Coca-Cola HBC AG on Wednesday cited ongoing volatility amid a profit decline but said it was optimistic in its outlook as it upgraded its guidance.

Coca-Cola HBC is a Zug, Switzerland-based bottling partner of US soft drinks maker Coca-Cola Co. It distributes beverages in countries eastern and western Europe, as well as in Egypt and Nigeria. In Europe, its territory includes Greece, Hungary, Italy, Ireland and Poland.

‘Conflict in the Middle East and calls for boycotts of US brands continues to impact our business in countries with large Muslim populations such as Egypt and Bosnia. The geopolitical environment in which we operate will remain challenging in the medium term,’ Coca-Cola HBC said.

Pretax profit fell 1.3% to €521.0 million in the six months that ended June 28 from €527.6 million a year prior.

Net sales revenue climbed 3.1% to €5.18 billion from €5.02 billion. Net sales revenue per unit case remained unchanged at €3.63.

Cost of goods sold increased 1.4% to €3.31 billion from €3.26 billion.

Operating costs increased 8.4% to €1.31 billion from €1.21 billion. ‘We expect that regulatory pressure will increase over the medium term and that will flow through to additional operating costs associated with water,’ Coca-Cola HBC said.

The company noted its shareholders approved a 93 cents per share dividend in May, paid in June and up 19% from 78c paid a year prior.

Looking ahead, Coca-Cola HBC said: ‘The Israel/Palestine conflict is not expected to be resolved in the short term. We expect to see continuing instability in the Middle East in the medium term. This will continue to affect our business in markets that have large Muslim populations given calls for boycotts of US associated products.’

Looking further out, the company said: ‘We expect continuing volatility in the short-to-medium term as a result of macroeconomic and geopolitical conditions and continuing supply-demand imbalances. Over the longer term we expect climate change and our suppliers’ response to climate change to affect the cost of ingredients as well as our ability to meet key sustainability targets.’

Chief Executive Officer Zoran Bogdanovic said: ‘While mindful of macroeconomic and geopolitical challenges as well as a more uncertain consumer environment, we are upgrading our guidance for the year, reflecting our strong first half performance and confidence that we can continue to win in the marketplace.’

The company now expects organic revenue growth of 8% to 12% for 2024, up from a previously set mid-term target range of 6% to 7%. Organic earnings before interest and tax are anticipated to climb between 7% and 12%, up from a previous guidance of 3% to 9%.

Cost of goods sold per unit case are anticipate to increase by a low to mid single-digit percentage due to inflation and foreign exchange effects.

Coca-Cola HBC shares were down 2.5% to 2,672.00 pence each on Wednesday morning in London.

Copyright 2024 Alliance News Ltd. All Rights Reserved.