production facilities in Chaudfontaine
and Bad Neuenahr.
( 5 ) Amounts represent the considerations received relating to the sale of
the sub-strata and associated mineral rights in Australia. The transaction
completed in April 2023 and the proceeds were recognised as "Other income" in
our condensed consolidated interim income statement as of the six months ended
30 June 2023.
( )
Supplemental Financial Information - Operating Profit - Reported to Comparable
Revenue
Revenue CCEP Second-Quarter Ended Six 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.
30 June 2023 1 July 2022 % Change 30 June 2023 1 July 2022 % Change
As reported 4,823 4,571 5.5% 8,977 8,280 8.5%
Adjust: Impact of fx changes 117 n/a n/a 188 n/a n/a
Fx-neutral 4,940 4,571 8.0% 9,165 8,280 10.5%
Revenue per unit case 5.73 5.21 10.0% 5.62 5.12 10.0%
Revenue Europe Second-Quarter Ended Six 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.
30 June 2023 1 July 2022 % Change 30 June 2023 1 July 2022 % Change
As reported 3,960 3,646 8.5% 7,105 6,451 10.0%
Adjust: Impact of fx changes 50 n/a n/a 106 n/a n/a
Fx-neutral 4,010 3,646 10.0% 7,211 6,451 12.0%
Revenue per unit case 5.60 5.11 9.5% 5.52 5.06 9.0%
Revenue API Second-Quarter Ended Six 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.
30 June 2023 1 July 2022 % Change 30 June 2023 1 July 2022 % Change
As reported 863 925 (6.5)% 1,872 1,829 2.5%
Adjust: Impact of fx changes 67 n/a n/a 82 n/a n/a
Fx-neutral 930 925 0.5% 1,954 1,829 7.0%
Revenue per unit case 6.35 5.61 13.0% 6.03 5.34 13.0%
Revenue by Geography Six Months Ended 30 June 2023
In millions of €
As reported Reported Fx-Neutral
% change % change
Great Britain 1,570 7.5% 11.5%
Germany 1,458 12.5% 12.5%
Iberia( 1 ) 1,541 12.5% 12.5%
France( 2 ) 1,200 18.0% 18.0%
Belgium/Luxembourg 541 6.0% 6.0%
Netherlands 355 8.0% 8.0%
Norway 193 (7.0)% 5.0%
Sweden 207 (3.0)% 5.5%
Iceland 40 (7.0)% -%
Total Europe 7,105 10.0% 12.0%
Australia 1,162 5.5% 11.0%
New Zealand and Pacific Islands 330 9.5% 14.0%
Indonesia and Papua New Guinea 380 (10.5)% (9.0)%
Total API 1,872 2.5% 7.0%
Total CCEP 8,977 8.5% 10.5%
________________________
( 1 ) Iberia refers to Spain, Portugal & Andorra.
( 2 ) France refers to continental France & Monaco.
( )
Volume
Comparable Volume - Selling Day Shift CCEP Second-Quarter Ended Six Months Ended
In millions of unit cases, prior period volume recast using current year
selling days
30 June 2023 1 July 2022 % Change 30 June 2023 1 July 2022 % Change
Volume 863 878 (1.5)% 1,631 1,618 1.0%
Impact of selling day shift n/a - n/a n/a - n/a
Comparable volume - Selling Day Shift adjusted 863 878 (1.5)% 1,631 1,618 1.0%
Comparable Volume - Selling Day Shift Europe Second-Quarter Ended Six Months Ended
In millions of unit cases, prior period volume recast using current year
selling days
30 June 2023 1 July 2022 % Change 30 June 2023 1 July 2022 % Change
Volume 717 714 0.5% 1,307 1,276 2.5%
Impact of selling day shift n/a - n/a n/a - n/a
Comparable volume - Selling Day Shift adjusted 717 714 0.5% 1,307 1,276 2.5%
Comparable Volume - Selling Day Shift API Second-Quarter Ended Six Months Ended
In millions of unit cases, prior period volume recast using current year
selling days
30 June 2023 1 July 2022 % Change 30 June 2023 1 July 2022 % Change
Volume 146 164 (11.0)% 324 342 (5.5)%
Impact of selling day shift n/a - n/a n/a - n/a
Comparable volume - Selling Day Shift adjusted 146 164 (11.0)% 324 342 (5.5)%
Cost of Sales
Cost of Sales Six 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.
30 June 2023 1 July 2022 % change
As reported 5,707 5,288 8.0%
Adjust: Total items impacting comparability (6) 12 n/a
Adjust: Restructuring charges ( 1 ) (9) -
Adjust: European flooding ( 2 ) 3 12
Comparable 5,701 5,300 7.5%
Adjust: Impact of FX changes 121 n/a n/a
Comparable and FX neutral 5,822 5,300 10.0%
Cost of sales per unit case 3.57 3.28 9.0%
__________________________
( 1 ) Amounts represent restructuring charges related to business
transformation activities.
( 2 ) Amounts represent the incremental expense incurred offset by the
insurance recoveries collected as a result of the July 2021 flooding events,
which impacted the operations of our production facilities in Chaudfontaine
and Bad Neuenahr.
For the six months ending 30 June 2023, reported cost of sales were €5,707
million, up 8.0% versus 2022.
Comparable cost of sales for the same period were €5,701 million, up 7.5%
versus 2022. Cost of sales per unit case increased by 9.0% on a comparable and
fx-neutral basis, reflecting increased revenue per unit case driving higher
concentrate costs, and inflation in commodities and manufacturing.
Operating expenses
Operating Expenses Six Months Ended
In millions of €. FX impact calculated by recasting current year results at
prior year rates.
30 June 2023 1 July 2022 % Change
As reported 2,153 2,025 6.5%
Adjust: Total items impacting comparability (42) (96) n/a
Adjust: Restructuring charges ( 1 ) (42) (95)
Adjust: Acquisition and Integration related costs ( 2 ) - (1)
Comparable 2,111 1,929 9.5%
Adjust: Impact of FX changes 42 n/a n/a
Comparable and FX neutral 2,153 1,929 11.5%
__________________________
( 1 ) Amounts represent restructuring charges related to business
transformation activities.
( 2 ) Amounts represent cost associated with the acquisition and integration
of CCL.
For the six months ending 30 June 2023, reported operating expenses were
€2,153 million, up 6.5% versus 2022.
Comparable operating expenses were €2,111 million for the same period, up
9.5% versus 2022, reflecting the impact of inflation and higher volumes,
partially offset by the benefit of ongoing efficiency programmes and our
continuous efforts on discretionary spend optimisation.
Restructuring charges in operating expenses of €42 million related to
various productivity initiatives were recognised in the six month period
ending 30 June 2023.This compares to restructuring charges of €95 million
incurred in the six month period ending 1 July 2022, primarily attributable to
€81 million of expense recognised in connection with the transformation of
the full service vending operations and related initiatives in Germany.
Operating profit
Operating Profit CCEP Six Months Ended
In millions of €. FX impact calculated by recasting current year results at
prior year rates.
30 June 2023 1 July 2022 % Change
As reported 1,170 967 21.0 %
Adjust: Total items impacting comparability (5) 84 n/a
Comparable 1,165 1,051 11.0 %
Adjust: Impact of fx changes 25 n/a n/a
Comparable & fx-neutral 1,190 1,051 13.0 %
Operating Profit Europe Six Months Ended
In millions of €. FX impact calculated by recasting current year results at
prior year rates.
30 June 2023 1 July 2022 % Change
As reported 887 741 19.5 %
Adjust: Total items impacting comparability 37 84 n/a
Comparable 924 825 12.0 %
Adjust: Impact of fx changes 15 n/a n/a
Comparable & fx-neutral 939 825 14.0 %
Operating Profit API Six Months Ended
In millions of €. FX impact calculated by recasting current year results at
prior year rates.
30 June 2023 1 July 2022 % Change
As reported 283 226 25.0%
Adjust: Total items impacting comparability (42) - n/a
Comparable 241 226 6.5%
Adjust: Impact of fx changes 10 n/a n/a
Comparable & fx-neutral 251 226 11.0%
Supplemental Financial Information - Effective Tax Rate
The effective tax rate was 22% and 25% for the six months ended 30 June 2023
and 1 July 2022, respectively, and 22% for the years ended 31 December 2022.
