Coca-Cola Europacific Partners(CCEP) - 2023 Q1 - Quarterly Report

FORM 6-K Filing Information Details the Form 6-K report filed by Coca-Cola Europacific Partners plc for Q1 2023 Details of the Filing This document is a Form 6-K report filed by Coca-Cola Europacific Partners plc with the United States Securities and Exchange Commission for the period ending March 31, 2023, indicating it is a report of a foreign private issuer - The filing is a Form 6-K report for Coca-Cola Europacific Partners plc, covering the period ending March 31, 2023[1][32] - The company's principal executive office is located at Pemberton House, Bakers Road, Uxbridge, UB8 1EZ, United Kingdom[38] Company Overview and Q1 2023 Performance Summary Summarizes the company's Q1 2023 performance, including CEO insights, financial highlights, and operational achievements CEO Statement and Business Outlook Damian Gammell, CEO, reported an encouraging start to the year with solid top-line growth, driven by strong in-market execution, recovery in the away-from-home channel, and effective revenue growth management. The company confidently reaffirmed its full-year 2023 guidance, emphasizing profitable revenue growth, solid free cash flow, and continued shareholder value - CEO Damian Gammell stated an encouraging start to the year with solid top-line growth, driven by consumer demand for leading brands and effective revenue growth management[39] - The company reaffirmed its full-year 2023 guidance, focusing on profitable revenue growth, solid free cash flow, and delivering continued shareholder value[4] Q1 2023 Key Financial Highlights Coca-Cola Europacific Partners (CCEP) reported a strong Q1 2023 with comparable volume growth of 4.0% and revenue per unit case increasing by 10.0%. Total revenue reached €4,154 million, reflecting a 12.0% reported growth and 14.0% on an Fx-neutral basis Q1 2023 Key Financial Highlights | Metric | CCEP (€ million) | Europe (€ million) | API (€ million) | | :----------------------------------- | :--------------- | :----------------- | :-------------- | | Revenue | 4,154 | 3,145 | 1,009 | | Q1 2023 Volume (million unit cases) | 768 | 590 | 178 | | Revenue per Unit Case (€) | 5.50 | 5.42 | 5.77 | | Comparable Volume Change | 4.0% | 5.0% | 0.0% | | Revenue per Unit Case Change | 10.0% | 8.5% | 13.5% | | vs 2022 Fx-neutral Revenue | 14.0% | 14.0% | 13.5% | | Reported Revenue Change | 12.0% | 12.0% | 11.5% | - Q1 reported revenue grew by 12.0%, and Fx-neutral revenue grew by 14.0%[36] Q1 2023 Operational Highlights CCEP achieved significant revenue growth for retail customers in Europe and NARTD in Australia & New Zealand, gaining value share in both in-store and online channels. Comparable volume increased by 4.0%, driven by strong in-market execution and demand, particularly in the Away from Home (AFH) channel (+5.5%). Revenue per unit case rose by 10.0% due to positive pricing and favorable pack & channel mix - Continued to deliver the largest revenue growth YTD for retail customers within FMCG in Europe and NARTD in Australia & New Zealand[6] - NARTD YTD value share gains across measured channels: in-store (+10 basis points) and online (+40 basis points)[6] - Comparable volume increased by 4.0% (Europe: +5.0%; API: flat), reflecting solid in-market execution and underlying demand, with Away from Home (AFH) channel volume up 5.5%[6] - Revenue per unit case grew by 10.0%, driven by positive headline price across all markets and favorable pack & channel mix, led by the recovery of the AFH channel[6] FY23 Financial Guidance Reaffirms the company's full-year 2023 financial outlook and dividend policy Full-Year 2023 Outlook CCEP reaffirmed its FY23 guidance on a comparable and Fx-neutral basis, projecting revenue growth of 6-8% and operating profit growth of 6-7%. The company anticipates commodity inflation of approximately 10% and maintains a strong hedge coverage of ~90%. Free cash flow is expected to be at least €1.6 billion FY23 Guidance (Comparable & Fx-neutral) | Metric | Guidance (unchanged) | | :-------------------------- | :------------------- | | Revenue Growth | 6-8% | | Cost of Sales per Unit Case | ~8% growth | | Operating Profit Growth | 6-7% | | Comparable Effective Tax Rate | ~23% | | Capital Expenditure | 4-5% of revenue | | Free Cash Flow | at least €1.6 billion| - Commodity inflation is