Coca-Cola European Partners Reports Interim Results for the Third-Quarter Ended 30 September 2016
Coca-Cola European Partners plc (CCEP) (ticker symbol: CCE) today
announces its interim results for the third-quarter ended 30 September
2016, and affirms full-year 2016 outlook.
Third-quarter diluted earnings per share were EUR0.67 on a reported
basis or EUR0.66 on a pro forma comparable basis, including a negative
currency translation impact of EUR0.03.
Third-quarter reported revenue totaled EUR3.0 billion. Pro forma
comparable revenue was EUR3.0 billion, flat vs. prior year, or up 3.5
per cent on a pro forma comparable and fx-neutral basis. Volume
increased 3.5 per cent on a pro forma basis.
Third-quarter reported operating profit was EUR405 million; pro forma
comparable operating profit was EUR459 million, up 2.0 per cent or up
7.0 per cent on a pro forma comparable and fx-neutral basis.
CCEP affirms its full-year guidance for 2016, including flat
revenue growth, modest mid-single-digit operating profit growth, and
diluted earnings per share growth in a mid-teen range, all on a pro
forma comparable and fx-neutral basis. After including an expected
negative currency impact of approximately 4.5 per cent, pro forma
comparable diluted earnings per share is expected in a range of EUR1.86
CCEP remains on track to achieve pre-tax savings of EUR315 million to
EUR340 million through synergies by mid-2019.
Separately today, CCEP announced Damian Gammell will succeed John
F. Brock as chief executive officer.
"This marks the first full quarter of operation for CCEP since our
merger, and we are encouraged by the return to growth in our
third-quarter results," said John F. Brock, chief executive officer.
"These results support the opportunities we see for growth and our
long-term outlook for CCEP.
"We remain focused on successfully integrating the territories of
Coca-Cola European Partners, enhancing customer service, realising the
synergies we have communicated, and ensuring we capture the growth
opportunities in the market," Mr. Brock said. "This will enable us to
better meet the needs of our customers, serve our communities
effectively, and importantly, drive shareowner value."
Note Regarding the Presentation of Financial
Unless otherwise noted, the financial information included in this
release is provided on a pro forma comparable basis to allow investors
to better analyse CCEPs business performance and allow for greater
comparability. To do so, we have given effect to the Merger as if it had
occurred at the beginning of the periods presented, thereby including
the financial results of Coca-Cola Enterprises, Inc. ("CCE"), Coca-Cola
Erfrischungsgetranke GmbH ("Germany", "CCEG") and Coca-Cola Iberian
Partners S.A.U. ("Iberia", "CCIP") and acquisition accounting
adjustments for the full periods presented. We have also excluded items
affecting the comparability of year-over-year financial performance,
including merger and integration costs, restructuring costs, the
out-of-period mark-to-market impact of hedges and the inventory step-up
related to acquisition accounting. See the Supplementary Financial
Information for a full reconciliation of our reported results to our pro
forma comparable results.
For purposes of this review, the following terms are defined as follows:
As reported includes the financial results of CCE only,
as the accounting predecessor, for all periods prior to 27 May 2016 and
combined CCEP (CCE, Germany and Iberia) for the period from 28 May 2016
through 30 September 2016.
Pro forma includes the results of CCE, Germany and
Iberia as well as the impact of the additional debt financing costs
incurred by CCEP in connection with the Merger for all periods
presented, as if the Merger had occurred at the beginning of the period
Pro forma Comparable represents the pro forma results
excluding the items impacting comparability during the periods presented
for CCE, Germany and Iberia.
Fx-Neutral represents the pro forma comparable results
excluding the impact of foreign exchange rate changes during the periods
Key Financial Measures
Third Quarter Ended 30 September 2016
calculated by recasting current year results at prior year rates
Cost of sales
Profit after taxes
Diluted earnings per share (EUR)
Key Financial Measures
Nine Months Ended 30 September 2016
calculated by recasting current year results at prior year rates
Cost of sales
Profit after taxes
Diluted earnings per share (EUR)
"Our return to growth reflects the impact of brand and package
innovations, strong in-market execution, improving operating
effectiveness, and the benefits of favourable weather," said Damian
Gammell, chief operating officer. "Going forward, we recognise that the
soft consumer environment that has affected our business is still
"In this environment, we are focused on three key areas: delivering
against our objectives for 2016, partnering with The Coca-Cola Company
to drive long-term growth, and successfully delivering our synergy
objectives, with a pretax goal of EUR315 million to EUR340 million by
"Ultimately, we are working to reignite the type of consistent,
value-building growth that creates benefits for our stakeholders and
drives shareowner value," Mr. Gammell said.