For the six months ending 30 June 2023, the effective tax rate reflects the
impact of having operations outside the UK which are taxed at rates other than
the statutory UK rate of 23.5%, and adjustments made in respect of prior
periods.
We expect our full year 2023 comparable effective tax rate to be approximately
24%.
Income tax Six Months Ended
In millions of €
30 June 2023 1 July 2022
As reported 247 223
Adjust: Total items impacting comparability 2 16
Adjust: Restructuring charges ( 1 ) 9 19
Adjust: European flooding ( 2 ) (1) (3)
Adjust: Coal royalties ( 3 ) (6) -
Comparable 249 239
__________________________
( 1 ) Amounts represent the tax impact of restructuring charges related to
business transformation activities.
( 2 ) Amounts represent the tax impact of the incremental expense incurred
offset by the insurance recoveries collected as a result of the July 2021
flooding events, which impacted the operations of our production facilities in
Chaudfontaine and Bad Neuenahr.
( 3 ) Amounts represent the tax impact of royalty income arising from the
ownership of certain mineral rights in Australia. The royalty income is
recognised as "Other income" in our condensed consolidated interim income
statement as of the six months ended 30 June 2023.
Supplemental Financial Information - Free Cash Flow
Free Cash Flow Six Months Ended
In millions of €
30 June 2023 1 July 2022
Net cash flows from operating activities 1,307 1,653
Less: Purchases of property, plant and equipment (264) (178)
Less: Purchases of capitalised software (40) (22)
Add: Proceeds from sales of property, plant and equipment 9 6
Less: Payments of principal on lease obligations (74) (80)
Less: Interest paid, net (88) (98)
Free Cash Flow 850 1,281
Supplemental Financial Information - Borrowings
Net Debt As at Credit Ratings
In millions of € As of 1 August 2023
30 June 2023 31 December 2022 Moody's Fitch Ratings
Total borrowings ( 4 ) 11,757 11,907 Long-term rating Baa1 BBB+
Fair value of hedges related to borrowings( 1 ) 44 (83) Outlook Stable Stable
Other financial assets/liabilities( 1 ) 23 25 Note: Our credit ratings can be materially influenced by a number of factors
including, but not limited to, acquisitions, investment decisions and working
capital management activities of TCCC and/or changes in the credit rating of
TCCC. A credit rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time.
Adjusted total borrowings 11,824 11,849
Less: cash and cash equivalents( 2 4 ) (1,112) (1,387)
Less: short term (862) (256)
investments( 3 )
Net debt 9,850 10,206
______________________
( 1 ) Net debt includes adjustments for the fair value of derivative
instruments used to hedge both currency and interest rate risk on the Group's
borrowings. In addition, net debt also includes other financial
assets/liabilities relating to cash collateral pledged by/to external parties
on hedging instruments related to borrowings.
( 2 ) Cash and cash equivalents as at 30 June 2023 and 31 December 2022
include €37 million and €102 million of cash in Papua New Guinea Kina
respectively. Presently, there are government-imposed currency controls which
impact the extent to which the cash held in Papua New Guinea can be converted
into foreign currency and remitted for use elsewhere in the Group.
( 3 ) Short term investments are term cash deposits held in API and Europe
with maturity dates when acquired of greater than three months and less than
one year. These short term investments are held with counterparties that are
continually assessed with a focus on preservation of capital and liquidity.
Short term investments as at 30 June 2023 and 31 December 2022 include €61
million and €49 million of assets in Papua New Guinea Kina respectively,
subject to the same currency controls outlined above.
( 4 ) Both borrowings and cash and cash equivalents as at 30 June 2023
include €188 million in relation to a notional pooling agreement for which
an offsetting agreement is in place which does not meet the criteria for net
presentation on the statement of financial position.
Supplemental Financial Information - Adjusted EBITDA
Adjusted EBITDA Six Months Ended
In millions of €
30 June 2023 1 July 2022
Reported profit after tax 854 675
Taxes 247 223
Finance costs, net 63 63
Non-operating items 6 6
Reported operating profit 1,170 967
Depreciation and amortisation 377 386
Reported EBITDA 1,547 1,353
Items impacting comparability
Restructuring charges( 1 ) 47 94
Acquisition and Integration related costs( 2 ) - 1
European flooding( 3 ) (3) (12)
Coal royalties( 4 ) (18) -
Sale of sub-strata and associated mineral rights( 5 ) (35) -
Adjusted EBITDA 1,538 1,436
______________________
( 1 ) Amounts represent restructuring charges related to business
transformation activities, excluding accelerated depreciation included in the
depreciation and amortisation line.
( 2 ) Amounts represent cost associated with the acquisition and integration
of CCL.
( 3 ) Amounts represent the incremental expense incurred offset by the
insurance recoveries collected as a result of the July 2021 flooding events,
which impacted the operations of our manufacturing facilities in
Chaudfontaine and Bad Neuenahr.
( 4 ) Amounts represent royalty income arising from the ownership of certain
mineral rights in Australia. The royalty income is recognised as "Other
income" in our condensed consolidated interim income statement as of the six
months ended 30 June 2023.
( 5 ) Amounts represent the considerations received relating to the sale of
the sub-strata and associated mineral rights in Australia. The transaction
completed in April 2023 and the proceeds were recognised as "Other income" in
our condensed consolidated interim income statement as of the six months ended
30 June 2023.
Principal Risks and Risk Factors
The Group faces a number of risks and uncertainties that may have an adverse
effect on its operations, performance and future prospects and has a robust
risk management programme to assess these and evaluate strategies to manage
them. The principal risks and risk factors in our 2022 Integrated Report on
Form 20-F for the year ended 31 December 2022 ('2022 Integrated Report')
(pages 64 to 71 and 223 to 229 respectively) continue to represent our risks.
Since the publication of the Integrated Report in March, the macro risk
environment remains similar and the reported key control mitigations continue
to be appropriate and effective. Although we don't foresee in the near term an
escalation of current geopolitical tensions, freight disruptions, shortages
and sanctions would be the consequences and have a significant impact on
global trade. CCEP is working to de-risk its supply chain and put in place
plans to secure commodities in particular with our Asian Pacific suppliers. We
will continue to monitor the developments of the situation and any other
potential impacts.
Economic conditions in our markets remain challenging with increases in
inflation and interest rates expected to continue through the remainder of
2023. This may lead to affordability issues for consumers and pricing pressure
from retail customers. We continue to focus on the wellbeing and security of
our people and we are carefully considering the situation and maintaining an
open dialogue and good relations with our social partners. We have not
experienced material impacts on our business from labour issues.
We continue to monitor the developments of the war in Ukraine, which has
impacted the supply of raw materials, supplies, finished goods, gas/oil/energy
and increased cyber risks.
As part of our risk management governance and routines we continuously monitor
the risk landscape and discuss with business leaders risk trends every
quarter, velocity and actions to be taken, as well as scanning for future
risks. Based on that exercise we do not intend to change the principal risk
ratings included in our 2022 Integrated Report, but we have identified some
trends in this first half of 2023.
Water scarcity has been an issue in this first half of the year, in particular
in France and Spain, where authorities have issued contingency plans. In
addition to strong water management routines, a cross functional team has been
using scenario planning to assess the potential impact. As of today we
consider the risk low. We maintain good relations with the local authorities
based on the credibility of our water management strategy and the strict
discipline our demand planning teams apply for SKU prioritisation and
rationalisation.
We have noticed an increase of cyber-attacks to other bottlers within the
Coca-Cola system and suppliers during the first half of the year. CCEP has
responded with increased training and awareness of phishing and social
engineering attacks, increased focus on remediating technical vulnerabilities
as well as increasing the level of testing and exercising.
We continue to be under pressure from customers and authorities to keep prices
low despite the increase in costs. Our commercial teams continue to work
positively with customers to mitigate this risk.
When it comes to our products, discussions on potential taxes to soft drinks
and plastic continue in different countries across our territories including
Spain, the Netherlands, Indonesia and Sweden. Based on our experience we
engage in open and collaborative discussions with authorities and other
stakeholders. We are also evaluating and responding appropriately to recent
reports in relation to sweeteners, considering the risk of regulation,
litigation and reputational damage.
