Business Context and Reporting Period
Company: Coca-Cola Europacific Partners Plc (CCEP)
Filing Type: Form 6-K (Preliminary Unaudited Results)
Reporting Period: Full year ended 31 December 2022
Geographic Scope: Operations across Europe (Great Britain, France, Germany, Iberia, Northern Europe) and the Asia-Pacific region (Australia, New Zealand, Indonesia, Papua New Guinea). The results include the full-year impact of the acquisition of Coca-Cola Amatil (API), completed in May 2021.
Key Financial Metrics
| Metric | As Reported (€M) | Comparable (€M) | YoY Change (As Reported) | YoY Change (Comparable) |
|---|---|---|---|---|
| Revenue | 17,320 | 17,320 | +26.0% | +26.0% |
| Operating Profit | 2,086 | 2,138 | +37.5% | +20.5% |
| Profit After Taxes | 1,521 | 1,564 | +54.0% | +20.0% |
| Diluted EPS (€) | 3.29 | 3.39 | +53.0% | +19.5% |
| Net Debt (€M) | 10,206 | - | - | - |
| Operating Cash Flow (€M) | 2,932 | - | +38.5% | - |
Volume Performance: Total comparable volume increased by 18.0% (3,300 million unit cases). Europe volume grew 11.0%, while API volume grew 57.5% (driven by the full-year inclusion of API).
Dividend: Full year interim dividend of €1.68 per share, representing a 20.0% increase year-over-year and maintaining a payout ratio of approximately 50%.
Material Changes vs. Prior Period
- Revenue Growth: Reported revenue grew 26.0% to €17.32 billion. On a pro forma comparable basis (adjusting for the API acquisition as if it occurred on Jan 1, 2021), revenue grew 17.0%. Growth was driven by volume recovery, particularly in Away From Home (AFH) channels, and favorable price/mix.
- Profitability: Operating profit rose 37.5% to €2.09 billion. Comparable operating profit increased 20.5% to €2.14 billion. Pro forma comparable operating profit grew 13.5%.
- Cost Pressures: Cost of sales per unit case increased 8.5% on a comparable basis due to commodity inflation, higher concentrate costs linked to revenue per case, and adverse mix. These were partially offset by the recovery of fixed manufacturing costs due to higher volumes.
- Geographic Performance:
- Europe: Revenue +17.0%; Operating Profit +18.0%. Strong recovery in AFH channels supported by tourism and favorable weather.
- API: Revenue +74.0% (As Reported); Operating Profit +155.5% (As Reported). Pro forma comparable revenue growth was 17.0%.
- One-off Items: Reported results included €144 million in restructuring charges (primarily Germany vending transformation) and €96 million in other income from a favorable court ruling regarding mineral rights in Australia.
Guidance, Outlook, and Risks
Management Commentary:
- Efficiency: Over 90% of the multi-year €375 million efficiency program has been delivered.
- Portfolio Strategy: Completed the exit of beer and cider production in Australia and the sale of NARTD own brands to The Coca-Cola Company for A$275 million. Acquired the remaining 29.4% minority stake in Coca-Cola Bottling Indonesia for €282 million, achieving 100% ownership.
- Sustainability: Achieved ~48% recycled plastic (rPET) usage globally; 6 manufacturing sites certified as carbon neutral.
Risks and Contingencies:
- Supply Chain & Energy: Risks related to the war in Ukraine, including potential shortages of natural gas, oil, and raw materials, and increased cyber risks.
- Economic Environment: Exposure to global economic downturns, elevated inflation, and reduced consumer disposable income.
- Regulatory: Currency controls in Papua New Guinea limiting the repatriation of cash (€102 million cash and €49 million short-term investments held in Kina).
Guidance: The filing does not provide specific numerical guidance for 2023 but emphasizes maintaining the dividend payout ratio of ~50% and continuing efficiency programs.
Investor Verification Checklist
- Pro Forma Adjustments: Verify the assumptions used in the pro forma financials regarding the API acquisition, specifically the treatment of acquisition accounting adjustments and debt financing costs.
- Restructuring Costs: Review the €144 million restructuring charge in 2022, specifically the €82 million related to vending operations in Germany, to assess future cash flow impacts.
- Commodity Inflation: Monitor the trajectory of cost of sales per unit case (up 8.5% comparable) and the company's ability to pass on price increases without volume erosion.
- Indonesia Acquisition: Assess the integration progress and expected EPS accretion from the 100% ownership of Coca-Cola Bottling Indonesia.
- Currency Controls: Evaluate the liquidity risk associated with the €151 million in assets held in Papua New Guinea Kina subject to government-imposed currency controls.