# Coca-Cola HBC AG Strong volume growth in all segments helped by a record number of new product launches

- Link: https://www.directorstalkinterviews.com/coca-cola-hbc-ag-strong-volume-growth-in-all-segments-helped-by-a-record-number-of-new-product-launches/412767205
- Published: 2019-02-14T07:17:39+00:00
- Author: Charlotte Edwards

**Coca-Cola HBC AG **(LON:CCH), a leading bottler of The Coca-Cola Company, reported
its financial results for the full year ended 31 December 2018.

**Full-year highlights**

· Second year of FX-neutral revenue growth above our 4-5% target range, with continued
good progress towards 2020 margin targets

· Net sales revenue up 6.0% on an FX-neutral basis; reported net sales revenue increased
by 2.1%

· FX-neutral revenue per case up 1.7% benefiting from our revenue growth management
initiatives including product innovation, price increases and better package mix

˗ Established and Developing segment countries improved price/mix at a higher rate
than in 2017

˗ Emerging segment price/mix growth, up 2.4%, was a moderation from prior years 
due to the cycling of 2016/17 price increases in Nigeria and lower Premium Spirits
sales in Russia

· Volume growth accelerated to 4.2%, with growth in all segments, driven by Sparkling
beverages

˗ broad-based growth, with continued momentum in the Emerging and Developing segment
countries

˗ Nigeria volume decline in a very competitive environment

˗ growth in all categories including RTD Tea, which returned to growth after the
launch of FUZE Tea

· Comparable EBIT up 9.6% to €680.7 million; comparable EBIT margin up 70 basis 
points to 10.2%; reported margin up 60 basis points to 9.6%; key drivers included:

˗ operating leverage from benefits of revenue growth management and strong volume
growth

˗ 20 basis-point reduction in comparable operating expenses as a percentage of revenue,
a good performance in a year of continued investment in innovation and marketing

˗ slightly favourable input costs offset by the impact of adverse foreign exchange
movements

· Comparable EPS up 5.9%; higher operating profitability, lower interest income 
and higher effective tax rate

· Free cash flow was €370.0 million; strong operating cash flow was offset by a 
€49 million increase in net capital expenditure as we accelerated investment in 
revenue-generating assets as planned

· The Board of Directors proposes a €0.57 dividend per share, a 5.6% increase on
the 2017 dividend

  |   |

Full Year

  |

Change

  |  
 |   |

2018

  |

2017

  |   |  
 |

Volume (m unit cases)

  |

2,192.3

  |

2,104.1

  |

4.2%

  |  
 |

Net sales revenue (€ m)

  |

6,657.1

  |

6,522.0

  |

2.1%

  |  
 |

Net sales revenue per unit case (€)

  |

3.04

  |

3.10

  |

-2.0%

  |  
 |

FX-neutral net sales revenue^(1) (€ m)

  |

6,657.1

  |

6,283.1

  |

6.0%

  |  
 |

FX-neutral net sales revenue per unit case^(1) (€)

  |

3.04

  |

2.99

  |

1.7%

  |  
 |

Operating expenses / Net sales revenue (%)

  |

28.2

  |

28.4

  |

-20bps

  |  
 |

Comparable operating expenses / Net sales revenue (%)

  |

27.7

  |

27.9

  |

-20bps

  |  
 |

Operating profit (EBIT)^(2) (€ m)

  |

639.4

  |

589.8

  |

8.4%

  |  
 |

Comparable EBIT^(1) (€ m)

  |

680.7

  |

621.0

  |

9.6%

  |  
 |

EBIT margin (%)

  |

9.6

  |

9.0

  |

60bps

  |  
 |

Comparable EBIT margin^(1) (%)

  |

10.2

  |

9.5

  |

70bps

  |  
 |

Net profit^(3) (€ m)

  |

447.4

  |

426.0

  |

5.0%

  |  
 |

Comparable net profit^(1,3) (€ m)

  |

480.4

  |

449.7

  |

6.8%

  |  
 |

Basic earnings per share (EPS) (€)

  |

1.216

  |

1.168

  |

4.1%

  |  
 |

Comparable EPS^(1) (€)

  |

1.306

  |

1.233

  |

5.9%

  |  
 |

Free cash flow^(1) (€ m)

  |

370.0

  |

425.9

  |

-13.1%

  |

^(1)For details on APMs refer to ‘Alternative Performance Measures’ and ‘Definitions
and reconciliations of APMs’ sections.

^(2 )Refer to the condensed consolidated income statement.

^(3)Net Profit and comparable net profit refer to net profit and comparable net 
profit respectively after tax attributable to owners of the parent.

> **Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG, commented:**
> In 2018 we delivered another very good performance with revenue growth above our
> target range and another step up in margins. Strong volume growth in all our segments
> was helped by a record number of new product launches, whilst price/mix improved
> for the eighth consecutive year. This growth supported margin progress, which 
> we delivered while increasing our investment in marketing.
> Our sharp focus on cost efficiencies continues while we invest in the business
> for growth. The shape of the business, capabilities and commitment of our people
> and our overall commercial proposition give us confidence in our ability to continue
> to grow revenues and margins.

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