Accordingly, the information provided about our principal risks and risk
factors in the table below and in the Principal Risks and Risk Factors in our
2022 Integrated Report, and any or all of the Principal Risks and Risk Factors
contained therein may be exacerbated by developments in the factors identified
above and in our Forward-Looking Statements set out on page 7 of this interim
management report.
The risks described in this report and in our 2022 Integrated Report are not
the only risks facing the Group. Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial may also
adversely affect our business, financial condition or future results.
SUMMARY OF OUR PRINCIPAL RISKS
The table below shows our Principal Risks:
Risk change legend: ↑ Increased ↓ Decreased → Stayed the same
Principal Risk Description Causal factors themes (What gives rise to the risk?) Consequence themes (Potential impact of the risk) Key control mitigations Change vs. 2022 Integrated Report
(What is the risk?) (How we manage it)
Packaging The risks relating to packaging waste, plastic pollution, and single use • Stakeholder concern about the environmental impacts of single use plastic • Brand and reputation damage from not keeping up with community/customer • Development of the packaging pillar within our This is Forward →
plastic. packaging, litter and packaging waste expectations sustainability action plan, including pack mix, recycled content and
improvement of packaging collection. More information on our packaging
• Financial impact from increased taxes and on the costs of doing business strategy can be found in our Forward on packaging section on pages 42-45 of
our 2022 Integrated Report
• Regulatory and compliance impacts
• Continued sustainability action plan focused on packaging, including our
• Increased potential for activism and collective litigation (including commitments to:
potential greenwashing claims)
- Ensure that 100% of our primary packaging is recyclable by 2025
- Drive higher collection rates, aiming to ensure that we collect and recycle
a bottle or a can for each one we sell by 2030
- 50% recycled plastic in our PET bottles by 2023 (Europe) and 2025 (API)
- Stop using oil-based virgin plastic in our bottles by 2030
- Invest in rPET infrastructure to help drive packaging circularity and secure
access to recycled material
Legal, regulatory and tax The risks associated with new or changing legal, regulatory or tax, • Manufacturing activities • Financial impact from new or higher taxes • Continuous monitoring, assessment and appropriate implementation of new or →
legislative environment and subsequent obligations and compliance
changing laws and regulations. Include pending and likely forthcoming
requirements. • Use of certain ingredients • Stricter sales and marketing controls impacting margins and market share regulations in decision making
• Packaging • Punitive action from regulators or other legislative bodies • Dialogue with government representatives and input to public consultations
on new or changing regulations
• Restrictions on sugar and sweeteners • Increase to the cost of compliance to meet stricter or new regulatory
requirements • Development of compliance processes and training programmes for employees
• Labelling requirements
• Brand and reputation damage • Communication with public health stakeholders to tell our story on drinks
• Distribution and sale activities in anticipation of potential regulatory pressures
• Employment costs • Close liaison with our franchisors and checking of public statements
including labelling and advertising
• Carbon taxes
• Increase of tech and AI
Business disruption The risk of prolonged, large scale natural and/or man made disruptive events. • Cyber attack or IT/operational technology system failure • Disruption to supply chains/operations • Development, testing and continual improvement of Business Continuity →
Planning (BCP) through implementation of the BCP elements of TCCC's Business
• Pandemics • Safety and wellbeing of our people Resilience Framework
• Extreme weather events (floods, fires) • Brand and reputation damage • Training and awareness to build Business Continuity and Resilience
capabilities across our sites and processes and improve our response to
• Natural disasters • Financial impact incidents
• Civil unrest, war and terrorism • Scenario planning exercises and Business Impact Assessments to analyse and
identify critical people (roles), property, technology, equipment and
suppliers (value chain)
• Coordination, continuous improvement and testing of our Incident
Management and Crisis Response process
• Ongoing focus on de-risking Procurement and Supply Chain
Cyber and social engineering attacks and IT infrastructure The risks related to the protection of information systems and data from • External attackers seeking to ransom or disrupt systems and data • Financial and other impacts from disruption to operations • Established cyber strategy with engagement of the ELT and Board →
unauthorised access, misuse, disruption, modification, or destruction.
• Dependency on third parties • Fines, increased cybersecurity protection costs, litigation expense and • Conducting regular training and awareness on information security and data
increased insurance premiums privacy
• Internal misuse (malicious or accidental)
• Safety and privacy of employees, customers or business partners who may • Development of BCP and Disaster Recovery programmes including regular
• Security and maintenance of IT infrastructure and applications have their personal information stolen internal and external testing of security controls to identify and resolve
vulnerabilities
• Brand and reputation damage
• Threat vulnerability management and threat intelligence
• Implementation of a hardware lifecycle
• Security event logging and management through a Global Security Operations
Centre operating 24/7 to proactively monitor cyber threats and implement
preventive measures
• Completion of third party risk assessments
• Established Data Privacy Office including data governance and information
classification and handling
• IT change management process
Economic and political conditions The risks associated with operating in volatile and challenging macroeconomic • Low economic growth or recession • Financial impact from reduced demand from consumers and an increasing cost • Diversified product portfolio and geographic diversity of operations →
and geopolitical conditions.
base assists in mitigating exposure to localised economic risk
• High currency and commodity price volatility
• Disruption to supply chains from sanctions or impact on shipping/trade • Development of a flexible business model that allows us to adapt our
• High inflation routes portfolio to suit our customers' changing needs during economic downturns
• Political instability/conflict • Regular review of business results and cash flows to rebalance capital
investments where necessary
• Civil unrest
• Monitoring of macroeconomic, political and societal developments to ensure
that business is prepared to manage emerging situations
• Established hedging policy for managing financial risks like FX, commodity
and interest rate risks
• Keeping a strong level of liquidity and back up credit lines at all times
for working capital purposes as well as unexpected cash flow swings
Market The risks to maintaining the relationships with our customers and consumers to • New distribution channels and platforms • Financial impact from reduced demand from consumers • Conducting shopper insights and price elasticity assessments →
meet their changing demands, needs and expectations.
• Changing customer and consumer habits • Decreasing margins and market share • Investing in pack and product innovation
• Changes in the competitive landscape • Inability to meet strategic objectives • Established promotional strategy
• Brand and reputation damage • Development of commercial policy
• Collaborative category planning with customers
• Development of growth centric customer investment policies
• Established business development plans aligned with our customers
• Diversification of portfolio and customer base
• Development of realistic budgeting routines and targets
• Investment in key account development and category planning
• Open up new route to market opportunities, for example eB2B and
platforms/direct to consumer
Climate change and water The risks and opportunities associated with managing the impacts of climate • GHG emissions across our value chain, including emissions from our • Brand and reputation damage from not meeting sustainability targets • Development of the climate pillar within our This is Forward →
change and water scarcity across our value chain. production facilities, cold drinks equipment, the transportation of our
sustainability action plan including our short-term and long-term GHG
products, packaging and the ingredients that we use, and storage of our • Financial impacts from future carbon taxes and the transition costs to low emissions reduction targets to reduce our absolute Scope 1, 2 and 3 GHG
products GHG emissions emissions by 30% by 2030 (vs 2019), and to achieve Net Zero by 2040. Our
strategy outlines the management actions and key mitigations taken to manage
• Scarcity of water and water quality issues related to water sources we and • Regulatory and compliance impacts related to TCFD disclosures this risk. More information can be found in our Forward on climate section on
our suppliers rely upon
pages 38-41 of our 2022 Integrated Report
• Restrictions on water use adversely affecting costs and ability to
• Regulatory and legislative initiatives aimed at reducing GHG emissions manufacture and distribute products • Development of the water pillar within our This is Forward sustainability
action plan which sets out targets for water efficiency, regenerative water
• Changing consumer and investor preferences use and water replenishment and outlines management actions and key
mitigations taken to manage risk. More information can be found in our Forward
• Concern about environmental impact of plastic bottles and other packaging on water section on pages 46-48 of our 2022 Integrated Report
materials
• Transition to 100% renewable electricity aiming to achieve this across all
markets by 2030
• Supplier engagement programme to support suppliers to set their own
reduction targets and transition to use renewable electricity
Perceived health impact of our beverages (including ingredients), and changing The risks relating to our ability to effectively adapt and respond to changes • Legislative changes driven by government or lobby groups • Financial impacts from decline in sales volumes and market share • Development of the drinks pillar within our This is Forward sustainability →
customer buying trends in consumer preferences and behaviour towards our products.
