Coca-Cola HBC reports 'solid' quarter despite poor weather

The FTSE 100 bottler of Coca-Cola products said foreign exchange-neutral revenue growth was 3.4%, or 2.3% excluding the impact of the Bambi acquisition.

It said it saw continued strong progress on its key areas of strategic focus, claiming that innovation had supported its market share gains and contributed 3.7 percentage points of growth in the quarter, adding that FX-neutral revenue per case accelerated with price increases and positive pack and category mix.

Volumes increased by 1.1% in the quarter, but were down 0.1% excluding Bambi.

Transactions grew faster than volume, and the company said its brands gained or maintained share in the majority of its markets, while poor weather caused industry volumes to fall in several key countries.

Established markets volumes increased 1.2%, which was an acceleration on the first half and prior-year period, while developing markets volumes declined by 4.0%, which the board compared to a “very strong” volume growth of 11.3% in the prior-year period, and claimed was particularly impacted by poor weather across all major countries in August.

Emerging markets volumes increased by 3.0%, or by 0.8% excluding Bambi.

Coca-Cola HBC saw ongoing volume growth in Romania, Ukraine and Nigeria, where the market was reportedly responding well to its strategic initiatives, although that was partially offset by a decline in Russia due to poor weather and tough comparatives.

FX-neutral revenue per case increased 2.3%, or 2.4% excluding Bambi, which was an acceleration of more than 1% compared to the first half, and prior-year period.

Established markets FX-neutral revenue per case increased 0.3%, as price increases and positive category and pack mix were offset by adverse channel mix.

Developing markets FX-neutral revenue per case was ahead 4.6%, which the company said was helped by the execution of its strategy for price, package and category mix to drive more revenue growth.

In emerging markets, FX-neutral revenue per case rose 3.4%, or 3.1% excluding Bambi, with strong improvements in price-mix reported in all markets except Nigeria.

The firm said that in Nigeria, recently-concluded successful pricing investments had “enhanced” its competitive position, driving strong volume growth in October.

Coca-Cola HBC said it expected to deliver full year FX-neutral revenue growth of between 4.0% and 4.5%, including a 70 basis point contribution from Bambi.

Currency movements during the quarter were said to be better than expected, and the board said it now expected a negative impact for the full year of €15m, which was an improvement of €5m compared to its prior guidance.

“In a quarter in which unseasonably cold and wet weather significantly depressed industry volume growth in a number of our countries, we are pleased to have gained or maintained share in the majority of our markets and to have made progress with our commercial strategy which delivered a step-up in price/mix and ongoing growth in key areas of strategic focus such as Trademark Coke, Adults, Zeros and innovation,” said chief executive officer Zoran Bogdanovic.

“We are also proud to have been named by the Dow Jones Sustainability Index as Europe's most sustainable beverage company for the 6th time in seven years.

“As we look to the full year, we are pleased to have seen an acceleration in the fourth quarter, giving us confidence that 2019 will be a year of solid top-line growth and good margin expansion.”

At 0939 GMT, shares in Coca-Cola HBC were up 6.49% at 2,512p.