expected to be up ~10%, with FY23 hedge coverage at ~90% and low overall FX transactional exposure (<10%)[8] - Continued focus on delivering efficiency programmes and discretionary spend optimisation[8] Dividend Policy The company declared a first-half interim dividend of €0.67 per share, calculated as 40% of the full-year 2022 dividend, and reaffirmed its FY23 guidance for an annualised total dividend payout ratio of approximately 50% - Declared a first-half interim dividend per share of €0.67, representing 40% of the full-year 2022 dividend[37] - Reaffirmed FY23 guidance for an annualised total dividend payout ratio of approximately 50%[9][37] Detailed First Quarter Performance Analysis Analyzes Q1 revenue and volume performance across geographies and beverage categories Revenue Performance by Geography CCEP's total revenue grew by 12.0% (14.0% Fx-neutral) in Q1 2023, with Europe contributing €3,145 million and API contributing €1,009 million. Iberia and Germany showed the strongest Fx-neutral revenue growth at 20.5% and 17.5% respectively, driven by favorable pricing and recovery in the Away from Home channel First Quarter Revenue Performance by Geography (Unaudited, € million) | Geography | Q1 Revenue (€ million) | % Change | Fx-neutral % Change | | :-------------- | :--------------------- | :------- | :------------------ | | Great Britain | 689 | 4.5 % | 10.5 % | | France | 535 | 15.5 % | 15.5 % | | Germany | 659 | 17.5 % | 17.5 % | | Iberia | 655 | 20.5 % | 20.5 % | | Northern Europe | 607 | 4.5 % | 7.5 % | | Total Europe | 3,145 | 12.0 % | 14.0 % | | API | 1,009 | 11.5 % | 13.5 % | | Total CCEP | 4,154 | 12.0 % | 14.0 % | Total Europe Revenue Performance Europe's revenue growth reflects trading momentum, AFH recovery, favorable pricing, and positive brand mix - Total Europe revenue grew by 12.0% (14.0% Fx-neutral), with volume growth reflecting continued trading momentum in both channels and recovery of the AFH channel[11] - Revenue per unit case growth was driven by favorable underlying price from annualization of last year's headline price increases and further headline price implemented in Q1 2023, along with positive brand mix[11] API Revenue Performance API's revenue growth is driven by strong trading, favorable pricing, and positive pack & channel mix - API revenue grew by 11.5% (13.5% Fx-neutral), with flat volume reflecting strong trading in Australia & New Zealand offset by strategic SKU rationalisation in Indonesia[11] - Revenue per unit case growth was driven by favorable underlying price in all markets, promotional optimization in Australia, and positive pack & channel mix from the recovery of the AFH channel[11] Specific European Markets Revenue Performance Iberia and Germany led European revenue growth due to pricing and Away from Home channel recovery - Iberia and Germany showed the highest Fx-neutral revenue growth at 20.5% and 17.5% respectively, largely due to favorable underlying pricing and AFH channel recovery[11] - Great Britain and Northern Europe reported lower Fx-neutral revenue growth at 10.5% and 7.5% respectively, with Great Britain's volume growth reflecting continued trading momentum and Northern Europe's volume growth reflecting AFH channel recovery[11] Volume Performance by Category Overall comparable volume grew by 4.0% in Q1 2023. Sparkling beverages, representing 85.0% of total volume, grew by 4.5%, with Coca-Cola® and Flavours, Mixers & Energy categories performing well. Stills declined by 1.5%, primarily due to a 3.5% decrease in RTD Tea, RTD Coffee, Juices & Other, despite growth in Hydration First Quarter Volume Performance by Category (Unaudited) | Category | % of Total | Q1 % Change | | :------------------------------------- | :--------- | :---------- | | Sparkling | 85.0 | 4.5 % | | Coca-Cola® | 58.5 | 4.5 % | | Flavours, Mixers & Energy | 26.5 | 5.0 % | | Stills | 15.0 | (1.5)% | | Hydration | 7.5 | 0.5 % | | RTD Tea, RTD Coffee, Juices & Other | 7.5 | (3.5)% | | Total | 100.0 | 4.0 % | Sparkling Category Performance Sparkling beverages, including Coca-Cola® and Energy, showed robust volume growth - Coca-Cola® volume grew by 4.5%, driven by Original Taste (+5.5%) and Lights (+3.0%), with Coca-Cola Zero Sugar achieving 8.0% growth and gaining 20 basis points of total Cola value share[19] - Flavours, Mixers & Energy volume increased by 5.0%, with