(delisting, demand decrease) action plan to support the recommendation by several leading health
• External marketing campaigns towards alternative ingredients/products
authorities, including WHO, that people should limit their intake of added
• Increased regulatory scrutiny sugar to 10% of their total calorie consumption. More information can be found
• Publication of guidelines or recommendations related to sugar consumption
in our Forward on drinks section on pages 53-55 of our 2022 Integrated Report
or additives by WHO or other health authorities • Increased taxes on our products
• Support TCCC, EU or National associations on strong advocacy regarding no
• Increased media scrutiny and social media coverage impacting consumer • Damage to brand and reputation and low-calorie sweeteners and processed food
perception
• Viability of alternatives to sugar, sweeteners and other ingredients
within our product portfolio
Business transformation, integration and digital capability The risks relating to the execution of our strategic and continuous • Digital transformation • Damage to brand and reputation • Solid governance model in place leveraging Competitiveness Steering →
improvement initiatives.
Committee for enterprise wide transformation
• Identification and execution of supply chain improvements • Financial impacts from a decline in our share price arising from not
realising the value creation from these initiatives • Regular competitiveness reviews ensuring effective steering, high
• Relationships with our partners and franchisors
visibility and quick decision making
• Industrial action and disruption to our operations
• Ineffective coordination between BUs and central functions • Dedicated programme management office and effective project management
methodology
• Change management failure
• Continuation of strong governance routines
• Diversion of management's focus away from our core business
• Regular ELT and Board reviews and approvals of progress and issue
resolution
• Analysis and review of Acquisition-related activities such as integration
and business performance risk indicators and capital allocation risk reviews
• Building a well functioning and resilient workforce with priority focus on
health and safety, and mental wellbeing initiatives, especially in frontline
roles
People and wellbeing The risks relating to the identification, attraction, development, and • Job design and working conditions • Damage to brand and reputation • Development of our people strategy, Me@CCEP, which sets out the diversity, →
retention of talent. Also risks relating to the wellbeing of our people
inclusion, wellbeing and human rights targets, management actions and the key
(including human rights and modern slavery). • Reward and recognition • Financial impacts from a decline in employee engagement and productivity mitigations taken to manage this risk. More information can be found in our
Forward on society - people section on pages 58-63 of our 2022 Integrated
• Misconduct by third parties relating to human rights • Industrial action and disruption to our operations Report
• Punitive action from regulators or other legislative bodies and potential • Our Everyone's Welcome philosophy sets out our commitment to inclusion,
for litigation diversity and equity. The Everyone's Welcome playbook is the blueprint for
countries and functions to align campaigns, training and tracking mechanisms
• We have set up a strong policy framework, regular training and supplier
management to strengthen our human rights commitments, such as modern slavery
Relationships with TCCC and other franchisors The risk of misaligned incentives or strategy with TCCC and/or other • Lack of effective engagement, communication and/or discussion with • Damage to brand and reputation • Clear agreements govern the relationships →
franchisors. franchisors
• Financial impacts, including as a result of TCCC or other franchisors • Incidence pricing agreement with TCCC
acting adversely to our interests with respect to our business relationship
• Aligned long range planning and annual business planning processes
• Ongoing group and local routines between CCEP and franchisors
• Regular meetings and maintenance of positive relationships at all levels
• Regular contact and best practice sharing across the Coca-Cola system
Product quality The risks relating to ensuring the wide range of products we produce are safe • A failure in food safety, food quality, food defence or food fraud • Physical harm to consumers • TCCC standards and audits →
for consumption and adhere to strict food safety and quality requirements. processes
• Damage to brand and reputation • Hygiene regimes at production facilities
• Financial impacts from a decline in sales volume and market share • Total quality management programme
• Fines and litigation expense or increased insurance premiums • Robust management systems
• ISO Certification
• Internal governance audits
• Quality monitoring programme
• Customer and consumer monitoring and feedback
• Incident management and crisis resolution
• Every CCEP production facility has:
- a hazard analysis critical control points assessment and mitigation plan in
place
- a quality monitoring plan based on risk and requirements
- a food fraud vulnerability assessment and mitigation plan based on risk and
requirements
- a food defence threat assessment and mitigation plan based on risk and
requirements
*Change vs 2022 Integrated Report may be as a result of a change in likelihood
or impact.
Related Parties
Related party disclosures are presented in Note 10 of the Notes to the
condensed consolidated interim financial statements contained in this interim
management report.
Going Concern
As part of the Directors' consideration of the appropriateness of adopting the
going concern basis in preparing the condensed consolidated interim financial
statements, the Directors have considered the Group's financial performance in
the period and have taken into account its current cash position and its
access to a €1.95 billion undrawn committed credit facility. Further, the
Directors have considered the current cash flow forecast, including a downside
stress test, which supports the Group's ability to continue to generate cash
flows during the next 12 months.
In addition, the Group expects to complete the acquisition of 60% of Coca-Cola
Beverages Philippines, Inc. around the end of 2023 subject to the finalisation
of due diligence, signing definitive agreements and obtaining regulatory
approval. The acquisition is expected to be funded by a combination of
existing liquidity and 3rd party borrowing. In making their going concern
assessment, the Directors have considered scenarios for the combined Group.
On this basis, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a period of 12
months from the date of signing these financial statements. Accordingly, the
condensed consolidated interim financial statements have been prepared on a
going concern basis and the Directors do not believe there are any material
uncertainties to disclose in relation to the Group's ability to continue as a
going concern.
Responsibility Statement
The Directors of the Company confirm that to the best of their knowledge:
• The condensed consolidated interim financial statements for
the six months ended 30 June 2023 have been prepared in accordance with
International Accounting Standard 34, "Interim Financial Reporting" as adopted
by the European Union, International Accounting Standard 34, "Interim
Financial Reporting", as issued by the International Accounting Standards
Board, UK adopted International Accounting Standard 34 "Interim Financial
Reporting" and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority (DTR).
• The interim management report includes a fair review of the
information required by the DTR 4.2.7 R and DTR 4.2.8 R as follows:
• DTR 4.2.7 R: (1) an indication of important events that have
occurred during the first six months of the financial year, and their impact
on the condensed set of financial statements, and (2) a description of the
principal risks and uncertainties for the remaining six months of the
financial year; and
• DTR 4.2.8 R: (1) related parties transactions that have taken
place in the first six months of the current financial year and that have
materially affected the financial position or the performance of the Group
during that period, and (2) any changes in the related parties transactions
described in the last annual report that could have a material effect on the
financial position or performance of the Group in the first six months of the
current financial year.
A list of current directors is maintained on CCEP's website:
www.cocacolaep.com/about-us/governance/board-of-directors/.
