Coca-Cola Hellenic Rises as Sales Increase on Emerging MarketsAndrew Roberts
Coca-Cola Hellenic Bottling Co. SA, the world’s second-largest bottler of the soft drink, gained in Athens trading after the company increased its sales volume in emerging markets.
Greece’s largest company by market value said revenue climbed 5 percent in the fourth quarter to 1.6 billion euros ($2.1 billion) on volume growth in countries including Russia, Nigeria and Poland. Coca-Cola HBC maintained volume for the full year, compared to a 1 percent decline in 2011, it said today in a statement.
An 8 percent boost in volume in emerging markets in the fourth quarter, as well as a 5 percent decline in cases of drinks sent to established markets, were a “positive” surprise, Mike Gibbs, an analyst at JP Morgan Cazenove with an overweight recommendation on the shares, said today in a note. “We think that the worst of the margin pain is now behind.”
Coca-Cola HBC is shifting its primary listing to London from the Greek stock exchange in an effort to reduce exposure to Europe’s sovereign-debt crisis and improve access to international investors. The change is expected to be completed early in the second quarter of 2013, Chief Executive Officer Dimitris Lois said.
The shares rose as much as 3.2 percent to 19.97 euros and were up 2.7 percent at 3:57 p.m. in Athens, taking the 12-month gain to 37 percent.
Revenue growth outpaced volume gains for the sixth consecutive quarter, Coca-Cola HBC said. “We gained or maintained volume share in sparkling beverages in 21 out of 28 markets,” the company said.
Even so, the successes came as the bottler posted a wider-than-expected fourth-quarter loss and forecast that currency-neutral revenue per case will grow at a slower pace this year.
The fourth-quarter loss widened to 45.8 million euros compared with a deficit of 11.6 million euros a year earlier. The average of five analysts’ estimates compiled by Bloomberg was for a loss of 26 million euros.
Higher input costs, unfavorable currency swings and higher operating expenses weighed on 2012 profit, which fell 28 percent to 190.4 million euros, the company said.
Coca-Cola HBC said it is targeting free cash flow of 1.3 billion euros for the period ending Dec. 31, 2015. Annual net capital expenditure is expected to range from 5.5 percent to 6.5 percent of net sales in the period, it said.
“We expect challenging conditions to persist across most” markets, CEO Lois said in a phone interview. While “we don’t really see any signs of stabilization” in Greece, Italy and Ireland, “we are positive about Russia and Nigeria,” he said.
The company expects to incur costs of 50 million euros in 2013 tied mainly to infrastructure and distribution, Chief Financial Officer Michalis Imellos said by phone. On an annualized basis, these will yield savings of about 30 million euros from 2014, he said.
Currency-neutral input costs per case will rise at a low single-digit pace, led by sugar, resin and aluminum, though the rate will be slower than in 2012 and 2011, Imellos said.