Coca-Cola Europacific Partners plc Announces Preliminary Unaudited Results Q4 & FY 2023

Rhea-AI Summary

CCEP reports solid financial performance for FY 2023, showing revenue growth, increased operating profit, and strong free cash flow. The company maintains a positive outlook for FY24 and beyond, focusing on strategic acquisitions and market activations.

Positive

• CCEP demonstrates a 5.5% revenue growth in FY 2023 compared to the previous year, reaching €18,302 million.
• Operating profit increased by 12.0% to €2,339 million, with a 9.5% growth in diluted EPS to €3.71.
• The company's free cash flow stands at €1,734 million, supporting a dividend per share of €1.84.
• CCEP highlights successful in-market execution and brand partnerships contributing to revenue and margin growth.
• The acquisition of Coca-Cola Beverages Philippines strengthens the company's position and diversifies its portfolio.
• The CEO, Damian Gammell, expresses confidence in the company's future, emphasizing long-term investments and shareholder value.
• CCEP's inclusion in the Nasdaq 100 index reflects the company's strong performance and growth prospects.

Negative

• None.

Financial Analyst

The disclosed financial metrics suggest a robust fiscal performance for the company, with a noted 5.5% increase in revenue and a 12.0% rise in operating profit on a reported basis. Notably, the operating margin has improved, indicating enhanced efficiency in operations and cost management. The free cash flow of €1,734M is particularly impressive, reflecting the company's ability to generate liquidity which can be pivotal for future investments or dividend payments.

The dividend per share of €1.84, maintaining a payout ratio of approximately 50%, demonstrates a commitment to returning value to shareholders while retaining sufficient capital for reinvestment. This balance is crucial in fostering investor confidence and supporting the stock price. The company's performance in Europe, with a 20.5% increase in operating profit, signifies strong regional growth, potentially making it an attractive area for investors focusing on geographic performance.

Market Research Analyst

The company's strategy of focusing on leading brands and solid in-market execution has yielded a positive outcome, as evidenced by the growth in revenue per unit case. This metric's rise suggests effective pricing and promotion strategies, which are critical in the consumer goods sector for maintaining competitive edge and market share. The acquisition of Coca-Cola Beverages Philippines aligns with the company's expansion strategy, potentially opening up new market segments and contributing to long-term growth.

Despite a slight decline in total volume, the increase in transactions over volume in developed markets indicates a shift towards higher-value products or more efficient sales strategies. This is a significant trend that can impact the company's revenue mix and profitability. The emphasis on premiumisation and affordability suggests a nuanced approach to consumer demand, which can be a differentiating factor in the highly competitive beverage industry.

Economist

The company's performance must be contextualized within the broader economic environment, characterized by macroeconomic and geopolitical volatility. The resilience shown in their financial results is commendable and indicates strong underlying fundamentals. However, investors should be cognizant of the potential risks posed by inflationary pressures on cost of sales and operating expenses.

The company's proactive management of pricing and promotional spend in anticipation of such challenges is a prudent strategy. The focus on productivity to drive free cash flow is also a sustainable approach in the face of economic uncertainty. The recent inclusion into the Nasdaq 100 is a testament to the company's financial stability and growth prospects, potentially influencing investor sentiment and the stock's liquidity in the market.

Preliminary unaudited results for the full year ended 31 December 2023

Solid end to a great year, well placed for FY24 and beyond

UXBRIDGE, UK / ACCESSWIRE / February 23, 2024 / (NASDAQ:CCEP)(LSE:CCEP)

