Solid Start to 2017 and On-Track to Deliver
Full-Year Outlook
Regulatory News:
Coca-Cola European Partners plc (CCEP) (ticker symbol: CCE)
today announces its interim results for the first quarter ended 31
March 2017, and affirms its full-year 2017 outlook.
Highlights
- First-quarter diluted earnings per
share were €0.30 on a reported basis or €0.31 on a comparable
basis, including a negative currency translation impact of
€0.01.
- First-quarter reported revenue
totalled €2.4 billion, down 0.5 percent on a comparable basis or up
1.5 percent on a comparable and fx-neutral basis. Volume grew 0.5
percent on a comparable basis.
- First-quarter reported operating
profit was €219 million; comparable operating profit was €228
million, up 11.0 percent on a comparable basis, or up 15.0 percent
on a comparable and fx-neutral basis.
- CCEP affirms its full-year guidance
for 2017 including comparable and fx-neutral diluted earnings per
share growth in a high single-digit range when compared to the 2016
comparable results; at recent rates, currency translation would
reduce diluted earnings per share by approximately 1.0
percent.
- CCEP remains on track to achieve
pre-tax savings of €315 million to €340 million through synergies
by mid-2019.
- CCEP declares quarterly dividend of
€0.21 per share.
“Our first-quarter results are a solid start to the year,
reflecting our focus on improving field level execution while
winning with customers through increasing the value proposition of
our portfolio for consumers,” said Damian Gammell, Chief Executive
Officer. “While we are pleased with these results and our continued
progress in the integration of our business, the first quarter is
our smallest, and to reach our full-year targets we must execute
our marketing and operating plans in the key summer selling
season.
“In addition, we must continue to achieve operating synergies,
creating a platform for core business growth and long-term value
creation,” Mr. Gammell said. “Ultimately, our goal remains to drive
stakeholder and importantly, shareowner value.”
Key Financial Measures
Unaudited, fx impact calculated by
recasting current year results at prior year rates
First-Quarter Ended 31 March 2017 € million
% change
AsReported
Comparable Fx-Impact
AsReported
Comparable Fx-Impact
ComparableFx-Neutral
Revenue 2,382 2,382 (42 ) 73.0 % (0.5 )%
(2.0 )% 1.5 % Cost of sales 1,468 1,479 (25 ) 69.5 %
1.0 % (2.0 )% 3.0 % Operating expenses 695 675 (9 ) 72.5 % (6.5 )%
(1.5 )% (5.0 )% Operating profit 219 228 (8 ) 108.5 % 11.0 % (4.0
)% 15.0 % Profit after taxes 147 152 (6 ) 149.0 % 15.0 % (4.5 )%
19.5 % Diluted earnings per share (€) 0.30
0.31 (0.01 ) 20.0 % 15.0 % (3.5
)% 18.5 %
Operational Review
CCEP reported first-quarter 2017 diluted earnings per share of
€0.30 or €0.31 on a comparable basis. Currency translation had a
negative impact of approximately €0.01 on first-quarter comparable
diluted earnings per share. Reported operating profit totalled €219
million, up 108.5 percent versus prior year driven by the inclusion
of Germany, Iberia and Iceland. Comparable operating profit was
€228 million, up 11.0 percent on a comparable basis, or up 15.0
percent on a comparable and fx-neutral basis.
Key operating profit factors in the quarter included modest
revenue growth compared to prior year revenue declines, modest
gross margin declines as revenue per unit case partially offset
increases in costs of sales per unit case driven in-part by
one-time items, ongoing operating expense management, post-merger
synergy benefits, and one fewer selling day in the first quarter
versus prior year.
Revenue
First-quarter 2017 reported revenue totalled €2.4 billion, up
73.0 percent, driven by the inclusion of Germany, Iberia and
Iceland versus prior year. Comparable revenue was down 0.5
percent, or up 1.5 percent on a comparable and fx-neutral basis.
Revenue per unit case was up 2.5 percent on a comparable and
fx-neutral basis driven by promotional timing, price increases, and
favourable mix.
On a territory basis, all revenue growth figures for the first
quarter of 2017 reflect one less selling day when compared to the
first quarter of 2016. Iberia revenues were flat, benefiting from
strong growth of Coca-Cola Zero Sugar and the addition of Monster
brands, with revenue per unit case growth offsetting volume
declines as improvements in local market conditions led to
favourable channel mix. Revenue in Germany declined 2.5 percent,
with revenue per unit case growth driven by the impact of pricing
and promotional plans and favourable package mix, all partially
offset by volume declines. Great Britain revenues were down
6.5 percent, driven by an almost 11.0 percent decline of the
British pound versus the Euro, partially offset by modest gains in
revenue per unit case and solid volume growth driven in part by
volume recovery when compared to prior year when there was an
adverse supply chain challenge. Revenue in France was down 0.5
percent, with favourable price/mix and modest volume declines
driven by promotional timing. Revenue in the Northern European
territories (Belgium, Luxembourg, the Netherlands, Norway, Sweden,
and Iceland) was up 7.0 percent, benefiting 3.5 percent from the
inclusion of Iceland, 1.5 percent from currency translation, and
2.0 percent growth in previously existing territories.
