REG - Coca-Cola HBC AG - Strong execution powers a year of growth
14/02/2024 07:00
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RNS Number : 0440D Coca-Cola HBC AG 14 February 2024
Strong execution powers a year of growth
Coca-Cola HBC AG, a growth-focused Consumer Packaged Goods business and
strategic bottling partner of The Coca-Cola Company, reports its financial
results for the twelve months ended 31 December 2023.
Full-year highlights
· Focused execution of 24/7 strategy delivered 16.9% organic revenue
growth1
o Organic volume growth of 1.7% led by our strategic priority categories,
with Sparkling +2.5%, Energy +27.3% and Coffee +31.5%
o Strong finish to the year with 6.8% organic volume growth in Q4 and
improving trends in all three reporting segments
o Organic revenue per case growth of 15.0%, reflecting the benefits of
revenue growth management initiatives throughout the year
o Reported revenue up 10.7%, with strong organic growth partly offset by FX
translation headwinds in Emerging markets
o Continued value share gains in 2023 in both Non-Alcoholic Ready-To-Drink
(NARTD) and Sparkling of 110bps and 80bps respectively
· Strong organic EBIT growth of 17.7% driving good improvement in
Return on Invested Capital
o Comparable EBIT of €1,083.8 million; Comparable EBIT margins improved 50
basis points on a reported basis to 10.6%, up 10 basis points on an organic
basis
o Comparable gross profit margin up 80 basis points, reflecting easing cost
pressures in the second half of the year
o Disciplined investment in growth capabilities and good operating leverage
reduced comparable operating expenses as a percent of revenue by 10 basis
points
o ROIC up 230 basis points to 16.4%
· Double-digit organic revenue and EBIT growth across all segments
o Established: Organic revenue up 12.3%, led by pricing and mix. Organic
EBIT grew 23.0%
o Developing: Organic revenue up 18.2%, with strong revenue per case
expansion. Organic EBIT grew 26.9%
o Emerging: Organic revenue up 19.9%, with volume growth as well as revenue
per case improvement. Organic EBIT grew by 11.7%
· Strong EPS progress, record FCF generation and improved shareholder
returns
o Comparable EPS grew by 21.8% to €2.08, supported by strong profit
delivery and effective management of finance costs
o Free cash flow increased by 10.3% to a record €711.8 million
o Net debt of €1.6 billion and 1.1x net debt to comparable adjusted
EBITDA, reflecting the strength of our balance sheet
o Launched a two-year share buyback programme of up to €400 million in
November, reflecting the Board's long-term confidence in business performance
o Board of Directors to propose an ordinary dividend of €0.93 per share,
up 19.2% year on year and representing a 45% payout
· Sustained investment across our strategic priorities
o Capital expenditure of €674.9 million, up 14.5%, focused on sustainable
growth
o Acquisition of Finlandia Vodka business from Brown-Forman for €180
million net consideration paid
o Accelerated investment in bespoke capabilities, particularly digital
initiatives, and our agenda to further strengthen our ability to win in the
market
o Launched Jack Daniel's & Coca-Cola in Poland, Ireland and Hungary
Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG, commented:
"I am deeply proud of our team as we delivered a third year of double-digit
growth and record profits. I would like to thank them for their tireless
efforts, and their commitment to our company vision, our customers and
consistent focused execution. I would also like to thank our customers and
partners for their ongoing support throughout the year.
"2023 was another year of consistent execution of our growth strategy. We
delivered volume growth, share gains, improved margins and record levels of
free cash flow. As a result, we were able to increase shareholder returns,
including the launch of a share buyback programme.
"The power of our 24/7 portfolio, our diversified country footprint and our
sustained investment in building bespoke capabilities, driven by data,
insights and analytics, are foundations of compounding growth.
"In 2023, we made significant progress towards our Mission 2025 and
NetZeroby40 goals, with key milestones including commissioning a new in-house
recycled plastic (rPET) production facility in Romania and a new line for
returnable and resealable glass bottles in Austria. In December, we also
announced that we are establishing a charitable foundation dedicated to
supporting local communities where we operate.
"While we expect the macroeconomic and geopolitical environment to remain
challenging, we remain confident that we will continue to make progress
against our medium-term growth targets."
Full Year
2023 2022 % Change Reported %Change Organic(1)
Volume (m unit cases) 2,835.5 2,711.8 4.6% 1.7%
Net sales revenue (€ m) 10,184.0 9,198.4 10.7% 16.9%
Net sales revenue per unit case (€) 3.59 3.39 5.9% 15.0%
Operating profit (EBIT)(2) (€ m) 953.6 703.8 35.5%
Comparable EBIT(1) (€ m) 1,083.8 929.7 16.6% 17.7%
EBIT margin (%) 9.4 7.7 170bps
Comparable EBIT margin(1) (%) 10.6 10.1 50bps 10bps
Net profit(3) (€ m) 636.5 415.4 53.2%
Comparable net profit(1,3) (€ m) 764.2 624.9 22.3%
Basic earnings per share (EPS) (€) 1.730 1.134 52.6%
Comparable EPS(1) (€) 2.078 1.706 21.8%
Free cash flow(1) (€ m) 711.8 645.1 10.3%
(1)For details on APMs refer to 'Alternative Performance Measures' and
'Definitions and reconciliations of APMs' sections.
(2)Refer to the condensed consolidated income statement.
(3)Net Profit and comparable net profit refer to net profit and comparable net
profit respectively after tax attributable to owners of the parent.
Business Outlook
We have delivered a stronger-than-expected financial performance in 2023,
despite the significant headwinds to our business. While we expect the
macroeconomic and geopolitical environment to remain challenging, we have high
confidence in our 24/7 portfolio and the opportunities for growth in our
diverse markets, amplified by our bespoke capabilities, and above all, the
talent of our people. In 2024 we expect to make progress against our
medium-term growth targets.
Our guidance for 2024 is:
· Organic revenue growth at a Group level in our 6-7% medium-term
target range
· On a comparable basis, COGS per unit case should increase low to
mid-single digits through the combined effect of inflation, transactional and
translational FX
· Organic EBIT growth in the range of +3% to +9%
Technical 2024 guidance
FX: We expect the impact of translational FX on our Group comparable EBIT to
be a €30-50 million headwind.
Restructuring: We do not expect significant restructuring initiatives to take
place.
Tax: We expect our comparable effective tax rate to be towards the top end of
our 25% to 27% range.
Finance costs: We expect net finance costs to be between €50-70 million.
Scope: We expect the scope impact from the Finlandia acquisition to be between
€5-10 million
Group Operational Review
Consistent execution of our 24/7 growth strategy has delivered a strong
financial performance and significant strategic progress. We have invested
strategically in the business, further developed our bespoke capabilities and
evolved our culture, our partnerships and our portfolio. As a result, we
remain very confident in the differentiated strengths of our business and our
ability to sustain high levels of revenue growth into the future. This is well
reflected in the progress we have made delivering our strategic pillars.
Leveraging our unique 24/7 portfolio
Full year organic revenue grew by 16.9%, with growth in volumes, price and
mix. Reported net sales revenue increased by 10.7%, with adverse FX
translation effects partially offsetting strong organic growth across the
group.
Volumes increased by 1.7% on an organic basis, led by our strategic priority
categories of Sparkling, Energy and Coffee, which offset declines in Stills,
as a result of conscious choices to drive profitable growth.
· Sparkling volumes grew by 2.5%. Excluding Russia, where we no
longer sell any Coca-Cola Company brands, Trademark Coke brands grew 1.9%.
· Energy volumes grew by 27.3%, the eighth consecutive year of strong
double-digit growth, with good results across all segments. In Established and
Developing markets, growth was driven by Monster, while growth in Emerging was
led by Predator, as well as the successful launch of our Energy portfolio in
Egypt.
· Coffee volumes grew 31.5%, with all three segments growing above
20%. We continue to make good progress on out-of-home customer recruitment,
adding 5,000 outlets in the year to bring our total to 13,000. Our
segmentation strategy is working well and we remain excited about the
medium-term opportunity.
· Sports drinks delivered good growth, however Still volumes declined
4.4% as we consciously chose to focus on opportunities for the most profitable
revenue growth in the Water category. As a result, Water volumes were 5.9%
lower than the prior year, largely reflecting declines in Italy, Poland,
Hungary, Czech and Romania.
· Premium Spirits volumes grew by 13.1% on an organic basis, driven
by all segments. The acquisition of the Finlandia Vodka business, completed in
November 2023, is a unique opportunity with significant geographic overlap in
our territories, enhancing our premium spirits credentials and opening
incremental mixability opportunities for our NARTD portfolio.
Winning in the marketplace
Organic net sales revenue per case grew by 15.0% in the full year, led by
19.0% growth in the first half, due to pricing actions to mitigate cost
inflation in our markets. As cost pressures eased in the second half of the
year, organic net sales revenue per case grew 11.1%, largely reflecting the
cycling effect of pricing actions taken in the second half of 2022.
Our revenue growth management initiatives, powered by ongoing investment in
data, insights and analytics, have allowed us to take more informed pricing
decisions and address both affordability and premiumisation, while still
improving revenue per case. Affordability remained important in 2023, as many
of our markets faced pressures on consumer disposable income. We responded by
launching new smaller pack formats, as well as by driving promotional
activities with a higher return on investment, and utilising the strength of
our 24/7 portfolio to tailor our offer in different markets and for different
customer needs.
Our actions to drive premiumisation resulted in positive category and package
mix. Category mix benefitted mainly from the increased contribution of
Sparkling, Adult Sparkling and Energy, as well as the lower contribution from
Water. Package mix improved as we made further strategic progress, increasing
single-serve mix by 80 basis points.
As a result of the commercial decisions we have made, we continued to deliver
strong share gains in 2023, gaining 110 basis points of value share in NARTD
and 80 basis points in Sparkling. This improved performance benefitted from
our core focus of driving joint value with customers and the strength of our
24/7 brand portfolio. We were again the number one contributor to retail
customers' absolute revenue growth within fast moving consumer goods (FMCG) in
Europe, according to Nielsen.
Operating profit, margins and cost control
Comparable gross profit grew by 13.2%, with gross profit margins up 80 basis
points to 35.0%. Comparable COGS per case increased 4.7%, mainly reflecting
easing inflation in some commodities in the second half of the year, FX
translational benefits from the movements in the Nigerian Naira, offset by
transactional headwinds.
Comparable operating costs as a percent of revenue decreased by 10 basis
points to 24.4%. We benefitted from good operational leverage while investing
in growth as revenues accelerated. We increased marketing spend and added
route-to-market capabilities, seizing opportunities across our markets while
maintaining tight control of non-essential costs.
Comparable EBIT increased by 16.6% on a reported basis to €1,083.8 million,
principally driven by organic growth across our markets, only partially offset
by negative foreign currency movements. The comparable EBIT margin was 10.6%,
up 50 basis points on a reported basis, benefitting from operational leverage.
On an organic basis, comparable EBIT increased by 17.7%, and margins grew 10
basis points.
We saw a negative translational and transactional currency impact in 2023,
driven by the depreciation of the Nigerian Naira, Russian Rouble and Egyptian
Pound.
Net profit and free cash flow
Comparable net profit of €764.2 million and comparable basic earnings per
share of €2.078 were 22.3% and 21.8% higher respectively. Reported net
profit and reported basic earnings per share of €636.5 million and €1.730
were 53.2% and 52.6% higher respectively compared to 2022, reflecting the
lower level of non-cash financial charges including impairments.
Comparable taxes amounted to €277.1 million, representing a comparable tax
rate of 27%, at the top end of our guided range of 25% to 27%.
ROIC expanded by 230 basis points to 16.4%, driven by higher profit, partly
offset by higher invested capital.
Net finance costs were €34.4 million lower than the prior year at €48.3
million, driven mainly by higher finance income as a result of increased
interest on cash deposits and stable finance costs on fixed rate borrowings.
Net impairment losses were €16.9 million lower, reflecting a €109.4
million charge in Egypt, more than offset by the non-repeat of the charges
taken in 2022.
Capital expenditure increased by €85.4 million to €674.9 million as we
continued to invest in developing our production facilities, renovating and
expanding our cooler footprint, and driving other strategic opportunities that
help deliver our sustainability agenda. Capex as a percentage of revenue was
6.6%, towards the low end of our targeted range of 6.5% to 7.5%, reflecting
the strong level of revenue growth achieved in the year.
Free cash flow was €711.8 million, an increase of €66.7 million compared
to the prior year and a record for the business, largely reflecting higher
operating profit.
ESG leadership
In 2023 we made good progress on sustainability, which remains an important
growth enabler.
A significant focus for us is full packaging circularity. In 2023, Romania
became our first country to have all three elements: 100% recycled bottles,
in-house rPET production and a newly launched, country-wide Deposit Return
Scheme (DRS). By the end of the year a DRS was live in six of our markets:
Croatia, Estonia, Latvia, Lithuania, Romania and Slovakia. Our in-house rPET
production in Poland, Italy and Romania will cover 50% of our rPET needs in
2024, securing availability and reducing costs.
We have also led on packaging innovation. In Austria we commissioned a new
RGB(4) line for both 1 litre and new 400ml resealable bottles. We also
introduced an industry-leading, innovative solution to replace shrink plastic
with 100%-recyclable paper on 1.5 litre PET bottles.
Turning to other elements of our Mission 2025 framework, we exceeded our goal
of having 50% energy-efficient coolers in the market (excluding Egypt -
acquired in 2022), with a total of 54% by June 2023 - eighteen months ahead of
target. On water stewardship, we now have community projects in twelve
water-risk areas where we operate, up from eight last year.
Innovation is critical in creating new technologies and for this reason we
became a partner in the $137.7 million Greycroft Coca-Cola System
Sustainability Fund, with seven other bottlers and The Coca-Cola Company. Also
in 2023, we announced we are establishing a charitable foundation, with an
initial donation of €10 million, dedicated to supporting local communities.
Our 2023 sustainability performance was recognised externally by leading
scores from major ESG benchmarks. We were ranked, for the seventh time, as the
world's most sustainable beverage company by the 2023 Dow Jones Sustainability
Indices, and we were recognised in CDP's A List for leading practices in
climate and water security.
(4) Returnable Glass Bottle line co-funded by the European Union,
NextGenerationEU.
Operational Review by Reporting Segment
Established markets
Full Year
2023 2022 % Change Reported % Change Organic
Volume (m unit cases) 628.7 643.9 -2.4% -2.4%
Net sales revenue (€ m) 3,358.5 2,974.1 12.9% 12.3%
Net sales revenue per unit case (€) 5.34 4.62 15.7% 15.1%
Operating profit (EBIT) (€ m) 379.2 310.4 22.2%
Comparable EBIT (€ m) 381.1 307.1 24.1% 23.0%
EBIT margin (%) 11.3 10.4 90bps
Comparable EBIT margin (%) 11.3 10.3 100bps 100bps
Net sales revenue grew by 12.3% and 12.9% on an organic and reported basis
respectively, as we experienced positive foreign currency movements from the
Swiss Franc.
