Business Context and Reporting Period
Company: Coca-Cola Europacific Partners Plc (CCEP)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Six months ended 30 June 2023 (H1 2023)
Business Overview: CCEP is a leading consumer goods group in Western Europe and the Asia Pacific region, manufacturing, selling, and distributing non-alcoholic ready-to-drink beverages. The Group operates two primary segments: Europe and Asia Pacific (API).
Key Financial Metrics
| Metric | H1 2023 (As Reported) | H1 2023 (Comparable) | YoY Change (Comparable) |
|---|---|---|---|
| Revenue (€M) | 8,977 | 8,977 | +8.5% (+10.5% FX-neutral) |
| Operating Profit (€M) | 1,170 | 1,165 | +11.0% (+13.0% FX-neutral) |
| Profit After Tax (€M) | 854 | 847 | +14.0% (+16.5% FX-neutral) |
| Diluted EPS (€) | 1.86 | 1.85 | +14.5% (+17.0% FX-neutral) |
| Net Debt (€M) | 9,850 | - | - |
| Operating Cash Flow (€M) | 1,307 | - | - |
| Comparable Volume (M UC) | 1,631 | 1,631 | +1.0% |
Note: "Comparable" excludes items impacting comparability such as restructuring charges, mineral rights income, and flooding impacts. "FX-neutral" excludes foreign exchange rate changes.
Material Changes vs. Prior Period
- Revenue Growth: Reported revenue increased 8.5% year-over-year, driven by a 10.0% increase in revenue per unit case (driven by price increases and mix) and a 1.0% increase in comparable volume.
- Profitability: Operating profit grew 21.0% on a reported basis and 11.0% on a comparable basis. This was supported by strong top-line growth and efficiency programs, despite a 9.0% increase in cost of sales per unit case due to inflation and higher concentrate costs.
- Volume Performance:
- Europe: Comparable volume +2.5% (driven by developed markets and execution).
- API: Comparable volume -5.5% (impacted by strategic SKU rationalization in Indonesia and Ramadan timing).
- One-off Items: H1 2023 included €53 million in other income (€18m coal royalties and €35m sale of sub-strata/mineral rights in Australia), partially offset by €51 million in restructuring charges.
Guidance, Outlook, and Risks
- Dividend: Declared H1 interim dividend of €0.67 per share. Reaffirmed guidance for an annualized total dividend payout ratio of approximately 50%.
- Acquisition: Announced a non-binding Letter of Intent to jointly acquire 100% of Coca-Cola Beverages Philippines, Inc. (CCBPI) with Aboitiz Equity Ventures Inc. for $1.8 billion. CCEP will acquire a 60% stake. Completion expected end of 2023.
- Strategic Portfolio Changes:
- Ending partnership with Beam Suntory in Australia/NZ (effective 2025/2026).
- Ending partnership with Capri Sun in Europe (effective 2024).
- Tax Outlook: Full year 2023 comparable effective tax rate expected to be approximately 24%.
- Risks:
- Macroeconomic: Elevated inflation, interest rates, and potential recession impacting consumer affordability.
- Supply Chain: Geopolitical tensions (Ukraine war), energy shortages, and raw material constraints.
- Regulatory: Potential taxes on soft drinks/plastics and water scarcity regulations (noted in France and Spain).
- Cybersecurity: Increased cyber-attacks on bottlers and suppliers.
Investor Verification Checklist
- Volume Sustainability: Verify the impact of strategic SKU rationalization in Indonesia on long-term API volume recovery.
- Price Realization: Confirm the ability to maintain revenue per unit case growth amidst inflationary pressures and potential consumer pushback on pricing.
- Acquisition Execution: Monitor the progress of the CCBPI acquisition, including regulatory approvals and integration costs.
- Cost Inflation: Assess the trajectory of cost of sales per unit case, specifically regarding concentrate costs and energy prices.
- FX Exposure: Evaluate the impact of currency fluctuations on reported results versus underlying operational performance (FX-neutral metrics).