CCEP

Business Context and Reporting Period

Company: Coca-Cola Europacific Partners Plc (CCEP)
Reporting Period: Six months ended 28 June 2024 (H1 2024)
Filing Type: Form 6-K (Unaudited Interim Results)
Key Event: On 23 February 2024, CCEP completed the acquisition of Coca-Cola Beverages Philippines, Inc. (CCBPI) in a joint venture with Aboitiz Equity Ventures Inc. (AEV). The transaction cost US$1.68 billion (€1.55 billion). Financial results include CCBPI from the acquisition date, with "Adjusted Comparable" metrics presented as if the acquisition occurred on 1 January 2024.

Key Financial Metrics

Note: "Comparable" excludes one-off items. "Adjusted Comparable" includes CCBPI as if acquired at the start of the period.

Material Changes vs. Prior Period

• Revenue Growth: Reported revenue increased 9.5% to €9.83 billion. On an adjusted comparable basis (including CCBPI), revenue grew 3.5% (3.5% FX-neutral). Growth was driven by positive headline pricing and promotional optimization, partially offset by geographic mix.
• Volume Performance: Reported volume rose 13.8% due to the CCBPI acquisition. Adjusted comparable volume grew 0.6%.
  • Europe: Volume declined 2.8% (adjusted comparable) due to adverse weather, strategic de-listings (e.g., Capri Sun), and cycling strong comparables.
  • APS (Australia, Pacific & SE Asia): Volume grew 7.5% (adjusted comparable), driven by double-digit growth in the Philippines and solid momentum in Australia/Pacific.
• Profitability: Reported operating profit decreased 2.4% to €1.14 billion, impacted by €95 million in restructuring charges and €11 million in acquisition costs. Adjusted comparable operating profit increased 9.0% to €1.31 billion, reflecting top-line growth and efficiency programs.
• Cost of Sales: Adjusted comparable cost of sales per unit case increased 2.5% due to higher concentrate costs (linked to revenue per unit case), manufacturing inflation, and a tax increase in the Netherlands.

Guidance, Outlook, and Risks

• Dividends: An interim dividend of €0.74 per share was declared and paid in May 2024.
• Tax Outlook: The effective tax rate for H1 2024 was 22%. Management expects the full-year 2024 comparable effective tax rate to be approximately 25%.
• Sustainability: CCEP is investing €40 million in a new production line for refillable glass bottles in Germany and has invested in Airhive direct air capture technology.
• Key Risks:
  • Geopolitical: Ongoing monitoring of the war in Ukraine and tensions in the Middle East/Asia Pacific, which impact supply chains and raw material costs.
  • Regulatory: Potential taxes on soft drinks, plastic, and sweeteners in various jurisdictions (e.g., Spain, France, Indonesia).
  • Climate: Water scarcity issues in France and Spain requiring contingency planning.
  • Integration: Risks associated with the successful integration of CCBPI operations.

Investor Verification Checklist

• Acquisition Accounting: Verify the provisional nature of the CCBPI acquisition accounting adjustments and the timeline for finalizing fair values (measurement period ends 22 February 2025).
• Restructuring Costs: Confirm the €95 million restructuring charge related to the efficiency program and its impact on future cash flows.
• Net Debt Leverage: Assess the increase in Net Debt to €10.38 billion (from €9.46 billion at year-end 2023) and the associated interest coverage ratios.
• Geographic Mix: Analyze the divergence between Europe (volume decline) and APS (volume growth) to understand long-term growth drivers.
• FX Exposure: Review the impact of foreign exchange rates, particularly the Euro vs. Philippine Peso and Australian Dollar, on reported vs. FX-neutral results.