	FY 2023 Metric[1]	As Reported		Comparable [1]	Change vs 2022
					As Reported	Comparable [1]	Comparable Fx-Neutral [1]
Total CCEP	Volume (M UC)[2]	3,279		3,279	(0.5) %	(0.5) %
	Revenue (€M)	18,302		18,302	5.5 %	5.5 %	8.0 %
	Cost of sales (€M)	11,582		11,576	4.5 %	4.5 %	6.5 %
	Operating expenses (€M)	4,488		4,353	6.0 %	6.5 %	8.5 %
	Operating profit (€M)	2,339		2,373	12.0 %	11.0 %	13.5 %
	Profit after taxes (€M)	1,669		1,701	9.5 %	9.0 %	11.5 %
	Diluted EPS (€)	3.63		3.71	10.5 %	9.5 %	12.0 %
	Revenue per UC[2] (€)			5.70			8.5 %
	Cost of sales per UC[2] (€)			3.61			7.5 %
	Comparable Free cash Flow (€M)			1,734
	Dividend per share[3] (€)		1.84	Maintained dividend payout ratio of c.50%
Europe	Volume (M UC)[2]	2,644		2,644	0.5 %	0.5 %
	Revenue (€M)	14,553		14,553	7.5 %	7.5 %	8.5 %
	Operating profit (€M)	1,842		1,888	20.5 %	13.0 %	14.0 %
	Revenue per UC[2] (€)			5.56			8.0 %
API	Volume (M UC) [2]	635		635	(5.0) %	(5.0) %
	Revenue (€M)	3,749		3,749	(1.0) %	(1.0) %	5.5 %
	Operating profit (€M)	497		485	(11.0) %	3.5 %	10.5 %
	Revenue per UC[2] (€)			6.30			11.0 %

DAMIAN GAMMELL, CHIEF EXECUTIVE OFFICER, SAID:

"2023 was a great year for CCEP. This is testament to the hard work of our colleagues to whom we are extremely grateful, alongside our customers and brand partners. Our focus on leading brands, strong customer relationships and solid in-market execution served us well. We delivered solid top and bottom-line growth and generated impressive free cash flow. We drove solid gains in revenue per unit case through our revenue and margin growth management, along with our price and promotion strategy across a broad pack offering. Across our developed markets, transactions outpaced volume and we grew both share and household penetration. We progressed our long-term transformation strategy in Indonesia, and today, we completed the exciting acquisition, with Aboitiz^[4], of Coca-Cola Beverages Philippines^[5].

"We are well placed for FY24 and beyond. We are stronger and better, more diverse and robust, and our categories remain resilient despite ongoing macroeconomic and geopolitical volatility. We have fantastic activation plans, focusing on the Paris Olympics and the UEFA Euros, to engage customers and consumers. And we continue to actively manage our pricing and promotional spend to remain relevant to our consumers, balancing affordability and premiumisation. Along with our focus on productivity, this will all ultimately drive our free cash flow.

"We remain confident in the future, continuing to invest for the long-term. A record dividend in FY23 and our recent inclusion into the Nasdaq 100, combined with our FY24 guidance, demonstrate the strength of our business and our ability to deliver continued shareholder value. Supported by strong relationships with our brand partners, we have the platform and momentum, now including the Philippines, to go even further together whilst continuing to be a great partner for our customers and a great place to work for our colleagues."

___________________________

Note: All footnotes included after the ‘About CCEP' section

FY & Q4 HIGHLIGHTS^[1]

Revenue

FY Reported +5.5%; Fx-neutral +8.0%^[6]

• Delivered more revenue growth YTD for our retail customers than any of our FMCG peers in Europe & our NARTD peers in Australia & New Zealand (NZ)^[7]

^• NARTD value share gains^[7] across measured channels both in-store (+10bps) & online (+90bps), & increased household penetration in Europe (+70bps)^[8]

• Transactions ahead of volume growth in Europe, Australia & NZ

• Comparable volume -0.5%^[9]

◦ By geography:

▪ Europe +0.5%^[9] reflecting solid in-market execution, resilient consumer demand offset by mixed summer weather

▪ API -5.0%^[9] reflecting solid in-market execution driving continued volume growth in Australia & NZ offset by softer consumer spending in Indonesia & the strategic SKU portfolio rationalisation

◦ By channel: Away from Home (AFH) -1.5%^[9] & Home 0.0%^[9]

