Business Context and Reporting Period
Company: Coca-Cola Europacific Partners Plc (CCEP)
Filing Type: Form 6-K (Trading Update)
Reporting Period: Third Quarter and Nine Months ended September 30, 2022
Context: CCEP reported strong performance driven by the recovery of the away-from-home (AFH) channel, favorable weather in Europe, and resilient home channel demand. The company declared a record dividend and upgraded its full-year 2022 guidance and mid-term objectives.
Key Financial Metrics
| Metric | Q3 2022 (Pro Forma) | YTD 2022 (Pro Forma) |
|---|---|---|
| Revenue | €4,745 million | €13,025 million |
| Revenue Growth (Pro Forma Comparable) | +20.0% | +19.0% |
| Revenue Growth (FX-Neutral) | +18.0% | +17.5% |
| Comparable Volume Growth | +11.5% | +12.5% |
| Revenue per Unit Case | €5.26 (+6.0%) | €5.12 (+5.0%) |
| Dividend Declared (H2 Interim) | €1.12 per share | — |
| Full Year Dividend (2022) | €1.68 per share (+20.0% vs 2021) | — |
Note: The filing does not provide specific values for Net Income, Operating Profit, Cash Flow, or Debt for the reported period, only guidance ranges for the full year.
Material Changes vs. Prior Period
- Revenue: Reported revenue increased 20.0% in Q3 and 32.0% YTD (as reported). On a pro forma comparable basis, revenue grew 20.0% in Q3 and 19.0% YTD.
- Volume: Comparable volume grew 11.5% in Q3 and 12.5% YTD (pro forma). This was driven by a 16.0% growth in the AFH channel and 8.5% growth in the Home channel.
- Geographic Performance:
- Europe: Q3 revenue €3,820m (+17.5% pro forma comparable). Growth driven by Iberia (+22.0%), France (+22.5%), and Germany (+15.5%).
- API (Asia Pacific): Q3 revenue €925m (+32.0% pro forma comparable). Growth supported by soft comparables from prior year restrictions and recovery in Australia and New Zealand.
- Category Performance: Energy drinks grew 25.5% (led by Monster), Hydration grew 24.5%, and Flavours/Mixers grew 15.0% in Q3.
Guidance, Outlook, and Management Commentary
FY22 Guidance Upgrades (Pro Forma Comparable)
- Revenue: Raised to 15-16% growth (previously 11-13%).
- Operating Profit: Raised to 11-12% growth (previously 9-11%).
- Free Cash Flow: Raised to at least €1.8 billion (previously at least €1.6 billion).
- Cost of Sales: Expected to grow ~8.5% (previously ~7.5%) due to commodity inflation in the low twenties.
- Diluted EPS: Expected to grow 14-15% based on actual FX rates.
Updated Mid-Term Objectives
- Revenue Growth: Raised to ~4% (previously low single digit).
- Comparable Operating Profit Growth: Raised to ~7% (previously mid single digit).
- Free Cash Flow: Raised to ~€1.7 billion (previously at least €1.25 billion).
- ROIC: Raised to ~+50bps p.a. (previously ~+40bps p.a.).
- Efficiency: Announced a new €350-400 million efficiency program to be delivered by end of FY28.
Risks and Contingencies
- Supply Chain: Risks related to global supply chain disruptions, including the war in Ukraine and potential energy shortages (natural gas).
- Economic Environment: Risks of global recession, elevated inflation, and price elasticity affecting consumer disposable income.
- Integration: Risks associated with the integration of Coca-Cola Amatil Limited (API).
Investor Verification Checklist
- Dividend Payment Date: Verify the record date (November 18, 2022) and payment date (December 7, 2022) for the €1.12 interim dividend.
- FX Impact: Confirm the impact of foreign exchange on future guidance, as FX is expected to add ~150 basis points to FY22 revenue guidance.
- Commodity Inflation: Monitor commodity cost inflation, currently expected in the low twenties for FY22 and mid-teens for FY23.
- API Integration: Track the completion of the sale of NARTD own brands to The Coca-Cola Company (expected by year-end) and the reorientation of the API portfolio.
- Efficiency Program: Verify the execution of the new €350-400 million efficiency program announced for delivery by FY28.