On behalf of the Board
Damian Gammell Manik Jhangiani
Chief Executive Officer Chief Financial Officer
2 August 2023
INDEPENDENT REVIEW REPORT TO COCA-COLA EUROPACIFIC PARTNERS PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2023 which comprises the Condensed Consolidated Interim Income Statement,
Condensed Consolidated Interim Statement of Comprehensive Income, Condensed
Consolidated Interim Statement of Financial Position, Condensed Consolidated
Interim Statement of Cash Flows, Condensed Consolidated Interim Statement of
Changes in Equity and the related explanatory notes 1 - 14. We have read the
other information contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as issued by the International Accounting
Standards Board, International Accounting Standard 34, "Interim Financial
Reporting" as issued by the European Union, U.K. adopted International
Accounting Standard 34, "Interim Financial Reporting" and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with U.K. adopted International Accounting Standards,
International Financial Reporting Standards ("IFRS") as adopted by the
European Union and International Financial Reporting Standards as issued by
the International Accounting Standards Board ("IASB"). The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim
Financial Reporting", as issued by the International Accounting Standards
Board, International Accounting Standard 34, "Interim Financial Reporting" as
issued by the European Union, and U.K. adopted International Accounting
Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
2 August 2023
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Income Statement (Unaudited)
Six Months Ended
30 June 2023 1 July 2022
Note € million € million
Revenue 2 8,977 8,280
Cost of sales (5,707) (5,288)
Gross profit 3,270 2,992
Selling and distribution expenses (1,522) (1,410)
Administrative expenses (631) (615)
Other income 13 53 -
Operating profit 1,170 967
Finance income 31 30
Finance costs (94) (93)
Total finance costs, net (63) (63)
Non-operating items (6) (6)
Profit before taxes 1,101 898
Taxes 11 (247) (223)
Profit after taxes 854 675
Profit attributable to shareholders 854 667
Profit attributable to non-controlling interests - 8
Profit after taxes 854 675
Basic earnings per share (€) 3 1.86 1.46
Diluted earnings per share (€) 3 1.86 1.46
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Statement of Comprehensive Income (Unaudited)
Six Months Ended
30 June 2023 1 July 2022
€ million € million
Profit after taxes 854 675
Components of other comprehensive income/(loss):
Items that may be subsequently reclassified to the income statement:
Foreign currency translations:
Pretax activity, net (280) 98
Tax effect - -
Foreign currency translation, net of tax (280) 98
Cash flow hedges:
Pretax activity, net (38) 8
Tax effect 7 (3)
Cash flow hedges, net of tax (31) 5
Other reserves:
Pretax activity, net 13 (2)
Tax effect (3) -
Other reserves, net of tax 10 (2)
Items that may be subsequently reclassified to the income statement (301) 101
Items that will not be subsequently reclassified to the income statement:
Pension plan remeasurements:
Pretax activity, net 13 53
Tax effect (4) (16)
Pension plan adjustments, net of tax 9 37
Items that will not be subsequently reclassified to the income statement: 9 37
Other comprehensive income/(loss) for the period, net of tax (292) 138
Comprehensive income for the period 562 813
Comprehensive income attributable to shareholders 562 798
Comprehensive income attributable to non-controlling interests - 15
Comprehensive income for the period 562 813
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Statement of Financial Position (Unaudited)
30 June 2023 31 December 2022
Note € million € million
ASSETS
Non-current:
Intangible assets 4 12,319 12,505
Goodwill 4 4,483 4,600
Property, plant and equipment 5 5,077 5,201
Non-current derivative assets 7 134 191
Deferred tax assets 32 21
Other non-current assets 292 252
Total non-current assets 22,337 22,770
Current:
Current derivative assets 7 233 257
Current tax assets 50 85
Inventories 1,714 1,380
Amounts receivable from related parties 10 88 139
Trade accounts receivable 2,930 2,466
Other current assets 415 479
Assets held for sale 6 54 94
Short term investments 862 256
Cash and cash equivalents 1,112 1,387
Total current assets 7,458 6,543
Total assets 29,795 29,313
LIABILITIES
Non-current:
Borrowings, less current portion 8 9,332 10,571
Employee benefit liabilities 110 108
Non-current provisions 12 39 55
Non-current derivative liabilities 7 227 187
Deferred tax liabilities 3,448 3,513
Non-current tax liabilities 71 82
Other non-current liabilities 42 37
Total non-current liabilities 13,269 14,553
Current:
Current portion of borrowings 8 2,425 1,336
Current portion of employee benefit liabilities 8 8
Current provisions 12 113 115
Current derivative liabilities 7 102 76
Current tax liabilities 269 241
Amounts payable to related parties 10 373 485
Trade and other payables 5,476 5,052
Total current liabilities 8,766 7,313
Total liabilities 22,035 21,866
EQUITY
Share capital 5 5
Share premium 265 234
Merger reserves 287 287
Other reserves (808) (507)
Retained earnings 8,011 7,428
Total equity 7,760 7,447
Total equity and liabilities 29,795 29,313
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Statement of Cash Flows (Unaudited)
Six Months Ended
30 June 2023 1 July 2022
Note € million € million
Cash flows from operating activities:
Profit before taxes 1,101 898
Adjustments to reconcile profit before tax to net cash flows from operating
activities:
Depreciation 5 324 336
Amortisation of intangible assets 4 53 50
Share-based payment expense 29 12
Gain on sale of sub-strata and associated mineral rights 13 (35) -
Finance costs, net 63 63
Income taxes paid (212) (162)
Changes in assets and liabilities:
Increase in trade and other receivables (385) (429)
Increase in inventories (353) (245)
Increase in trade and other payables 564 936
Increase in net payable receivable from related parties 223 180
Increase/(decrease) in provisions (18) 59
Change in other operating assets and liabilities (47) (45)
Net cash flows from operating activities 1,307 1,653
Cash flows from investing activities:
Purchases of property, plant and equipment (264) (178)
Purchases of capitalised software (40) (22)
Proceeds from sales of property, plant and equipment 9 6
Proceeds from sales of intangible assets 37 143
Proceeds from the sale of sub-strata and associated mineral rights 13 35 -
Investments in equity instruments (1) (2)
Proceeds from the sale of equity instruments - 13
Net proceeds/(payments) of short term investments (638) (181)
Other investing activity, net 1 (1)
Net cash flows used in investing activities (861) (222)
Cash flows from financing activities:
Changes in short-term borrowings 8 543 237
Repayments on third party borrowings 8 (706) (834)
Payments of principal on lease obligations (74) (80)
Interest paid, net (88) (98)
Dividends paid 9 (308) (256)
Exercise of employee share options 31 5
Acquisition of non-controlling interest 10 (282) -
Other financing activities, net (9) (8)
Net cash flows used in financing activities (893) (1,034)
Net change in net cash and cash equivalents (447) 397
Net effect of currency exchange rate changes on cash and cash equivalents (16) 15
Net cash and cash equivalents at beginning of period 1,387 1,407
Net cash and cash equivalents at end of period 924 1,819
Net cash and cash equivalents consist of:
Cash and cash equivalents 1,112 1,819
Bank overdrafts 8 (188) -
Net cash and cash equivalents at end of period 924 1,819
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Statement of Changes in Equity (Unaudited)
Share capital Share premium Merger reserves Other reserves Retained earnings Total Non-controlling interest Total equity
Note € million € million € million € million € million € million € million € million
Balance as at 31 December 2021 5 220 287 (156) 6,677 7,033 177 7,210
Profit after taxes - - - - 667 667 8 675
Other comprehensive income - - - 94 37 131 7 138
Total comprehensive income - - - 94 704 798 15 813
Issue of shares during the period - 5 - - - 5 - 5
Equity-settled share-based payment expense - - - - 12 12 - 12
Dividends 9 - - - - (257) (257) - (257)
Balance as at 1 July 2022 5 225 287 (62) 7,136 7,591 192 7,783
Balance as at 31 December 2022 5 234 287 (507) 7,428 7,447 - 7,447
Profit after taxes - - - - 854 854 - 854
Other comprehensive income - - - (301) 9 (292) (292)
Total comprehensive income - - - (301) 863 562 - 562
Issue of shares during the period - 31 - - - 31 - 31
Equity-settled share-based payment expense - - - - 29 29 - 29
Dividends 9 - - - - (309) (309) - (309)
Balance as at 30 June 2023 5 265 287 (808) 8,011 7,760 - 7,760
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Notes to the Condensed Consolidated Interim Financial Statements
Note 1
GENERAL INFORMATION AND BASIS OF PREPARATION
Coca-Cola Europacific Partners plc (the Company) and its subsidiaries
(together CCEP, or the Group) are a leading consumer goods group in Western
Europe and the Asia Pacific region, making, selling and distributing an
extensive range of primarily non-alcoholic ready to drink beverages.
The Company has ordinary shares with a nominal value of €0.01 per share
(Shares). CCEP is a public company limited by shares, incorporated under the
laws of England and Wales with the registered number in England of 09717350.
The Group's Shares are listed and traded on Euronext Amsterdam, the NASDAQ
Global Select Market, London Stock Exchange and on the Spanish Stock
Exchanges. The address of the Company's registered office is Pemberton House,
Bakers Road, Uxbridge, UB8 1EZ, United Kingdom.
These condensed consolidated interim financial statements do not constitute
statutory accounts as defined by Section 434 of the Companies Act 2006. They
have been reviewed but not audited by the Group's auditor. The statutory
accounts for the Company for the year ended 31 December 2022, which were
prepared in accordance with U.K. adopted International Accounting Standards,
International Financial Reporting Standards (IFRS) as adopted by the European
Union and International Financial Reporting Standards as issued by the
International Accounting Standards Board (IASB), have been delivered to the
Registrar of Companies. The auditor's opinion on those accounts was
unqualified and did not contain a statement made under section 498 (2) or (3)
of the Companies Act 2006.