• Strong revenue per unit case +8.5%^[2],[6] (Europe: +8.0%; API: +11.0%) driven by positive headline price increases & promotional optimisation alongside favourable mix

Q4 Reported +5.0%; Fx-neutral +7.0%^[6]

• Comparable volume +1.0%^[9]

◦ By geography:

▪ Europe +2.0%^[9] reflecting solid in-market execution & cycling disruption last year relating to a customer negotiation

▪ API -3.0%^[9] reflecting solid in-market execution driving underlying volume growth in Australia & NZ offset by softer consumer spending in Indonesia & the strategic SKU portfolio rationalisation

◦ By channel: AFH -1.0%^[9] & Home +3.0%^[9]

• Strong revenue per unit case +6.0%^[2],[6] (Europe: +5.5%; API: +8.5%) driven by positive headline price increases & promotional optimisation alongside favourable mix

Operating profit

FY Reported +12.0%; Fx-neutral +13.5%^[6]

• Cost of sales per unit case +7.5%^[2],[6] reflecting increased revenue per unit case driving higher concentrate costs, inflation in commodities & manufacturing

• Comparable operating profit of €2,373m, +13.5%^[6] reflecting strong top-line, our efficiency programmes & continuous efforts on discretionary spend optimisation

• Comparable diluted EPS of €3.71, +12.0%^[6] (reported +10.5%)

Dividend

• Full year dividend per share of €1.84^[3], +9.5% vs 2022, maintaining annualised total dividend payout ratio of approximately 50%

Joint acquisition of Coca-Cola Beverages Philippines, Inc. (CCBPI)

• CCEP confirms it has, together with Aboitiz Equity Ventures Inc., completed the acquisition of CCBPI from The Coca-Cola Company

• See separate release on Investors section of our website for more detail including provision of adjusted financial information on a FY basis for FY23 (https://ir.cocacolaep.com/financial-reports-and-results/financial-releases)

Other

• Comparable free cash flow: generated impressive comparable free cash flow of €1,734m^[1][10] reflecting strong performance & working capital initiatives (net cashflows from operating activities of €2,806m)

◦ Supporting return to the top end of our target leverage range (2.5 to 3.0x Net debt: Comparable EBITDA^[1],[11]) by the end of 2023, as previously guided

◦ At the end of 2023, Net debt: Comparable EBITDA^[1][11] was 3.0x (end of FY22: 3.5x). This excludes the acquisition of CCBPI, which is expected to have a modest impact

• Comparable ROIC^[1] increased by 120bps to 10.3% (reported 9.5%) driven by the increase in comparable profit after tax & continued focus on capital allocation

• Strategic portfolio choices: CCEP will move forward independently from both Beam Suntory & Capri Sun. See H1 2023 release on our website for more detail

(https://ir.cocacolaep.com/financial-reports-and-results/financial-releases)

SUSTAINABILITY HIGHLIGHTS

• Retained MSCI AAA rating, inclusion on Carbon Disclosure Project A List for Climate & on the Bloomberg Gender Equality index

• Received approval from the Science Based Targets initiative (SBTi) of CCEP's long-term 2040 net zero & 2030 greenhouse gas reduction targets

• Exceeded target of 50% recycled plastic in our packaging: closed 2023 at 54.9%^[12] (2022: 48.5%)

• Achieved carbon neutral certification for a further six manufacturing sites (five in Iberia and one in NZ); now a global total of 14 sites

• Partnered with The Coca-Cola Company, other bottlers & Greycroft, a seed-to-growth venture capital firm, to create a sustainability-focused venture capital fund

FY24 GUIDANCE^{[1], [13]}

The outlook for FY24 reflects our current assessment of market conditions. Unless stated otherwise, guidance is on an adjusted^[13] comparable & FX-neutral basis. Guidance is therefore provided on the basis that the acquisition of CCBPI occurred on 1 Jan 2023.