Organic growth in net sales revenue per case was 15.1%, driven by price
increases, weighted to the first half, as well as positive category and
package mix. A focus on single-serve activation drove a 3.2 percentage point
improvement in single-serve mix.
Established markets volume declined by 2.4%, on strong comparatives, with an
improving trend towards the end of the year. Sparkling volumes fell slightly,
despite growth in Coke Zero and Adult Sparkling. Energy volumes expanded by
mid-teens despite tough comparatives, with good growth in Monster. Stills
volumes declined by high-single digits, driven by a low-double digit decline
in the Water category, as we made conscious choices to prioritise profitable
revenue growth.
· Volumes in Greece grew by 6.9%, despite tough comparatives, driven
by strong execution throughout key trading periods, with an extended tourist
season. Sparkling expanded mid-single digits driven by Coke Zero, Fanta and
Adult Sparkling, while Energy grew mid-teens. Stills grew high-single digits.
· In Italy, volumes declined 8.6%, primarily due to Water. Volume
trends improved in Q4, with growth in Sparkling. In the year, Coke Zero
volumes grew low-single digits and Coke Zero Sugar Zero Caffeine performed
well. Adult Sparkling grew high-single digits, driven by both Kinley and
Lurisia. In Water, we made deliberate choices to focus on profitable revenue
growth, and as a result volumes declined over 25%. Stills overall declined
over 20%, but only low-single digits excluding Water.
· In Ireland, volumes grew by 2.7%. Sparkling volumes were up by
low-single digits, driven by Coke Zero, Sprite and Fanta. Energy grew in the
mid-twenties, retaining good momentum. Stills were slightly down year-on-year,
with a low-single digit decline in Water, partly offset by strong growth in
premium water brands.
· In Switzerland, volumes increased by 1.6%. Sparkling volumes grew
low-single digits with a strong performance from Adult Sparkling and Coke
Zero. Energy volumes grew strongly. Stills volume was down low-single digits,
impacted by Ready-to-Drink Tea, despite low-double digit growth in Sport
Drinks.
Comparable EBIT in the Established segment increased by 23.0% and 24.1% on an
organic and reported basis respectively, to €381.1 million. Comparable EBIT
margin was 11.3%, up 100 basis points on an organic basis, as operational
leverage and cost control more than offset COGS inflation.
Developing markets
Full Year
2023 2022 % Change Reported % Change Organic
Volume (m unit cases) 471.0 478.8 -1.6% -1.7%
Net sales revenue (€ m) 2,088.6 1,719.7 21.5% 18.2%
Net sales revenue per unit case (€) 4.43 3.59 23.5% 20.2%
Operating profit (EBIT) (€ m) 152.6 113.1 34.9%
Comparable EBIT (€ m) 153.8 115.1 33.6% 26.9%
EBIT margin (%) 7.3 6.6 70bps
Comparable EBIT margin (%) 7.4 6.7 70bps 50bps
Net sales revenue grew by 18.2% and 21.5% on an organic and reported basis
respectively, as well as positive foreign currency movements from the Polish
Zloty and Hungarian Forint.
Organic net sales revenue per case increased by 20.2%, driven by pricing
initiatives, and positive category and package mix.
Developing markets volume declined 1.7% on an organic basis, with a better
performance in Q4. Sparkling volume declined slightly, while Energy delivered
low-teens growth. Stills declined double-digits, as Water and Juice
contracted.
· Poland volumes increased by 1.5%, despite lapping a strong
performance in 2022. Sparkling grew by low-single digits, led by double-digit
growth in Coke Zero and Sprite, and an encouraging performance from Coke Zero
Sugar Zero Caffeine. Energy grew by low-teens and Coffee grew strongly. Stills
volumes declined more than 20%, due to deliberate choices made in Water to
prioritise profitable revenue growth.
· In Hungary, volumes declined by 5.3%, due to Stills. Encouragingly,
we saw a return to volume growth in Q4. In the year, Sparkling grew slightly,
despite being impacted by the incremental sugar tax effective July 2022, and
Trademark Coke grew mid-single digits. Stills declined high teens, led by
Water.
· Volume in the Czech Republic declined 12.6%, on tough comparatives.
We saw declines in Sparkling and Stills, albeit with an improved performance
in Q4. We actively drove robust price mix to manage cost inflation,
particularly in the first half. Energy grew low-double digits and Coffee grew
strongly.
Comparable EBIT in the Developing segment increased by 26.9% and 33.6% on an
organic and reported basis respectively, to €153.8 million. Comparable EBIT
margin was 7.4%, up 50 basis points on an organic basis, as operational
leverage and cost control more than offset COGS inflation.
Emerging markets
Full Year
2023 2022 % Change Reported % Change Organic
Volume (m unit cases) 1,735.8 1,589.1 9.2% 4.3%
Net sales revenue (€ m) 4,736.9 4,504.6 5.2% 19.9%
Net sales revenue per unit case (€) 2.73 2.83 -3.7% 15.0%
Operating profit (EBIT) (€ m) 421.8 280.3 50.5%
Comparable EBIT (€ m) 548.9 507.5 8.2% 11.7%
EBIT margin (%) 8.9 6.2 270bps
Comparable EBIT margin (%) 11.6 11.3 30bps -80bps
Net sales revenue grew by 19.9% on an organic basis, or by 5.2% on a reported
basis, as currency headwinds from the Nigerian Naira, Egyptian Pound and
Russian Rouble offset strong organic growth and the impact of the
consolidation of Multon for the first seven months of the year.
Net sales revenue per case grew 15.0% organically, driven by pricing actions
taken throughout the year, proactively managing the impact of currency
devaluation.
Emerging markets' volume grew by 4.3% organically and 9.2% on a reported
basis, which includes the consolidation of Multon. Sparkling volumes grew by
mid-single digits and Energy volume grew strong double-digits. Still volumes
were broadly unchanged year-on-year.
· Volume in Nigeria grew by 1.8%, with high-single digit growth in
Q4. We continued to consciously drive price mix to manage cost inflation and
currency devaluations while addressing affordability and gaining both value
and volume share. Trademark Coke volumes increased high-single digits and
Energy continued to grow strong double-digits. Stills fell low-double digits,
due to Water.
· Ukraine volume grew by 17.8%, with good results across the
portfolio, on soft comparatives impacted by the war. Sparkling grew
high-teens, led by Trademark Coke, Adult Sparkling and Fanta. Energy grew very
strongly, and Juice and Ready-to-Drink Tea performed well.
· Volume in Romania declined by 8.3%, reflecting a challenging
customer and consumer backdrop for the first nine months of the year. Trends
improved in Q4, with volumes returning to growth. Sparkling volumes fell
mid-single digits, although we drove low-single digit growth in Coke Zero and
strong double-digit growth in Energy and Coffee. Stills declined high-teens.
· Volumes in Serbia increased by 2.2%. Sparkling grew low-single
digits, and Energy delivered low-teens growth. Stills grew high-single digits.
· Volumes grew by 4.5% in Egypt on an organic basis, despite some
macroeconomic headwinds, benefitting from our significant investment in
commercial capabilities over the last two years. Sparkling grew, with a good
performance in Coke Zero. We are encouraged by the launch of Energy, both
Monster and Fury, which contributed positively to the results. Water grew
high-single digits, with a rebound in the second half. Trademark Coke was
impacted in Q4 by pushback against some western brands.
· Volumes in Russia grew by 12.1% on an organic basis. Compared to
2021, volumes were down around 30% on an organic basis. The local business
continued to perform in line with expectations.
Comparable EBIT in the Emerging segment grew by 11.7% on an organic basis and
8.2% on a reported basis, to €548.9 million. Operating profit grew strongly,
driven by lower non-cash financial charges compared to prior-year period.
Comparable EBIT margin was 11.6%, down 80 basis points on an organic basis,
but up 30 basis points on a reported basis, reflecting the mix effect from
currency headwinds.
Conference call
Coca-Cola HBC's management will host a conference call for investors and
analysts on Wednesday, 14 February 2024 at 9:00 am GMT. To join the call, in
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Next event
30 April 2024 2024 First quarter trading update
Enquiries
Coca-Cola HBC Group
Investors and Analysts:
John Dawson Tel: +44 7552 619509
Investor Relations Director (Interim) john.dawson@cchellenic.com
Jemima Benstead Tel: +44 7740 535130
Investor Relations Manager jemima.benstead@cchellenic.com
Virginia Phillips Tel: +44 7864 686582
Investor Relations Manager virginia.phillips@cchellenic.com
Media:
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Claire Evans Tel: +44 7597 562 978
Group Senior Communications Manager claire.evans@cchellenic.com
Greek media contact: Tel: +30 694 454 8914
V+O Communications sm@vando.gr
Sonia Manesi
Coca-Cola HBC Group
Coca-Cola HBC is a growth-focused consumer packaged goods business and
strategic bottling partner of The Coca-Cola Company. We open up moments that
refresh us all, by creating value for our stakeholders and supporting the
socio-economic development of the communities in which we operate. With a
vision to be the leading 24/7 beverage partner, we offer drinks for all
occasions around the clock and work together with our customers to serve 740
million consumers across a broad geographic footprint of 29 countries. Our
portfolio is one of the strongest, broadest and most flexible in the beverage
industry, with consumer-leading beverage brands in the sparkling, adult
sparkling, juice, water, sport, energy, ready-to-drink tea, coffee, and
premium spirits categories. These include Coca-Cola, Coca-Cola Zero Sugar,
Fanta, Sprite, Schweppes, Kinley, Costa Coffee, Caffè Vergnano, Valser,
FuzeTea, Powerade, Cappy, Monster Energy, Finlandia Vodka, The Macallan, Jack
Daniel's and Grey Goose. We foster an open and inclusive work environment
amongst our 33,000 employees and believe that building a more positive
environmental impact is integral to our future growth. We rank among the top
sustainability performers in ESG benchmarks such as the Dow Jones
Sustainability Indices, CDP, MSCI ESG, FTSE4Good and ISS ESG.
Coca-Cola HBC has a premium listing on the London Stock Exchange (LSE: CCH)
and is listed on the Athens Exchange (ATHEX: EEE). For more information,
please visit https://www.coca-colahellenic.com
(https://www.coca-colahellenic.com/) .
Financial information in this announcement is presented on the basis of
International Financial Reporting Standards ('IFRS')
Special Note Regarding the Information set out herein
Unless otherwise indicated, the condensed consolidated financial statements
and the financial and operating data or other information included herein
relate to Coca-Cola HBC AG and its subsidiaries ('Coca-Cola HBC' or the
'Company' or 'we' or the 'Group').
Forward-Looking Statements
This document contains forward-looking statements that involve risks and
uncertainties. These statements may generally, but not always, be identified
by the use of words such as 'believe', 'outlook', 'guidance', 'intend',
'expect', 'anticipate', 'plan', 'target' and similar expressions to identify
forward-looking statements. All statements other than statements of historical
facts, including, among others, statements regarding our future financial
position and results, our outlook for 2024 and future years, business strategy
and the effects of the global economic slowdown, the impact of the sovereign
debt crisis, currency volatility, our recent acquisitions, and restructuring
initiatives on our business and financial condition, our future dealings with
The Coca-Cola Company, budgets, projected levels of consumption and
production, projected raw material and other costs, estimates of capital
expenditure, free cash flow, effective tax rates and plans and objectives of
management for future operations, are forward-looking statements. By their
nature, forward-looking statements involve risk and uncertainty because they
reflect our current expectations and assumptions as to future events and
circumstances that may not prove accurate. Our actual results and events could
differ materially from those anticipated in the forward-looking statements for
many reasons, including the risks described in the 2022 Integrated Annual
Report for Coca-Cola HBC AG and its subsidiaries.
Although we believe that, as of the date of this document, the expectations
reflected in the forward-looking statements are reasonable, we cannot assure
you that our future results, level of activity, performance or achievements
will meet these expectations. Moreover, neither we, nor our directors,
employees, advisors nor any other person assumes responsibility for the
accuracy and completeness of the forward-looking statements. After the date of
the condensed consolidated financial statements included in this document,
unless we are required by law or the rules of the UK Financial Conduct
Authority to update these forward-looking statements, we will not necessarily
update any of these forward-looking statements to conform them either to
actual results or to changes in our expectations.
Alternative Performance Measures
The Group uses certain Alternative Performance Measures ('APMs') in making
financial, operating and planning decisions as well as in evaluating and
reporting its performance. These APMs provide additional insights and
understanding to the Group's underlying operating and financial performance,
financial condition and cash flow. The APMs should be read in conjunction with
and do not replace by any means the directly reconcilable IFRS line items. For
more details on APMs please refer to 'Definitions and reconciliations of APMs'
section.
Group Financial Review
Income statement Full Year
2023 2022 % Change Reported % Change Organic(5)
€ million € million
Volume (m unit cases) 2,835.5 2,711.8 4.6% 1.7%
Net sales revenue 10,184.0 9,198.4 10.7% 16.9%
Net sales revenue per unit case (€) 3.59 3.39 5.9% 15.0%
Cost of goods sold (6,626.6) (6,054.2) 9.5%
Comparable cost of goods sold(5) (6,622.0) (6,050.6) 9.4%
Gross profit 3,557.4 3,144.2 13.1%
Comparable gross profit(5) 3,562.0 3,147.8 13.2%
Operating expenses (excluding exceptional items (2,613.5) (2,354.6) 11.0%
related to Russia-Ukraine conflict)
Exceptional items related to Russia-Ukraine conflict - (127.4) -100.0%
Operating expenses (2,613.5) (2,482.0) 5.3%
Comparable operating expenses(5) (2,487.9) (2,259.7) 10.1%
Share of results of integral equity method investments 9.7 41.6 -76.7%
Operating profit (EBIT)(6) 953.6 703.8 35.5%
Comparable operating profit (EBIT)(5) 1,083.8 929.7 16.6% 17.7%
Adjusted EBITDA(5) 1,487.8 1,343.6 10.7%
Comparable adjusted EBITDA(5) 1,506.1 1,371.5 9.8%
Finance costs, net (48.3) (82.7) -41.6%
Share of results of non-integral equity method investments 5.0 2.5 100.0%
Tax (274.6) (208.0) 32.0%
Comparable tax(5) (277.1) (224.4) 23.5%
Net profit(7) 636.5 415.4 53.2%
Comparable net profit(5,7) 764.2 624.9 22.3%
Basic earnings per share (€) 1.730 1.134 52.6%
Comparable basic earnings per share (€)(5) 2.078 1.706 21.8%
(5)Refer to the 'Alternative Performance Measures' and 'Definitions and
reconciliations of APMs' sections.
(6)Refer to the condensed consolidated income statement.
(7)Net Profit and comparable net profit refer to net profit and comparable net
profit respectively after tax attributable to owners of the parent.