Third-quarter 2016 reported revenue totaled EUR3.0 billion, up 82.5 per
cent vs. prior year, reflecting the inclusion of Germany and Iberia in
the quarter. Pro forma comparable revenue was flat, or up 3.5 per cent
on a pro forma comparable and fx-neutral basis. Revenue per unit case
was down 0.5 per cent on a pro forma comparable and fx-neutral
basis. Volume grew 3.5 per cent on a pro forma basis. These results
reflect favourable weather conditions, the benefits of our marketing and
brand initiatives, execution, and our focus on driving top-line growth.
On a territory basis for the third quarter, Iberia revenues were up 6.5
per cent benefiting from favourable weather and solid execution, as both
revenue per unit case and volume grew. Revenue in Germany declined 1.0
per cent, reflecting the impact of a transition to recyclable PET from
returnable PET, promotional plans, and slight negative mix, partially
offset by positive volume growth. Great Britain revenues were down 13.0
per cent, driven primarily by volume growth and favourable weather,
offset by a 16 per cent decline of the British pound vs. the Euro.
Revenue in France grew 1.0 per cent, primarily due to favourable weather
partially offset by slight negative price and mix driven by promotional
plans. Revenue in the Northern European territories (Belgium, the
Netherlands, Norway and Sweden) grew approximately 5.5 per cent driven
by promotional plans, favourable weather, and favourable price and mix.
As for volume, total third-quarter volume grew 3.5 per cent vs. prior
year on a pro forma basis. These results reflect growth in all
categories including regular colas, favourable weather, and the benefits
of our brand and marketing initiatives. Sparkling brands grew 3.0 per
cent. Coca-Cola trademark grew approximately 2.0 per cent, with regular
Coca-Cola up 1.0 per cent. Coca-Cola Zero trademark brands grew at a
mid-teen per cent rate, led by growth in Iberia and Great Britain. The
introduction of Coca-Cola Zero Sugar in Great Britain continues to be
successful and will be introduced in all CCEP territories by early 2017.
Sparkling flavors and energy grew 6.5 per cent with continued strong
growth in energy combined with solid growth in Fanta and the benefits of
the expansion of Vio. Energy is benefiting from year-over-year
comparisons as we have not yet lapped the newly acquired distribution of
Monster in Iberia. Still brands grew 4.5 per cent with water brands up
4.0 per cent driven by smartwater and Vio.
Cost of Sales
Third-quarter 2016 reported cost of sales totaled EUR1.8 billion, up 80.0
per cent vs. prior year, driven by the inclusion of Germany and Iberia
in the quarter. Pro forma comparable cost of sales totaled EUR1.8 billion,
flat vs. prior year, or up 3.0 per cent on a pro forma comparable and
Third-quarter cost of sales per unit case declined 0.5 per cent on a pro
forma comparable and fx-neutral basis. This reflects the benefit of
favourable year-over-year costs in some key commodities, principally
sugar, partially offset by an increase of cost of sales in Germany from
a shift from returnable to recyclable packages.
Third-quarter 2016 reported operating expenses totaled EUR756 million, up
90.5 per cent vs. prior year, reflecting the inclusion of Germany and
Iberia in the quarter. Pro forma comparable operating expenses were EUR701
million, down 1.5 per cent, or up 1.5 per cent on a pro forma comparable
and fx-neutral basis. This includes the impact of volume growth and
expense timing, partially offset by the early benefits of restructuring.
During the third quarter of 2016, the Company recorded EUR53 million in
restructuring charges principally related to restructuring initiatives
in Germany that were in-flight at the time of Merger and the transition
of Atlanta-based headquarters roles to Europe. Additionally, in October
2016, the Company announced several restructuring proposals including
those related to further supply chain improvements including network
optimisation, productivity initiatives, continued facility
rationalisation in Germany, and end-to-end supply chain organisational
design. These announcements also included transferring of Germany
transactional related activities to the Companys shared services centre
in Bulgaria, and other central function initiatives. All of these
proposals are subject to consultation and agreement with relevant
employee representative bodies.
For 2016, CCEP expects revenue growth to be flat, with operating profit
growth in a modest mid-single-digit range and mid-teens diluted earnings
per share growth. Each of these items are on a pro forma comparable and
fx-neutral basis. Pro forma comparable diluted earnings per share is
expected in a range of EUR1.86 to EUR1.90, including a negative currency
translation impact of approximately 4.5 per cent. In addition to
operating profit growth, full-year 2016 diluted earnings per share
growth is benefiting from differences in interest and tax rates between
pro forma comparable 2015 figures and our 2016 outlook.