Fanta growing 6.5% and Energy (led by Monster) growing 15.0%[13] Stills Category Performance Stills volume declined, with Hydration growth offset by decreases in RTD Tea, Coffee, Juices & Other - Hydration volume grew by 0.5%, with strong performance in Sports (+14.5%) led by Aquarius and Powerade, offsetting a 5.0% decline in Water due to strategic exits and SKU rationalization[49] - RTD Tea, RTD Coffee, Juices & Other declined by 3.5%, primarily due to an 8.0% decrease in Juice drinks from Indonesia SKU rationalization, partially offset by RTD Tea growth (+2.0%) led by Fuze Tea and Nestea in Europe[14] Corporate Information and Disclosures Covers interim dividend, innovation, sustainability, investor relations, company profile, and disclosures Interim Dividend Declaration The CCEP Board of Directors declared a first-half interim dividend of €0.67 per share, payable on May 25, 2023, to shareholders of record on May 12, 2023. The dividend will be paid in euros to holders on Euronext Amsterdam, Spanish Stock Exchanges, and London Stock Exchange, with other publicly held shares converted to USD - The CCEP Board of Directors declared a first-half interim dividend of €0.67 per share[50] - The interim dividend is payable on May 25, 2023, to shareholders of record on May 12, 2023[50] - Dividends will be paid in euros for shares on Euronext Amsterdam, Spanish Stock Exchanges, and London Stock Exchange, while other publicly held shares will be converted to an equivalent US dollar amount[50] Innovation and Sustainability Highlights CCEP highlighted innovation in NARTD with new Monster Juice & Ultra flavors and Schweppes mixers, and in ARTD with the launch of Jack Daniel's & Coca-Cola RTD. Sustainability efforts included retaining inclusion on Carbon Disclosure Project's A List for Supplier Engagement, recognition as a Europe's Climate Leader, joining the UN Global Compact's 'Open Call to Accelerate Action on Water', and progress on a second PET recycling facility in Australia - Innovation highlights include new Monster Juice & Ultra flavour extensions, What the Fanta Purple in Europe, Schweppes Melon Watermelon & Peach Coconut Soda Mixers in GB, and Jack Daniel's & Coca-Cola ready-to-drink (RTD) launched in GB & the Netherlands[42] - Sustainability achievements include retaining inclusion on Carbon Disclosure Project's A List for Supplier Engagement for the fifth consecutive year and recognition as a Europe's Climate Leader for the third time[42] - Joined 'Open Call to Accelerate Action on Water' from the United Nations Global Compact and is on track to open a second industry partnership PET recycling facility in Australia, aiming to recycle the equivalent of 2 billion PET bottles annually[42] Conference Call and Investor Relations A conference call was held on April 25, 2023, with replay and transcript available on the company's website. Contact information for Investor Relations and Media Relations personnel is provided - A conference call was held on April 25, 2023, at 12:00 BST, 13:00 CEST & 7:00 a.m. EDT, accessible via www.cocacolaep.com, where replay and transcript will be available[15][50] - Contact details for Investor Relations (Sarah Willett, Claire Michael, Claire Copps, Awais Khan) and Media Relations (Shanna Wendt, Nick Carter) are provided[16] About Coca-Cola Europacific Partners Coca-Cola Europacific Partners is a leading global consumer goods company that manufactures, moves, and sells popular brands, serving 600 million consumers and 2 million customers across 29 countries. The company is listed on Euronext Amsterdam, NASDAQ Global Select Market, London Stock Exchange, and Spanish Stock Exchanges under the symbol CCEP - Coca-Cola Europacific Partners is one of the world's leading consumer goods companies, serving 600 million consumers and 2 million customers across 29 countries[51] - The company is listed on Euronext Amsterdam, the NASDAQ Global Select Market, London Stock Exchange, and the Spanish Stock Exchanges, trading under the symbol CCEP[20] Forward-Looking Statements This document contains forward-looking statements subject to various risks that could cause actual results to differ materially from projections. These risks include the ongoing impact of COVID-19, global economic conditions (inflation, recession), global supply chain issues (including geopolitical tensions and