Net sales revenue grew by 10.7% in 2023 compared to the prior year. These
results were primarily driven by pricing initiatives and the consolidation of
Multon for the first seven months of the year as well as mix improvements,
which were partially offset by adverse foreign currency movements mainly in
connection with the Nigerian Naira, the Russian Rouble and the Egyptian Pound.
On an organic basis, net sales revenue grew by 16.9% during 2023, compared to
the prior year.
Comparable and reported cost of goods sold increased by 9.4% and 9.5%
respectively in 2023 compared to the prior year, due to input cost inflation
and the consolidation of Multon for the first seven months of the year.
Comparable operating expenses increased by 10.1% in 2023 compared to the prior
year, mainly driven by higher selling and administrative expenses. Operating
expenses increased by 5.3% in 2023, due to higher selling and administrative
expenses as well as the current-year impairment of goodwill predominantly
related to the Group's operations in Egypt, which were partially offset by the
cycling of prior-year's exceptional items related to Russia-Ukraine conflict
and acquisition costs resulting from the change in control of Multon.
Exceptional items related to Russia-Ukraine conflict in the prior year
consisted of net impairment losses for property, plant and equipment, equity
method investments and goodwill, resulting from the Group's restructuring
initiatives in Russia and the deterioration of Russia's macroeconomic
environment.
Comparable operating profit grew by 16.6% in 2023, compared to the prior year,
primarily reflecting the benefits from top-line growth resulting from pricing
initiatives and mix improvements, partially offset by adverse foreign currency
movements. Operating profit improved by 35.5% in 2023 compared to the prior
year, due to top-line growth resulting from pricing initiatives and mix
improvements as well as the cycling of prior-year's exceptional items related
to Russia-Ukraine conflict and acquisition costs resulting from the change in
control of Multon, partially offset by the current-year impairment of goodwill
and adverse foreign currency movements.
Net finance costs decreased by €34.4 million during 2023 compared to the
prior year, mainly driven by higher finance income earned on the Group's cash,
cash equivalents and financial assets, partially offset by the increased
interest expense from the Green bond issued in September 2022.
On a comparable basis, the effective tax rate was 26.6% for 2023 and 26.4% for
2022. On a reported basis, the effective tax rate was 30.2% for 2023, impacted
by the current-year impairment of goodwill, and 33.4% for 2022, respectively.
The Group's effective tax rate varies depending on the mix of taxable profits
by territory, the non-deductibility of certain expenses, non-taxable income
and other one-off tax items across its territories.
Comparable net profit grew by 22.3% compared to the prior year, due to higher
operating profitability and lower finance costs, partially offset by higher
taxes, while net profit grew by 53.2%, further cycling the impact of
prior-year's exceptional items related to Russia-Ukraine conflict and
acquisition costs resulting from the change in control of Multon, partially
offset by the current-year impairment of goodwill
Balance Sheet
As at 31 December
2023 2022 Change
Assets € million € million € million
Total non-current assets 5,969.4 6,139.5 (170.1)
Total current assets 3,910.2 3,716.2 194.0
Total assets 9,879.6 9,855.7 23.9
Liabilities
Total current liabilities 3,846.3 3,006.7 839.6
Total non-current liabilities 2,846.6 3,463.4 (616.8)
Total liabilities 6,692.9 6,470.1 222.8
Equity
Owners of the parent 3,092.8 3,282.3 (189.5)
Non-controlling interests 93.9 103.3 (9.4)
Total equity 3,186.7 3,385.6 (198.9)
Total equity and liabilities 9,879.6 9,855.7 23.9
Net current assets 63.9 709.5 (645.6)
Total non-current assets decreased by €170.1 million during 2023, primarily
driven by foreign currency translation, which was partially offset by the
Group's continued investment in property, plant and equipment. Net current
assets decreased by €645.6 million, while non-current liabilities decreased
by €616.8 million during 2023 respectively, mainly due to the
reclassification of the current portion of borrowings from non-current
liabilities to current liabilities.
Cash flow
Full Year
2023 2022 %
€ million € million Change
Net cash from operating activities 1,386.7 1,234.6 12.3%
Capital expenditure(8) (674.9) (589.5) 14.5%
Free cash flow(8) 711.8 645.1 10.3%
( )
(8)Refer to the 'Definitions and reconciliations of APMs' section.
Net cash from operating activities increased by 12.3% or €152.1 million
during 2023, compared to the prior year, mainly due to increased operating
profitability excluding non-cash charges, partially offset by higher taxes
paid.
Capital expenditure increased by 14.5% in 2023, compared to the prior year. In
2023, capital expenditure amounted to €674.9 million of which 53% was
related to investment in production equipment and facilities and 17% to the
acquisition of marketing equipment. In 2022, capital expenditure amounted to
€589.5 million of which 53% was related to investment in production
equipment and facilities and 20% to the acquisition of marketing equipment.
In 2023, free cash flow increased by 10.3% or €66.7 million, compared to the
prior-year period, driven by the increased cash from operating activities,
partially offset by increased capital expenditure.
Definitions and reconciliations of Alternative Performance Measures ("APMs")
1. Comparable APMs(9)
In discussing the performance of the Group, "comparable" measures are used. In
2023, the Group updated the definitions of items which are deducted from the
directly reconcilable IFRS measures to calculate comparable APMs, to include
impairment of goodwill and indefinite-lived intangible assets. This update was
performed to provide more relevant information on the Group's ongoing
operating and financial performance, considering also reporting by its peer
group and had no impact on the comparative figures disclosed.
More specifically, comparable measures are calculated by deducting from the
directly reconcilable IFRS measures the impact of the Group's restructuring
costs, the mark-to-market valuation of the commodity hedging activity, the
acquisition, integration and divestment-related costs, the impairment of
goodwill and indefinite-lived intangible assets, the Russia-Ukraine conflict
impact and certain other tax items, which are collectively considered as items
impacting comparability, due to their nature. More specifically the following
items are considered as items that impact comparability:
1) Restructuring costs
Restructuring costs comprise costs arising from significant changes in the way
the Group conducts business, such as significant supply chain infrastructure
changes, outsourcing of activities and centralisation of processes. These
costs are included within the income statement line 'Operating expenses';
however, they are excluded from the comparable results so that the users can
obtain a better understanding of the Group's operating and financial
performance achieved from underlying activity. Restructuring costs resulting
from initiatives driven by the Russia-Ukraine conflict are presented under the
'Russia-Ukraine conflict impact' item, to provide users complete information
on the financial implications of the conflict.
2) Commodity hedging
The Group has entered into certain commodity derivative transactions in order
to hedge its exposure to commodity price risk.
Although these transactions are economic hedging activities that aim to manage
our exposure to sugar, aluminium, gas oil and plastics price volatility, hedge
accounting has not been applied in all cases. In addition, the Group
recognises certain derivatives embedded within commodity purchase contracts
that have been accounted for as stand-alone derivatives and do not qualify for
hedge accounting. The fair value gains or losses on the derivatives and
embedded derivatives are immediately recognised in the income statement in the
cost of goods sold and operating expenses line items. The Group's comparable
results exclude the gains or losses resulting from the mark-to-market
valuation of these derivatives to which hedge accounting has not been applied
(primarily plastics) and embedded derivatives. These gains or losses are
reflected in the comparable results in the period when the underlying
transactions occur, to match the profit or loss to that of the corresponding
underlying transactions. We believe this adjustment provides useful
information related to the impact of our economic risk management activities.
3) Acquisition, integration and divestment-related costs or gains
Acquisition costs comprise costs incurred to effect a business combination
such as finder's fees, advisory, legal, accounting, valuation and other
professional or consulting fees as well as changes in the fair value of
contingent consideration recognised in the income statement. They also include
any gain from bargain purchase arising from business combinations, as well as
any gain or loss recognised in the income statement from the remeasurement to
fair value of previously held interests and the reclassification to the income
statement of items of other comprehensive income resulting from step
acquisitions. Integration costs comprise direct incremental costs necessary
for the acquiree to operate within the Group. Divestment-related costs
comprise transaction expenses, including advisory, consulting, and other
professional fees to effect the disposal of a subsidiary or equity method
investment, any impairment losses or write-downs to fair value less costs to
sell recognised in the income statement upon classification as held for sale
and any relevant disposal gains or losses or reversals of impairment
recognised in the income statement upon disposal. These costs or gains are
included within the income statement line 'Operating expenses', however, to
the extent that they relate to business combinations or divestments that have
been completed or are expected to be completed, they are excluded from the
comparable results so that the users can obtain a better understanding of the
Group's operating and financial performance achieved from underlying activity.
4) Impairment of goodwill and indefinite-lived intangible assets
Impairment losses recognised for goodwill and indefinite-lived intangible
assets as well as reversals of impairment losses recognised for
indefinite-lived intangible assets, are included within the income statement
line 'Operating expenses'; however are excluded from comparable results so
that the users can obtain a better understanding of the Group's ongoing
operating and financial performance.
5) Russia-Ukraine conflict impact
As a result of the conflict between Russia and Ukraine, the Group recognised
net impairment losses for property, plant and equipment, intangible assets and
equity method investments as well as restructuring costs, in connection with
the new business model in Russia and adverse changes to the economic
environment. The Group also recognised incremental allowance for expected
credit losses and write-offs of inventory and property, plant and equipment
resulting from the Russia-Ukraine conflict. The aforementioned net impairment
losses are included within the income statement line 'Exceptional items
related to Russia-Ukraine conflict' so as to provide users with enhanced
visibility over these items considering their materiality, while remaining
costs are included within 'Operating expenses' and 'Cost of goods sold' lines
of the income statement accordingly. Net impairment losses and other costs
directly attributable to the Russia-Ukraine conflict are excluded from the
comparable results so that the users can obtain a better understanding of the
Group's operating and financial performance from underlying activity.
6) Other tax items
Other tax items represent the tax impact of (a) changes in income tax rates
affecting the opening balance of deferred tax arising during the year and (b)
certain tax-related matters selected based on their nature. Both (a) and (b)
are excluded from comparable after-tax results so that the users can obtain a
better understanding of the Group's underlying financial performance.
(9)Comparable APMs refer to comparable COGS, comparable gross profit,
comparable operating expenses, comparable EBIT, comparable EBIT margin,
comparable Adjusted EBITDA, comparable profit before tax, comparable tax,
comparable net profit and comparable EPS
The Group discloses comparable performance measures to enable users to focus
on the underlying performance of the business on a basis which is common to
both periods for which these measures are presented. The reconciliation of
comparable measures to the directly related measures calculated in accordance
with IFRS is as follows:
Reconciliation of comparable financial indicators (numbers in € million
except per share data)
Full Year 2023
COGS Gross Operating EBIT Adjusted Profit before tax Tax Net EPS
Profit expenses EBITDA Profit(10) (€)
As reported (6,626.6) 3,557.4 (2,613.5) 953.6 1,487.8 910.3 (274.6) 636.5 1.730
Restructuring costs - - 8.3 8.3 6.9 8.3 (1.6) 6.7 0.018
Commodity hedging 4.6 4.6 - 4.6 4.6 4.6 (1.3) 3.3 0.009
Acquisition costs - - 6.3 6.3 6.3 6.3 - 6.3 0.017
Russia-Ukraine conflict impact - - 0.5 0.5 0.5 0.5 (0.1) 0.4 0.001
Impairment of goodwill and indefinite-lived intangible assets - - 110.5 110.5 - 110.5 - 110.5 0.301
Other tax items - - - - - - 0.5 0.5 0.002
Comparable (6,622.0) 3,562.0 (2,487.9) 1,083.8 1,506.1 1,040.5 (277.1) 764.2 2.078
Full Year 2022
COGS Gross Operating EBIT Adjusted Profit before tax Tax Net EPS
Profit expenses EBITDA Profit(10) (€)
As reported (6,054.2) 3,144.2 (2,482.0) 703.8 1,343.6 623.6 (208.0) 415.4 1.134
Restructuring costs - - 8.0 8.0 7.9 8.0 (1.7) 6.3 0.017
Commodity hedging 2.5 2.5 - 2.5 2.5 2.5 (0.5) 2.0 0.005
Acquisition and integration costs - - 79.7 79.7 9.2 79.7 - 79.7 0.218
Russia-Ukraine conflict impact 1.1 1.1 134.6 135.7 8.3 135.7 (13.8) 121.9 0.333
Other tax items - - - - - - (0.4) (0.4) (0.001)
Comparable (6,050.6) 3,147.8 (2,259.7) 929.7 1,371.5 849.5 (224.4) 624.9 1.706
( )
(10) Net Profit and comparable net profit refer to net profit and comparable
net profit respectively after tax attributable to owners of the parent.
Reconciliation of comparable EBIT per reportable segment (numbers in €
million)
Full Year 2023
Established Developing Emerging Consolidated
EBIT 379.2 152.6 421.8 953.6
Restructuring costs 0.9 1.1 6.3 8.3
Commodity hedging (0.9) (2.0) 7.5 4.6
Acquisition costs 1.9 1.0 3.4 6.3
Russia-Ukraine conflict impact - - 0.5 0.5
Impairment of goodwill and indefinite-lived - 1.1 109.4 110.5
intangible assets
Comparable EBIT 381.1 153.8 548.9 1,083.8
Full Year 2022
Established Developing Emerging Consolidated
EBIT 310.4 113.1 280.3 703.8
Restructuring costs (6.1) (1.5) 15.6 8.0
Commodity hedging 2.5 3.5 (3.5) 2.5
Acquisition and integration costs 0.3 - 79.4 79.7
Russia-Ukraine conflict impact - - 135.7 135.7
Comparable EBIT 307.1 115.1 507.5 929.7
2. Organic APMs
Organic growth
Organic growth enables users to focus on the operating performance of the
business on a basis which is not affected by changes in foreign currency
exchange rates from year to year or changes in the Group's scope of
consolidation ('consolidation perimeter') i.e. acquisitions, divestments and
reorganisations resulting in equity method accounting. Thus, organic growth is
designed to assist users in better understanding the Group's underlying
performance.
More specifically, the following items are adjusted from the Group's volume,
net sales revenue and comparable EBIT in order to derive organic growth
metrics:
(a) Foreign Currency impact
Foreign Currency impact in the organic growth calculation reflects the
adjustment of prior-year net sales revenue and comparable EBIT metrics for the
impact of changes in exchange rates applicable to the current year.
(b) Consolidation perimeter impact
Current year volume, net sales revenue and comparable EBIT metrics, are each
adjusted for the impact of changes in the consolidation perimeter. More
specifically adjustments are performed as follows:
i. Acquisitions:
For current year acquisitions, the results generated in the current year by
the acquired entities are not included in the organic growth calculation. For
prior year acquisitions, the results generated in the current year over the
period during which the acquired entities were not consolidated in the prior
year, are not included in the organic growth calculation.
