# Coca-Cola HBC AG Q1 2024 Trading Update shows 12.6% organic revenue growth - Link: https://www.directorstalkinterviews.com/coca-cola-hbc-ag-q1-2024-trading-update-shows-12.6-organic-revenue-growth/4121154073 - Published: 2024-04-30T07:20:00+01:00 - Author: Amilia Stone **Coca-Cola HBC AG** (LON:CCH), a growth-focused Consumer Packaged Goods business and strategic bottling partner of The Coca-Cola Company, has announced its Q1 2024 trading update. **First quarter highlights** ·     **Continued execution of our 24/7 strategy delivered 12.6% organic revenue growth****^(1)** o  Organic volume grew 1.8%, driven by good performances in Emerging and Developing markets; Sparkling volumes were stable, while Energy and Coffee delivered strong double-digit growth (up +37.3% and +34.3% respectively) o  Organic revenue per case increased 10.6%, reflecting effective revenue growth management initiatives through the last twelve months o  Reported revenue growth of 1.0%, with strong organic growth offset by FX translation headwinds in Nigeria and Egypt o  Ongoing improvement in value share on top of strong gains in 2023; 120bps gain in Non-Alcoholic Ready-To-Drink (NARTD) and 70bps in Sparkling year-to-date ·     **Organic revenue growth across all segments, led by a particularly good performance in Emerging** o  **Established:** Organic revenue up 5.1%, led by revenue-per-case expansion, with volumes impacted by tough comparatives o  **Developing:** Organic revenue increased by 12.5%, with an encouraging improvement in volumes after a challenging 2023 o  **Emerging:** Organic revenue up 19.0%, driven by revenue-per-case expansion, and with a resilient volume performance despite macroeconomic headwinds and currency devaluation ·     **Further investment in our unique 24/7 portfolio and bespoke capabilities** o  Single-serve mix in Sparkling increased 230 basis points, enabled by revenue growth management initiatives o  Monster Energy Green Zero Sugar launched in 16 markets, supporting Monster’s continued strong growth o  Coffee growth driven by premium out-of-home recruitment o  Finlandia Vodka distribution expanded to a further 17 markets o  Announced an agreement to acquire BDS Vending in Ireland, advancing our in-house capabilities in vending and enhancing our route-to-market capabilities **Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG, commented:** _“We have made a strong start to the year, with continued progress of our 24/7 strategy. Organic revenues grew by 12.6% led by our strategic priority categories of Sparkling, Energy and Coffee. We are also pleased to report another quarter of volume growth and market share gains._ _“During the period, informed by data, insights and analytics, we have accelerated investment in our unique 24/7 portfolio and in our bespoke capabilities, with several new brand launches and targeted initiatives across our markets. This ensures our continued strong in-market execution, in close collaboration with our customers._ _“Although we are mindful of the broader macroeconomic backdrop, we are confident in delivering our financial guidance in the year ahead and on making further progress against our medium-term growth targets.”_ | Q1 2024 vs Q1 2023 | Net sales revenue | Volume | Net sales revenue per unit case | | growth (%) | Organic^(1) | Reported | Organic^(1) | Reported | Organic^(1) | Reported | | Total Group | 12.6 | 1.0 | 1.8 | 1.9 | 10.6 | -0.8 | | Established markets | 5.1 | 6.6 | -3.8 | -3.7 | 9.3 | 10.6 | | Developing markets | 12.5 | 16.5 | 4.2 | 4.2 | 8.0 | 11.8 | | Emerging markets | 19.0 | -8.3 | 3.2 | 3.2 | 15.3 | -11.2 | _^(1)_ _For details on Alternative Performance Measures (‘APMs’) refer to ‘Alternative Performance Measures’ and ‘Definitions and reconciliations of APMs’ sections._ **Business Outlook** We have delivered a strong start to 2024. While we expect the macroeconomic and geopolitical environment to remain challenging, we have high confidence in our 24/ 7 portfolio and the opportunities for growth in our diverse markets, amplified by our bespoke capabilities, and above all, the talent of our people. In 2024 we expect to make progress against our medium-term growth targets. We are confident in reiterating our guidance for 2024: ·     Achieving our mid-term target of organic revenue growth at a Group level of 6-7% ·     On a comparable basis, COGS per unit case should increase low to mid-single digits through the combined effect of inflation, transactional and translational FX ·     Organic EBIT growth in the range of +3% to +9% **Technical 2024 guidance** Our technical guidance is unchanged from what we provided at the FY23 results. **FX:** We expect the impact of translational FX on our Group comparable EBIT to be a €30 – 50 million headwind. **Restructuring:** We do not expect significant restructuring costs to occur. **Tax:** We expect our comparable effective tax rate to be towards the top end of our 25% to 27% range. **Finance costs:** We expect net finance costs to be between €50 – 70 million. **Scope:** We expect the scope impact from the Finlandia acquisition on comparable EBIT to be between €5 – 10 million. **Operational highlights** **Leveraging our unique 24/7 portfolio** Organic revenue increased by 12.6% in the first quarter of 2024, with 1.8% growth in volumes, as well as strong revenue-per-case enhancement. Reported net sales revenue increased by 1.0%, with adverse FX translation effects in Emerging markets offsetting strong organic