REG - Coca-Cola EP PLC - Q1 Trading Update & Interim Dividend Declaration
25/04/2023 07:00
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RNS Number : 2915X Coca-Cola Europacific Partners plc 25 April 2023
25 April 2023
COCA-COLA EUROPACIFIC PARTNERS
Trading Update for the First Quarter ended 31 March 2023 & Interim
Dividend Declaration
Good start to the year, confidently reaffirming FY23 guidance
Q1 2023 Change vs 2022
Revenue Volume Revenue per UC( 1 , 2 , 4 ) Comparable Volume( 2 , 3 ) Revenue per UC( 1 , 2 , 4 ) FXN( 2 , 4 ) Revenue Revenue
(UC)( 1 )
Europe €3,145m 590m €5.42 5.0% 8.5% 14.0% 12.0%
API €1,009m 178m €5.77 0.0% 13.5% 13.5% 11.5%
CCEP €4,154m 768m €5.50 4.0% 10.0% 14.0% 12.0%
Damian Gammell, Chief Executive Officer, said:
"We have had an encouraging start to the year, delivering solid top-line
growth as consumers continued to enjoy our portfolio of leading brands across
a broad pack offering. Our performance reflects great in-market execution with
further growth in the home channel and the tail end of continued recovery of
the away from home channel. This resulted in strong volume growth across our
developed markets and albeit early in its transformation journey, Indonesia
delivered volume growth in the core sparkling category. Our focus on revenue
growth management and our headline price and promotion strategy also drove
solid gains in revenue per unit case.
"Although our first quarter has set us up really well for the rest of the
year, it is typically our smallest. We are building on this momentum supported
by fantastic activation plans. We remain focused on driving profitable revenue
growth and solid free cash flow, and I am pleased to confidently reaffirm our
full-year guidance for 2023, despite a dynamic outlook. We are confident that
we have the right strategy, done sustainably, to deliver on our ambitious
mid-term growth objectives which combined with today's interim dividend
declaration, demonstrate the strength and resilience of our business, and our
ability to deliver continued shareholder value. All underpinned by our
talented and engaged people as well as 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
Q1 HIGHLIGHTS( 2 )
Revenue
Q1 Reported +12.0%; Q1 Fx-neutral +14.0%( 4 )
• Continued to deliver the largest revenue growth YTD for our
retail customers within FMCG in Europe & within NARTD in Australia &
New Zealand( 5 )
(• ) NARTD YTD value share gains( 5 ) across measured
channels both in store (+10bps) & online (+40bps)
(• ) Comparable volume +4.0%( 3 ) (Europe: +5.0%; API:
flat) reflecting solid in-market execution & underlying demand. In API,
the strategic SKU portfolio rationalisation in Indonesia offset continued
trading momentum in Australia & New Zealand
◦ Away from Home (AFH) channel comparable volume: +5.5%( 3 )
driven by good underlying demand & the tail end of the effects of the
pandemic. Immediate consumption (IC) packs continued to recover reflecting
increased mobility (+9.5%( 6 ) vs 2022)
◦ Home channel comparable volume: +3.0%( 3 ) driven by solid
in-market execution
• Revenue per unit case +10.0%( 1 , 4 ) reflecting positive
headline price across all markets, alongside favourable pack & channel mix
led by the recovery of the AFH channel
• Recent trading indicating no significant change in underlying
consumer demand
Dividend
• Declaring first-half interim dividend per share of €0.67,
calculated as 40% of the full-year 2022 dividend. Reaffirming FY23 guidance
for an annualised total dividend payout ratio of approximately 50%( 7 )
Other
• Innovation highlights:
◦ NARTD: Monster Juice & Ultra flavour extensions, What the
Fanta Purple rolled out in Europe, Schweppes Melon Watermelon & Peach
Coconut Soda Mixers launched in GB
◦ ARTD: Jack Daniel's & Coca-Cola ready to drink (RTD)
launched in GB & the Netherlands
• Sustainability highlights:
◦ Retained inclusion on Carbon Disclosure Project's A List for
Supplier Engagement Rating for fifth consecutive year
◦ Recognised, for the third time, in the Financial
Times-Statista list of Europe's Climate Leaders
◦ Joined 'Open Call to Accelerate Action on Water', an
initiative from the United Nations Global Compact
◦ Second industry partnership PET recycling facility on track to
open in Australia. The two sites will have the capacity to recycle the
equivalent of 2 billion PET bottles each year
FY23 GUIDANCE( 2 )
The outlook for FY23 reflects current market conditions. Guidance is on a
comparable & Fx-neutral basis
Revenue: comparable growth of 6-8% (unchanged)
• Driven by price & mix through dynamic headline pricing,
including the annualisation of FY22 second headline price increases, &
promotional optimisation
Cost of sales per unit case: comparable growth of ~8% (unchanged)
• Concentrate directly linked to revenue per unit case through
incidence pricing model
• Commodity inflation expected to be up ~10% (unchanged)
• FY23 hedge coverage at ~90%
• Low overall FX transactional exposure (<10%)
Operating profit: comparable growth of 6-7% (unchanged)
• Continued focus on delivering efficiency programmes &
discretionary spend optimisation
Comparable effective tax rate: ~23% (unchanged)
( )
Free cash flow: at least €1.6bn (unchanged)
Capital expenditure: 4-5% of revenue excluding leases (unchanged)
Dividend payout ratio: ~50%( 7 ) (unchanged)
First Quarter Revenue Performance by Geography( 2 )
All values are unaudited & all references to volumes are on a comparable
basis versus prior year equivalent period unless stated otherwise
Q1
Fx-neutral
€ million % change % change
Great Britain 689 4.5 % 10.5 %
France( 9 ) 535 15.5 % 15.5 %
Germany 659 17.5 % 17.5 %
Iberia( 10 ) 655 20.5 % 20.5 %
Northern Europe( 11 ) 607 4.5 % 7.5 %
Total Europe 3,145 12.0 % 14.0 %
API( 8 ) 1,009 11.5 % 13.5 %
Total CCEP 4,154 12.0 % 14.0 %
API
• Flat volume reflects strong trading in Australia & New
Zealand, benefiting from the recovery of the AFH channel & navigation of
industry-wide supply constraints, offset mainly by strategic SKU
rationalisation in Indonesia.
• Coca-Cola Classic, Coca-Cola Zero Sugar & Monster
performed well in all markets. In Australia, Fanta & Sprite achieved
double-digit volume growth reflecting the strategic focus on Flavours.
• Revenue/UC( 12 ) growth driven by favourable underlying price
in all markets, promotional optimisation in Australia & positive pack
& channel mix from the recovery of the AFH channel.
France
• Volume growth reflects continued trading momentum in both
channels, whilst also cycling some customer disruption in the Home channel
last year.
• Coca-Cola Original Taste & Coca-Cola Zero Sugar performed
well, both achieving high single-digit volume growth. Continued strong
performance in Fuze tea, achieving double-digit growth across both channels.
• Revenue/UC( 12 ) growth driven by favourable underlying price
from the annualisation of last year's headline price increases, as well as
further headline price implemented late in the first quarter of 2023. Positive
brand mix also contributed to the growth.
Germany
• Volume growth, despite further strategic de-listings within
the water portfolio, reflects the recovery of the AFH channel following the
later removal of covid restrictions last year & soft comparables. Strong
trading in the Home channel also supported overall volume growth.
• Coca-Cola Original Taste, Fanta, Fuze Tea & Monster all
performed well, achieving double-digit volume growth.
• Revenue/UC( 12 ) growth driven by favourable underlying price
from the annualisation of the second headline price increase last year &
positive pack mix from the recovery of the AFH channel e.g. small glass
+21.5%.
Great Britain
• Flat volume reflects resilient trading despite cycling tough
comparables following the early rebound of the AFH channel last year.
