Coca-Cola Europacific Partners(US:CCEP)2020-02-13 19:44Financial Data and Key Metrics Changes - Full-year revenue increased by 4.5% or 3.5% excluding the impact of incremental soft drinks taxes, both on an FX-neutral basis [6][22] - Operating profit grew by 6% on a comparable and FX-neutral basis, with comparable and FX-neutral operating margin growing by about 20 basis points [21][22] - Comparable and FX-neutral diluted earnings per share grew 10%, reflecting accretion from the completed €1.5 billion share buyback program [22] - Free cash flow generated was €1.1 billion, with a net debt to adjusted EBITDA ratio of 2.7x [23][24] Business Line Data and Key Metrics Changes - Revenue per unit case increased by 2%, with volume growth of 1% [6][7] - Coca-Cola Zero Sugar saw a volume growth of 13%, while the overall Coke trademark portfolio grew by 1.5% [9][8] - The flavors segment gained 110 basis points of value share, driven by Fanta and innovative campaigns [10] - Small pack formats experienced an 11% volume growth, contributing positively to mix and gross margins [11] Market Data and Key Metrics Changes - Market share grew in all territories, with over 1 percentage point of value share gained in NARTD and 90 basis points in Sparkling [8] - The company was the largest FMCG value creator in the retail channel, adding €430 million in value versus 2018 [8] - The away-from-home channel continued to grow, supported by investments in sales force and product distribution [75] Company Strategy and Development Direction - The company aims to diversify into a total beverage company, focusing on innovation and sustainability [4][18] - Strategic investments in supply chain, coolers, and digital platforms are prioritized to enhance customer experience and productivity [16][17] - Sustainability initiatives are integrated into the company's culture, with a target of 0 waste and increased use of recycled materials [19][20] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the growth potential of the NARTD and Sparkling categories, despite macroeconomic challenges [62] - The company anticipates low single-digit revenue growth and mid-single-digit operating profit growth for 2020 [33][37] - The management highlighted the importance of maintaining strong relationships with customers amid ongoing negotiations [38] Other Important Information - The company plans to maintain a dividend payout ratio of approximately 50% alongside a €1 billion share buyback program [22][37] - Capital expenditures are expected to be in the range of €650 million to €700 million, inclusive of lease payments under IFRS 16 [36] Q&A Session Summary Question: Can you elaborate on the Coca-Cola Light repositioning? - The company confirmed that Coca-Cola Light will undergo a significant repositioning across all markets, with new packaging and flavors [44][46] Question: What is the Energy Drink strategy? - The management discussed a multi-brand strategy for energy drinks, including Monster, Reign, and Coca-Cola Energy, to capture market share [47][49] Question: Can you explain the small pack format growth? - The management noted that while volume growth was strong, revenue growth was impacted by various factors, and further details could be provided offline [53] Question: What are the expectations for free cash flow? - The management indicated confidence in achieving at least €1 billion in free cash flow, despite potential working capital growth [56][57] Question: How is the consumer environment in GB and France? - The management reported strong revenue growth in both markets, with expectations for continued growth in 2020 [60][62] Question: How is the integration of the German-Danish border contract progressing? - The management stated that the integration is proceeding smoothly, with expectations for additional revenue from this contract [63][65] Question: Are there KPIs aligned with sustainability? - The management confirmed plans to incorporate sustainability metrics into incentive planning, focusing on CO2 emissions and waste [66][69]