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LONDON (Alliance News) - Coca-Cola HBC AG on Friday beat market expectations, reporting growth in profit in 2015 as volumes increased in all of the markets in which it operates, but revenue continued to be hit by unfavourable movements in foreign exchange rates, as anticipated.
The soft drinks bottling company made a pretax profit of EUR357.1 million in 2015, up from EUR352.0 million in 2014, despite net sales revenue slipping to EUR6.35 billion from EUR6.51 billion.
Shore Capital analyst Phil Carroll said pretax profit came in better than both Shore's and the market's expectations.
Coca-Cola HBC said volume grew 2.6% in the full year, following a 2.8% decline the prior year, as strong underlying trends continued into the fourth quarter, particularly in the sparkling, water and juice categories. Coca-Cola HBC also bottles other still drinks, such as energy and tea drinks.
Volume grew in each of the established, developing and emerging markets, by 1.0%, 5.7% and 2.5%, respectively.
Particularly good performances came from Italy and Greece in the established markets, driving the division to return to growth for the first time in five years. Poland and Hungary did well in the developing markets, helping this division to bounce back from a 6.0% decline in 2014. Nigeria, Romania and Ukraine performed strongly in the emerging markets division.
Coca-Cola HBC's business in Russia did suffer an anticipated single-digit decline in the emerging markets division. But Nigeria managed double-digit growth despite challenging economic conditions there. Romania and Ukraine also posted double-digit growth.
However, a 5.1% adverse foreign exchange rate impact led to the fall in net sales revenue, Coca-Cola HBC said, as a 7.9% decline in emerging markets revenue at actual currency rates offset increases of 1.5% and 3.6% in the established and developing markets, respectively.
Stripping out the impact of foreign exchange rate movements, currency-neutral net sales revenue per unit case would have been up 0.3% but declined 4.9% on a reported basis.
Mike van Dulken, head of Research at Accendo Markets, noted that the net sales decline shouldn't cause too much worry, given the return to growth in established markets, continued growth in developing markets and double-digit progress in several emerging market components despite weakness in key oil-reliant economies.
"Coca-Cola HBC are top of the pile this morning, back testing 2016 highs as investors welcome a better-than-expected set of full-year 2015 results," he said.
Shares in Coca-Cola HBC were trading up 2.8% at 1,412.00 pence on Friday morning, the best performer in the FTSE 100. The stock is well above its 52-week low of 1,086.00p but still short of its 52-week high of 1,638.00p.
Coca-Cola HBC will pay a dividend of EUR0.40 per share, which is an 11% increase on 2014.
"Conditions in Europe are slowly improving while countries with large oil exposure face ongoing difficult trading conditions. Going into 2016 we will continue to take action to address the challenges on a country by country basis. Overall we think the business is well placed to build further on both the volume growth and margin expansion achieved in 2015," Chief Executive Dimitris Lois said in a statement.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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