Coca-Cola HBC third quarter sales lack fizz

Coca-Cola HBC bottled 5.4% more cases of fizzy drinks in the third quarter as favourable weather helped sales but exchange rates and pricing efforts in emerging markets put a cap on revenues.

Total group revenue in the quarter of €1.77bn was a 2.7% fall from the same period last year and slightly short of analyst consensus for €1.79bn.

Volumes from the FTSE 100 Coca-Cola bottler of 577.1m cases were 5.4% higher, exceeding markets´ expectation of 572.7m unit cases, albeit last year's comparative of -4.8% was helpful.

Established markets, especially Italy and Austria, were strong contributors to 7.4% volume growth, compared to a 9.6% fall in the same quarter last year, helped by the strong Swiss franc, with net sales revenue up 6.4%.

While volumes from developing markets continued to see good growth, led by Poland and Hungary, revenue slowed to 6.8%.

In emerging markets, volume growth accelerated to 2.4% despite Russian sales deteriorating as a a poor summer saw volumes there fall 10%.

Exceptional volume growth in Romania, Nigeria and Ukraine, mainly in the Sparkling category, offset Russia, but the emerging segment saw net sales fall 13% overall. For the full-year management reiterated their belief that volume declines in Russia can be limited to mid-single digits.

"Our commercial initiatives and a hot summer in parts of Europe contributed to a strong volume performance in the quarter, with growth in all segments and increased momentum in the business," said chief executive Dimitris Lois, citing gradual improvement in market conditions in most European countries and buoyant trading in many emerging markets.

"In the remainder of the year, we will continue to manage the conditions in each of our market segments with the right mix of pricing initiatives, affordability focus and consumer offering, although the four fewer selling days will impact our volumes.

"Overall, we are confident that in 2015 we will grow volumes across our reporting segments as well as expand group operating margin."

Broker Shore Capital said the deterioration in Russia was "a worry" and although the performance was good in many markets, it was generally against very weak comparative figures from last year and reliant on weather.

Analysts there did not expect consensus expectations to move materially post Thursday’s update, with full year EBIT ranging from €429m-€480m mainly reflecting the impact of FX.