15th May 2015 09:20
LONDON (Alliance News) - Coca-Cola HBC AG on Friday said its net sales revenue rose in the first quarter, with volumes higher due to extra selling days and an early Easter, though it faced a mixed effect from currency fluctuations across its operations.
The company, the second-largest bottler of products made by US drinks group The Coca-Cola Co, said its net sales revenue in the first quarter to the end of March was EUR1.35 billion, up from EUR1.33 billion a year earlier. The group's volume rose by 7.2% in the quarter, up to 439 million unit cases from 409.6 million a year earlier, though its net sales revenue per unit case fell to EUR3.08 against EUR3.25.
Coca-Cola HBC said volumes increased in all three of its segments, covering established, developing and emerging markets, in the quarter, largely due to four extra selling days and the timing of the Easter holiday, with good performances for the group in Nigeria, Poland, Romania, Hungary and the Czech Republic.
Established market net sales revenue growth of 5.1% was boosted by positive currency movements in the quarter and a 3.4% increase in volumes versus a 7.5% decline in the prior-year quarter, although net sales revenue per case fell 1.9% due to a combination of deflationary pressure, unfavourable product mix and efforts to maintain the affordability of its products, particularly in Greece, Coca-Cola HBC said.
While Italy, Greece, Austria and Switzerland all demonstrated volume increases, Coca-Cola HBC said it remains cautious of its business in Greece, "where the expectation for GDP growth in 2015 is overshadowed by a fragile political environment". HBC stands for Hellenic Bottling Company.
Meanwhile, developing market net sales revenue grew 11.4% due to a 13.7% increase in volumes, compared to an 8.9% volume decline in the prior-year quarter. Volumes in Poland, the Czech Republic and Hungary all grew strongly, although this was partly offset by a net sales revenue per case decline of 2.7% due to negative pricing and an unfavourable package and channel mix.
Emerging markets net sales revenue growth, however, declined 4.6%, as a 7.4% volume increase and 4.1% rise in net sales revenue per case were offset by negative currency fluctuations in the quarter. This was despite a good performance in Nigeria and Romania, with a mixed performance in Russia.
"Trading was in line with expectations, delivering a solid quarter. The plans we put in place to stabilise volumes in Europe, and the pricing initiatives we implemented to mitigate the adverse impact of currencies in certain emerging markets have been effective," said Chief Executive Dimitris Lois.
"While there is still some uncertainty ahead, the initiatives we can deploy to mitigate the potential headwinds have been successful and we are encouraged by the results the business has delivered in the quarter," Lois added.
However, analysts at Nomura are less positive about Coca-Cola HBC's results, saying its underlying trading was weaker than expected and estimating that volumes would have been flat if the number was adjusted to exclude the earlier timing of Easter and the four extra selling days.
"We highlight that 1Q benefits from four additional selling days worth 6% to volumes, which will reverse in 4Q15, and earlier timing of Easter (est 1%)," Nomura analyst Edward Mundy said in a note.
Revenue of EUR1.35 billion was ahead of Nomura's EUR1.30 billion estimate and consensus of EUR1.31 billion, but the analyst noted that underlying revenue per case was weaker than expected at flat compared to consensus of 1.5% growth and Nomura's growth of 1.7%.
Coca-Cola HBC is one of the best performers in the FTSE 100, up 1.4% at 1,436.00p mid-morning Friday, having hit a new 52-week high of 1,472.00p at the open.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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