For current year step acquisitions where the Group obtains control of a)
entities over which it previously held either joint control or significant
influence and which were accounted for under the equity method, or b) entities
which were carried at fair value either through profit or loss or other
comprehensive income, the results generated in the current year by the
relevant entities over the period during which these entities are
consolidated, are not included in the organic growth calculation. For such
step acquisitions of entities previously accounted for under the equity method
the share of results for the respective period described above, is included in
the organic growth calculation of the current year. For such step acquisitions
of entities previously accounted for at fair value through profit or loss any
fair value gains or losses for the respective period described above, are
included in the organic growth calculation. For such step acquisitions in the
prior year, the results generated in the current year by the relevant entities
over the period during which these entities were not consolidated in the prior
year, are not included in the organic growth calculation. However, the share
of results or gains or losses from fair value changes of the respective
entities, based on their accounting treatment prior to the step acquisition,
for the current-year period during which these entities were not consolidated
in the prior year are included in the organic growth calculation.
ii. Divestments:
For current year divestments, the results generated in the prior year by the
divested entities over the period during which the divested entities are no
longer consolidated in the current year, are included in the current year's
results for the purpose of the organic growth calculation. For prior-year
divestments, the results generated in the prior year by the divested entities
over the period during which the divested entities were consolidated, are
included in the current year's results for the purpose of the organic growth
calculation.
iii. Reorganisations resulting in equity method accounting:
For current year reorganisations where the Group maintains either joint
control or significant influence over the relevant entities so that they are
reclassified from subsidiaries or joint operations to joint ventures or
associates and accounted for under the equity method, the results generated in
the current year by the relevant entities over the period during which these
entities are no longer consolidated, are included in the current year's
results for the purpose of the organic growth calculation. For such
reorganisations in the prior year, the results generated in the current year
by the relevant entities over the period during which these entities were
consolidated in the prior year, are included in the current year's results for
the purpose of the organic growth calculation. In addition, the share of
results in the current year of the relevant entities, for the respective
period as described above, is excluded from the organic growth calculation for
such reorganisations.
The calculations of the organic growth and the reconciliation to the most
directly related measures calculated in accordance with IFRS are presented in
the below tables. Organic growth (%) is calculated by dividing the amount in
the row titled 'Organic movement' by the amount in the associated row titled
'2022 reported' or, where presented, '2022 adjusted'. Organic growth for
comparable EBIT margin is the organic movement expressed in basis points.
Reconciliation of organic measures
Full Year 2023
Volume (m unit cases) Established Developing Emerging Group
2022 reported 643.9 478.8 1,589.1 2,711.8
Consolidation perimeter impact 0.3 0.4 78.0 78.7
Organic movement -15.5 -8.2 68.7 45.0
2023 reported 628.7 471.0 1,735.8 2,835.5
Organic growth (%) -2.4% -1.7% 4.3% 1.7%
Full Year 2023
Net sales revenue (€ m) Established Developing Emerging Group
2022 reported 2,974.1 1,719.7 4,504.6 9,198.4
Foreign currency impact 11.0 41.8 -816.7 -763.9
2022 adjusted 2,985.1 1,761.5 3,687.9 8,434.5
Consolidation perimeter impact 4.9 7.0 313.5 325.4
Organic movement 368.5 320.1 735.5 1,424.1
2023 reported 3,358.5 2,088.6 4,736.9 10,184.0
Organic growth (%) 12.3% 18.2% 19.9% 16.9%
Full Year 2023
Net sales revenue per unit case (€)(11) Established Developing Emerging Group
2022 reported 4.62 3.59 2.83 3.39
Foreign currency impact 0.02 0.09 -0.51 -0.28
2022 adjusted 4.64 3.68 2.32 3.11
Consolidation perimeter impact 0.01 0.01 0.06 0.02
Organic movement 0.70 0.74 0.35 0.47
2023 reported 5.34 4.43 2.73 3.59
Organic growth (%) 15.1% 20.2% 15.0% 15.0%
Full Year 2023
Comparable EBIT (€ m) Established Developing Emerging Group
2022 reported 307.1 115.1 507.5 929.7
Foreign currency impact 2.1 3.9 -55.7 -49.7
2022 adjusted 309.2 119.0 451.8 880.0
Consolidation perimeter impact 0.8 2.8 44.3 47.9
Organic movement 71.1 32.0 52.8 155.9
2023 reported 381.1 153.8 548.9 1,083.8
Organic growth (%) 23.0% 26.9% 11.7% 17.7%
Full Year 2023
Comparable EBIT Margin (%)(11) Established Developing Emerging Group
2022 reported 10.3% 6.7% 11.3% 10.1%
Foreign currency impact - 0.1% 1.0% 0.3%
2022 adjusted 10.4% 6.8% 12.3% 10.4%
Consolidation perimeter impact - 0.1% 0.2% 0.1%
Organic movement 1.0% 0.5% -0.8% 0.1%
2023 reported 11.3% 7.4% 11.6% 10.6%
Organic growth (%) 100bps 50bps -80bps 10bps
(11) Certain differences in calculations are due to rounding.
3. Other APMs
Adjusted EBITDA
Adjusted EBITDA is calculated by adding back to operating profit the
depreciation and net impairment of property, plant and equipment, the
amortisation and impairment of intangible assets, the net impairment of equity
method investments, the employee share option and performance share costs and
items, if any, reported in line 'Other non-cash items' of the condensed
consolidated cash flow statement. Adjusted EBITDA is intended to provide
useful information to analyse the Group's operating performance excluding the
impact of operating non-cash items as defined above. The Group also uses
comparable Adjusted EBITDA, which is calculated by deducting from Adjusted
EBITDA the impact of: the Group's restructuring costs, the acquisition,
integration and divestment-related costs, the mark-to-market valuation of the
commodity hedging activity and the impact from the Russia-Ukraine conflict.
Comparable Adjusted EBITDA is intended to measure the level of financial
leverage of the Group by comparing comparable Adjusted EBITDA to Net debt.
Adjusted EBITDA and comparable Adjusted EBITDA are not measures of
profitability and liquidity under IFRS and have limitations, some of which are
as follows: Adjusted EBITDA and comparable Adjusted EBITDA do not reflect our
cash expenditures, or future requirements, for capital expenditures or
contractual commitments; Adjusted EBITDA and comparable Adjusted EBITDA do not
reflect changes in, or cash requirements for, our working capital needs;
although depreciation and amortisation are non-cash charges, the assets being
depreciated and amortised will often have to be replaced in the future, and
Adjusted EBITDA and comparable Adjusted EBITDA do not reflect any cash
requirements for such replacements. Because of these limitations, Adjusted
EBITDA and comparable Adjusted EBITDA should not be considered as measures of
discretionary cash available to us and should be used only as supplementary
APMs.
Free cash flow
Free cash flow is an APM used by the Group and defined as cash generated by
operating activities after payments for purchases of property, plant and
equipment net of proceeds from sales of property, plant and equipment and
including principal repayments of lease obligations. Free cash flow is
intended to measure the cash generation from the Group's business, based on
operating activities, including the efficient use of working capital and
taking into account its net payments for purchases of property, plant and
equipment. The Group considers the purchase and disposal of property, plant
and equipment as ultimately non‑discretionary since ongoing investment in
plant, machinery, technology and marketing equipment, including coolers, is
required to support the day-to-day operations and the Group's growth
prospects. The Group presents free cash flow because it believes the measure
assists users of the financial statements in understanding the Group's cash
generating performance as well as availability for interest payment, dividend
distribution and own retention. The free cash flow measure is used by
management for its own planning and reporting purposes since it provides
information on operating cash flows, working capital changes and net capital
expenditure that local managers are most directly able to influence.
Free cash flow is not a measure of cash generation under IFRS and has
limitations, some of which are as follows: free cash flow does not represent
the Group's residual cash flow available for discretionary expenditures since
the Group has debt payment obligations that are not deducted from the measure;
free cash flow does not deduct cash flows used by the Group in other investing
and financing activities and free cash flow does not deduct certain items
settled in cash. Other companies in the industry in which the Group operates
may calculate free cash flow differently, limiting its usefulness as a
comparative measure.
Capital expenditure
Capital expenditure is defined as payments for purchases of property, plant
and equipment plus principal repayments of lease obligations less proceeds
from sales of property, plant and equipment. The Group uses capital
expenditure as an APM to ensure that the cash spending is in line with its
overall strategy for the use of cash.
The following table illustrates how Adjusted EBITDA, Free Cash Flow and
Capital Expenditure are calculated:
Full Year Full Year
2023 2022
€ million € million
Operating profit (EBIT) 953.6 703.8
Depreciation and impairment of property, plant and equipment, 399.9 484.9
including right-of-use assets
Amortisation and impairment of intangible assets 113.9 15.1
Employee performance shares 20.4 16.5
Impairment of equity method investments - 52.8
Other non-cash items included in operating profit(12) - 70.5
Adjusted EBITDA 1,487.8 1,343.6
Share of results of integral equity method investments (9.7) (41.6)
(Gain) / loss on disposals of non-current assets (1.3) 1.5
Cash generated from working capital movements 135.7 126.8
Tax paid (225.8) (195.7)
Net cash from operating activities 1,386.7 1,234.6
Payments for purchases of property, plant and equipment(13) (623.0) (531.8)
Principal repayments of lease obligations (59.1) (65.2)
Proceeds from sales of property, plant and equipment 7.2 7.5
Capital expenditure (674.9) (589.5)
Free cash flow 711.8 645.1
( )
(12)Other non-cash items included in operating profit for 2022 relate to the
net loss recognised in the income statement from the remeasurement to fair
value of the previously held interest, the reclassification to the income
statement of items of other comprehensive income and the gain from bargain
purchase arising due to the change in control of Multon Z.A.O. group of
companies ('Multon'), For more details, refer to Note 24 of the Group's 2022
Integrated Annual Report.
(13)Payments for purchases of property, plant and equipment for 2023 include
€12.3 million (2022: €8.4 million) relating to repayment of borrowings
undertaken to finance the purchase of production equipment by the Group's
subsidiary in Nigeria, classified as 'Repayments of borrowings' in the
condensed consolidated cash flow statement.
Net debt
Net debt is an APM used by management to evaluate the Group's capital
structure and leverage. Net debt is defined as current borrowings plus
non-current borrowings less cash and cash equivalents and financial assets
(time deposits and money market funds), as illustrated below:
As at 31 December
2023 2022
€ million € million
Current borrowings 948.1 337.0
Non-current borrowings 2,476.4 3,082.9
Other financial assets (568.6) (1,026.7)
Cash and cash equivalents (1,260.6) (719.9)
Net debt 1,595.3 1,673.3
Return on invested capital ('ROIC')
ROIC is an APM used by management to assess the return obtained from the
Group's asset base and is defined as the percentage of comparable net profit
excluding net finance costs divided by the five-quarter average capital
invested in the business ('capital employed'). Capital employed is defined as
the average net debt and shareholders' equity attributable to the owners of
the parent, as illustrated below. The Group presents ROIC because it believes
the measure assists users of the financial statements in understanding the
Group's capital efficiency.
Year ended
31 December 2023 31 December 2022
€ million € million
Comparable operating profit 1,083.8 929.7
Plus: Share of results of non-integral equity method investments 5.0 2.5
Less: Comparable tax (277.1) (224.4)
Tax shield(14) (13.0) (21.5)
Comparable net profit excl. finance costs, net (a) 798.7 686.3
Average net debt(16) 1,676.1 1,575.2
Plus: Average equity attributable to owners of the parent(16) 3,194.2 3,300.4
Capital employed (b) 4,870.3 4,875.6
Return on invested capital (a/b) 16.4% 14.1%
(14)Tax shield is calculated as comparable effective tax rate times finance
costs, net as illustrated below:
Year ended
31 December 2023 31 December 2022
€ million € million
Finance costs, net 48.3 82.7
Comparable effective tax rate (%)(15) 27% 26%
Tax shield 13.0 21.5
(15)Comparable effective tax rate is calculated as comparable tax divided by
comparable profit before tax, as illustrated below:
Year ended
31 December 2023 31 December 2022
€ million € million
Comparable tax 277.1 224.4
Comparable profit before tax 1,040.5 849.5
Comparable effective tax rate (%) 27% 26%
(16)Five-quarter average net debt and equity attributable to owners of the
parent are calculated as presented below:
2023 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Average
€ million € million € million € million € million € million(*)
Net debt 1,673.3 1,827.2 1,779.4 1,504.9 1,595.3 1,676.1
Equity attributable to owners of the parent 3,282.3 3,255.2 3,005.0 3,335.6 3,092.8 3,194.2
2022 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Average
€ million € million € million € million € million € million(*)
Net debt 1,319.7 1,881.9 1,584.1 1,417.2 1,673.3 1,575.2
Equity attributable to owners of the parent 3,114.5 3,203.5 3,275.7 3,626.1 3,282.3 3,300.4
(*)Certain differences in calculations are due to rounding.