growth. ·     Sparkling volumes were flat in the quarter. Trademark Coke grew low-single digits, with good growth in Zero and low/no sugar variants. Momentum in Adult Sparkling continued, with low-double digit growth overall, ongoing good performance from Schweppes, and notably strong, double-digit growth in Kinley. Fanta and Sprite declined mid- single digits, driven by Emerging markets and tough comparatives. ·     Energy volumes grew 37.3%, with strong momentum particularly in Emerging markets. We launched Monster Energy Green Zero Sugar in 16 markets in the quarter, adding to the three markets launched in Q4 2023. ·     Coffee grew by 34.3%, with good performance in Developing and Emerging, and strong growth in Caffè Vergnano. We continued to recruit out-of-home outlets for Costa Coffee and Caffè Vergnano. ·     Still volumes grew 2.5%. We achieved growth in Water in Emerging markets on soft comparatives, which offset declines in Established and Developing, where the category was impacted by our conscious choices to focus on opportunities for the most profitable revenue growth. We delivered robust growth in Sports Drinks in Developing and Emerging markets. **Winning in the marketplace** Organic net sales revenue per case grew 10.6%. Within our revenue growth management toolkit, pricing remained the most important driver of value. We continued to adjust our pricing in Q1 2024 to mitigate ongoing cost inflation, albeit at a lower level than 2023. We also made successful pricing interventions to navigate currency devaluation, regulation and taxation in specific markets. In addition, we benefitted from the cycling impact of pricing taken in 2023, an impact we expect to reduce through the course of the year. In Q1, and in our plans for 2024, we continued to use our revenue growth management framework to strengthen our customer offer, including through affordability and premiumisation initiatives. Affordability actions range from new promotion strategies leveraging data and insights to improve returns, including promotions on key pack formats, to new entry packages at specific price points. Premiumisation continues to be important for a large number of consumers, and our leading ability to use data, insights and analytics to segment our customer base allows us to personalise portfolio assortments to address specific consumer needs. We continued to see an improvement in package and category mix in the quarter. Category mix benefitted from the increased contribution of Energy, while package mix improved due to effective activations of single-serve multipacks, which drove single-serve mix up 210 basis points. Our execution in the marketplace and joint value creation with customers enabled us to continue to gain share, building on strong gains in 2023. We gained 120 basis points of value share in NARTD and 70 basis points in Sparkling year-to-date. **ESG leadership** Packaging circularity continues to be a focus. Deposit return schemes went live in both the Republic of Ireland and Hungary. In Nigeria, we are co-investing together with The Coca-Cola Company to build the first-ever Coca-Cola System-owned and operated packaging collection facility.  We expect it to be operational in the second half of 2024, collecting around 100 tonnes of plastic bottles each month. In Q1, we continued our long-running commitment to the communities and watersheds in the six markets that the Danube River runs through, by joining The Living Danube Partnership, helping nature and communities thrive along the river basin. **Established markets** Established markets net sales revenue grew by 5.1% and 6.6% on an organic and reported basis respectively. Organic net sales revenue per case increased by 9.3%. Established markets benefitted from pricing actions taken through 2023 as well as specific additional increases in Q1 2024 to navigate inflation and regulation. We drove another quarter of strong improvement in package mix, with single-serve improving 130 basis points. Volume in the segment declined 3.8% organically, on tough comparatives. Sparkling volumes declined by mid-single digits, slightly offset by a positive performance from Coke Zero and Adult Sparkling. Energy grew by mid-single digits despite tough comparatives and Juice volumes grew by low-single digits in the period. In Italy, volumes decreased by high-single digits on tough comparatives. Sparkling volumes declined by mid-single digits due to Trademark Coke, partially offset by Adult Sparkling, which grew by high-single digits. Stills declined low-teens driven by Water, partially offset by Juice volumes, up mid-single digits. In Greece, volumes grew by low-single digits despite challenging comparatives. Sparkling volumes were flat with a positive performance from Coke Zero and Adult Sparkling. Energy grew low-single digits and Stills grew by high-single digits, driven by low double-digit growth in Water. In Ireland, volumes decreased by mid-single digits, as consumers adjusted to the impact of the Deposit Return Scheme in the Republic of Ireland launched in February. Sparkling volumes declined mid-single digits, while Energy and Coffee volumes grew mid-single digits. In Switzerland, volumes declined low-single digits. Sparkling declined mid-single digits, offset by high-single digit growth in Stills, driven by low-double digit growth in Water. **Developing markets** Net sales revenue grew by 12.5% and 16.5% on an organic and reported basis respectively. Organic net