CCEP profits from good weather in Europe with revenue up 11%

Coca-Cola European Partners (CCEP) posted an 11% increase in third-quarter revenue, as it benefitted from favourable weather and the strong performance of its Coca-Cola Zero Sugar beverage.

The firm, which is the world’s largest Coca-Cola bottler by revenue, saw sales rise to €3.29 billion for the quarter. Operating profit rose by 17.3% to €501 million.

Revenue in Great Britain grew 21%, in part due to improved promotional effectiveness and the good weather. Revenues in France and Germany rose by 10.5% and 11.5% respectively.

In Iberia, revenue was up 3.5%, led by strong volume growth in Portugal. However, volumes in Spain were negatively impacted by weaker tourism trends over the peak summer months.

On a brand basis for the third quarter, sparkling brands increased 5.5%. Coca-Cola trademark brands grew by 3.5%, with over 18% growth in Coca-Cola Zero Sugar. Coca-Cola Classic volume declined by approximately 1%, mainly due to the impact of new soft drinks industry taxes.

Sparkling flavours and energy grew 9.5% supported by solid performances from Fanta, Schweppes, Sprite and energy brands. Still brands increased 4%, underpinned by 9% growth in water as a result of favourable weather in most markets.

Brands such as Fuze Tea, Vio, Chaudfontaine and Smartwater all saw “solid volume growth” in the quarter.

CCEP CEO Damian Gammell said: “Our year-to-date results reflect our ongoing focus on driving profitable revenue growth through continued strong price and mix realisation and solid in-market execution. I am particularly pleased with how our teams across Great Britain, Germany and Northern Europe have embraced the positive challenges brought by great summer weather, although partially offset by softer trading in Spain and France.

“It is a fantastic time to be leading Coca-Cola European Partners, soon with a new CCEP ticker, and the world’s largest independent Coca-Cola bottler by net revenue. As we laid out at our recent Capital Markets Day, we have an exciting but realistic long-term view of the growth opportunity across our portfolio of markets. We continue to make the right strategic decisions for the long-term alongside investing now in core capabilities that will support our growth and set us apart to win.

“Given our solid performance year-to-date, we are reaffirming our 2018 profit outlook. We are on track to return up to €500 million to shareholders in 2018 as part of the recently announced €1.5 billion share buyback programme, which alongside moving to an annualised payout ratio of approximately 50% in Q4 2018, collectively demonstrate our ultimate goal of delivering sustainable value for our shareholders.”

For 2018, CCEP expects revenue growth of approximately 2% to 2.5% and operating profit growth at the top end of the 6% to 7% range.