Condensed consolidated financial statements for the six months and the year ended
31 December 2023
Condensed consolidated income statement (unaudited)
Six months ended
31 December
Note 2023 2022
€ million € million
Net sales revenue 3 5,162.5 4,988.5
Cost of goods sold (3,366.7) (3,294.5)
Gross profit 1,795.8 1,694.0
Operating expenses (excluding exceptional items related to Russia-Ukraine (1,405.1) (1,339.3)
conflict)
Exceptional items related to Russia-Ukraine conflict - 56.2
Operating expenses (1,405.1) (1,283.1)
Share of results of integral equity method investments 5.6 17.2
Operating profit 3 396.3 428.1
Finance costs, net 5 (16.9) (40.0)
Share of results of non-integral equity method investments 3.3 1.1
Profit before tax 382.7 389.2
Tax 6 (132.1) (126.0)
Profit after tax 250.6 263.2
Attributable to:
Owners of the parent 250.8 262.5
Non-controlling interests (0.2) 0.7
250.6 263.2
Basic and diluted earnings per share (€) 7 0.68 0.72
Condensed consolidated statement of comprehensive income (unaudited)
Six months ended
31 December
2023 2022
€ million € million
Profit after tax 250.6 263.2
Other comprehensive income:
Items that may be subsequently reclassified to income statement:
Cost of hedging (4.4) (3.2)
Net gain of cash flow hedges 1.3 10.1
Foreign currency translation losses (91.6) (388.5)
Share of other comprehensive loss of equity method investments (3.9) (10.1)
Reclassification of share of other comprehensive income of equity method - 145.2
investments to income statement arising from business combination
Income tax relating to items that may be subsequently reclassified to income (0.5) -
statement
(99.1) (246.5)
Items that will not be subsequently reclassified to income statement:
Actuarial losses (19.7) (13.2)
Income tax relating to items that will not be subsequently reclassified to 2.7 2.9
income statement
(17.0) (10.3)
Other comprehensive loss for the period, net of tax (116.1) (256.8)
Total comprehensive income for the period 134.5 6.4
Total comprehensive income attributable to:
Owners of the parent 136.2 12.5
Non-controlling interests (1.7) (6.1)
134.5 6.4
Condensed consolidated income statement (unaudited)
Year ended 31 December
Note 2023 2022
€ million € million
Net sales revenue 3 10,184.0 9,198.4
Cost of goods sold (6,626.6) (6,054.2)
Gross profit 3,557.4 3,144.2
Operating expenses (excluding exceptional items related to Russia-Ukraine (2,613.5) (2,354.6)
conflict)
Exceptional items related to Russia-Ukraine conflict - (127.4)
Operating expenses (2,613.5) (2,482.0)
Share of results of integral equity method investments 9.7 41.6
Operating profit 3 953.6 703.8
Finance costs, net 5 (48.3) (82.7)
Share of results of non-integral equity method investments 5.0 2.5
Profit before tax 910.3 623.6
Tax 6 (274.6) (208.0)
Profit after tax 635.7 415.6
Attributable to:
Owners of the parent 636.5 415.4
Non-controlling interests (0.8) 0.2
635.7 415.6
Basic and diluted earnings per share (€) 7 1.73 1.13
Condensed consolidated statement of comprehensive income (unaudited)
Year ended 31 December
2023 2022
€ million € million
Profit after tax 635.7 415.6
Other comprehensive income:
Items that may be subsequently reclassified to income statement:
Cost of hedging (7.1) (3.5)
Net gain of cash flow hedges 19.7 34.6
Foreign currency translation losses (484.6) (252.6)
Share of other comprehensive (loss) / income of equity method investments (11.7) 34.2
Reclassification of share of other comprehensive income of equity method - 145.2
investments to income statement arising from business combination
Income tax relating to items that may be subsequently reclassified to income (3.0) (3.9)
statement
(486.7) (46.0)
Items that will not be subsequently reclassified to income statement:
Valuation gain / (loss) on equity investments at fair value through other 0.4 (0.1)
comprehensive income
Actuarial (losses) / gains (16.4) 26.0
Income tax relating to items that will not be subsequently reclassified to 1.9 1.8
income statement
(14.1) 27.7
Other comprehensive loss for the year, net of tax (500.8) (18.3)
Total comprehensive income for the year 134.9 397.3
Total comprehensive income attributable to:
Owners of the parent 141.3 406.1
Non-controlling interests (6.4) (8.8)
134.9 397.3
Condensed consolidated balance sheet (unaudited)
As at 31 December
2023 2022
Note € million € million
Assets
Intangible assets 8 2,568.6 2,542.5
Property, plant and equipment 8 3,057.1 3,266.3
Other non-current assets 343.7 330.7
Total non-current assets 5,969.4 6,139.5
Inventories 773.3 770.0
Trade, other receivables and assets 1,205.1 1,162.4
Other financial assets 10 667.9 1,063.8
Cash and cash equivalents 10 1,260.6 719.9
3,906.9 3,716.1
Assets classified as held for sale 3.3 0.1
Total current assets 3,910.2 3,716.2
Total assets 9,879.6 9,855.7
Liabilities
Borrowings 10 948.1 337.0
Other current liabilities 2,898.2 2,669.7
Total current liabilities 3,846.3 3,006.7
Borrowings 10 2,476.4 3,082.9
Other non-current liabilities 370.2 380.5
Total non-current liabilities 2,846.6 3,463.4
Total liabilities 6,692.9 6,470.1
Equity
Owners of the parent 3,092.8 3,282.3
Non-controlling interests 93.9 103.3
Total equity 3,186.7 3,385.6
Total equity and liabilities 9,879.6 9,855.7
Condensed consolidated statement of changes in equity (unaudited)
Attributable to owners of the parent
Share capital Share premium Group reorganisation reserve Treasury shares Exchange equalisation reserve Other reserves Retained earnings Total Non-controlling interests Total equity
€ million € million € million € million € million € million € million € million € million € million
Balance as at 1 January 2022 2,022.3 3,097.3 (6,472.1) (146.6) (1,154.0) 310.2 5,457.4 3,114.5 2.6 3,117.1
Shares issued to employees exercising stock options 2.0 2.7 - - - - - 4.7 - 4.7
(Note 11)
Share-based compensation:
Performance shares - - - - - 16.6 - 16.6 - 16.6
Movement in shares held for - - - - - 1.2 - 1.2 - 1.2
equity compensation plan
Appropriation of reserves - - - 15.4 - (21.1) 5.7 - - -
(Note 11)
Non-controlling interests on business combinations - - - - - - - - 259.6 259.6
Purchase of shares held by non-controlling interests - - - - - - 40.9 40.9 (149.8) (108.9)
(Note 14)
Dividends (Note 13) - (262.6) - - - - 2.4 (260.2) (0.3) (260.5)
Transfer of cash flow hedge reserve, including cost of - - - - - (41.5) - (41.5) - (41.5)
hedging to inventories, net of
tax( )(1)
2,024.3 2,837.4 (6,472.1) (131.2) (1,154.0) 265.4 5,506.4 2,876.2 112.1 2,988.3
Profit for the year, net of tax - - - - - - 415.4 415.4 0.2 415.6
Other comprehensive loss for the year, net of tax - - - - (64.2) 27.1 27.8 (9.3) (9.0) (18.3)
Total comprehensive income for the year, net of tax(2) - - - - (64.2) 27.1 443.2 406.1 (8.8) 397.3
Balance as at 31 December 2022 2,024.3 2,837.4 (6,472.1) (131.2) (1,218.2) 292.5 5,949.6 3,282.3 103.3 3,385.6
(1)The amount included in other reserves of €41.5 million represents the
cash flow hedge reserve, including cost of hedging, transferred to inventories
of €51.4 million gain, and the deferred tax expense thereof amounting to
€9.9 million.
(2)The amount included in the exchange equalisation reserve of €64.2 million
loss for 2022 represents the exchange loss attributable to owners of the
parent, mainly related to the Egyptian Pound, including €34.8 million gain
relating to the share of other comprehensive income of equity method
investments and €144.6 million gain relating to reclassification of share of
other comprehensive income of equity method investments to the income
statement arising from business combination.
The amount of other comprehensive income, net of tax included in other
reserves of €27.1 million gain for 2022 consists of cash flow hedges gain of
€31.1 million, share of other comprehensive income of equity method
investments of €0.6 million loss, valuation losses of €0.1 million on
equity investments at fair value through other comprehensive income, €0.6
million gain relating to reclassification of share of other comprehensive
income of equity method investments to the income statement arising from
business combination, and the deferred tax expense thereof amounting to €3.9
million.
The amount of €443.2 million gain attributable to owners of the parent for
2022 comprises profit for the year, net of tax of €415.4 million, actuarial
gains of €26.0 million and the deferred tax income thereof amounting to
€1.8 million.
The amount of €8.8 million losses included in non-controlling interests for
2022, represents the exchange loss attributable to non-controlling interests
of €9.0 million, and the share of non-controlling interests in profit for
the year, net of tax of €0.2 million.
Condensed consolidated statement of changes in equity (unaudited)
Attributable to owners of the parent
Share capital Share premium Group reorganisation reserve Treasury shares Exchange equalisation reserve Other reserves Retained earnings Total Non-controlling interests Total equity
€ million € million € million € million € million € million € million € million € million € million
Balance as at 1 January 2023 2,024.3 2,837.4 (6,472.1) (131.2) (1,218.2) 292.5 5,949.6 3,282.3 103.3 3,385.6
Shares issued to employees exercising stock options (Note 11) 6.0 8.2 - - - - - 14.2 - 14.2
Share-based compensation:
Performance shares - - - - - 20.4 - 20.4 - 20.4
Movement in shares held for equity - - - - - 0.2 - 0.2 - 0.2
compensation plan
Appropriation of reserves (Note 11) - - - 29.7 - (25.0) (4.7) - - -
Purchase of shares held by - - - - - - (9.9) (9.9) (2.7) (12.6)
non-controlling interests (Note 14)
Acquisition of treasury shares - - - (42.6) - - - (42.6) - (42.6)
(Note 11)
Dividends (Note 13) - (289.9) - - - - 2.7 (287.2) (0.3) (287.5)
Transfer of cash flow hedge reserve, including cost of hedging to - - - - - (25.9) - (25.9) - (25.9)
inventories, net of tax(3)
2,030.3 2,555.7 (6,472.1) (144.1) (1,218.2) 262.2 5,937.7 2,951.5 100.3 3,051.8
Profit for the year, net of tax - - - - - - 636.5 636.5 (0.8) 635.7
Other comprehensive loss - - - - (490.7) 9.9 (14.4) (495.2) (5.6) (500.8)
for the year, net of tax
Total comprehensive income - - - - (490.7) 9.9 622.1 141.3 (6.4) 134.9
for the year, net of tax(4)
Balance as at 31 December 2023 2,030.3 2,555.7 (6,472.1) (144.1) (1,708.9) 272.1 6,559.8 3,092.8 93.9 3,186.7
(3)The amount included in other reserves of €25.9 million represents the
cash flow hedge reserve, including cost of hedging, transferred to inventories
of €30.8 million gain, and the deferred tax expense thereof amounting to
€4.9 million.
(4)The amount included in the exchange equalisation reserve of €490.7
million loss for 2023 represents the exchange loss attributable to owners of
the parent, primarily related to the Nigerian Naira, the Russian Rouble and
the Egyptian Pound, including €11.7 million loss relating to the share of
other comprehensive income of equity method investments.
The amount of other comprehensive income, net of tax included in other
reserves of €9.9 million gain for 2023 consists of cash flow hedges gain of
€12.6 million, valuation gain of €0.4 million on equity investments at
fair value through other comprehensive income and the deferred tax expense
thereof amounting to €3.1 million.
The amount of €622.1 million gain attributable to owners of the parent for
2023 comprises profit for the year, net of tax of €636.5 million, actuarial
losses of €16.4 million and the deferred tax income thereof amounting to
€2.0 million.
The amount of €6.4 million losses included in non-controlling interests for
2023, represents the exchange loss attributable to the non-controlling
interests of €5.6 million, and the share of non-controlling interests in
profit for the year, net of tax amounting to €0.8 million loss.
Condensed consolidated cash flow statement (unaudited)
Year ended 31 December
Note 2023 2022
€ million € million
Operating activities
Profit after tax for the year 635.7 415.6
Finance costs, net 5 48.3 82.7
Share of results of non-integral equity method investments (5.0) (2.5)
Tax charged to the income statement 274.6 208.0
Depreciation and impairment of property, plant and equipment, including 399.9 484.9
right-of-use assets
Employee performance shares 20.4 16.5
Amortisation and impairment of intangible assets 8 113.9 15.1
Impairment of equity method investments - 52.8
Other non-cash items - 70.5
1,487.8 1,343.6
Share of results of integral equity-method investments (9.7) (41.6)
(Gain) / loss on disposals of non-current assets (1.3) 1.5
Increase in inventories (142.6) (241.1)
Increase in trade and other receivables (212.7) (104.7)
Increase in trade and other payables 491.0 472.6
Tax paid (225.8) (195.7)
Net cash inflow from operating activities 1,386.7 1,234.6
Investing activities
Payments for purchases of property, plant and equipment (610.7) (523.4)
Proceeds from sales of property, plant and equipment 7.2 7.5
Payment for integral equity-method investment 15 - (4.0)
Receipts from integral equity-method investments 15 6.7 9.7
Payments for non-integral equity method investments - (6.5)
Receipts from non-integral equity-method investments 15 7.0 1.8
Net proceeds from / (payments for) investments in financial assets at 473.5 (333.4)
amortised cost
Net proceeds from investments in financial assets at fair value through profit - 142.6
or loss
Payments for investments in financial assets at fair value through other (5.9) -
comprehensive income
Payment for business combination, net of cash acquired 14 (180.4) (399.2)
Proceeds from settlement of derivatives relating to 14 - 13.0
business combination
Loans to related parties (4.7) (0.4)
Repayments of loans by related parties 0.5 2.0
Interest received 38.0 7.2
Net cash outflow from investing activities (268.8) (1,083.1)
Financing activities
Proceeds from shares issued to employees, exercising stock options 11 14.2 4.7
Purchase of shares held by non-controlling interests 14 (12.6) (108.9)
Acquisition of treasury shares 11 (42.6) -
Proceeds from borrowings 136.4 650.0
Repayments of borrowings (89.7) (358.6)
Principal repayments of lease obligations (59.1) (65.2)
Proceeds from settlement of derivatives regarding financing activities 4.6 0.1
Interest paid (76.2) (60.4)
Dividends paid to owners of the parent (287.2) (260.2)
Dividends paid to non-controlling interests (0.2) (0.2)
Net cash outflow from financing activities (412.4) (198.7)
Net increase / (decrease) in cash and cash equivalents 705.5 (47.2)
Movement in cash and cash equivalents
Cash and cash equivalents at 1 January 719.9 782.8
Net increase / (decrease) in cash and cash equivalents 705.5 (47.2)
Effect of changes in exchange rates (164.8) (15.7)
Cash and cash equivalents at 31 December 1,260.6 719.9
The accompanying notes form an integral part of these condensed consolidated
financial statements
Selected explanatory notes to the condensed consolidated financial statements
(unaudited)
1. Basis of preparation and accounting policies
Basis of preparation
These condensed consolidated financial statements are prepared in accordance
with International Accounting Standard ('IAS') 34, 'Interim Financial
Reporting', as adopted by the European Union ('EU'), and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. These condensed consolidated financial statements do not
include all the information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's annual
consolidated financial statements for the year ended 31 December 2022.
Going concern
As part of the consideration of whether to adopt the going concern basis in
preparing the condensed consolidated financial statements, management has
considered the Group's financial performance in the year and overall financial
position, as well as a quantitative viability exercise, including the
performance of various stress tests that consider the Group's principal risks,
including those relating to climate change, and confirms the Group's ability
to generate cash in 12 months from the date of approval of the condensed
consolidated financial statements and beyond. Management has also considered
the geopolitical events involving Russia and Ukraine as well as the tensions
in the Middle East and no impact has been identified on the Group's ability to
continue as a going concern. Therefore, it is deemed appropriate that the
Group continues to adopt the going concern basis of accounting for the
preparation of the condensed consolidated financial statements.
Accounting policies
The accounting policies used in the preparation of the condensed consolidated
financial statements of Coca-Cola HBC AG ('Coca-Cola HBC', the 'Company' or
the 'Group') are consistent with those used in the 2022 annual consolidated
financial statements, except for the adoption of applicable standards and
amendments to accounting standards effective as of 1 January 2023. The Group
has not early adopted any standard, interpretation or amendment that has been
issued but is not yet effective.
Amended and new standards adopted by the Group
The below standard and amendments to standards became applicable as of 1
January 2023 and were adopted by the Group. The adoption of these amendments
and new standard did not have a material impact on the Group's condensed
consolidated financial statements.
Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting
policies: These amendments provide guidance and examples to help entities
apply materiality judgements to accounting policy disclosures. The amendments
aim to help entities provide accounting policy disclosures that are more
useful by replacing the requirement for entities to disclose their
'significant' accounting policies with a requirement to disclose their
'material' accounting policies and adding guidance on how entities apply the
concept of materiality in making decisions about accounting policy
disclosures.
Amendments to IAS 8 - Definition of Accounting Estimates: These amendments
clarify the distinction between changes in accounting estimates and changes in
accounting policies and the correction of errors. Also, they clarify how
entities use measurement techniques and inputs to develop accounting
estimates.
Amendment to IAS 12 - International tax reform - pillar two model rules: These
amendments give companies temporary relief from recognising and disclosing
deferred tax assets and liabilities related to Pillar Two income taxes. The
amendments clarify that IAS 12 applies to income taxes arising from tax law
enacted or substantively enacted to implement the Pillar Two Model Rules
published by the Organization for Economic Cooperation and Development
('OECD'), including tax law that implements qualified domestic minimum top-up
taxes. An entity is required to separately disclose its current tax expense
(income) related to Pillar Two income taxes, in the periods when the
legislation is effective. The amendments require, for periods in which Pillar
Two legislation is (substantively) enacted but not yet effective, disclosure
of known or reasonably estimable information that helps users of financial
statements understand the entity's exposure arising from Pillar Two income
taxes. To comply with these requirements, an entity is required to disclose
qualitative and quantitative information about its exposure to Pillar Two
income taxes at the end of the reporting period.
Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising
from a Single Transaction: These amendments narrow the scope of the initial
recognition exception, so that it no longer applies to transactions that give
rise to equal taxable and deductible temporary differences such as leases and
decommissioning liabilities.
IFRS 17 - Insurance Contracts: In May 2017, the IASB issued IFRS 17 'Insurance
Contracts', a comprehensive new accounting standard for insurance contracts
covering recognition and measurement, presentation and disclosure. IFRS 17
replaces IFRS 4 'Insurance Contracts' that was issued in 2005. IFRS 17 applies
to all types of insurance contracts, regardless of the type of entities that
issue them, as well as to certain guarantees and financial instruments with
discretionary participation features, while a few scope exceptions apply.
Targeted amendments made in July 2020 aimed to ease the implementation of the
standard and deferred the application date of IFRS 17 to 1 January 2023, while
further amendments made in December 2021 added a transition option that
permits an entity to apply an optional classification overlay in the
comparative period(s) presented on initial application of IFRS 17.
2. Foreign currency and translation
The Group's reporting currency is the Euro (€). Coca-Cola HBC translates the
income statements of foreign operations to the Euro at average exchange rates
and the balance sheets at the closing exchange rates on 31 December. The
principal exchange rates used for translation purposes in respect of one Euro
are:
Average rate for the year ended Closing rate as at
31 December 2023 31 December 2022 31 December 2023 31 December 2022
US Dollar 1.08 1.05 1.11 1.06
UK Sterling 0.87 0.85 0.87 0.88
Polish Zloty 4.54 4.68 4.32 4.69
Nigerian Naira 695.06 448.99 1,056.96 493.61
Hungarian Forint 381.75 390.36 382.03 401.54
Swiss Franc 0.97 1.01 0.94 0.99
Russian Rouble 92.40 74.01 101.68 79.23
Romanian Leu 4.95 4.93 4.98 4.94
Ukrainian Hryvnia 39.54 33.92 41.63 38.94
Czech Koruna 24.00 24.56 24.69 24.21
Serbian Dinar 117.25 117.47 117.16 117.30
Egyptian Pound 33.15 20.09 34.16 26.35
In mid-June 2023, the Nigerian Central Bank stopped intervening heavily in the
interbank foreign exchange market, allowing the Nigerian Naira to float more
freely. The Group monitors the situation in Nigeria in order to ensure that
timely actions and initiatives are undertaken to mitigate any potential
adverse impact.
3. Segmental analysis
The Group has essentially one business, being the production, sale and
distribution of ready-to-drink, primarily non-alcoholic, beverages across 29
countries. The Group's markets are aggregated in reportable segments as
follows:
Established markets: Austria, Cyprus, Greece, Italy, Northern Ireland, the Republic of Ireland and
Switzerland, Global exports(*).
Developing markets: Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia
and Slovenia.
Emerging markets: Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, Egypt, Moldova,
Montenegro, Nigeria, North Macedonia, Romania, the Russian Federation, Serbia
(including the Republic of Kosovo) and Ukraine.
*The Global exports market refers to the export business for Finlandia Vodka
and Three Cents in countries where the Group does not have operations in
connection with non-alcoholic ready-to-drink beverages, driven by the
Finlandia acquisition.
a) Volume and net sales revenue
The Group sales volume in million unit cases(5) for the six months and the
years ended 31 December was as follows:
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
Established 322.3 338.2 628.7 643.9
Developing 243.7 248.4 471.0 478.8
Emerging 886.4 795.0 1,735.8 1,589.1
Total volume 1,452.4 1,381.6 2,835.5 2,711.8
(5) One unit case corresponds to approximately 5.678 litres or 24 servings,
being a typically used measure of volume. For Premium Spirits volume, one unit
case also corresponds to 5.678 litres. For biscuits volume, one unit case
corresponds to 1 kilogram. For coffee volume, one unit case corresponds to 0.5
kilograms or 5.678 litres. Volume data is derived from unaudited operational
data.
Net sales revenue per reportable segment for the six months and the years
ended 31 December is presented below:
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
€ million € million € million € million
Established 1,730.5 1,589.9 3,358.5 2,974.1
Developing 1,103.4 928.1 2,088.6 1,719.7
Emerging 2,328.6 2,470.5 4,736.9 4,504.6
Total net sales revenue 5,162.5 4,988.5 10,184.0 9,198.4
In addition to non-alcoholic, ready-to-drink beverages as well as coffee and
snacks ("NARTD"), the Group sells and distributes Premium Spirits. An analysis
of volume and net sales revenue per product type for the six months and the
years ended 31 December is presented below:
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
€ million € million € million € million
Volume (in million unit cases)
NARTD 1,449.8 1,379.6 2,831.2 2,708.4
Premium spirits 2.6 2.0 4.3 3.4
Total volume 1,452.4 1,381.6 2,835.5 2,711.8
Net sales revenue (€ million)
NARTD 4,992.6 4,846.4 9,886.1 8,956.0
Premium spirits 169.9 142.1 297.9 242.4
Total net sales revenue 5,162.5 4,988.5 10,184.0 9,198.4
b) Other income statement items
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
€ million € million € million € million
Operating profit
Established 208.4 163.0 379.2 310.4
Developing 85.4 56.2 152.6 113.1
Emerging 102.5 208.9 421.8 280.3
Total operating profit 396.3 428.1 953.6 703.8
Reconciling items
Finance costs, net (16.9) (40.0) (48.3) (82.7)
Tax (132.1) (126.0) (274.6) (208.0)
Share of results of non-integral equity method investments 3.3 1.1 5.0 2.5
Non-controlling interests 0.2 (0.7) 0.8 (0.2)
Profit after tax attributable to owners of the parent 250.8 262.5 636.5 415.4
c) Other items
We disclosed in our 2022 Integrated Annual Report that exceptional items
related to Russia-Ukraine conflict of €127.4 million were recognised in the
income statement, referring to net impairment losses for property, plant and
equipment, equity method investments and goodwill. These resulted from the
Group's restructuring initiatives in connection with its Russian operation, as
a result of The Coca-Cola Company's decision to suspend its business in
Russia, and the worsening macroeconomic factors in Russia, as sanctions and
other regulations had an adverse impact on the country's economic environment.
In 2023, the Russian operations continued to operate under a self-sufficient
business model focusing on local brands and there are no significant
developments in the geopolitical events involving Russia and Ukraine that
would have a material adverse impact in the Group's operations in those
territories and the Group's consolidated financial statements. The Group
continues to monitor the situation in Russia and Ukraine in order to ensure
that timely actions and initiatives are undertaken to mitigate any potential
adverse impact arising from the ongoing conflict.
4. Restructuring costs
As part of the effort to optimise its cost base and sustain competitiveness in
the marketplace, the Group undertakes restructuring initiatives. Restructuring
mainly concerns employees' termination benefits, which are included within
operating expenses. Restructuring costs per reportable segment for the six
months and years ended 31 December are presented below:
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
€ million € million € million € million
Established 0.9 (1.1) 0.9 (6.1)
Developing 1.1 (1.5) 1.1 (1.5)
Emerging 5.2 8.5 7.0 19.5
Total restructuring costs 7.2 5.9 9.0 11.9
5. Finance costs, net
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
€ million € million € million € million
Finance income (35.7) (9.3) (55.7) (13.2)
Finance costs 45.3 38.9 88.1 79.9
Net foreign exchange losses 7.3 10.4 15.9 16.0
Finance costs, net 16.9 40.0 48.3 82.7
6. Tax
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
€ million € million € million € million
Profit before tax 382.7 389.2 910.3 623.6
Tax (132.1) (126.0) (274.6) (208.0)
Effective tax rate 34.5% 32.4% 30.2% 33.4%
The Group's effective tax rate for 2023 may differ from the theoretical amount
that would arise using the weighted average tax rate applicable to profits of
the consolidated entities. This difference can be a consequence of a number of
factors, the most significant of which are the application of statutory tax
rates of the countries in which the Group operates, the non-deductibility of
certain expenses, the non-taxable income and one-off tax items.
7. Earnings per share
Basic earnings per share is calculated by dividing the net profit attributable
to the owners of the parent by the weighted average number of shares
outstanding during the period (full year of 2023: 367,824,641; full year of
2022: 366,351,704; six months ended 31 December 2023: 368,133,839; six months
ended 31 December 2022: 366,539,951). Diluted earnings per share is calculated
by adjusting the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive ordinary shares arising from exercising
employee stock options.
8. Intangible assets and property, plant and equipment
Intangible Property, plant
assets and equipment
€ million € million
Net book value as at 1 January 2023 excluding right-of-use assets 2,542.5 3,062.4
Additions - 610.2
Arising from business combinations (Note 14) 204.4 -
Reclassified to assets held for sale - (3.3)
Assets held for sale classified back to property, plant and equipment - 0.1
Disposals - (8.3)
Depreciation, impairment and amortisation (113.9) (340.8)
Foreign currency translation (64.4) (472.8)
Net book value as at 31 December 2023 excluding right-of-use assets 2,568.6 2,847.5
Net book value as at 1 January 2023 of right-of-use assets (Note 12) 203.9
Net book value as at 31 December 2023 of right-of-use assets (Note 12) 209.6
Net book value as at 31 December 2023 3,057.1
( )
Right-of-use assets arising from business combinations in 2023 amounted to
€6.7 million (2022: €40.1 million).
Impairment losses recognised in connection with intangible assets amounted to
€112.5 million in 2023 as detailed below (2022: €13.7 million, in
connection with the Group's Russian cash-generating unit).
Impairment of Egyptian cash-generating unit
We disclosed in our 2022 integrated annual report that in the cash-generating
unit ('unit') of Egypt, reasonably possible changes in key assumptions of the
2022 impairment test would remove the remaining headroom. During 2023, we
experienced worsening macroeconomic factors in the country with inflation
persisting at record-high levels, more than double of the upper bound of the
Central Bank of Egypt's target band and increasing risk of foreign currency
crisis due to low reserves, while geopolitical tensions in the Middle East
negatively impacted the financial performance of the unit in late 2023.
The Group performed its annual impairment test in 2023, which resulted in an
impairment loss for its Egyptian unit of €109.4 million, as the recoverable
amount was lower than the carrying amount of the unit. The recoverable amount
was determined based on value-in-use calculations consistent with those
performed in 2022, updated to consider management's best estimates of expected
cash flows and a higher discount rate, reflective of the increased
macroeconomic uncertainty in Egypt, as discussed above. The impairment loss
was allocated in its entirety to reduce the carrying amount of goodwill
allocated to the unit and was included in line 'Operating expenses' of the
condensed consolidated income statement and included under Emerging markets
for segmental allocation purposes.
The following table sets out the key assumptions used in the impairment
assessment of the Egyptian unit:
December 2023 December 2022
Growth rate in perpetuity 5.0% 5.0%
Post-tax discount rate 17.4% 15.2%
Pre-tax discount rate 20.8% 17.8%
As at 31 December 2023, the recoverable amount of the Egyptian unit was
approximately €340 million. The Group continues to closely monitor its
Egyptian unit in order to ensure that timely actions and initiatives are
undertaken to minimise potential adverse impacts on its expected performance.
Impairment of Costa Express Business
In 2023, the Group recognised an impairment loss of €3.1 million in
connection with its self-serve coffee vending business in Poland (the 'Costa
Express Business'), as the recoverable amount was lower than the carrying
amount. The recoverable amount was determined based on value-in-use
calculations, considering management's best estimates of future cash flows
expected to arise from the business, discounted at a rate of 7.7%. The
impairment was driven mainly by change in expectations regarding the scope and
duration of a contract with a key customer. The impairment loss was allocated
to goodwill (€1.1 million) and other finite-lived intangible assets (€2.0
million) and was included in line 'Operating expenses' of the condensed
consolidated income statement and included under Developing markets for
segmental allocation purposes.
9. Financial risk management and financial instruments
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, interest rate risk and commodity price risk), credit
risk, liquidity risk and capital risk. There have been no material changes in
the risk management policies since the previous year end.
As described in the 2022 Integrated Annual Report, the Group actively manages
its liquidity risk. The Group maintains its healthy liquidity position and is
able to meet its liabilities as they fall due. As at 31 December 2023, the
Group has net debt of €1.6 billion (Note 10). In addition, as at 31 December
2023, the Group has cash and cash equivalents and other financial assets of
€1.8 billion, an undrawn Revolving Credit Facility of €0.8 billion, an
uncommitted Money Market Loan agreement of €0.2 billion, as well as €0.8
billion available out of the €1.0 billion Commercial Paper Programme. None
of our debt facilities are subject to any financial covenants that would
impact the Group's liquidity or access to capital. The Group's Standard &
Poor's and Moody's credit ratings as disclosed in the 2022 Integrated Annual
Report were reaffirmed in 2023, while the outlook by Standard and Poor's
returned to stable in 2023 compared to negative in 2022.
The Group's financial instruments recorded at fair value are included in Level
1, Level 2 and Level 3 within the fair value hierarchy as described in the
2022 Integrated Annual Report.
The fair value of bonds and notes payable applying the clean market price, as
at 31 December 2023, was €2,717.4 million compared to their book value of
€2,887.3 million, as at the same date. The money market funds recorded at
fair value are included in Level 1 within the fair value hierarchy. As at 31
December 2023, the fair value of the money market funds amounted to €513.8
million (€497.2 million as at 31 December 2022).