Basis of Preparation and Accounting Policies
The condensed consolidated interim financial statements of the Group have been
prepared in accordance with the U.K. adopted International Accounting Standard
34, "Interim Financial Reporting" and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority, the International
Accounting Standard 34, "Interim Financial Reporting" as adopted by the
European Union, the International Accounting Standard 34, "Interim Financial
Reporting" as issued by the International Accounting Standards Board and
should be read in conjunction with our 2022 consolidated financial statements.
The annual financial statements of the Group for the year ended 31 December
2023 will be prepared in accordance with U.K. adopted International Accounting
Standards, International Financial Reporting Standards (IFRS) as adopted by
the European Union and International Financial Reporting Standards as issued
by the International Accounting Standards Board (IASB).
Except as described below, the accounting policies applied in these interim
condensed consolidated financial statements are consistent with those followed
in the preparation of the Group's consolidated financial statements as at and
for the year ended 31 December 2022. The policy for recognising income taxes
in the interim period is consistent with that applied in previous interim
periods and is described in Note 11.
International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12)
On 12 May 2023, the International Accounting Standards Board ( "the IASB")
issued International Tax Reform - Pillar Two Model Rules - Amendments to IAS
12 ("the Amendments"). The Amendments apply with immediate effect and
introduce a mandatory temporary exception from the recognition and disclosure
of deferred taxes arising from the implementation of the OECD's Pillar Two
Model Rules. On 20 June 2023, Finance (No.2) Act 2023 was substantively
enacted in the UK, introducing a global minimum effective tax rate of 15%. The
legislation implements a domestic top-up tax and a multinational top-up tax,
effective for accounting periods starting on or after 31 December 2023. The
Group has applied the exception under the IAS 12 amendment to recognising and
disclosing information about deferred tax assets and liabilities related to
top-up income in preparing its condensed consolidated interim financial
statements as of the six month period ended 30 June 2023.
Other amendments and interpretations also apply for the first time in 2023,
but do not have a material impact on the condensed consolidated interim
financial statements of the Group.
Reporting periods
Results are presented for the interim period from 1 January 2023 to 30 June
2023.
The Group's financial year ends on 31 December. For half-yearly reporting
convenience, the first six month period closes on the Friday closest to the
end of the interim calendar period. There is no change in selling days between
the six months ended 30 June 2023 versus the six months ended 1 July 2022, and
there will be equal selling days in the second six months of 2023 versus the
second six months of 2022 (based upon a standard five-day selling week).
The following table summarises the number of selling days, for the years ended
31 December 2023 and 31 December 2022 (based on a standard five-day selling
week):
Half year Full year
2023 130 260
2022 130 260
Change - -
Comparability
Operating results for the first half of 2023 may not be indicative of the
results expected for the year ended 31 December 2023 as sales of the Group's
products are seasonal. In Europe, the second and third quarters typically
account for higher unit sales of the Group's products than the first and
fourth quarters. In the Group's Asia Pacific territories, the fourth quarter
would typically reflect higher sales volumes in the year. The seasonality of
the Group's sales volume, combined with the accounting for fixed costs such as
depreciation, amortisation, rent and interest expense, impacts the Group's
results for the first half of the year. Additionally, year-over-year shifts in
holidays, selling days and weather patterns can impact the Group's results on
an annual or half-yearly basis.
Exchange rates
The Group's reporting currency is the Euro. CCEP translates the income
statements of non-Euro functional currency subsidiary operations to the Euro
at average exchange rates and the balance sheets at the closing exchange rate
as at the end of the period.
The principal exchange rates used for translation purposes in respect of one
Euro were:
Average for the six month period ended Closing as at
30 June 2023 1 July 2022 30 June 2023 31 December 2022
British Pound 1.14 1.19 1.16 1.13
US Dollar 0.92 0.91 0.91 0.94
Norwegian Krone 0.09 0.10 0.09 0.10
Swedish Krone 0.09 0.10 0.08 0.09
Icelandic Krone 0.01 0.01 0.01 0.01
Australian Dollar 0.63 0.66 0.61 0.64
Indonesian Rupiah( 1 ) 0.06 0.06 0.06 0.06
New Zealand Dollar 0.58 0.61 0.56 0.60
Papua New Guinean Kina 0.26 0.26 0.26 0.27
( 1 ) Indonesian Rupiah is shown as 1000 IDR versus 1 EUR.
( )
(
)
Note 2
OPERATING SEGMENTS
Description of segments and principal activities
The Group derives its revenues through a single business activity, which is
making, selling and distributing an extensive range of primarily non-alcoholic
ready to drink beverages. The Group's Board continues to be its Chief
Operating Decision Maker (CODM), which allocates resources and evaluates
performance of its operating segments based on volume, revenue and comparable
operating profit. Comparable operating profit excludes items impacting the
comparability of period over period financial performance.
The following table provides a reconciliation between reportable segment
operating profit and consolidated profit before tax:
Six Months Ended 30 June 2023 Six Months Ended 1 July 2022
Europe API Total Europe API Total
€ million € million € million € million € million € million
Revenue 7,105 1,872 8,977 6,451 1,829 8,280
Comparable operating profit( 1 ) 924 241 1,165 825 226 1,051
Items impacting comparability( 2 ) 5 (84)
Reported operating profit 1,170 967
Total finance costs, net (63) (63)
Non-operating items (6) (6)
Reported profit before tax 1,101 898
( 1 ) Comparable operating profit includes comparable depreciation and
amortisation of €272 million and €101 million for Europe and API
respectively, for the six months ended 30 June 2023. Comparable depreciation
and amortisation charges for the six months ended 1 July 2022 totalled
€273 million and €114 million, for Europe and API respectively.
( 2 ) Items impacting the comparability of period-over-period financial
performance for 2023 primarily include €53 million of other income related
to the royalties arising from the ownership of certain mineral rights in
Australia (€18 million) and the proceeds from the sale of sub-strata and
associated mineral rights (€35 million), partially offset by restructuring
charges of €51 million. Items impacting the comparability for 2022 primarily
include restructuring charges of €95 million, partially offset by net
insurance recoveries received of €12 million arising from the July 2021
flooding events.
( )
No single customer accounted for more than 10% of the Group's revenue during
the six months ended 30 June 2023 and 1 July 2022.
Revenue by geography
The following table summarises revenue from external customers by geography,
which is based on the origin of the sale:
Six Months Ended
30 June 2023 1 July 2022
Revenue € million € million
Great Britain 1,570 1,463
Germany 1,458 1,296
Iberia( 1 ) 1,541 1,371
France( 2 ) 1,200 1,017
Belgium/Luxembourg 541 511
Netherlands 355 329
Norway 193 208
Sweden 207 213
Iceland 40 43
Total Europe 7,105 6,451
Australia 1,162 1,102
New Zealand and Pacific Islands 330 302
Indonesia and Papua New Guinea 380 425
Total API 1,872 1,829
Total CCEP 8,977 8,280
( 1 ) Iberia refers to Spain, Portugal & Andorra.
( 2 ) France refers to continental France & Monaco.
(
)
Note 3
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing profit after taxes by the
weighted average number of Shares in issue and outstanding during the period.
Diluted earnings per share is calculated in a similar manner, but includes the
effect of dilutive securities, principally share options, restricted stock
units and performance share units. Share-based payment awards that are
contingently issuable upon the achievement of specified market and/or
performance conditions are included in the diluted earnings per share
calculation based on the number of Shares that would be issuable if the end of
the period was the end of the contingency period.
The following table summarises basic and diluted earnings per share
calculations for the periods presented:
Six Months Ended
30 June 2023 1 July 2022
Profit after taxes attributable to equity shareholders (€ million) 854 667
Basic weighted average number of Shares in issue( 1 ) (million) 458 457
Effect of dilutive potential Shares( 2 ) (million) 1 1
Diluted weighted average number of Shares in issue( 1 ) (million) 459 458
Basic earnings per share (€) 1.86 1.46
Diluted earnings per share (€) 1.86 1.46
( 1 ) As at 30 June 2023 and 1 July 2022, the Group had 458,846,191 and
456,789,240 Shares, respectively, in issue and outstanding.
( 2 ) For the six months ended 30 June 2023 and 1 July 2022, there were no
outstanding options to purchase Shares excluded from the diluted earnings per
share calculation. The dilutive impact of the remaining options outstanding,
unvested restricted stock units and unvested performance share units was
included in the effect of dilutive securities.