• Coca-Cola Zero Sugar continued to perform well, while Dr
Pepper & Monster achieved double-digit volume growth.
• Revenue/UC( 12 ) growth driven predominantly by favourable
underlying price from the annualisation of the second headline price increase
last year & promotional optimisation.
Iberia
• Volume growth reflects recovery of the AFH channel & soft
comparables from cycling covid restrictions last year. Resilient trading in
the Home channel also supported overall volume growth.
• Coca-Cola Original Taste & Coca-Cola Zero Sugar performed
well & both Monster & Aquarius achieved double-digit volume growth.
• Revenue/UC( 12 ) growth driven by favourable underlying price,
with further headline pricing implemented in both Spain & Portugal, in
addition to positive pack & channel mix from the recovery of the AFH
channel e.g. small glass +21.5%.
Northern Europe
• Volume growth reflects recovery of the AFH channel following
the later removal of covid restrictions last year & soft comparables.
• Coca-Cola Zero Sugar, Fuze Tea & Monster all performed
well.
• Revenue/UC( 12 ) growth driven by favourable underlying price,
with further headline pricing implemented in some markets, alongside positive
pack & channel mix from the recovery of the AFH channel e.g. small glass
+21.5%.
First Quarter Volume Performance by Category( 2 , 3 )
All values are unaudited & all references to volumes are on a comparable
basis versus prior year equivalent period unless stated otherwise
Q1
% of Total % Change
Sparkling 85.0 % 4.5 %
Coca-Cola® 58.5 % 4.5 %
Flavours, Mixers & Energy 26.5 % 5.0 %
Stills 15.0 % (1.5) %
Hydration 7.5 % 0.5 %
RTD Tea, RTD Coffee, Juices & Other( 13 ) 7.5 % (3.5) %
Total 100.0 % 4.0 %
Coca-Cola®
• Original Taste +5.5% driven by the recovery of the AFH channel
in markets cycling covid restrictions last year.
• Lights +3.0% reflecting continued solid performance in
Coca-Cola Zero Sugar across all markets (+8.0%) supported by innovation &
targeted campaigns.
• Coca-Cola Zero Sugar continued to gain value share( 5 )
(+20bps of total Cola).
Flavours, Mixers & Energy
• Fanta +6.5% driven by the recovery of the AFH channel, with
soft comparables from cycling covid restrictions last year. What the Fanta
continued to drive excitement with the latest flavour rolling out across
Europe.
• Continuing growth trends in Energy (+15.0%) led by Monster.
Innovation & solid in-market execution continued to drive recruitment
& distribution.
Hydration
• Continued strong performance in Sports (+14.5%), offsetting
decline in Water. Growth driven by Aquarius & Powerade, both achieving
double-digit growth.
• Water -5.0% driven by strategic exit of Vio large PET in
Germany & Indonesia SKU rationalisation.
RTD Tea, RTD Coffee, Juices & Other( 13 )
• Juice drinks -8.0% reflecting Indonesia SKU rationalisation.
• RTD Tea +2.0% driven by Fuze Tea (+23.5%) & Nestea
(+15.5%) in Europe, partially offset by SKU rationalisation in Indonesia.
• Costa RTD continues to maintain momentum in GB & Australia
continues to benefit from double-digit growth in -196.
