Coca-Cola HBC shares fizz as anchor bottler reveals record profits

Coca-Cola Hellenic Bottling Company Shares rose on Wednesday after the group reported record annual profits for the third year in a row.

The London-listed anchor bottler, which sells Coca-Cola drinks in 29 countries, said comparable operating profits soared 16.6 percent to 1.08 billion euros (£920 million) in 2023.

Its organic net sales revenue rose 16.9 percent as the group initiated price increases in response to inflationary pressures and enjoyed much higher demand for its energy and coffee products.

The turnover growth was partially offset by adverse currency movements in the Russian ruble, Nigerian naira and Egyptian pound.

But the Switzerland-based company’s reported turnover still rose 10.7 percent to €10.2 billion thanks to strong results in established and developing markets and the consolidation of Russian company Multon Partners.

Following the release of its results, the group’s shares rose 5.8 per cent to £23.34 in early trading, making it the best performer in the FTSE 100 index. They have risen around 16 per cent. in the last 12 months.

Coca-Cola HBC expects much more modest levels of growth this year, including a 6 to 7 percent increase in organic revenue and a 3 to 9 percent increase in operating profit.

CEO Zoran Bogdanovic warned investors of a challenging “macroeconomic and geopolitical environment.”

But Bogdanovic said the group is “confident that we will continue to make progress towards our medium-term growth objectives.”

The company noted that cost pressures eased during the second half of 2023 as some commodities fell in price, bolstering its full-year comparable gross profit margin by 80 basis points.

Coca-Cola HBC has its origins in Nigeria in the 1950s, but the company began in its current form in 2000 following the merger of Coca-Cola Beverages and Hellenic Bottling Company.

The company packages and sells dozens of beverages, from Fanta and Sprite to Schweppes, Fuze tea, Dasani water and Monster Energy.

It has increasingly diversified into the premium spirits industry and recently purchased Brown-Forman Finland, owner of the Finland vodka brand.

Luxembourg company Kar-Tess controls the largest single stake in the group, followed by Coca-Cola itself, which holds a 21 percent stake.

On Tuesday, the soft drink giant reported that fourth-quarter organic revenue rose 12 percent to a better-than-expected $10.8 billion, driven by higher prices and unit case volume purchases.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: ‘The real secret formula to Coca-Cola’s success doesn’t lie in a vault. Rather, it is about successfully aligning your interests with those of your bottling partners.

‘The group achieves this by holding approximately 20 to 25 per cent of its largest bottlers, with a significant portion of the remaining shares typically owned by a single family.

“This ownership structure helps align the focus on long-term growth, with family equity owners naturally being more patient than typical public investors.”