(
)
Note 4
INTANGIBLE ASSETS AND GOODWILL
The following table summarises the movement in net book value for intangible
assets and goodwill during the six months ended 30 June 2023:
Intangible assets Goodwill
€ million € million
Net book value as at 31 December 2022 12,505 4,600
Additions 40 -
Amortisation expense (53) -
Disposals - -
Transfers and reclassifications (1) -
Currency translation adjustments (172) (117)
Net book value as at 30 June 2023 12,319 4,483
Note 5
PROPERTY, PLANT AND EQUIPMENT
The following table summarises the movement in net book value for property,
plant and equipment during the six months ended 30 June 2023:
Total
€ million
Net book value as at 31 December 2022 5,201
Additions 279
Disposals (16)
Depreciation expense (324)
Transfers and reclassifications 1
Currency translation adjustments (64)
Net book value as at 30 June 2023( 1 ) 5,077
( 1 ) The net book value of property, plant and equipment includes right of
use assets of €662 million.
(
)
Note 6
ASSETS HELD FOR SALE
Assets classified as held for sale as at 30 June 2023 and 31 December 2022
were €54 million and €94 million, respectively. The decrease is due to the
completion of the remaining portion of the sale of certain non-alcoholic ready
to drink beverage brands to TCCC (See Note 10 for further details).
Note 7
FAIR VALUES AND FINANCIAL RISK MANAGEMENT
Fair Value Measurements
All assets and liabilities for which fair value is measured or disclosed in
the condensed consolidated interim financial statements are categorised in the
fair value hierarchy as described in our 2022 consolidated financial
statements.
The fair values of the Group's cash and cash equivalents, short term
investments, trade accounts receivable, amounts receivable from related
parties, trade and other payables, and amounts payable to related parties
approximate their carrying amounts due to their short-term nature.
The fair values of the Group's borrowings are estimated based on borrowings
with similar maturities and credit quality and current market interest rates.
These are categorised in Level 2 of the fair value hierarchy as the Group uses
certain pricing models and quoted prices for similar liabilities in active
markets in assessing their fair values. The total fair value of borrowings as
at 30 June 2023 and 31 December 2022, was €10.6 billion and €10.5 billion,
respectively. This compared to the carrying value of total borrowings as at 30
June 2023 and 31 December 2022 of €11.8 billion and €11.9 billion,
respectively. Refer to Note 8 for further details regarding the Group's
borrowings.
The Group's derivative assets and liabilities are carried at fair value, which
is determined using a variety of valuation techniques, depending on the
specific characteristics of the hedging instrument taking into account credit
risk. The fair value of our derivative contracts (including forwards, options,
cross-currency swaps and interest rate swaps) are determined using standard
valuation models. The significant inputs used in these models are readily
available in public markets or can be derived from observable market
transactions and, therefore, the derivative contracts have been classified as
Level 2. Inputs used in these standard valuation models include the applicable
spot, forward, and discount rates. The standard valuation model for the option
contracts also includes implied volatility, which is specific to individual
options and is based on rates quoted from a widely used third-party resource.
As at 30 June 2023 and 31 December 2022, the total value of derivative assets
was €367 million and €448 million, respectively. As at 30 June 2023 and 31
December 2022, the total value of derivative liabilities was €329 million
and €263 million, respectively. During the period, €38 million of losses
have been recorded within Other Comprehensive Income, primarily related to
decreases in fair value on commodity related hedging instruments.
For assets and liabilities that are recognised in the condensed consolidated
interim financial statements on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by
re-assessing categorisation at the end of each reporting period. There have
been no transfers between levels during the periods presented.
During the six month period ending 30 June 2023, the Group implemented a new
gas and power hedging program to manage its exposure to changes in commodity
prices in relation to its purchases of power and gas, by entering into
financial swaps designated in a cash flow hedge relationship. As at 30 June
2023 the notional value of the swaps was €139 million and amounts of €1
million and €18 million were included in derivative assets and derivative
liabilities respectively.
Financial Instruments Risk Management Objectives and Policies
The Group's activities expose it to several financial risks including market
risk, credit risk, and liquidity risk. Financial risk activities are governed
by appropriate policies and procedures to minimise the uncertainties these
risks create over the Group's future cash flows. Such policies are developed
and approved by the Group's Treasury and Commodities Risk Committee through
the authority provided to it by the Group's Board of Directors. There have
been no changes in the risk management policies since the year end.
Note 8
BORROWINGS AND LEASES
Borrowings Outstanding
The following table summarises the carrying value of the Group's borrowings as
at the dates presented:
30 June 2023 31 December 2022
€ million € million
Non-current:
Euro denominated bonds( 3 ) 7,689 8,176
Foreign currency bonds (swapped into Euro)( 1 ) 455 1,074
Australian dollar denominated bonds 337 422
Foreign currency bonds (swapped into Australian dollar or New Zealand 329 364
dollar)( 1 )
Lease obligations 522 535
Total non-current borrowings 9,332 10,571
Current:
Euro denominated bonds 850 350
Foreign currency bonds (swapped into Euro)( 1 , 2 ) 594 797
Australian dollar denominated bonds 62 -
Foreign currency bonds (swapped into New Zealand dollar)( 1 ) 46 48
Euro commercial paper( 4 ) 543 -
Bank overdrafts( 5 ) 188 -
Lease obligations 142 141
Total current borrowings 2,425 1,336
( 1 ) Cross currency swaps are used by the Group to swap foreign currency
bonds into the required local currency.
( 2 ) In May the Group repaid on maturity the outstanding amount related to
the US$850 million 0.50% Notes 2023.
( 3 ) Some bonds are designated in full or partially in a fair value hedge
relationship.
( 4 ) During the 6 month period ending 30 June 2023, the Group issued €3,914
million and repaid €3,371 million Euro commercial paper. During the 6 month
period ending 1 July 2022, the Group issued €2,394 million and repaid
€2,157 million Euro commercial paper. The issuance net of repayments of Euro
commercial paper is presented as changes in short-term borrowings in our
condensed consolidated interim statement of cash flows.
( 5 ) Included within bank overdrafts is €188 million in relation to a
notional pooling arrangement for which an offsetting agreement is in place but
does not meet the criteria for net presentation on the condensed consolidated
interim statement of financial position. A corresponding amount is also shown
in cash and cash equivalents.
( )
Note 9
EQUITY
Share Capital
As at 30 June 2023, the Company had issued and fully paid 458,846,191 Shares.
Shares in issue have one voting right each and no restrictions related to
dividends or return of capital. The share capital increased during the six
months ended 30 June 2023 from the issue of 1,739,738 Shares, following the
exercise of share-based payment awards.
Dividends
During the first six months of 2023, the Board declared a first half dividend
of €0.67 per share, which was paid on 25 May 2023. During the first six
months of 2022, the Board declared a first half dividend of €0.56 per share,
which was paid on 26 May 2022.
Note 10
RELATED PARTY TRANSACTIONS
For the purpose of these condensed consolidated interim financial statements,
transactions with related parties mainly comprise transactions between
subsidiaries of the Group and the related parties of the Group.
Transactions with The Coca-Cola Company (TCCC)
The principal transactions with TCCC are for the purchase of concentrate,
syrup and finished goods. The following table summarises the transactions with
TCCC that directly impacted the condensed consolidated interim income
statement for the periods presented:
Six Months Ended
30 June 2023 1 July 2022
€ million € million
Amounts affecting revenue( 1 ) 68 51
Amounts affecting cost of sales( 2 ) (2,099) (1,910)
Amounts affecting operating expenses( 3 ) 5 1
Total net amount affecting the consolidated income statement (2,026) (1,858)
( 1 ) Amounts principally relate to fountain syrup and packaged product sales.
( 2 ) Amounts principally relate to the purchase of concentrate, syrup,
mineral water and juice as well as funding for marketing programmes.
( 3 ) Amounts principally relate to costs associated with new product
development initiatives and reimbursement of certain marketing expenses.
( )
The following table summarises the transactions with TCCC that impacted the
consolidated statement of financial position as at the dates presented:
30 June 2023 31 December 2022
€ million € million
Amount due from TCCC 75 130
Amount payable to TCCC 333 442
During the first half of 2023, the Group completed the remaining portion of
the sale of certain non-alcoholic ready to drink beverage brands that were
acquired as part of the business combination transaction consummated on 10 May
2021. The sale price approximated the fair value of the brands assessed at the
acquisition. These brands were classified as assets held for sale in our
consolidated statement of financial position as at 31 December 2022.