After adjusting for one fewer selling day, first-quarter volume
grew 0.5 percent versus prior year. This was driven in part by the
benefits of brand innovation, including 16.0 percent growth in
Coca-Cola Zero Sugar and 21.0 percent growth in energy brands led
by Monster through new flavours and territory
expansion. Sparkling brands were flat. Coca-Cola trademark
brands declined 0.5 percent, as growth in Coca-Cola Zero Sugar was
offset by declines in other trademark brands. Sparkling flavours
and energy grew 1.5 percent led by strong growth in Monster. Still
brands grew 3.5 percent, with water brands up 1.0 percent and
juices, isotonics and other up 5.0 percent driven in part by the
inclusion of Iceland.
Cost of Sales
First-quarter 2017 reported cost of sales were €1.5 billion, up
69.5 percent, driven by the inclusion of Germany, Iberia and
Iceland versus prior year. Comparable cost of sales were €1.5
billion, up 1.0 percent on a comparable basis, or up 3.0 percent on
a comparable and fx-neutral basis.
First-quarter cost of sales per unit case increased 3.5 percent
on a comparable and fx-neutral basis. This was driven primarily by
one-time factors that were adverse in the first quarter of 2017 and
favourable in first-quarter 2016. On a full-year comparable and
fx-neutral basis for 2017, we now expect cost of sales per unit
case to be at the high end of the previously stated range of 1.0
percent to 1.5 percent, driven by year-over-year cost increases in
key inputs, principally concentrate, PET, and sugar, partially
offset by benefits from our cost reduction programmes.
Operating Expense
First-quarter 2017 reported operating expenses were €695
million, up 72.5 percent, driven by the inclusion of Germany,
Iberia and Iceland versus prior year. Comparable operating expenses
were €675 million, down 6.5 percent on a comparable basis, or down
5.0 percent on a comparable and fx-neutral basis. This decline
was driven by synergy benefits, a continued focus on managing
operating expenses, the impact of a modest decline in reported
volume in the quarter as a result of one fewer selling day, and
cycling last year’s increased costs associated with the supply
chain disruption in Great Britain.
Outlook
For 2017, CCEP affirms prior guidance, including expectations of
modest low single-digit revenue growth, with operating profit and
diluted earnings per share growth to be up high single-digits.
Excluding synergies, CCEP expects core operating profit growth to
modestly exceed revenue growth. Each of these growth figures are on
a comparable and fx-neutral basis when compared to the 2016
comparable results. At recent rates, currency translation would
reduce 2017 full-year diluted earnings per share by approximately
1.0 percent.
CCEP expects 2017 free cash flow in a range of €700 million to
€800 million, including the expected benefit from improved working
capital offset by the impact of restructuring and integration costs
(note: free cash flow is defined as net cash flows from operations,
less capital expenditures and interest paid, plus proceeds from
capital disposals). Capital expenditures are expected to be in a
range of €575 million to €625 million, including €75 million to
€100 million of capital expenditures related to synergies.
Weighted-average cost of debt is expected to be approximately 2.0
percent. The comparable effective tax rate for 2017 is expected to
be in a range of 24 percent to 26 percent. CCEP does not expect to
repurchase shares in 2017.
CCEP remains on track to achieve pre-tax run-rate savings of
€315 million to €340 million through synergies by mid-2019.
Further, CCEP expects to exit 2017 with run-rate savings of
approximately one-half of the target. Restructuring cash costs to
achieve these synergies are expected to be approximately 2 1/4
times expected savings and includes cash costs associated with
pre-transaction close accruals. Given these factors, currency
exchange rates, and our outlook for 2017, CCEP expects year-end net
debt to EBITDA for 2017 to be under 3 times.
Dividends
The CCEP Board of Directors declared a regular quarterly
dividend of €0.21 per share. The dividend is payable 5 June 2017 to
those shareholders of record on 22 May 2017. The Company is
pursuing arrangements to pay the dividend in euros to shares held
within Euroclear Netherlands. Other publicly held shares will be
converted into an equivalent US dollar amount using exchange rates
issued by WM/Reuters taken at 16:00 BST on 5 May 2017. This
translated amount will be posted on our website, www.ccep.com,
under the Investor/Shareowner Information section.
