LONDON (Alliance News) - Coca-Cola HBC AG, the second largest bottler of the brands of The Coca-Cola Co, said Friday its full-year expectations for the year ahead remain unchanged, despite a challenging first quarter, which saw a drop in both volume and sales and an increase in losses.
For the three months to March 28, the FTSE 100 group's net loss widened to EUR39.2 million, compared with EUR24.4 million last year, hit by volume declines and what it said were "adverse foreign exchange movements" in the period.
Net sales revenue fell 7.0% to EUR1.33 billion from EUR1.43 billion a year earlier, as volume fell by 4.0% to 409.6 million unit cases, from 426.7 million last year.
It said that volume declines due to Easter phasing, "value-accretive" volume initiatives and country-specific issues were partially offset by continued solid growth in Russia.
"This quarter, Easter phasing and other timing issues combined with one-off items in some of our major markets has resulted in weak performance. Given the seasonality of our business, the first quarter is typically small and therefore, not indicative of our expected full-year performance," said Chief Executive Dimitris Lois in a statement.
Net sales revenues per unit case fell by 3.3% to EUR3.25 in the quarter, down from EUR3.36 a year earlier, but improved 2% in currency-neutral terms.
The group said that an "action plan" is now underway to fully mitigate the incremental impact of higher-than-expected foreign exchange movements for the year.
"While the challenging trading conditions persist in most of our territories, our expectations for the full-year remain unchanged," Lois added.
Coca-Cola HBC said it either gained or maintained market share in volume and value in 15 markets in sparkling beverages in the first quarter.
"Specific market and timing issues in Italy, Romania and Poland were the main drivers of the 6% decline in sparkling beverages, where we are cycling 2% growth," the company said.
Coca-Cola HBS said that emerging markets were stable overall in the quarter, but while Russia saw strong growth, consumption in Ukraine and Nigeria suffered.
Established markets had a slow start to the year, it said, held back by the later timing of Easter in a number of countries. It said the main driver of the 7% decline in this segment was Italy.
Volume in developing markets declined by 9% in the quarter, reflecting underlying market weakness in sparkling beverages and its strategic decision to focus on more-profitable volume in Poland and the Czech Republic.
During the first quarter, the group said it booked around EUR7 million in pre-tax restructuring charges in line with the prior year, as it continues with its restructuring plans for the year ahead, which it said it expects will create a more agile and efficient organisation.
"For 2014, we have identified restructuring initiatives of approximately EUR35 million. We expect these initiatives to yield EUR25 million in annualised benefits from 2015 onwards, while the initiatives already taken in 2013 and those that we will take in 2014 are expected to yield approximately EUR33 million of total benefits in 2014," the company said.
Shares were up 0.5% at 1,454.00 pence Friday morning.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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Coca-Cola HBC (CCH)