war in Ukraine), potential global energy crises, and water use reductions due to regulations - Forward-looking statements are subject to risks that could cause actual results to differ materially from expectations, and undue reliance should not be placed on them[18][22] - Key risks include the impact of COVID-19, global economic conditions (inflation, recession, price elasticity), global supply chain issues (war in Ukraine, geopolitical tension, raw material supply), potential global energy crisis, and water use reductions due to regulations[23][54] - CCEP does not undertake any obligation to publicly update or revise any forward-looking statements, except as required by applicable rules, laws, and regulations[54] Note Regarding Alternative Performance Measures CCEP uses certain alternative performance measures (non-GAAP) to evaluate and report performance, believing they provide useful information to investors. These measures exclude items impacting comparability, such as restructuring charges and acquisition-related costs. Key definitions include 'Comparable' (excluding comparability items and adjusted for selling days), 'Fx-neutral' (excluding foreign exchange rate changes), 'Capex' (purchases of property, plant and equipment, and capitalized software), 'Free cash flow' (net cash flows from operating activities less capital expenditures and interest paid), and 'Dividend payout ratio' (dividends as a proportion of comparable profit after tax) - Alternative performance measures (non-GAAP) are used to make financial, operating, and planning decisions and to evaluate and report performance, providing useful information to investors[25][55] - Key definitions include 'Comparable' (excluding items impacting comparability), 'Fx-neutral' (excluding foreign exchange rate changes), 'Capex' (purchases of property, plant and equipment and capitalised software), 'Free cash flow' (net cash flows from operating activities less capital expenditures and interest paid), and 'Dividend payout ratio' (dividends as a proportion of comparable profit after tax)[25][26][56][57] - Forward-looking non-GAAP measures cannot be reconciled to reported measures without unreasonable efforts due to the unpredictability of comparability impacts[27] Supplemental Financial Information Supplemental financial information provides a reconciliation of reported to comparable and Fx-neutral revenue for CCEP, Europe, and API for the first quarter ended March 31, 2023. CCEP's reported revenue of €4,154 million adjusted to €4,225 million on an Fx-neutral basis, representing a 14.0% increase CCEP Revenue Reconciliation (First-Quarter Ended) | Metric | 31 March 2023 (€ million) | 1 April 2022 (€ million) | % Change | | :----------------------------------- | :------------------------ | :----------------------- | :------- | | As reported and comparable | 4,154 | 3,709 | 12.0 % | | Adjust: Impact of Fx changes | 71 | n/a | n/a | | Comparable and Fx-neutral | 4,225 | 3,709 | 14.0 % | | Revenue per Unit Case (€) | 5.50 | 5.01 | 10.0 % | Europe Revenue Reconciliation (First-Quarter Ended) | Metric | 31 March 2023 (€ million) | 1 April 2022 (€ million) | % Change | | :----------------------------------- | :------------------------ | :----------------------- | :------- | | As reported and comparable | 3,145 | 2,805 | 12.0 % | | Adjust: Impact of Fx changes | 56 | n/a | n/a | | Comparable and Fx-neutral | 3,201 | 2,805 | 14.0 % | | Revenue per Unit Case (€) | 5.42 | 4.99 | 8.5 % | API Revenue Reconciliation (First-Quarter Ended) | Metric | 31 March 2023 (€ million) | 1 April 2022 (€ million) | % Change | | :----------------------------------- | :------------------------ | :----------------------- | :------- | | As reported and comparable | 1,009 | 904 | 11.5 % | | Adjust: Impact of Fx changes | 15 | n/a | n/a | | Comparable and Fx-neutral | 1,024 | 904 | 13.5 % | | Revenue per Unit Case (€) | 5.77 | 5.09 | 13.5 % | Signature Confirms the official signing of the report by the Chief Financial Officer Report Sign-off The report was duly signed on behalf of Coca-Cola Europacific Partners plc by Manik Jhangiani, Chief Financial Officer, on April 25, 2023, pursuant to the requirements of the Securities Exchange Act of 1934 - The report was signed by Manik Jhangiani, Chief Financial Officer of Coca-Cola Europacific Partners plc, on April 25, 2023[31]