Coca-Cola HBC profits dive as Russia exit costs bottler £161m


Coca-Cola HBC profits dive as Russia exit costs bottler £161m – but shares rise on expectations of a bumper second half

  • The Swiss-based group revealed that first-half net profits declined by 34.4%
  • All production and sales of Coca-Cola company brands in Russia has stopped
  • HBC boosted its net sales revenue across emerging markets by more than a third

Coca-Cola HBC has seen earnings tumble by about a third following its decision to drastically scale back its operations in Russia.

The London-listed group revealed that first-half net profits declined by 34.4 per cent to €152.9million even as total sales exceeded forecasts on the back of price hikes and stronger demand in emerging markets.

The anchor bottler incurred €190million (£161million) in impairment charges during the opening six months of the year, mostly concerning its Russian business, and it expects a further €82million hit in the second half.

 Earnings: Swiss-based Coca-Cola HBC revealed that first-half net profits declined by 34.4 per cent to €152.9million even as total sales exceeded forecasts

All production and sales of Coca-Cola company brands in Russia has been stopped due to its full-scale invasion of Ukraine, which has resulted in trade dropping significantly across both countries.

Last week, HBC said it would have a much leaner operation in Russia going forward that will sell local soft drinks brands, such as Dobry, Rich and Moya Semya.

Despite the financial impacts of the Ukraine War, the FTSE 100 firm still managed to boost its net sales revenue across emerging markets by more than a third, or 14.2 per cent on an organic basis.

It attributed the expansion to higher pricing, stronger Russian rouble and Nigerian naira currencies, as well as the acquisition of a majority stake in the Cola Bottling Company of Egypt.

The group’s developing and established markets also performed well thanks to increases in both volumes and prices, with revenues jumping by at least a fifth in Poland, Hungary and the Czech Republic.

Demand for HBC’s sparkling and still products only rose modestly, but roaring trade at Costa Coffee outlets, many of which were forced to temporarily close last year, helped volumes in its coffee division surge by over 50 per cent.

Meanwhile, volumes of the firm’s energy drinks, which include Monster Energy and Predator, climbed by 18.6 per cent, following double-digit percentage growth in multiple territories, such as Nigeria, Italy and Greece.

Commenting on the company’s results, HBC chief executive Zoran Bogdanovic remarked: ‘I am pleased we achieved strong organic growth, balanced between volume and revenue per case.

‘Pricing, mix and cost efficiencies helped to mitigate input cost increases, underpinning successful conversion of revenue growth into profits and cashflow.’

The company has reinstated its annual guidance, with comparable operating profits of between €740million to 820million anticipated this year, ahead of market forecasts.

Coca-Cola HBC shares were 2.9 per cent higher at 20.38 during early afternoon trading on Thursday, although their value has fallen by around a quarter in the past 12 months.



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