As at 31 December 2023, the total derivatives included in Level 2 were
financial assets of €18.6 million and financial liabilities of €36.8
million. The Group recognises embedded derivatives whose risks and economic
characteristics were not considered to be closely related to the commodity
contract in which they were embedded. The valuation techniques used to
determine their fair value maximised the use of observable market data. The
fair value of the embedded derivatives as at 31 December 2023 amounted to a
financial liability of €9.1 million and are classified within Level 2.
The Group uses derivatives to mitigate the commodity price risk related to
plastics. As the valuation of these derivatives uses prices that are not
observable in the market, it is classified within Level 3. The fair value of
the derivatives related to plastics as at 31 December 2023 amounted to a
financial liability of €1.2 million.
The Group uses foreign currency derivatives to mitigate the currency risk
related to Nigerian Naira. As the valuation technique of these derivatives
incorporates greater use of unobservable inputs, their fair value is
classified within Level 3. The fair value of these derivatives as at 31
December 2023 were financial assets of €82.9 million and financial
liabilities of €35.0 million.
There were no transfers between Levels 1, 2 and 3 during the year ended 31
December 2023.
10. Net debt
As at 31 December
2023 2022
€ million € million
Current borrowings 948.1 337.0
Non-current borrowings 2,476.4 3,082.9
Less: Cash and cash equivalents (1,260.6) (719.9)
- Financial assets at amortised cost (54.8) (529.5)
- Financial assets at fair value through profit or loss (513.8) (497.2)
Less: Other financial assets (568.6) (1,026.7)
Net debt 1,595.3 1,673.3
In September 2022 the Group completed the issue of a €500 million
Euro-denominated fixed rate Green bond maturing in September 2025 with a
coupon rate of 2.75%.
In December 2019 the Group established a loan facility of US Dollar 85.0
million to finance the purchase of production equipment by the Group's
subsidiary in Nigeria. The facility has been drawn down by Nigerian Bottling
Company Ltd ('NBC') over the course of 2020 and 2021 and matures in 2027. The
obligations under this facility are guaranteed by Coca-Cola HBC AG. As at 31
December 2023, the outstanding liability amounted to €45.4 million (€59.3
million as at 31 December 2022).
Cash and cash equivalents include an amount of €92.5 million (€120.9
million as at 31 December 2022) equivalent in Nigerian Naira. This includes an
amount of €nil (€10.6 million as at 31 December 2022) equivalent in
Nigerian Naira, which related to the outstanding balance held for the
repayment of NBC's former minority shareholders, following the 2011
acquisition of non-controlling interests. The financial liability regarding
former minority shareholders was extinguished in 2023.
As a result of sanctions and other regulations, there have been changes in
required regulatory approvals, potentially impacting the transfer and usage of
cash outside of Russia. Cash and cash equivalents held by the Group's
operations in Russia (including Multon) amounted to €278.7 million
equivalent in Russian Rouble, US Dollar and Euro as at 31 December 2023 (2022:
€155.3 million). The aforementioned changes restrict the usage of cash held
in Russia outside the country, however, are not expected to have a material
impact on the Group's liquidity, as the cash and cash equivalents held in
Russia are expected to be used in the forthcoming financial periods primarily
for working capital purposes by the Russian operations.
The financial assets at amortised cost comprise of time deposits amounting to
€54.8 million (31 December 2022: €529.5 million) The financial assets at
fair value through profit or loss are related to money market funds. Included
in 'Other financial assets' of the condensed consolidated balance sheet are
derivative financial instruments of €97.5 million (31 December 2022: €35.3
million) and related party loans receivable of €1.8 million (31 December
2022: €1.8 million).
11. Share capital, share premium and treasury shares
Number of shares Share Share
(authorised capital premium
and issued) € million € million
Balance as at 1 January 2022 371,795,418 2,022.3 3,097.3
Shares issued to employees exercising
stock options 290,677 2.0 2.7
Dividends (Note 13) - - (262.6)
Balance as at 31 December 2022 372,086,095 2,024.3 2,837.4
Shares issued to employees exercising
stock options 891,127 6.0 8.2
Dividends (Note 13) - - (289.9)
Balance as at 31 December 2023 372,977,222 2,030.3 2,555.7
In 2023, the share capital of Coca-Cola HBC increased by the issuance of
891,127 (2022: 290,677) new ordinary shares following the exercise of stock
options pursuant to the Coca-Cola HBC AG's employees' stock option plan. Total
proceeds from the issuance of the shares under the stock option plan amounted
to €14.2 million (2022: €4.7 million).
An amount of €29.7 million in 2023 (2022: €15.4 million) relates to
treasury shares provided to employees in connection with vested performance
share awards under the Company's employee incentive scheme, which was
reflected as an appropriation of reserves between 'Treasury shares' and 'Other
reserves' in the condensed consolidated statement of changes in equity.
Following the above changes, on 31 December 2023 the share capital of the
Group amounted to €2,030.3 million and comprised 372,977,222 shares with a
nominal value of CHF 6.70 each.
On 20 November 2023, the Group announced the launch of a share buyback
programme of up to a maximum of 18,000,000 ordinary shares to be purchased in
a manner consistent with the Company's general authority to repurchase shares
granted at its annual general meeting on 17 May 2023 and any such authority
granted at its following annual general meetings. The programme commenced on
21 November 2023 and is expected to run for a period of around two years. As
at 31 December 2023, the Group had purchased shares under the programme for a
total consideration of €42.6 million, which was reflected in line
'Acquisition of treasury shares' of the consolidated cash flow statement and
the consolidated statement of changes in equity.
12. Leases
The leases which are recorded on the condensed consolidated balance sheet are
principally in respect of vehicles and buildings. The Group's right-of-use
assets and lease liability are presented below:
2023 2022
€ million € million
Land and buildings 105.2 82.7
Plant and equipment 104.4 121.2
Total right-of-use assets 209.6 203.9
Current lease liabilities 55.3 53.9
Non-current lease liabilities 154.8 152.1
Total lease liability 210.1 206.0
13. Dividends
On 21 June 2022, the shareholders of Coca-Cola HBC AG at the Annual General
Meeting approved a dividend distribution of 0.71 euro per share. The total
dividend amounted to €262.6 million and was paid on 2 August 2022. Of this,
an amount of €2.4 million related to shares held by the Group.
The shareholders of Coca-Cola HBC AG approved a dividend distribution of 0.78
euro per share at the Annual General Meeting held on 17 May 2023. The total
dividend amounted to €289.9 million and was paid on 19 June 2023. Of this,
an amount of €2.7 million related to shares held by the Group.
The Board of Directors will propose a 0.93 euro dividend per share in respect
of 2023. If approved by the shareholders of Coca-Cola HBC AG, this dividend
will be paid in 2024.
14. Business combinations and acquisition of non-controlling interests
Acquisition of Brown-Forman Finland Oy
On 1 November 2023, the Group acquired 100% of the issued shares of
Brown-Forman Finland Oy ('BFF'), established in Finland, owner of the
Finlandia Vodka brand (the 'Finlandia acquisition'). The acquisition enhances
the Group's premium spirits business, while complementing its existing adult
sparkling beverages portfolio and better positions the Group to strengthen
partnerships with customers in strategically important channels such as
hotels, restaurants and cafes (HoReCa).
The fair value of the consideration for the Finlandia acquisition consists of
US Dollar 193.8 million (€183.9 million), which has already been paid, and
an additional payment, based on BFF's net financial position and working
capital movement, of US Dollar 0.6 million (€0.5 million) expected to be
transferred within the first quarter of 2024. This additional payment is still
under discussion with the seller, according to the terms of the sale and
purchase agreement.
Details of the acquisition with regards to the provisionally determined fair
values of the net assets acquired and goodwill are presented in the table
below. The net assets acquired reflect the additional payment at the
provisional amount of US Dollar 0.6 million (€0.5 million).
Fair value
€ million
Trademarks 197.0
Property, plant and equipment 6.7
Inventories 4.9
Trade, other receivables and assets 9.1
Cash and cash equivalents 3.5
Borrowings (6.5)
Trade and other payables (9.7)
Net deferred tax liability (28.0)
Net identifiable assets acquired 177.0
Add: Goodwill arising on acquisition 7.4
Net assets acquired 184.4
Fair values on acquisition are provisional and will be finalised within 12
months of the acquisition date.
The goodwill arising is attributable to the brand's growth potential across
the Group's markets. Acquisition-related costs of €5.6 million were included
in the 2023 operating expenses, as a result of the above acquisition.
The fair value of trade, other receivables and assets acquired includes trade
receivables with a fair value of €2.0 million, while there was no
significant amount of trade receivables acquired considered to be
uncollectible.
Net sales revenue and profit after tax contributed by BFF to the Group for the
period from 1 November 2023 to 31 December 2023, amounted to €9.5 million
and €2.8 million respectively. If the business combination had occurred on 1
January 2023, consolidated net sales revenue and profit after tax for the year
ended 31 December 2023 would have been higher by approximately €43.5 million
and €7.4 million respectively. This pro forma information reflects the
pre-acquisition operating model of BFF and is not adjusted for the benefits
arising from the post-acquisition transfer of distribution from Brown-Forman
or third-party distributors to CCH operations in the CCH markets and therefore
should not be considered as indicative of Finlandia Vodka brand future
performance.
Other acquisition costs
During 2023, the Group incurred acquisition costs of €0.7 million in
connection with acquisition expected to be completed in 2024, which were
included in line 'Operating expenses' of the condensed consolidated income
statement.
Acquisition of Three Cents
On 21 October 2022, the Group acquired 100% of the issued shares of ESM
Effervescent Sodas Management Limited established in Cyprus, the owner of the
super-premium adult sparkling beverage and mixer product line under the Three
Cents brand and its subsidiary Three Cents Hellas Single Member S.A.
established in Greece (together 'Three Cents'), for a consideration of €45.9
million.
Details of the acquisition with regards to the determined fair values of the
net assets acquired and goodwill are presented in the table below:
Fair Value
€ million
Trademarks 22.6
Property, plant and equipment 0.2
Trade, other receivables and assets 1.9
Cash and cash equivalents 1.9
Borrowings (0.1)
Trade and other payables (1.9)
Net deferred tax liabilities (2.7)
Net identifiable assets acquired 21.9
Add: Goodwill arising on acquisition 24.0
Net assets acquired 45.9
No changes to net identifiable assets acquired have been identified compared
to the relevant amounts disclosed as part of the Group's 2022 integrated
annual report.
Details of the acquisition were disclosed in Note 24 of the Group's 2022
Integrated Annual Report.
Multon A.O. group of companies ('Multon')
The Group holds a 50% interest in Multon, which is engaged in the production
and distribution of juices in Russia and was jointly controlled by the Group
and TCCC. On 11 August 2022, following TCCC's announcement on suspension of
its business in Russia, as well as TCCC's unilateral waiver of certain of its
governance rights in connection with its 50% interest in Multon, the Group
acquired control in Multon.
Details of the change in control of Multon were disclosed in Note 24 of the
Group's 2022 Integrated Annual Report. The cash and cash equivalents acquired
amounting to €24.2 million was presented in line 'Payment for business
combinations, net of cash acquired' in the condensed consolidated cash flow
statement.
Acquisition of Coca-Cola Bottling Company of Egypt S.A.E.(6)
On 12 August 2021, the Group entered into a sale and purchase agreement to
acquire approximately 52.7% of Coca-Cola Bottling Company of Egypt S.A.E.
('CCBCE'), the bottling partner of TCCC in Egypt, from MAC Beverages Limited
and certain of its affiliated entities ('MBL acquisition'). The MBL
acquisition was completed on 13 January 2022 and resulted in the Group
obtaining control over CCBCE.
The fair value of the consideration for the MBL acquisition presented in line
'Payment for business combinations, net of cash acquired' of the condensed
consolidated cash flow statement consisted of US Dollar 303.7 million
(€264.9 million), which was transferred on acquisition, and an additional
payment of US Dollar 124.0 million (€119.1 million), based on CCBCE's past
performance, net financial position and working capital movement, which was
transferred in October 2022, while cash and cash equivalents acquired amounted
to €15.9 million. Foreign exchange loss arising on settlement of the
consideration payable for the MBL acquisition amounted to €11.3 million and
was also presented in line 'Payment for business combinations, net of cash
acquired' of the condensed consolidated cash flow statement, while proceeds
from settlement of derivatives used to hedge the relevant foreign currency
risk amounted to €13.0 million and were presented in line 'Proceeds from
settlement of derivatives relating to business combination' of the condensed
consolidated cash flow statement.
On 12 August 2021, the Group entered into an additional sale and purchase
agreement to acquire approximately 42% of CCBCE, from a wholly-owned affiliate
of TCCC ('TCCC acquisition') for a consideration of US Dollar 122.7 million
(€108.9 million). The TCCC acquisition was completed on 25 January 2022, it
was treated as separate to the MBL acquisition and was accordingly accounted
for as an equity transaction.
Details of the above transactions were disclosed in Note 24 of the Group's
2022 Integrated Annual Report. Following the completion of both transactions,
the Group held a 94.7% interest in CCBCE as at 31 December 2022.
During 2023, the Group acquired approximately 3.1% additional interest in
CCBCE for a consideration of €12.6 million, which was presented in line
'Purchases of shares held by non-controlling interests' of the condensed
consolidated cash flow statement. Following this, the Group held a 97.8%
interest in CCBCE as at 31 December 2023.
(6)Effective 18 June 2023, Coca-Cola Bottling Company of Egypt S.A.E. was
renamed to Coca-Cola HBC Egypt.
15. Related party transactions
a) The Coca-Cola Company
As at 31 December 2023, TCCC indirectly owned 21.0% (31 December 2022: 21.0%)
of the issued share capital of Coca-Cola HBC. Coca-Cola HBC's business
relationship with TCCC is mainly governed by the bottlers' agreements with
TCCC, which are an important element of the Coca-Cola HBC's business. TCCC
considers Coca-Cola HBC to be a 'key bottler'. Following their expiry on 31
December 2023, all bottlers' agreements in the CCH territories where CCH Group
produces, sells and distributes TCCC's trademarked beverages were renewed with
effect as from 1 January 2024, for an initial term of ten years, with the
option for the CCH Group to request an extension (at the discretion of TCCC)
for another ten years upon expiry of the initial term. The below table
summarises transactions with TCCC and its subsidiaries:
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
€ million € million € million € million
Purchases of concentrate, finished products
and other items 882.9 845.5 1,861.4 1,808.7
Net contributions received for marketing and
promotional incentives 67.8 56.0 125.1 108.6
Sales of finished goods and raw materials 2.1 2.2 4.7 4.2
Other income 2.2 6.6 4.1 8.6
Other expenses 1.8 2.5 3.6 4.7
As at 31 December 2023, the Group was owed €42.8 million (€45.3 million as
at 31 December 2022) by TCCC and owed €273.4 million (€226.9 million as at
31 December 2022) to TCCC.
Refer to Note 24 of the Group's 2022 Integrated Annual Report for payments to
TCCC during 2022 regarding purchase of convertible loan and acquisition of
non-controlling interests in the context of the acquisition of Coca-Cola
Bottling Company of Egypt S.A.E.
b) Frigoglass S.A. ('Frigoglass'), Kar-Tess Holding and AG Leventis
(Nigeria) Ltd
Truad Verwaltungs AG currently indirectly owns 99.3% (31 December 2022: 99.3%)
of AG Leventis (Nigeria) Ltd and also indirectly controls Kar-Tess Holding,
which holds approximately 23.0% (31 December 2022: 23.0%) of Coca-Cola HBC's
total issued capital.
