DE4CC0DE-5FC3-4494-BCBF-4D50B00366B5

Coca-Cola HBC Sees Lower Margins After First-Half Profit Surges

By Steve Wynne-Jones
Share this article
Coca-Cola HBC Sees Lower Margins After First-Half Profit Surges

Soft drinks bottler Coca-Cola HBC AG has said that it expects lower margins in the second half due to higher costs and inflation, while reporting a jump in first-half profit as people returned to restaurants and cinemas after lockdowns.

The company, which bottles and sells Coca-Cola drinks in 28 countries, said comparable operating profit rose 67.8% to €350.3 million for the six months ended July 2.

In terms of its core focus areas, it said that sparkling volumes were up 16.2% in the period, with Adult sparkling up 37.0% and Low/no sugar up 40.3%. Energy drinks volumes were up 66.1%, driven by the performance of its Monster, Burn and Predator brands.

Strategic Focus

"We are seeing excellent performance from our areas of strategic focus – in particular Low- and no-sugar sparkling, Adult sparkling and Energy," Zoran Bogdanovic, chief executive said. "We have strengthened our Coffee strategy with Caffè Vergnano, which will add a premium offering alongside the broad appeal of Costa Coffee."

Bogdanovic added that the business has also "made progress" on its World Without Waste agenda, with the launch of 100% recycled PET packaged beverages.

ADVERTISEMENT

Coca-Cola HBC, which had managed to save about €120 million in operational spending in 2020 due to the pandemic, said it expects €100 million in costs to return in the second half. It recently announced plans to optimise its supply chain, alongside Blue Yonder.

Input Costs

Higher input costs-led inflation and a Polish sugar tax, which hurt company earnings in the region, are expected to have a negative impact on the bottler's margins, it said.

"We are encouraged by the strength of the performance," Bogdanovic added, "and while conscious of the risks as the COVID-19 pandemic continues to impact our markets, we continue to expect a strong recovery in FX-neutral revenues and now believe that we can achieve a 20-30bps EBIT margin expansion this year.”

News by Reuters, edited by ESM. For more A-Brands stories, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

Get the week's top grocery retail news

The most important stories from European grocery retail direct to your inbox every Thursday

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our terms & conditions and privacy policy. You can unsubscribe at any time.