Coca-Cola Europacific Partners(CCEP)2024-11-05 21:26Financial Data and Key Metrics Changes - The company reported total revenue growth of 2.4% in Q3, driven by solid progression in revenue per unit case, despite flat total volumes year-on-year [11] - Underlying volumes, excluding strategic exits, grew by around 1% year-to-date, while volumes in Europe decreased by 1.4%, offset by a 3.3% increase in the Asia Pacific and Southeast Asia (APS) region [11][12] - The company reaffirmed full year operating profit growth guidance of around 7% and free cash flow generation of approximately €1.7 billion [17][19] Business Line Data and Key Metrics Changes - In Europe, revenue per unit case grew by 3.2%, reflecting price increases across all markets, while volumes were impacted by adverse weather conditions [14] - The APS region saw strong volume growth driven by the Philippines, which continued to perform well despite cycling over 20% volume growth in Q3 last year [11][12] - The company is increasing investment in the Philippines to support growth, with a focus on modern trade and key account capabilities [56][58] Market Data and Key Metrics Changes - The away-from-home channel in Europe has been under pressure, particularly in outdoor dining sectors in Southern Europe, while convenience and QSR channels have held up well [30][31] - The company noted that consumer spending in retail has remained stable, with a positive response during normalized weather conditions [25][26] - In Indonesia, the company is adapting its route to market and launching refillable glass bottles to enhance affordability and address local consumption behaviors [58][60] Company Strategy and Development Direction - The company is focused on long-term growth strategies, including digital transformation and enhancing customer engagement through improved B2B portals [21] - The company plans to showcase its business in the Philippines at a Capital Markets event in May, highlighting its growth potential [12][21] - The company is committed to maintaining a balance between revenue per case and volume growth, with a target of achieving a point of volume growth annually in Europe [66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of their categories and the potential for a return to quality underlying volume growth in Europe [20][66] - The company acknowledged macro challenges, including geopolitical tensions, but remains optimistic about the growth outlook in key markets [50][60] - Management highlighted the importance of maintaining price relevance and optimizing promotional strategies to support consumer engagement [26][29] Other Important Information - The company declared a second half dividend of €1.23 per share, maintaining an annualized payout ratio of approximately 50% [19] - The company is actively working towards meeting liquidity thresholds for potential entry into the FTSE, with no expected impact on capital allocation strategies [72] Q&A Session Summary Question: Update on European consumer health and expectations for Q4 - Management noted that consumer spending has not dramatically changed, with retail holding up well despite challenges in the away-from-home channel [25][26] Question: Drivers of revenue per case growth in Europe - Management attributed revenue per case growth to pricing strategies and strong customer relationships, expecting to sustain this into Q4 [28][29] Question: Performance of the away-from-home channel in Europe - Management identified outdoor dining in Southern Europe as the most impacted sub-channel, while convenience and QSR channels have performed better [30][31] Question: Factors contributing to maintaining EBIT guidance - Management highlighted lower cost of sales and ongoing efficiency initiatives as key factors supporting EBIT guidance [36][37] Question: Expectations for next year regarding headwinds and tailwinds - Management expressed optimism about potential tailwinds, including strong consumer activation plans for 2025, while acknowledging ongoing geopolitical challenges [49][50] Question: Insights on Southeast Asia division performance - Management praised the Filipino team's performance and discussed the launch of refillable glass bottles in Indonesia as part of their long-term strategy [56][58]