As at 31 December 2022, Truad Verwaltungs AG also indirectly owned 48.4% of
Frigoglass. Frigoglass, a company listed on the Athens Exchange, is a
manufacturer of coolers, cooler parts, glass bottles, crowns and plastics. In
April 2023, Frigoglass restructured its debt which resulted in changes to its
ownership structure. The restructured Frigoglass Group no longer meets the
definition of related party as per IAS 24 'Related party disclosures' for
Coca-Cola HBC AG. Accordingly, transactions with: Frigoglass and its
subsidiaries(7) up to April 2023 and the year ended 31 December 2022 are
presented below:
Four months ended Year ended
28 April 2023
31 December 2022
€ million € million
Purchases of coolers and other equipment, raw and other materials 24.4 112.3
Maintenance, rent and other expenses 10.0 33.1
(7) Transactions and balances with Frigoglass Industries (Nigeria) Limited, an
associate of the Group, for the year ended 31 December 2023 and as at 31
December 2023 respectively, are included under 'Other related parties' section
During 2022, the Group received dividends of €1.2 million from Frigoglass
Industries (Nigeria) Limited, which were included in line 'Receipts from
non-integral equity method investments' of the condensed consolidated cash
flow statement.
Transactions and balances with AG Leventis (Nigeria) Ltd for the six months
and years ended 31 December are presented below:
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
€ million € million € million € million
Purchases of finished goods and other items ― 1.7 ― 3.6
Other expenses 3.9 0.1 11.0 0.1
As at 31 December 2023, the Group owed €1.1 million (2022: €2.7 million)
and had a lease liability of €1.2 million (2022: €4.2 million) to AG
Leventis (Nigeria) Ltd.
c) Other related parties
During the six months and full year ended 31 December 2023, the Group incurred
other expenses of €5.6 million and €15.5 million (€7.9 million and
€15.5 million in the respective prior-year periods) mainly related to
maintenance services for cold drink equipment and installations of coolers,
fountains, vending and merchandising equipment as well as subsequent
expenditure for fixed assets of €1.7 million and €3.2 million (€1.8
million and €3.0 million in the respective prior-year periods) from other
related parties. In addition, during the six months and year ended 31 December
2023, the Group purchased coolers and other equipment, as well as inventory of
€18.7 million and €44.1 million (€4.2 million and €5.5 million in the
respective prior year periods) from other related parties.
We disclosed in our 2022 Integrated Annual Report that Frigoglass Industries
(Nigeria) Limited, an associate in which the Group holds an effective interest
of 23.9% through its subsidiary Nigerian Bottling Company Ltd, was guarantor
under the amended banking facilities and notes issued by the Frigoglass Group.
This guarantee expired in April 2023 as part of the restructuring of
Frigoglass Group. However, Frigoglass Industries (Nigeria) Limited is a
guarantor for the new senior secured notes issued in 2023 by the restructured
Frigoglass Group. The Group has no direct exposure arising from this guarantee
arrangement, but the Group's investment in this associate, which stood at
€14.0 million as at 31 December 2023 (31 December 2022: €21.1 million),
would be at potential risk if there was a default under the terms of the
senior secured notes and the restructured Frigoglass Group (including the
guarantor) were unable to meet their obligations thereunder.
During the six months and the year ended 31 December 2023, the Group received
dividends of €nil and €7.0 million from other related parties (€nil and
€0.6 million in the respective prior-year periods), which are included in
line `Receipts from non-integral equity method investments' of the condensed
consolidated cash flow statement and paid €nil in the six months and year
ended 31 December 2023 in connection with capital increase of other related
parties (€nil and €5.7 million in the respective prior-year periods, which
was included in line 'Payments for non-integral equity method investments' of
the condensed consolidated cash flow statement). Furthermore, during the six
months and the year ended 31 December 2023, €nil regarding loans receivable
from other related parties was converted to equity (€nil and €1.3 million
in the respective prior-year periods).
As at 31 December 2023, the Group owed €9.1 million (€3.7 million as at 31
December 2022) to and was owed €6.7 million including loans receivable of
€4.3 million (€1.5 million dividends receivable as at 31 December 2022)
from other related parties.
Capital commitments to other related parties amounted to €3.8 million as at
31 December 2023 (€4.5 million as at 31 December 2022).
d) Joint ventures
The below table summarises transactions with joint ventures:
Six months ended Year ended
31 December 31 December
2023 2022 2023 2022
€ million € million € million € million
Purchases of inventory 14.4 19.5 26.0 26.0
Sales of finished goods and raw materials 4.0 3.0 7.8 9.2
Other income 4.8 8.3 10.4 15.8
Other expenses 4.0 5.4 8.3 15.7
As at 31 December 2023, the Group owed €8.6 million including loans payable
of €2.7 million (€4.4 million as at 31 December 2022 including loans
payable of €nil) to and was owed €12.3 million including dividends and
loans receivable of €2.6 million and €4.3 million respectively (€9.6
million as at 31 December 2022 including dividends and loans receivable of
€nil and €4.3 million respectively) from joint ventures. During the six
months and year ended 31 December 2023, the Group received dividends of €5.2
million and €6.7 million from integral joint ventures (€7.7 million and
€9.7 million in the respective prior-year periods), which were included in
line `Receipts from integral equity method investments' of the condensed
consolidated cash flow statement. Furthermore, during the six months and year
ended 31 December 2023, the Group paid €nil in connection with capital
increase of joint ventures (€4.0 million in the respective prior-year
periods, which was included in line 'Payments for integral equity method
investments' of the condensed consolidated cash flow statement).
e) Directors
Evguenia Stoichkova and George Leventis have been elected to the Board of
Coca-Cola HBC, following a nomination made by The Coca-Cola Company and
Kar-Tess Holding respectively. There have been no transactions between
Coca-Cola HBC and the Directors and senior management except for remuneration
for both the six months and years ended 31 December 2023 and 2022.
16. Contingencies
In relation to the Greek Competition Authority's decision of 25 January 2002,
one of Coca-Cola Hellenic Bottling Company S.A.'s competitors had filed a
lawsuit against Coca-Cola Hellenic Bottling Company S.A. claiming damages in
an amount of €7.7 million. The court of first instance heard the case on 21
January 2009 and subsequently rejected the lawsuit. The plaintiff appealed the
judgement and on 9 December 2013 the Athens Court of Appeals rejected the
plaintiff's appeal. On 19 April 2014, the same plaintiff filed a new lawsuit
against Coca-Cola Hellenic Bottling Company S.A. (following the spin-off,
Coca-Cola HBC Greece S.A.I.C.) claiming payment of €7.5 million as
compensation for losses and moral damages for alleged anti-competitive
commercial practices of Coca-Cola Hellenic Bottling Company S.A. between 1994
and 2013. On 21 December 2018, the plaintiff served their withdrawal from the
lawsuit. However, on 20 June 2019, the same plaintiff filed a new lawsuit
against Coca-Cola HBC Greece S.A.I.C. claiming payment of €10.1 million as
compensation for losses and moral damages again for alleged anti-competitive
commercial practices of Coca-Cola Hellenic Bottling Company S.A. for the same
period between 1994 and 2013. On 16 July 2021, the Athens Multimember Court of
First Instance issued its judgement number 1929/2021 (hereinafter the
"Judgment"), which adjudicates that Coca-Cola HBC Greece S.A.I.C. is obliged
to pay to the plaintiff an amount of circa €0.9 million plus interest as of
31 December 2003. Both Coca-Cola HBC Greece S.A.I.C and the plaintiff have
appealed against this decision to the court of appeals. Both appeals were
heard on 19 January 2023. The decision is pending to be issued. Management
believes that any liability to the Group that may arise as a result of these
pending legal proceedings will not have a material adverse effect on the
results of operations, cash flows, or the financial position of the Group
taken as a whole.
With respect to the investigation of the Greek Competition Commission
initiated on 6 September 2016, regarding Coca-Cola HBC Greece S.A.I.C.'s
operations in certain commercial practices in the non-alcoholic beverages
market, the Rapporteur of the Greek Competition Commission appointed for this
case issued her Statement of Objections on 5 July 2021, alleging that
Coca‑Cola HBC Greece S.A.I.C. undertook a series of anti-competitive
practices in the market of instant consumption for cola and non-cola
carbonated soft drinks, thereby excluding competitors and limiting their
growth potential. Coca‑Cola HBC Greece S.A.I.C. has vigorously defended its
commercial practices, in rebuttal of the allegations set out in the Statement
of Objections. The hearing of the case, before the plenary session of the
Greek Competition Commission, was concluded on 29 November 2021 and the
supplementary briefs of the parties were submitted on 16 December 2021. On 3
November 2022, the Hellenic Competition Commission notified Coca‑Cola HBC
Greece S.A.I.C. of its ruling on the case, according to which Coca‑Cola HBC
Greece S.A.I.C. allegedly abused its dominant position in the Greek immediate
consumption market segment for cola and non‑cola carbonated soft drinks. The
Hellenic Competition Commission ruling imposed on Coca‑Cola HBC Greece
S.A.I.C. a fine of €10.3 million, as well as a behavioural remedy in
relation to beverage coolers valid until end of 2024. Coca‑Cola HBC Greece
S.A.I.C. paid the fine in May 2023. Coca‑Cola HBC Greece S.A.I.C. strongly
disagrees with this ruling and has challenged it before the competent Court of
Appeal. The hearing date of the appeal is set for 26 September 2024.
In 1992, our subsidiary NBC acquired a manufacturing facility in Nigeria from
Vacunak, a Nigerian company. In 1994, Vacunak filed a lawsuit against NBC,
alleging that a representative of NBC had orally agreed to rescind the sale
agreement and instead enter into a lease agreement with Vacunak. As part of
its lawsuit, Vacunak sought compensation for rent and loss of business
opportunities. NBC discontinued all use of the facility in 1995. On 19 August
2013, NBC received the written judgement of the Nigerian court of first
instance issued on 28 June 2012 providing for damages of approximately €7.8
million. The Appeal Court dismissed NBC's appeal and Vacunak's cross‑appeal
and affirmed the judgement of the first instance court in 2023. Both NBC and
Vacunak have filed an appeal against the judgement before the Supreme Court.
Based on advice from NBC's outside legal counsel, we believe that it is
unlikely that NBC will suffer material financial losses from this case. We
have consequently not provided for any losses in relation to this case.
The tax filings of the Group and its subsidiaries are routinely subjected to
audit by tax authorities in most of the jurisdictions in which the Group
conducts business. These audits may result in assessments of additional taxes.
The Group provides for additional tax in relation to the outcome of such tax
assessments, to the extent that a liability is probable and estimable.
The Group is also involved in various other legal proceedings. Management
believes that any liability to the Group that may arise as a result of these
pending legal proceedings will not have a material adverse effect on the
results of operations, cash flows, or the financial position of the Group
taken as a whole.
Considering the above, there have been no significant adverse changes in
contingencies since 31 December 2022 (as described in our 2022 Integrated
Annual Report available on the Coca-Cola HBC's web site:
www.coca-colahellenic.com (http://www.coca-colahellenic.com) ).
17. Commitments
As at 31 December 2023 the Group had capital commitments including commitments
for leases and the share of its joint ventures' capital commitments amounting
to €203.4 million (31 December 2022: €210.5 million), which mainly relate
to plant and machinery equipment.
18. Number of employees
The average number of full-time equivalent employees in 2023 was 32,747 (2022:
33,043).
19. Subsequent events
In late January 2024, the Nigerian Naira depreciated against the US Dollar by
approximately 33% compared to the December 2023 respective rate. The Group has
assessed the impact to 2024 operating profit of the devaluation resulting from
its operations in Nigeria and considering mitigation actions available, does
not expect that this will be material. This is captured within the 2024
outlook. We are continuously monitoring the situation to ensure that timely
actions are undertaken as planned to minimise the adverse impact from the
currency devaluation to the Group's business in Nigeria.
Volume by market for 2023 and 2022
% Change
Unit cases (million)(8) 2023 2022 2023 vs 2022
Established Markets
Austria 83.2 86.4 -4%
Cyprus 16.6 15.9 4%
Greece 120.7 112.8 7%
Italy 253.5 277.4 -9%
Republic of Ireland and Northern Ireland 85.1 83.0 3%
Switzerland 69.5 68.4 2%
Global exports(*) 0.1 - NM
Total 628.7 643.9 -2%
Developing Markets
Baltics 38.1 37.0 3%
Croatia 32.7 31.9 3%
Czech Republic 52.6 60.2 -13%
Hungary 97.3 102.7 -5%
Poland 216.6 213.4 1%
Slovakia 24.5 24.5 -
Slovenia 9.2 9.1 1%
Total 471.0 478.8 -2%
Emerging Markets
Armenia 15.5 15.5 -
Belarus 50.7 43.7 16%
Bosnia and Herzegovina 24.5 23.6 4%
Bulgaria 72.5 68.5 6%
Moldova 8.8 9.0 -2%
Nigeria 415.5 408.3 2%
Romania 186.8 203.7 -8%
Russian Federation 368.7 266.1 39%
Serbia (including the Republic of Kosovo) 165.7 162.1 2%
Ukraine 119.3 101.2 18%
Egypt 307.8 287.4 7%
Total 1,735.8 1,589.1 9%
Total Coca-Cola HBC 2,835.5 2,711.8 5%
(8)One unit case corresponds to approximately 5.678 litres or 24 servings,
being a typically used measure of volume. For Premium Spirits volume, one unit
case also corresponds to 5.678 litres. For biscuits volume, one unit case
corresponds to 1 kilogram. For coffee, one unit case corresponds to 0.5
kilograms or 5.678 litres. Volume data is derived from unaudited operational
data.
*Global exports market refers to the export business for Finlandia Vodka and
Three Cents for the period November-December 2023.
- Our joint venture with Heineken in North Macedonia generated volume of 27.7
million unit cases in 2023 (2022: 26.5 million unit cases), increased by 5%
compared to the prior year.
- Multon, our Russian juice business, generated volume of 36.7 million unit
cases in 2022, prior to the change in control effected 11 August 2022 (Note
14), which is not included in the performance of the Russian Federation for
2022.
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