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
Overview: CCEP reported its first full year of results as a combined entity following the acquisition of Coca-Cola Amatil (API). The company highlighted a "very successful year" driven by the recovery of the away-from-home (AFH) channel, strong brand performance, and operational efficiency.
Key Financial Metrics
| Metric | Value (€M or €) | YoY Change (Reported) | YoY Change (Comparable) |
|---|---|---|---|
| Revenue | 17,320 | +26.0% | +24.5% (Fx-Neutral) |
| Operating Profit | 2,086 | +37.5% | +19.5% (Fx-Neutral) |
| Profit After Taxes | 1,521 | +54.0% | +19.0% (Fx-Neutral) |
| Diluted EPS | 3.29 | +53.0% | +18.5% (Fx-Neutral) |
| Adjusted Free Cash Flow | 1,805 | N/A | N/A |
| Net Debt | 10,206 | N/A | N/A |
| Net Debt / Adjusted EBITDA | 3.5x | N/A | N/A |
| Dividend Per Share | 1.68 | +20.0% | N/A |
Note: Comparable figures exclude items impacting comparability such as restructuring charges and acquisition costs. Fx-Neutral figures exclude foreign exchange rate impacts.
Material Changes vs. Prior Period
- Revenue Growth: Reported revenue increased 26.0% to €17.32 billion. On a pro forma comparable basis (as if API was acquired Jan 1, 2021), revenue grew 15.5% (Fx-Neutral). Growth was driven by price increases, positive pack/channel mix, and volume recovery.
- Volume Performance: Total comparable volume grew 18.0% (17.5% reported).
- Europe: Volume +11.0% (pro forma comparable), driven by AFH recovery (+18.5%) and Home channel growth (+4.0%).
- API (Australia, NZ, Pacific, Indonesia): Volume +57.5% reported; +5.0% pro forma comparable, supported by a record Ramadan in Indonesia and strong trading in Australia/NZ.
- Profitability: Operating profit rose 37.5% reported. Comparable operating profit grew 20.5% (19.5% Fx-Neutral). Pro forma comparable operating profit grew 12.5%.
- Cost Pressures: Cost of sales per unit case increased 8.5% (comparable) due to commodity inflation, higher concentrate costs linked to revenue per case, and adverse mix, partially offset by fixed cost recovery from higher volumes.
- Dividends: A record full-year dividend of €1.68 per share was declared, maintaining a payout ratio of approximately 50%.
Guidance, Outlook, and Risks
FY23 Guidance (Comparable & Fx-Neutral Basis)
- Revenue: Comparable growth of 6-8%, driven by price and mix.
- Cost of Sales per Unit Case: Comparable growth of ~8% (commodity inflation expected to be ~10%).
- Operating Profit: Comparable growth of 6-7%.
- Free Cash Flow: At least €1.6 billion.
- Capital Expenditure: 4-5% of revenue (excluding leases).
- Dividend Payout Ratio: c.50%.
Management Commentary
CEO Damian Gammell emphasized the successful integration of API, the recovery of the AFH channel, and the company's focus on efficiency. The company completed the buyout of the minority stake in its Indonesian business (Coca-Cola Bottling Indonesia) for €282 million in February 2023.
Risks and Contingencies
- Macroeconomic Environment: Risks related to global economic downturns, elevated inflation, and consumer disposable income.
- Supply Chain & Energy: Potential disruptions from the war in Ukraine, including shortages of raw materials, natural gas, and oil.
- Foreign Exchange: Low overall transactional exposure (<10%), but currency fluctuations remain a factor.
- Regulatory & Tax: Ongoing VAT dispute in Spain (resolved with €252m proceeds in 2022, excluded from Adjusted FCF).
Investor Verification Checklist
- Pro Forma Adjustments: Verify the impact of the Coca-Cola Amatil (API) acquisition on year-over-year comparisons, as reported growth includes the full year of API operations.
- Cost Inflation Trajectory: Monitor the realization of the ~10% commodity inflation forecast for FY23 and the effectiveness of hedging (85% coverage).
- Volume Sustainability: Assess whether the strong recovery in the Away-From-Home (AFH) channel can be sustained in FY23 given the "dynamic outlook."
- Debt Reduction: Track progress toward the target leverage range of 2.5x-3.0x Net Debt/Adjusted EBITDA by end of 2023 (currently 3.5x).
- Indonesia Buyout: Review the integration and EPS accretion impact of the 100% ownership of Coca-Cola Bottling Indonesia.