Conference Call
• 25 April 2023 at 12:00 BST, 13:00 CEST & 7:00 a.m. EDT; accessible
via www.cocacolaep.com
• Replay & transcript will be available at www.cocacolaep.com as
soon as possible
Dividend
• The CCEP Board of Directors declared a first-half interim dividend of
€0.67 per share
• The interim dividend is payable 25 May 2023 to those shareholders of
record on 12 May 2023
• CCEP will pay the interim dividend in euros to holders of shares on
Euronext Amsterdam, the Spanish Stock Exchanges & London Stock Exchange
• Other publicly held shares will be converted into an equivalent US
dollar amount using exchange rates issued by WM/Reuters taken at 16:00 BST on
25 April 2023. This translated amount will be posted on our website here:
https://ir.cocacolaep.com/shareholder-information-and-tools/dividends
Financial Calendar
• H1 2023 Results: 3 August 2023
Contacts
Investor Relations
Sarah Willett Claire Michael Claire Copps Awais Khan
+44 7970 145 218 +44 7528 251 033 +44 7980 775 889 +44 7528 251 830
Media Relations
Shanna Wendt Nick Carter
+44 7976 595 168 +44 7976 595 275
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. A unit case equals approximately 5.678 litres or 24 8-ounce
servings
2. Refer to 'Note Regarding the Presentation of Alternative
Performance Measures' for further details & to 'Supplementary Financial
Information' for a reconciliation of reported to comparable results; Change
percentages against prior year equivalent period unless stated otherwise
3. No selling day shift in Q1; CCEP reported volume +4.0%
4. Comparable & Fx-neutral
5. External date sources: Nielsen & IRI P2 YTD
6. Europe only
7. Dividends subject to Board approval
8. Includes Australia, New Zealand & the Pacific Islands,
Indonesia & Papua New Guinea
9. Includes France & Monaco
10. Includes Spain, Portugal & Andorra
11. Includes Belgium, Luxembourg, the Netherlands, Norway, Sweden
& Iceland
12. Revenue per unit case
13. 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 and divestitures, 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;
2. the extent to which COVID-19 will continue to affect CCEP and the results
of its operations, financial condition and cash flows will depend on future
developments that are highly uncertain and cannot be predicted, including the
scope and duration of the pandemic and actions taken by governmental
authorities and other third parties in response to the pandemic;
3. 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;
4. 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;
5. 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; and
6. 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.
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, and ability
to remain in compliance with existing and future regulatory compliance, may
differ materially from the plans, goals, expectations and guidance set out in
forward-looking statements. These risks may also adversely affect CCEP's share
price. Additional risks that may impact CCEP's future financial condition and
performance are identified in filings with the SEC which are available on the
SEC's website at www.sec.gov. CCEP does not undertake any obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events, or otherwise, except as required under
applicable rules, laws and regulations. Any or all of the forward-looking
statements contained in this filing and in any other of CCEP's public
statements may prove to be incorrect.
Note Regarding the Presentation of Alternative Performance Measures
We use certain alternative performance measures (non-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 consolidated financial
statements.
"Comparable'' is defined as results excluding items impacting comparability,
which include restructuring charges, acquisition and integration related
costs, inventory fair value step up related to acquisition accounting, the
impact of the closure of the GB defined benefit pension scheme, net impact
related to European flooding, income arising from the favourable court ruling
pertaining to the ownership of certain mineral rights in Australia, impact of
a defined benefit plan amendment arising from legislative changes in respect
of the minimum retirement age and net tax items relating to rate and law
changes. 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.
''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%.
Supplemental Financial Information - Revenue - Reported to Comparable
Revenue
Revenue CCEP First-Quarter 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.
31 March 2023 1 April 2022 % Change
As reported and comparable 4,154 3,709 12.0 %
Adjust: Impact of fx changes 71 n/a n/a
Comparable and fx-neutral 4,225 3,709 14.0 %
Revenue per unit case 5.50 5.01 10.0 %
Revenue Europe First-Quarter 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.
31 March 2023 1 April 2022 % Change
As reported and comparable 3,145 2,805 12.0 %
Adjust: Impact of fx changes 56 n/a n/a
Comparable and fx-neutral 3,201 2,805 14.0 %
Revenue per unit case 5.42 4.99 8.5 %
Revenue API First-Quarter 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.
31 March 2023 1 April 2022 % Change
As reported and comparable 1,009 904 11.5 %
Adjust: Impact of fx changes 15 n/a n/a
Comparable and fx-neutral 1,024 904 13.5 %
Revenue per unit case 5.77 5.09 13.5 %
( )
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