sales revenue per case increased by 8.0%. The segment benefitted from carryover pricing, as well as positive channel and category mix. Developing markets volume grew 4.2% organically, with good momentum from our strategic priority categories. Sparkling grew mid-single digits with Coke Zero up low-double digits and Adult Sparkling up mid-teens. Coffee grew high-single digits despite tough comparatives. Poland volumes increased by low-single digits, building on a strong prior year performance. Sparkling volumes grew by mid-single digits, with growth across all brands. Energy declined by high-single digits on challenging comparatives and with some impact from the introduction of regulatory measures since the start of January 2024. Stills volumes declined low-double digits driven by Water and Juice. In Hungary, volumes grew by low-single digits, driven by our strategic priority categories. Sparkling grew mid-single digits. Energy grew by over 30% and Coffee grew by nearly 30% despite challenging comparatives. Volume in the Czech Republic increased by low-double digits, with low-teens growth in Sparkling and mid-single digit growth in Stills. Energy declined low-single digits on very challenging comparatives, while Coffee grew strong-double digits. **Emerging markets** Emerging markets net sales revenue grew by 19.0% on an organic basis but declined by 8.3% on a reported basis predominantly due to currency devaluations in Nigeria and Egypt. Net sales revenue per case grew 15.3% organically, as we made conscious decisions to drive pricing to manage cost inflation and currency devaluations, as well as benefitting from positive category and package mix. Emerging markets volume grew 3.2% organically. Sparkling volumes were flat, with over 30% growth in low/no sugar variants of Trademark Coke. Energy saw strong double- digit growth, despite tough comparatives. Stills grew mid-single digits, driven by Water. Volume in Nigeria grew high-teens despite the challenging macroeconomic environment, reflecting our good execution in the market. We purposely drove strong price mix to manage cost inflation and currency devaluation, while still gaining value share. Energy delivered strong double-digit growth, as momentum continued in Predator and Monster.  Sparkling volumes grew mid-teens driven by Trademark Coke and Adult Sparkling. Within Stills, we saw high-teens growth in Juices.  Ukraine volume declined mid-single digits. Sparkling declined mid-single digits driven by Trademark Coke, partially offset by a positive performance from Coke Zero and Adult Sparkling. Energy grew mid-teens with good underlying momentum, while Stills volumes grew mid-single digits. In Romania, volumes declined low-double digits driven by Sparkling and Stills. The consumer environment remained challenging, impacted by the introduction of a sugar tax in January, on top of the VAT increase in January 2023 and the launch of a Deposit Return Scheme in November 2023. Energy and Coffee continued their strong momentum with volumes up high-teens and mid-teens respectively. In Egypt, volumes declined by mid-single digits, reflecting a challenging consumer and macroeconomic environment. We proactively drove strong price mix to manage inflation and the currency devaluation in the period. Sparkling declined high-teens, impacted by pushback against some western brands. Energy continued its strong momentum from the launch in 2023. Water grew by over 30%. Russia volumes grew low-single digits as we continued to operate a self-sufficient local business. **Supplementary information** | Group | First quarter 2024 | First quarter 2023 | %Reported | %Organic^(2) | | Volume (m unit cases)^(3) | 632.6 | 621.1 | 1.9% | 1.8% | | Net sales revenue (€ m) | 2,225.4 | 2,202.5 | 1.0% | 12.6% | | Net sales revenue per unit case (€) | 3.52 | 3.55 | -0.8% | 10.6% | | Established markets | | | | | | Volume (m unit cases) | 131.9 | 136.9 | -3.7% | -3.8% | | Net sales revenue (€ m) | 742.6 | 696.6 | 6.6% | 5.1% | | Net sales revenue per unit case (€) | 5.63 | 5.09 | 10.6% | 9.3% | | Developing markets |   | | | | | Volume (m unit cases) | 104.5 | 100.3 | 4.2% | 4.2% | | Net sales revenue (€ m) | 480.1 | 412.2 | 16.5% | 12.5% | | Net sales revenue per unit case (€) | 4.59 | 4.11 | 11.8% | 8.0% | | Emerging markets |   | | | | | Volume (m unit cases) | 396.2 | 383.9 | 3.2% | 3.2% | | Net sales revenue (€ m) | 1,002.7 | 1,093.7 | -8.3% | 19.0% | | Net sales revenue per unit case (€) | 2.53 | 2.85 | -11.2% | 15.3% | _^(2)_ _For details on APMs refer to ‘Alternative Performance Measures’ and ‘Definitions and reconciliations of APMs’ sections._ _^(3)_ _One unit case corresponds to approximately 5.678 litres or 24 servings, being a typically used measure of volume. For biscuits volume, one unit case corresponds to 1 kilogram. For coffee volume, one unit case corresponds to 0.5 kilograms or 5.678 litres._ **Conference call** Coca-Cola HBC will host a conference call for financial analysts and investors to discuss the 2024 first quarter trading update on Tuesday 30 April 2024 at 9:30 am BST. To join the call in listen-only mode, please join via the [webcast](https://edge.media-server.com/mmc/p/m9k4scwf). If you anticipate asking a question, please [click here to register](https://services.choruscall.it/DiamondPassRegistration/register?confirmationNumber=9748900&linkSecurityString=ae9d4d020) and to find dial-in details. **Next event** |    7 August 2024 | 2024 Half-year results | Share on: