Coca-Cola Europacific Partners(CCEP)2022-08-06 16:14Financial Data and Key Metrics Changes - The company reported total revenue of €8.3 billion, an increase of 17% compared to the previous year [21] - Comparable operating profit rose to €1.1 billion, up 29%, reflecting strong topline growth and efficiency programs [22] - Comparable diluted earnings per share increased by 32% to €1.61 [22] - Free cash flow generation reached €1.3 billion, significantly above the medium-term target of €1.25 billion [22][36] Business Line Data and Key Metrics Changes - The non-alcoholic ready-to-drink (NARTD) category grew by 5% in the first half, with the away-from-home channel recovering to 2019 levels [8][25] - The company achieved strong volume growth of 13% in the first half, supported by a rebound in tourism and the recovery of the HoReCa channel [16][25] - Revenue per unit case grew by 4.5%, reflecting strong growth in the away-from-home segment and effective revenue growth management initiatives [26] Market Data and Key Metrics Changes - The company gained approximately 30 basis points in NARTD value share both in-store and online [16] - The away-from-home channel, which accounts for about 40% of volumes, showed resilience in challenging times [9] - The company reported that its brands delivered more than twice the value to customers compared to the nearest competitor in Europe [9] Company Strategy and Development Direction - The company is focused on long-term profitable growth, emphasizing revenue growth management and efficiency [5][6] - There is a strong commitment to sustainability, with initiatives aimed at reducing emissions and improving packaging [14][15] - The company is strategically exiting non-core categories, such as beer and cider, to focus on sparkling and tea categories [19][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the uncertain economic environment, citing strong brand equity and a balanced revenue stream [39][42] - The company raised its full-year guidance for revenue, profit, and free cash flow, reflecting strong first-half performance [37] - Management acknowledged potential inflationary pressures but emphasized the importance of maintaining affordability for consumers [30][71] Other Important Information - The company is on track to deliver approximately 85% of its efficiency savings target by the end of 2022 [27][66] - The company is approximately 90% hedged for commodity inflation for the current year, with expectations of high single-digit inflation for 2023 [33][34] Q&A Session Summary Question: How is the business different in navigating potential consumer weakness? - Management highlighted stronger revenues from the away-from-home channel and a balanced pack architecture that allows for effective promotions [39][40][41] Question: What led to the acceleration in market share? - The acceleration was attributed to strong performance in sparkling beverages, continued investment in innovation, and improved execution during the pandemic [43][44][45] Question: How sensitive is the business to European gas prices? - Management discussed contingency plans for energy supply and the importance of maintaining service levels despite supply chain challenges [48][49] Question: What is the impact of working capital on cash flow guidance? - Management indicated that the impact on cash flow is primarily linked to inventory and CapEx phasing, with strong free cash flow performance overall [51][52] Question: How is gross margin affected by volume leverage? - Volume leverage has been beneficial, but broader commodity inflation pressures are also a significant factor [55][56] Question: What changes are being made to pricing strategies? - Management emphasized a surgical approach to pricing, focusing on affordability while maintaining brand equity [70][71] Question: How impactful has the portfolio rationalization been in Indonesia? - The rationalization has had a significant and quick impact, allowing for a more focused approach on core categories [72][73]