Finanzas: Coca-Cola European Partners Reports Interim Results


Coca-Cola European Partners plc (CCEP) (ticker symbol: CCE) today announces its interim results for the six months ended 1 July 2016 and affirms full-year 2016 earnings outlook



First-half diluted earnings per share were €0.74 on a reported basis or €0.83 on a pro forma comparable basis, including a negative currency translation impact of €0.02.

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First-half reported revenue totaled €3.5 billion. Pro forma comparable revenue was €5.2 billion, down 3 per cent, or down 1.5 per cent on a pro forma comparable and fx-neutral basis. Volume declined 1.0 per cent on a comparable basis.

First-half reported operating profit was €314 million; pro forma comparable operating profit was €603 million, down 2.5 per cent or flat on an fx-neutral basis.

CCEP provides its full-year guidance for 2016, including pro forma comparable, fx-neutral diluted earnings per share growth in a mid-teen range, with flat revenue growth and modest mid-single-digit operating profit growth.

CCEP remains on track to achieve pre-tax savings of €315 million to €340 million through synergies by mid-2019.

CCEP declares initial quarterly dividend of €0.17 per share.

“Since the creation of Coca-Cola European Partners nearly four months ago, our strong belief in the future of our new company has been reinforced,” said John F. Brock, chief executive officer. “We are making significant progress to integrate the new business, share best practices and become even more effective and efficient.

“Our first-half results reflect the continued impact of a soft consumer environment and persistent economic challenges,” Mr. Brock said. “These conditions support our focus on executing against our outstanding marketing programmes, improving our operational effectiveness and integrating CCEP to capture synergies as we work to reach our full-year 2016 performance objectives.”

“Ultimately, our focus remains on our most important goal – continuing to drive shareowner value, while maintaining a strong commitment to the communities we serve,” Mr. Brock said.

Note Regarding the Presentation of Financial Information

Unless otherwise noted, the financial information included in this interim management review is provided on a pro forma comparable basis to allow investors to better analyse CCEP’s business performance and allow for greater comparability. To do so, we have given effect to the Merger as if it had occurred at the beginning of the periods presented, thereby including the financial results of Coca-Cola Enterprises, Inc. (CCE), Coca-Cola Erfrischungsgetränke GmbH (“Germany”, “CCEG”) and Coca-Cola Iberian Partners S.A.U. (“Iberia”, “CCIP”) and acquisition accounting adjustments for the full periods presented. We have also excluded items affecting the comparability of year-over-year financial performance, including merger and integration costs, restructuring costs, the out-of-period mark-to-market impact of hedges and the inventory step-up related to acquisition accounting.

For purposes of this review, the following terms are defined as follows:
‘As reported’ includes the financial results of CCE only, as the accounting predecessor, for all periods prior to 27 May 2016 and combined CCEP (CCE, Germany and Iberia (IBKC)) for the period from 28 May 2016 through 1 July 2016.
‘Pro forma’ includes the results of CCE, Germany and Iberia as well as the impact of the additional debt financing costs incurred by CCEP in connection with the Merger for all periods presented, as if the Merger had occurred at the beginning of the period presented.

Operational Review

“As we move forward, we are aware of the current marketplace conditions that continue to impact our business,” said Damian Gammell, chief operating officer.

“CCEP provides a much stronger foundation and enhances our ability to leverage our strong portfolio of leading brands, generate new growth and create significant operating synergies.”

“We have teams of talented, motivated employee groups working to deliver against important brand and operating opportunities and look forward to sharing more details with you in the future,” Mr. Gammell said. “Importantly, we remain on track to deliver against our goal of pretax savings of €315 million to €340 million by mid-2019.”

“We are working to reignite growth, strengthen our operations, and ultimately, create value for each of our stakeholders, including our shareholders,” Mr. Gammell said.


First-half reported revenue totaled €3.5 billion, or up 10.5 per cent, driven by the inclusion of Germany and Iberia during the last part of the second quarter. Pro forma revenue was €5.2 billion, down 3.0 per cent, or down 1.5 per cent on a pro forma and fx-neutral basis. Revenue per unit case was flat on a pro forma comparable and fx-neutral basis. Volume was down 1.5 per cent on a pro forma basis. These results reflect poor weather conditions throughout our territories during the second quarter and the impact of a sustained, challenging consumer environment.

On a territory basis, Iberia revenues were up 1.5 per cent, as revenue per unit case increased ahead of volume. Revenue in Germany declined 0.5 per cent, in part due to the impact of a transition to recyclable PET from returnable PET.

Great Britain revenues were down 10.5 per cent, driven by the negative impact of an approximately 6.0 per cent decline for the British pound versus the Euro when compared to prior year. Great Britain revenue was also affected by temporary supply chain disruptions related to the implementation of new software programmes and processes and an ongoing competitive environment. Additionally, Great Britain faced a challenging prior year volume growth hurdle of 3.5 per cent versus the same period a year ago.

