Organic Revenue Growth: 10.6% increase. Reported Revenue Growth: 8.7% increase. Volume Growth: 1.8% increase. Revenue per Unit Case: 8.7% increase. Value Share Gain: 130 basis points in the non-alcoholic ready to drink market. Sparkling Volumes: 1.1% increase. Coke Zero Growth: High single digits. Energy Volumes: Over 25% increase. Coffee Volume Growth (Out-of-Home): 19% increase. Total Coffee Volume Decline: 8% decrease. Water Growth: Mid single digits. Sports Drinks Growth: Low teens increase. Emerging Markets Organic Revenue Growth: 20.3% increase. Emerging Markets Volume Growth: 3.5% increase.

Warning! GuruFocus has detected 9 Warning Signs with CCHBF.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Coca-Cola HBC AG (CCHBF) achieved strong revenue growth with a 10.6% increase in organic revenue, driven by a 1.8% rise in volumes and an 8.7% increase in revenue per unit case. The company gained 130 basis points of value share in the non-alcoholic ready-to-drink market, showcasing effective execution and portfolio management. Energy drinks saw significant growth with volumes up over 25%, supported by new product launches and strong marketing activations. The company is leveraging data insights and analytics to enhance customer segmentation and target premium consumers, particularly in Nigeria, resulting in mid-teens growth for Schweppes volumes. Coca-Cola HBC AG (CCHBF) is making strides in sustainability, with initiatives like the launch of a deposit return scheme in Austria and a packaging collection facility in Nigeria.

Negative Points

Currency headwinds continue to impact reported revenue growth, which was 8.7%, slightly lower than organic growth. The coffee segment experienced an 8% volume decline due to a strategic shift away from the at-home channel, impacting short-term performance. Emerging markets face challenges with weaker currencies and high inflation, particularly in Nigeria and Egypt, affecting overall financial performance. The potential introduction of a sugar tax in Italy could lead to price increases, impacting consumer demand and market dynamics. The company anticipates a challenging macroeconomic and geopolitical environment for the remainder of 2025, which could affect future performance.

Q & A Highlights

Q: Can you provide insights on the performance of Coca-Cola HBC in Italy, considering the impact of fewer selling days and Easter timing? A: Zoran Bogdanovic, CEO, explained that Italy was significantly impacted by fewer selling days and a later Catholic Easter. Despite these challenges, the business in Italy has shown solid performance, growing by an average of 11% per year over the last three years. The focus on food occasions, particularly pizza, has been a key driver, improving share trends in Sparkling beverages. The start of Q2 trading in Italy has been in line with expectations.

Story Continues

Q: What is the status of Coca-Cola HBC's strategic shift to focus on the out-of-home coffee channel, and what are the expectations for growth? A: Zoran Bogdanovic, CEO, stated that the shift to prioritize the out-of-home coffee channel is ongoing, with expectations to cycle out at-home volumes over the next two to three quarters. The company is leveraging data insights and analytics to segment the market and acquire new customers. The focus is on building a sustainable and profitable business in the coffee category.

Q: Can you elaborate on the initiatives in Nigeria and their potential for broader application across markets? A: Zoran Bogdanovic, CEO, highlighted that the initiatives in Nigeria, developed in collaboration with the Coca-Cola Company, leverage data insights and analytics for consumer and customer segmentation. This approach has shown promising results, such as Schweppes' volume growth. The initiative has the potential to be scaled across other markets, enhancing targeted marketing and sales strategies.

Q: How did the technical factors like selling days and Easter impact Q1 performance, and what is the outlook for Q2? A: Anastasis Stamoulis, CFO, noted that Q1 had two fewer selling days, resulting in a 300 basis point headwind to volume. The Easter timing added less than 50 basis points of headwind at the group level. These factors are expected to reverse in Q2, aligning with the company's guidance for low single-digit volume growth for the year.

Q: What are the expectations for the Share a Coke campaign, and how does it compare to the previous campaign? A: Zoran Bogdanovic, CEO, expressed excitement about the Share a Coke campaign, noting its potential to drive both brand equity and transactions. The campaign is designed with modern digital tools and is expected to enhance package mix, particularly single-serve packages, contributing to improved sales performance.

Q: How is Coca-Cola HBC addressing the potential sugar tax in Italy, and what impact is expected? A: Zoran Bogdanovic, CEO, stated that the company is prepared for the sugar tax, expected to be introduced in July. The tax is anticipated to result in an 8-11% price increase, which will be passed on to consumers. The impact is expected to be short-term, with the company confident in its growth trajectory in Italy.

Q: What is the status of pricing strategies in Nigeria and Egypt to address FX headwinds, and are there any ongoing boycotts affecting sales? A: Anastasis Stamoulis, CFO, explained that pricing actions taken in 2024 are still benefiting revenue per case in 2025, particularly in Nigeria and Egypt. The company employs a phased pricing approach to minimize market impact. Zoran Bogdanovic, CEO, added that the boycott in Egypt has lessened, with solid recovery in sparkling beverage sales and market share gains.

Q: How does Coca-Cola HBC plan to manage the impact of sugar taxes, and what tools are available beyond pricing? A: Zoran Bogdanovic, CEO, emphasized that sugar taxes are passed on to consumers, and the company is prepared for such regulatory changes. The impact is typically short-term, and the company uses a combination of pricing, product mix adjustments, and marketing strategies to manage these changes effectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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