Business Context and Reporting Period
Company: Coca-Cola Europacific Partners Plc (CCEP)
Filing Type: Form 6-K (Trading Update)
Reporting Period: First Quarter ended 29 March 2024
Context: CCEP reported a strong start to the year, driven by solid execution and brand performance. The results include the impact of the acquisition of Coca-Cola Beverages Philippines, Inc. (CCBPI), completed on 23 February 2024. Management has confidently reaffirmed full-year 2024 guidance.
Key Financial Metrics
| Metric | Q1 2024 (Reported) | Q1 2024 (Adjusted Comparable) | Change vs Prior Year |
|---|---|---|---|
| Total Revenue | €4,465m | €4,733m | +7.5% (Reported) / +4.3% (Adj. Comp.) |
| Volume (Unit Cases) | 829m | 930m | +7.9% (Reported) / +2.0% (Adj. Comp.) |
| Revenue per Unit Case | €5.43 | €5.14 | +0.5% (Reported) / +3.4% (Adj. Comp.) |
| Europe Revenue | €3,290m | €3,290m | +4.6% (FXN) |
| APS Revenue | €1,175m | €1,443m | +16.5% (Reported) / +3.7% (Adj. Comp.) |
| Dividend | Interim dividend declared: €0.74 per share (payable 23 May 2024) |
Note: Adjusted Comparable figures assume the CCBPI acquisition occurred on 1 January 2023 for illustrative purposes. FXN denotes FX-neutral.
Material Changes vs. Prior Period
- Geographic Performance:
- Europe: Reported revenue grew 4.6% (FX-neutral). Comparable volume declined 1.4% due to strategic de-listings of water and Capri Sun, offset by solid execution. Revenue per unit case rose 5.6% driven by price increases in France, Iberia, and annualization of prior pricing in GB and Germany.
- Asia Pacific (APS): Reported revenue surged 16.5% due to the inclusion of the Philippines. On an adjusted comparable basis, revenue grew 3.7% and volume grew 8.1%. Growth was led by strong demand in the Philippines and an encouraging start in Indonesia.
- Category Performance:
- Coca-Cola: Volume +2.4% (Classic +4.4%, Zero Sugar +1.3%).
- Flavours & Mixers: Volume +3.2% (Sprite +8.7%).
- Energy: Volume +7.5% led by Monster, despite strong comparables.
- Water: Volume -1.5% due to strategic de-listings in Europe and Australia.
- Channel Mix: Away from Home (AFH) volume grew 2.8% overall, while Home volume grew 1.3%. APS showed strong AFH growth (+10.3%), whereas Europe AFH declined (-4.6%) due to cycling strong comparables.
Guidance, Outlook, and Risks
Full Year 2024 Guidance (Adjusted Comparable & FX-Neutral)
- Revenue: Comparable growth of ~4% (more balanced between volume and price/mix than FY23).
- Cost of Sales per Unit Case: Comparable growth of 3-4% (commodity inflation expected to be low single-digit).
- Operating Profit: Comparable growth of ~7%.
- Free Cash Flow: ~€1.7bn.
- Capital Expenditure: ~5% of revenue (excluding leases).
- Dividend Payout Ratio: ~50% of comparable EPS.
Management Commentary
CEO Damian Gammell highlighted the resilience of the business despite macroeconomic volatility. The company is leveraging major activations (Paris Olympics, UEFA Euros) to drive momentum. Management remains focused on profitable revenue growth, pricing strategy, and productivity.
Risks and Contingencies
- Geopolitical & Supply Chain: Risks related to the war in Ukraine, tensions in the Middle East/Asia Pacific, and potential supply constraints for raw materials and energy.
- Economic Conditions: Risks of recession, elevated inflation, and consumer price elasticity.
- Integration: Risks associated with the integration of the CCBPI acquisition and the joint venture with Aboitiz Equity Ventures Inc.
- Regulatory: Potential water use reductions due to national/regional regulations.
Investor Verification Checklist
- Adjusted Metrics: Verify the reconciliation between "As Reported" and "Adjusted Comparable" figures, noting that the latter assumes the CCBPI acquisition occurred at the start of the period.
- Volume Drivers: Confirm the impact of strategic de-listings (Capri Sun, bulk water) on reported volume declines in Europe and Australia.
- FX Impact: Review the foreign exchange impact on revenue, particularly in the APS region where reported growth was significantly higher than FX-neutral growth.
- Guidance Assumptions: Note that FY24 guidance assumes two extra selling days in Q4 and ~85% hedge coverage for commodities.
- Dividend Timing: Confirm the record date (10 May 2024) and payment date (23 May 2024) for the interim dividend.