Revenue in France declined 4.5 per cent, primarily due to volume declines from challenging weather, the economic impact of the decline in tourist travel and soft category conditions. Revenue in the Northern European territories (Belgium, the Netherlands, Norway and Sweden) declined approximately 0.5 per cent driven by revenue declines in Belgium, due in part to the decline of tourist travel in Belgium, and offset partially by revenue growth in Norway and Sweden.

As for volume, total first-half comparable volume declined 1.5 per cent on a pro forma basis and was down 1.0 per cent on a pro forma and comparable basis after adjusting for one fewer selling day in the first quarter when compared to prior year. A challenging consumer environment, difficult second quarter weather and other operating factors highlighted above, combined to limit volume results. Sparkling brands declined 1.5 per cent. Coca-Cola trademark declined approximately 3.5 per cent, with approximate 6.5 per cent growth in Coca-Cola Zero Sugar offset by declines in other trademark brands. Sparkling flavors and energy grew 5.0 per cent as continued strong growth in energy offset low single-digit declines in sparkling flavors. Energy is benefiting from year-over-year comparisons as we have not yet lapped the newly acquired distribution of Monster in Germany, Norway and Spain. Still brands grew 1.0 per cent with water brands up 4.0 per cent and all other stills down 1.5 per cent.

Cost of Sales

First-half reported cost of sales totaled €2.2 billion, up 9.0 per cent, driven by the inclusion of Germany and Iberia during the last part of the second quarter. Pro forma comparable cost of sales totaled €3.3 billion, down 3.5 per cent, or down 2.0 per cent on a pro forma comparable and fx-neutral basis.

Cost of sales per unit case declined 1.0 per cent on a pro forma, comparable and fx-neutral basis. This reflects the benefit of favourable year-over-year costs in some key commodities, principally sugar, partially offset by an increase of cost of sales in Great Britain related to the supply chain disruption and the shift in Germany from returnable to recyclable packages.

Although the recent cost environment is favourable, we continue to execute our risk management strategy through the use of supplier agreements and hedging instruments designed to mitigate our exposure to commodity price volatility.

Operating Expense

First-half reported operating expenses totaled €1.0 billion, up 29.5 per cent, reflecting the inclusion of Germany and Iberia during the last part of the second quarter. Pro forma comparable operating expenses were €1.4 billion, down 2.0 per cent, or down 0.5 per cent on a pro forma, comparable and fx-neutral basis. This includes the early benefits of restructuring, the impact of a modest decline in volume, incremental expense associated with a supply chain disruption, incremental expense for the Euro 2016 marketing programme and a continued focus on managing operating expenses.

For 2016, CCEP expects revenue to be flat with operating profit growth in a modest mid-single-digit range and diluted earnings per share in a mid-teen range, all on a comparable and fx-neutral basis. In addition to operating profit growth, full-year 2016 diluted earnings per share growth is benefiting from differences in interest and tax rates between pro forma comparable 2015 figures and our 2016 outlook. Based on recent rates, currency translation would negatively impact full-year 2016 diluted earnings per share by approximately €0.07.

Weighted average cost of debt is expected to be approximately 2 per cent and the comparable effective tax rate for 2016 is expected to be between 24 per cent and 26 per cent. Year-end 2016 net debt to EBITDA is expected to be just over 3 times. CCEP does not expect to repurchase shares in 2016.


The CCEP Board of Directors today authorised the Company’s first dividend since the Company’s inception in May of this year. In line with its commitment to deliver long-term value to shareholders, and the Company’s prior commitment to have an initial dividend pay-out ratio of 30 per cent to 40 per cent of profit after taxes, the Board has approved an initial quarterly dividend of €0.17, equivalent to an annualised dividend of €0.68 per share. The dividend will be paid 17 October 2016 to those shareholders of record on 3 October 2016. The Company is pursuing arrangements to pay the dividend in euros to shares held within the Euroclear Netherlands. Other publicly held shares will be converted into an equivalent US dollar amount using exchange rates issued by WM/Reuters taken at 16:00 BST on 22 September 2016. This translated amount will be posted on our website,, under the Investor/Shareowner Information section.

CCEP is committed to providing regular returns to shareholders through quarterly dividends. The Board is also committed to supporting CCEP’s strategy to achieve long-term, profitable growth whilst maintaining an efficient and optimal capital structure. Through disciplined investment and a continued focus on free cash flow growth, CCEP targets long-term, mid-to-high single-digit EPS growth and an increase in return on invested capital (ROIC) of 20 basis points or more annually.

Fuente: Seeking Alpha

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