• Revenue: comparable growth of ~4% in line with our mid-term strategic objectives

• More balanced between volumes & price/mix than FY23

• Two extra selling days in Q4

• Cost of sales per unit case: comparable growth of 3-4%

• Expect commodity inflation to grow low single-digit

• FY24 hedge coverage at ~80%^[14]

• Taxes increase driven by Netherlands

• Concentrate directly linked to revenue per unit case through the incidence pricing model

• Operating profit: comparable growth of ~7% in line with our mid-term strategic objectives

• Continued focus on optimising discretionary spend & delivering efficiency programmes

• FY24 supported by first year of next €350-400m efficiency programme to be delivered by the end of FY28 (cash cost to deliver included within FCF guidance): expect ~€60-70m to be delivered in FY24

• Other:

• Finance costs: weighted average cost of net debt of ~2%

• Comparable effective tax rate: ~25%

• Comparable free cash flow: ~€1.7bn in line with our mid-term strategic objectives

• Capital expenditure: ~5% of revenue excluding leases

• Dividend payout ratio: ~50%^[15] based on comparable EPS

Fourth-quarter & Full-Year Revenue Performance by Geography^[1]

		Fourth-quarter												Full Year
		€ million				% change				Fx-Neutral % change				€ million				% change				Fx-Neutral % change
Great Britain			812				2.0	%			2.0	%			3,235				5.0	%			6.5	%
France[16]			535				6.0	%			6.0	%			2,321				11.0	%			11.0	%
Germany			760				16.5	%			16.5	%			3,018				12.5	%			12.5	%
Iberia[17]			755				9.0	%			9.0	%			3,325				9.5	%			9.5	%
Northern Europe[18]			630				3.0	%			5.0	%			2,654				0.5	%			4.0	%
Total Europe			3,492				7.0	%			7.5	%			14,553				7.5	%			8.5	%
API[19]			1,026				(1.0	) %			5.5	%			3,749				(1.0	) %			5.5	%
Total CCEP			4,518				5.0	%			7.0	%			18,302				5.5	%			8.0	%

France

• Q4 volume decline reflects poor weather conditions & cycling strong Q4 World Cup activation.

• Fuze Tea continued to perform well achieving double-digit volume growth for both Q4 (+29.5%) and FY (+41.0%). Monster, Sprite & Powerade also outperformed in Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented in the first quarter.

Germany

• Q4 volume growth reflects cycling disruption last year relating to a customer negotiation.

• Continued volume growth in Coca-Cola Zero Sugar & Fanta. Monster, Fuze Tea & Powerade achieved double-digit volume growth for both Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented in the third quarter & positive brand mix e.g. FY Monster volume +34.0%.

Great Britain

• Q4 volume broadly flat.

• Monster realised double-digit volume growth for both Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented at the end of the second quarter & positive brand mix e.g. FY Monster volume +16.5% & successful launch of Jack Daniel's & Coca-Cola.

Iberia

• Q4 volume growth driven by the AFH channel & resilient consumer demand.

• Coca-Cola Zero Sugar, Sprite & Monster volumes performed well. Royal Bliss achieved double-digit volume growth in Q4 (+12.0%), supported by launch in Portugal.

• Revenue/UC^[20] growth driven by headline price increase implemented in the first quarter & positive mix.

Northern Europe

• Q4 volume growth reflects solid in-market execution & promotional optimisation.

• Monster, Powerade & Aquarius volumes outperformed for both Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented across our markets & positive pack mix led by the recovery of the AFH channel e.g. FY small glass volume +4.5%.

API

• Q4 volume decline reflects the strategic de-listings within Australia's bulk water portfolio & softer consumer spending in Indonesia.

• Coca-Cola Zero Sugar, Monster & Powerade volume outperformed for both Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented across our markets during the first half & promotional optimisation in Australia.

___________________________

Note: All values are unaudited and all references to volumes are on a comparable basis. All changes are versus 2022 equivalent period unless stated otherwise

Fourth-quarter & Full-Year Volume Performance by Category^[1],[9]

Comparable volumes, changes versus equivalent 2022 period.

