Russian rouble gives Coca-Cola FY results extra fizz

Coca-Cola HBC reported full year earnings before interest and tax (EBIT) of €621m, a rise of 20% on net sales revenue of £6.5bn, up 4.9%.

Revenue was helped by the stronger Russian rouble. On a constant currency basis, revenue per case was up 3.6%, with positive contributions from price, category and package mix, Coca-Cola said.Profit before tax rose to €301.7m from €266.9m.

“Volume growth of 2.2% was broad based across the segments and improved as the year progressed, with the second half delivering better volume expansion than the first half,” it added.

“Strong in-market execution, supported by an improving economic environment, resulted in excellent top-line growth and margin expansion in 2017. We are particularly pleased to have achieved revenue growth through a balanced delivery of both volume and price/mix,” the company said.

It also reported a “rather unusual” currency tailwind worth €7.8m, given its operations in emerging companies, due to the rouble in 2017.

Free cash flow of €425.9m was generated during the year while capital expenditure as a percentage of revenue was up by 50 basis points to 5.8%.

“We have increased our investments in revenue-generating opportunities and in particular in markets with high growth potential such as Nigeria, Russia and Romania,” Coca-Cola said.

Comparable net profit of €449.7m and comparable earnings per share of €1.233 were 27.7% and 26.9% higher than in the prior year, respectively. Reported net profit and reported basic earnings per share were €426.m and €1.168.

The full year dividend was lifted by 23% to €0.54 a share.

Credit Suisse raised its forecast for current full year organic revenue to increase by 5.5% from 4.3%.

However, the bank it expected this to be largely offset by foreign exchange translations, and left EPS estimates unchanged at €1.37. It also lowered its target price to £27 from £28.20 due to forex changes.

"We expect CCH to deliver another year of solid topline growth in full year 2018, albeit with more balanced volume growth and price/mix than in recent years," CS said in a note.

"The company expects volume growth in all segments, in particular key markets Russia and Nigeria where the macro environment is becoming more favourable (Russia returned to low-single digit volume growth in Q4)."

"Growth is now broader based as many of CCH's smaller markets are contributing. We expect the group volume growth acceleration to offset a slower albeit solid price/mix development, as the business laps prior year price increases."