Conference Call
CCEP will host a conference call with investors and analysts
today at 15:00 BST, 16:00 CEST and 10:00 a.m. EDT. The call can be
accessed through the Company’s website at www.ccep.com.
Financial Details
Financial details can be found in our full first-quarter 2017
filing, available within the next 24 hours at
www.morningstar.co.uk/uk/NSM (located under effective date 31 March
2017) and available immediately on our website, www.ccep.com, under
the Investors tab.
About CCEP
Coca-Cola European Partners plc (CCEP) is a leading consumer
goods company in Europe, selling, making and distributing an
extensive range of nonalcoholic ready-to-drink beverages and is the
world’s largest independent Coca-Cola bottler based on revenue.
Coca-Cola European Partners serves a consumer population of over
300 million across Western Europe, including Andorra, Belgium,
continental France, Germany, Great Britain, Iceland, Luxembourg,
Monaco, the Netherlands, Norway, Portugal, Spain and Sweden. The
Company is listed on Euronext Amsterdam, the New York Stock
Exchange, Euronext London and on the Spanish stock exchanges, and
trades under the symbol CCE. For more information about CCEP,
please visit our website at www.ccep.com and follow CCEP on Twitter
at @CocaColaEP.
Forward-Looking Statements
This document may contain statements, estimates or projections
that constitute “forward-looking statements”. Generally, the words
“believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,”
“plan,” “seek,” “may,” “could,” “would,” “should,” “might,” “will,”
“forecast,” “outlook,” “guidance,” “possible,” “potential,”
“predict” and similar expressions identify forward-looking
statements, which generally are not historical in nature.
Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from Coca-Cola European Partners plc’s (“CCEP”) historical
experience and its present expectations or projections. These risks
include, but are not limited to, obesity concerns; water scarcity
and poor quality; evolving consumer preferences; increased
competition and capabilities in the marketplace; product safety and
quality concerns; perceived negative health consequences of certain
ingredients, such as non-nutritive sweeteners and
biotechnology-derived substances, and of other substances present
in their beverage products or packaging materials; increased demand
for food products and decreased agricultural productivity; changes
in the retail landscape or the loss of key retail or foodservice
customers; fluctuations in foreign currency exchange rates;
interest rate increases; an inability to maintain good
relationships with its partners; a deterioration in its partners’
financial condition; increases in income tax rates, changes in
income tax laws or unfavourable resolution of tax matters;
increased or new indirect taxes in its tax jurisdictions; increased
cost, disruption of supply or shortage of energy or fuels;
increased cost, disruption of supply or shortage of ingredients,
other raw materials or packaging materials; changes in laws and
regulations relating to beverage containers and packaging;
significant additional labeling or warning requirements or
limitations on the availability of its respective products; an
inability to protect its respective information systems against
service interruption, misappropriation of data or breaches of
security; unfavourable general economic or political conditions in
the United States, Europe or elsewhere; litigation or legal
proceedings; adverse weather conditions; climate change; damage to
its respective brand images and corporate reputation from negative
publicity, even if unwarranted, related to product safety or
quality, human and workplace rights, obesity or other issues;
changes in, or failure to comply with, the laws and regulations
applicable to its respective products or business operations;
changes in accounting standards; an inability to achieve its
respective overall long-term growth objectives; deterioration of
global credit market conditions; default by or failure of one or
more of its respective counterparty financial institutions; an
inability to timely implement their previously announced actions to
reinvigorate growth, or to realise the economic benefits it
anticipates from these actions; failure to realise a significant
portion of the anticipated benefits of its respective strategic
relationships, including (without limitation) The Coca-Cola
Company’s relationship with Monster Beverage Corporation; an
inability to renew collective bargaining agreements on satisfactory
terms, or it or its respective partners experience strikes, work
stoppages or labour unrest; future impairment charges; an inability
to successfully manage the possible negative consequences of its
respective productivity initiatives; global or regional
catastrophic events; and other risks discussed in the 2016 Annual
Report on Form 20-F, published on 12 April 2017. You should not
place undue reliance on forward-looking statements, which speak
only as of the date they are made. CCEP does not undertake any
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise. CCEP assumes no responsibility for the accuracy and
completeness of any forward-looking statements. Any or all of the
forward-looking statements contained in this filing and in any
other of its public statements may prove to be incorrect.
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version on businesswire.com: http://www.businesswire.com/news/home/20170504005722/en/
Coca-Cola European Partners plcInvestor RelationsThor Erickson,
+1-678-260-3110orMedia RelationsRos Hunt, +44 (0) 7528 251 022
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