		Fourth-quarter								Full Year
		% of Total				% Change				% of Total				% Change[5]
Sparkling			86.0	%			1.5	%			85.0	%			0.0	%
Coca-ColaTM			60.0	%			0.5	%			59.0	%			0.0	%
Flavours, Mixers & Energy			26.0	%			4.0	%			26.0	%			1.0	%
Stills			14.0	%			(2.0	)%			15.0	%			(5.0	)%
Hydration			7.0	%			(3.5	)%			7.5	%			(7.0	)%
RTD Tea, RTD Coffee, Juices & Other[21]			7.0	%			(0.5	)%			7.5	%			(3.0	)%
Total			100.0	%			1.0	%			100.0	%			(0.5	)%

Coca-Cola^TM

• Q4 & FY growth across all key markets reflecting outperformance of Coca-Cola Zero Sugar (Q4:+3.5%; FY:+4.0%) supported by targeted campaigns & innovation.

• Coca-Cola Zero Sugar gained FY value share^[7] of Total Cola +40bps, led by GB +120bps.

Flavours, Mixers & Energy

• Fanta Q4 +1.0%, reflecting strong consumer demand supported by flavour extensions.

• Q4 & FY Energy +14.0% led by Monster, continuing to gain distribution & share through exciting innovation e.g. launch of Monster Green Zero Sugar.

Hydration

• Q4 Water -9.5%; Q4 Sport +11.5%

• FY Water -13.5% driven by strategic portfolio choices (SKU rationalisation in Indonesia, the exit of large PET packs in Germany (Vio) & Iberia (Aquabona), & Mount Franklin bulk packs in Australia).

• FY Sports +9.0% growth in Powerade across all markets^[22] driven by continued favourable consumer trends in this category.

RTD Tea, RTD Coffee, Juices & Other^[21]

• Q4 Juice drinks -6.0%

• Q4 RTD Tea/Coffee +9.0% reflecting continued growth in Fuze Tea across Europe (+27.5%).

• FY performance reflecting strategic SKU rationalisation in Indonesia, partially offset by continued growth in Fuze Tea across Europe (+23.5%).

• Jack Daniel's & Coca-Cola performed well since launch e.g. now #1 ARTD^[23] value brand in GB^[24]

___________________________

Note: All references to volumes are on a comparable basis. All changes are versus 2022 equivalent period unless stated otherwise

Conference Call (with presentation)

• 23 February 2024 at 11:30 GMT, 12:30 CEST & 6:30 a.m. EDT; accessible via www.cocacolaep.com

• Replay & transcript will be available at www.cocacolaep.com

Financial Calendar

• Integrated Report for publication: 15 March 2024

• First-quarter 2024 trading update: 25 April 2024

• Financial calendar available here: https://ir.cocacolaep.com/financial-calendar/

Contacts

Investor Relations

Sarah Willett
sarah.willett@ccep.com

Awais Khan
awais.khan@ccep.com

Raj Sidhu
raj.sidhu@ccep.com

Media Relations
ccep@portland-communications.com

Please click on the following link to view the full announcement.

http://www.rns-pdf.londonstockexchange.com/rns/1877E_1-2024-2-22.pdf

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

SOURCE: Coca-Cola Europacific Partners plc

View the original press release on accesswire.com

FAQ

What was CCEP's revenue growth in FY 2023?

CCEP reported a 5.5% revenue growth in FY 2023, reaching €18,302 million.

What was the operating profit change for CCEP in FY 2023?

CCEP's operating profit increased by 12.0% to €2,339 million in FY 2023.

What is the free cash flow amount for CCEP in FY 2023?

CCEP's free cash flow stands at €1,734 million for FY 2023.

What strategic acquisition did CCEP complete in 2023?

CCEP completed the acquisition of Coca-Cola Beverages Philippines in 2023.

Who is the CEO of CCEP and what is his outlook for the company?

Damian Gammell is the CEO of CCEP, expressing confidence in the company's future and emphasizing long-term investments and shareholder value.