Coca-Cola HBC(US:CCHGY)2024-08-10 10:51Financial Data and Key Metrics Changes - Organic revenue increased by 13.6% in the first half of 2024, with organic volumes up 3.1% [5][12] - Organic EBIT grew by 7.5%, despite tough comparatives from 2023 [5][13] - Comparable gross profit expanded by 6%, with a 100 basis point expansion in gross profit margin [14] - Comparable earnings per share declined slightly to EUR 1.04 [20] - Free cash flow was EUR 220 million, a decline year-on-year due to net working capital phasing [20] Business Line Data and Key Metrics Changes - Sparkling volumes grew almost 1%, with value share up 80 basis points [6][17] - Energy segment saw strong performance, with high single-digit growth [7][18] - Coffee volumes grew by 21.6%, with 1,500 new outlets added [8] - Stills volumes increased by 5.2%, with a strong recovery in water [8] - Premium Spirits volumes grew by 17.3%, with successful distribution of Finlandia Vodka in 19 markets [9] Market Data and Key Metrics Changes - Established Markets revenue grew by 4.4%, driven by price mix [16] - Developing segment revenue increased by 11.5%, with volumes up 3.1% [17] - Emerging segment revenue grew by 22.7%, with price/mix positive at 17.6% [18] - Nigeria experienced double-digit volume growth despite macroeconomic challenges [19] Company Strategy and Development Direction - The company continues to invest in its 24/7 portfolio and bespoke capabilities to drive growth [4][24] - Focus on premiumization opportunities and targeted marketing campaigns [6][24] - Commitment to sustainability and packaging circularity through initiatives like Deposit Return Schemes [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic market environment despite uncertainties [23][24] - Upgraded guidance for 2024, expecting organic revenue growth of 8% to 12% and organic EBIT growth of 7% to 12% [21][22] - Acknowledgment of challenges in consumer sensitivity to pricing in certain markets [43][46] Other Important Information - The company received a $130 million loan from EBRD to finance CapEx and working capital in Egypt [11] - Strong balance sheet with net debt to EBITDA below the guided range of 1.5 to 2 times [21] Q&A Session Summary Question: Context on volume improvement and price/mix normalization in Established markets - Management noted positive volume growth in Q2, driven by strong performance in Greece and Italy, with a focus on promotions to support volume [29][30] Question: Mark-to-market FX impact on EBIT in Emerging segment - The mark-to-market adjustment was a noncash item related to currency devaluation, affecting OpEx as a percentage of revenue [33][34] Question: Specifics on margin development in Developing segment - Strong operational leverage and lower inflation in input costs contributed to margin expansion in the Developing segment [38][39] Question: Performance and strategy for Premium Spirits - The integration of Finlandia Vodka has been successful, enhancing the company's mixability initiatives and contributing positively to margins [40] Question: EBIT guidance and uncertainty in consumer environment - Management highlighted a wide range for EBIT guidance due to macroeconomic challenges and consumer sensitivity in certain markets [42][43] Question: Consumer behavior and pricing strategy in Nigeria - Management confirmed ongoing price increases in Nigeria, supported by data-driven revenue growth management strategies [53][54]