- Bottler serves up third year of record profits
- Market share gains, improved margins
- But slower organic growth expected for 2024
Coca-Cola HBC (CCH) was the FTSE 100’s best performer in early dealings on Wednesday, shares in the beverages behemoth fizzing 5.5% higher to £23.27 after it served up forecast-beating results for 2023 and delivered a 19.2% dividend hike.
Despite a difficult consumer backdrop and currency headwinds, the company delivered a strong finish to the year with 6.8% organic volume growth for the fourth quarter and ‘improving trends’ in all three reporting segments, demonstrating the resilience of a diverse drinks portfolio spearheaded by the iconic Coca-Cola brand.
ORGANIC REVENUE BUBBLES HIGHER
For the year to 31 December 2023, the strategic bottling partner of drinks giant Coca-Cola (KO:NYSE) generated organic sales growth of 16.9% to €10.2 billion thanks to price increases and volume growth.
Geographically-diversified Coca-Cola HBC, which operates everywhere from Greece, Italy and Poland to Ukraine, Egypt and Nigeria, delivered a 17.7% rise in organic operating profit to almost €1.1 billion, ahead of market expectations and at an improved margin of 9.4% as inflationary pressures eased in the second half of the year.
The Coke, Sprite and Schweppes seller, which acquired the Finlandia vodka brand from Jack Daniel’s maker Brown-Forman (BF.B:NYSE) for €180 million last year, guided to 2024 organic revenue growth within its 6-7% medium-term target range.
WHAT DID THE CEO SAY?
CEO Zoran Bogdanovic said he was ‘deeply proud of our team as we delivered a third year of double-digit growth and record profits. 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.’
Bogdanovic added: ‘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.’
Free cash flow rose 10.3% to a record high of almost €712 million last year and Coca-Cola HBC proposed a 19.2% increase in the 2023 dividend to €0.93, having launched a €400 million share buyback in November.
The results followed news of better-than-expected fourth quarter sales from Coca-Cola (13 February), as higher prices helped to offset a volume decline in North America.
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THE ANALYST’S VIEW
Edison analyst Milo Bussell said Coca-Cola HBC reported ‘a robust set of financial results in what remains a challenging backdrop for the consumer sector. Organic net revenue grew by 17% for the full year, reaching €10.2 billion, with reported revenues growing 11%, led by growth in volumes, price and mix.
‘Management will be pleased that growth was led by the company’s strategic priority categories, including Sparkling, Energy and Coffee.’
Bussell added: ‘Turning to the outlook, management is anticipating slower organic revenue growth of 6% to 7% given the continued challenges they face. Organic EBIT is expected to grow within a range of 3% to 9% due to low-to-mid single digit inflation and an FX headwind of €30 million to €50 million. Management remain positive in achieving Coca-Cola HBC's medium-growth targets.’
