Business Context and Reporting Period
Company: Coca-Cola Europacific Partners Plc (CCEP)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Six months ended 2 July 2021
Key Event: CCEP completed the acquisition of Coca-Cola Amatil Limited (API) on 10 May 2021, expanding operations into Australia, New Zealand, Indonesia, and Papua New Guinea. The filing includes pro forma financial information assuming the acquisition occurred at the beginning of the period.
Key Financial Metrics (H1 2021)
| Metric | As Reported (€M) | Comparable (€M) | Pro Forma Comparable (€M) | YoY Change (Comparable) |
|---|---|---|---|---|
| Revenue | 5,918 | 5,918 | 6,974 | +22.5% (As Reported) +13.0% (Pro Forma) |
| Operating Profit | 520 | 691 | 802 | +94.0% (As Reported) +61.0% (Pro Forma) |
| Profit After Taxes | 246 | 500 | 563 | +95.0% (As Reported) |
| Diluted EPS (€) | 0.53 | 1.09 | 1.22 | +89.5% (As Reported) |
| Free Cash Flow | 648 | n/a | n/a | vs. -5 (H1 2020) |
| Net Debt | 11,793 (as of 2 July 2021) | n/a | n/a | vs. 5,700 (31 Dec 2020) |
Note: "Comparable" excludes items impacting comparability such as restructuring charges, acquisition costs, and pension scheme closures. "Pro Forma" includes API results as if acquired on 1 Jan 2021.
Material Changes vs. Prior Period
- Volume Growth: Total CCEP volume increased 18.0% (As Reported) and 15.5% (Comparable) driven by the easing of pandemic restrictions and the inclusion of API. Pro forma comparable volume grew 6.0%.
- Revenue Drivers: Revenue growth was driven by volume recovery in Away from Home (AFH) channels, favorable price/mix, and the API acquisition. Revenue per unit case increased 3.0% (Comparable).
- Profitability: Operating profit surged due to volume recovery, efficiency programs, and the API acquisition. Pro forma comparable operating profit grew 61.0%.
- Debt Leverage: Net debt increased significantly from €5.7 billion (31 Dec 2020) to €11.8 billion (2 July 2021) due to financing the API acquisition. Leverage rose from ~3.0x to ~5.0x net debt to adjusted EBITDA.
- Tax Impact: The effective tax rate was 46% (vs. 40% in H1 2020), heavily impacted by a €118 million charge related to the revaluation of deferred tax liabilities due to the UK statutory tax rate increase to 25%.
Guidance, Outlook, and Risks
Full Year 2021 Guidance (Comparable Basis)
- Revenue: Growth of 26-28%.
- Operating Profit: Growth of 40-44%.
- Effective Tax Rate: Approximately 20%.
- Dividend Payout Ratio: Approximately 50%.
Management Commentary
CEO Damian Gammell highlighted strong H1 performance driven by the reopening of AFH channels and successful integration of API. The company is focusing on cost base adjustments, digital growth (on track for record revenues), and sustainability (accelerating rPET use, two sites certified carbon neutral).
Principal Risks
- COVID-19: Ongoing volatility in restrictions, particularly in Indonesia and API regions, and potential resurgence of variants.
- Acquisition Integration: Risks related to successfully integrating API, realizing synergies, and managing increased debt levels.
- Climate & Water: Exposure to extreme weather events (e.g., recent flooding in Belgium/Germany) and water scarcity in API regions.
- Regulatory & Tax: Changes in packaging regulations, soft drink taxes, and the impact of the UK tax rate increase.
- Debt Rating: Risk of credit rating downgrade if deleveraging targets (2.5x-3.0x leverage within 3 years) are not met.
Investor Verification Checklist
- Debt Servicing: Verify the company's ability to service the increased debt load (€11.8B net debt) and meet the 3-year deleveraging target.
- API Integration: Monitor the realization of cost synergies and operational integration of the Coca-Cola Amatil business.
- Tax Rate Normalization: Confirm the full-year effective tax rate stabilizes near the guided 20% after the one-off UK tax revaluation charge.
- Weather Impact: Assess the financial impact of recent flooding in Belgium and Germany on operations and insurance claims.
- Volume Sustainability: Evaluate whether volume growth in AFH channels can be sustained as pandemic restrictions fully normalize.