Weighted average cost of debt is expected to be approximately 2 per cent
and the pro forma comparable effective tax rate for 2016 is expected to
be approximately 25 per cent. CCEP does not expect to repurchase shares
CCEP will host a conference call with investors and analysts today at
15:00 GMT, 16:00 CET and 10:00 a.m. EST. The call can be accessed
through the Companys website at www.ccep.com.
Financial details can be found in our full third-quarter 2016 filing,
available within the next 24 hours at www.morningstar.co.uk/uk/NSM
(located under effective date 30 September 2016) and available
immediately on our website, www.ccep.com,
under the Investors tab.
Coca-Cola European Partners plc (CCEP) is a leading consumer packaged
goods company in Europe, selling, producing and distributing an
extensive range of nonalcoholic ready-to-drink beverages and is the
worlds largest independent Coca-Cola bottler based on revenue.
Coca-Cola European Partners serves a consumer population of over 300
million across Western Europe, including Andorra, Belgium, continental
France, Germany, Great Britain, Iceland, Luxembourg, Monaco, the
Netherlands, Norway, Portugal, Spain and Sweden. The Company is listed
on Euronext Amsterdam, the New York Stock Exchange, Euronext London and
on the Spanish stock exchanges, and trades under the symbol CCE. For
more information about CCEP, please visit our website at www.ccep.com
and follow CCEP on Twitter at @CocaColaEP.
This document may contain statements, estimates or projections that
constitute "forward-looking statements". Generally, the words "believe,"
"expect," "intend," "estimate," "anticipate," "project," "plan," "seek,"
"may," "could," "would," "should," "might," "will," "forecast,"
"outlook," "guidance," "possible," "potential," "predict" and similar
expressions identify forward-looking statements, which generally are not
historical in nature. Forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ
materially from Coca-Cola European Partners plcs ("CCEP") historical
experience and its present expectations or projections. These risks
include, but are not limited to, obesity concerns; water scarcity and
poor quality; evolving consumer preferences; increased competition and
capabilities in the marketplace; product safety and quality concerns;
perceived negative health consequences of certain ingredients, such as
non-nutritive sweeteners and biotechnology-derived substances, and of
other substances present in its beverage products or packaging
materials; increased demand for food products and decreased agricultural
productivity; changes in the retail landscape or the loss of key retail
or foodservice customers; an inability to expand operations in emerging
or developing markets; fluctuations in foreign currency exchange rates;
interest rate increases; an inability to maintain good relationships
with its partners; a deterioration in its partners financial condition;
increases in income tax rates, changes in income tax laws or
unfavourable resolution of tax matters; increased or new indirect taxes
in its tax jurisdictions; increased cost, disruption of supply or
shortage of energy or fuels; increased cost, disruption of supply or
shortage of ingredients, other raw materials or packaging materials;
changes in laws and regulations relating to beverage containers and
packaging; significant additional labeling or warning requirements or
limitations on the availability of its products; an inability to
protect its information systems against service interruption,
misappropriation of data or breaches of security; unfavourable general
economic or political conditions in the United States, Europe or
elsewhere; litigation or legal proceedings; adverse weather conditions;
climate change; damage to its brand images and corporate reputation from
negative publicity, even if unwarranted, related to product safety or
quality, human and workplace rights, obesity or other issues; changes
in, or failure to comply with, the laws and regulations applicable to
its products or business operations; changes in accounting standards; an
inability to achieve its overall long-term growth objectives;
deterioration of global credit market conditions; default by or failure
of one or more of its counterparty financial institutions; an inability
to timely implement its previously announced actions to reinvigorate
growth, or to realise the economic benefits it anticipates from these
actions; failure to realise a significant portion of the anticipated
benefits of its strategic relationships, including (without limitation)
The Coca-Cola Companys relationship with Monster Beverage Corporation;
an inability to renew collective bargaining agreements on satisfactory
terms, or it or its partners experience strikes, work stoppages or
labour unrest; future impairment charges; an inability to successfully
manage the possible negative consequences of its productivity
initiatives; global or regional catastrophic events; and other risks
discussed in the CCEP prospectus approved by the UK Listing Authority
and published on 25 May 2016, the registration statement on Form F-4,
which was filed with the SEC by CCEP, and the interim results for the
first six months ended 1 July 2016, published on 22 September 2016. You
should not place undue reliance on forward-looking statements, which
speak only as of the date they are made. CCEP does not undertake any
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise.
CCEP assumes no responsibility for the accuracy and completeness of any
forward-looking statements. Any or all of the forward-looking statements
contained in this filing and in any other of its public statements may
prove to be incorrect.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161110005703/en/
SOURCE: Coca-Cola European Partners plc
Coca-Cola European Partners plc
Thor Erickson, +1-678-260-3110
Ros Hunt, +44 (0) 7528 251 022