On 15 February 2023, the Group completed the acquisition of the remaining
29.4% ownership interest of its subsidiary, PT Coca-Cola Bottling Indonesia,
for a total consideration of €282 million.
Transactions with Cobega companies
The principal transactions with Cobega are for the purchase of juice
concentrate and packaging materials. The following table summarises the
transactions with Cobega that directly impacted the condensed consolidated
interim income statement for the periods presented:
Six Months Ended
30 June 2023 1 July 2022
€ million € million
Amounts affecting revenues( 1 ) 1 2
Amounts affecting cost of sales( 2 ) (40) (32)
Amounts affecting operating expenses( 3 ) (9) (8)
Total net amount affecting the consolidated income statement (48) (38)
( 1 ) Amounts principally relate to packaged product sales.
( 2 ) Amounts principally relate to the purchase of packaging materials and
concentrate.
( 3 ) Amounts principally relate to maintenance and repair services and
transportation.
The following table summarises the transactions with Cobega that impacted the
consolidated statement of financial position as at the dates presented:
30 June 2023 31 December 2022
€ million € million
Amount due from Cobega 8 3
Amount payable to Cobega 31 24
Transactions with Other Related Parties
For the six months ended 30 June 2023 and 1 July 2022 the Group recognised
charges in cost of sales of €88 million and €83 million, respectively, in
connection with transactions that have been entered into with joint ventures,
associates and other related parties predominantly for the purchase of resin
as well as container deposit scheme charges in Australia.
Transactions with joint ventures, associates and other related parties that
impacted the condensed consolidated interim statement of financial position as
at 30 June 2023 include €5 million in amounts receivable from related
parties and €9 million in amounts payable to related parties, respectively.
As at 31 December 2022 amounts receivable from related parties and amounts
payable to related parties included €6 million and €19 million
respectively related to transactions with joint ventures, associates and other
related parties.
Note 11
TAXES
Taxes on income in interim periods are accrued using the tax rate that would
be applicable to the expected total annual profit or loss.
The effective tax rate (ETR) was 22% and 25% for the six months ended 30 June
2023 and 1 July 2022, respectively, and 22% for the year ended 31 December
2022. The ETR has been calculated by applying the weighted average annual ETR,
excluding discrete items, of 25% to the profit before tax for the six months
ended 30 June 2023 and 1 July 2022, respectively.
The ETR of 22% which is lower than statutory UK rate of 23.5% reflects the
impact of having operations outside the UK which are taxed at rates other than
the statutory UK rate and adjustments made in respect of prior periods.
The following table summarises the major components of income tax expense for
the periods presented:
30 June 2023 1 July 2022
€ million € million
Current income tax:
Current income tax charge 278 228
Adjustment in respect of current income tax from prior periods (9) 8
Total current tax 269 236
Deferred tax:
Relating to the origination and reversal of temporary differences (2) (4)
Adjustment in respect of deferred income tax from prior periods (20) (9)
Relating to changes in tax rates or the imposition of new taxes - -
Total deferred tax (22) (13)
Income tax charge per the consolidated income statement 247 223
Tax Provisions
The Group is routinely under audit by tax authorities in the ordinary course
of business. Due to their nature, such proceedings and tax matters involve
inherent uncertainties including, but not limited to, court rulings,
settlements between affected parties and/or governmental actions. The
probability of outcome is assessed and accrued as a liability and/or
disclosed, as appropriate. The Group maintains provisions for uncertainty
related to these tax matters that it believes appropriately reflect its risk.
As at 30 June 2023, €147 million (1 July 2022: €154 million) of these
provisions is included in current tax liabilities and the remainder is
included in non-current tax liabilities.
The Group reviews the adequacy of these provisions at the end of each
reporting period and adjusts them based on changing facts and circumstances.
Due to the uncertainty associated with tax matters, it is possible that at
some future date, liabilities resulting from audits or litigation could vary
significantly from the Group's provisions. When an uncertain tax liability is
regarded as probable, it is measured on the basis of the Group's best
estimate.
The Group has received tax assessments in certain jurisdictions for potential
tax related to the Group's purchases of concentrate. The value of the Group's
concentrate purchases is significant, and therefore, the tax assessments are
substantial. The Group strongly believes the application of tax has no
technical merit based on applicable tax law, and its tax position would be
sustained. Accordingly, the Group has not recorded a tax liability for these
assessments and is vigorously defending its position against these
assessments.
Note 12
PROVISIONS, COMMITMENTS AND CONTINGENCIES
The following table summarises the movement of provisions for the periods
presented:
Restructuring Provision Other Provisions( 1 ) Total
€ million € million € million
Balance as at 31 December 2022 137 33 170
Charged/(credited) to profit or loss:
Additional provisions recognised 37 7 44
Unused amounts reversed (3) (3) (6)
Utilised during the period (54) (2) (56)
Balance as at 30 June 2023 117 35 152
( 1 ) Other provisions primarily relate to decommissioning provisions,
property tax assessment provisions and legal reserves.
Guarantees
During the 1st half of 2023, the Group has issued approximately
€505 million of financial guarantees related to various tax matters. These
guarantees have various terms and the amounts represent the maximum potential
future payments we could be required to make under the guarantees. No
significant additional liabilities requiring financial statement recognition
are expected to arise from the guarantees issued.
Commitments
There have been no significant changes in the commitments of the Group since
31 December 2022.
Contingencies
There have been no significant changes in contingencies since 31 December
2022.
Refer to Note 23 of the 2022 consolidated financial statements for further
details about the Group's guarantees, commitments and contingencies.
(
)
Note 13
OTHER INCOME
Other income for the six months ended 30 June 2023 totalled €53 million (1
July 2022: €0 million). The balance is attributable to the following
activities.
The Group recognised €18 million of royalty income arising from the
ownership of mineral rights in Queensland, Australia. On 7 March 2023 the
Group entered into an agreement to sell the sub-strata and associated mineral
rights. Upon regulatory approval, the transaction was consummated in April
2023. The total consideration approximated €35 million.
Note 14
EVENTS AFTER THE REPORTING PERIOD
On 7 July 2023, the Group completed the sale of property in Germany for a
total consideration of €80 million. The property is classified as assets
held for sale in our condensed consolidated interim statement of financial
position as at 30 June 2023.
On 2 August 2023, the Group announced that CCEP and Beam Suntory will
discontinue their relationship effective 1 July 2025 (Australia) and 1 January
2026 (New Zealand). CCEP will remain the exclusive manufacturing, sales and
distribution partner for Beam Suntory in Australia and New Zealand through the
end of the current contractual terms set to expire on 30 June 2025 and 31
December 2025, respectively. As at 30 June 2023, finite-lived intangible
assets of €127 million were reflected in the condensed consolidated interim
statement of financial position related to the Beam Suntory distribution
rights, primarily attributable to those available in Australia. The
discontinuance of the relationship will trigger a change in the assigned
useful economic life of the intangible assets effective from the second half
of 2023, shortening the amortization period.
On 2 August 2023, the Group announced that it has entered into a non-binding
Letter of Intent with Aboitiz Equity Ventures Inc. and The Coca-Cola Company
(TCCC) for the joint acquisition of 100% of the entire existing issued share
capital of
Coca-Cola Beverages Philippines, Inc. (CCBPI), a wholly owned subsidiary of
TCCC, for a total cash consideration of $1.8 billion on a debt- and cash-free
basis. The transaction is expected to be completed around the end of 2023,
subject to the finalisation of due diligence, signing definitive agreements
and obtaining regulatory approval. Upon completion, CCEP will pay 60% of the
total cash consideration commensurate with the proposed 60:40 ownership
structure of CCBPI.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR UUUVROAUWRRRRecent news on Coca-Cola Europacific Partners
See all newsREG - Coca-Cola EP PLC - Total Voting Rights
AnnouncementREG - Coca-Cola EP PLC - Q1 Trading Update & Interim Dividend Declaration
AnnouncementREG - Coca-Cola EP PLC - Director/PDMR Shareholding
AnnouncementREG - Coca-Cola EP PLC - Director/PDMR Shareholding
AnnouncementREG - Coca-Cola EP PLC - Notice of AGM
Announcement