Coca-Cola Europacific Partners (CCEP) remains confident about its future performance in Europe, despite a decline in volumes in the first half.
For the six months ended 28 June 2024, the Sprite producer saw volumes dip 2.8% in the region versus H1 2023 to 1.27 billion unit cases, attributed to poor weather.
Revenues were still up in Europe 2.4% on the year prior at €7.2bn ($7.86bn). Operating profits were relatively flat, slipping down 0.6% on a reported basis to €882m, but on a comparable basis, these increased 6% year-on-year to €979m.
By channel, revenues in its away-from-home (AFH) segment declined 4.4%, while its home channel saw them drop 1.9% in the six-month period. For the second quarter, revenues were also down 4.2% in AFH, while home dipped 3.8%.
Overall performance in CCEP’s first half however remained strong, helped out by decent growth in its Australia, Pacific and Southeast Asia (APS) market. Here, unit-case volumes were up 80.9% to 586 million, while revenues increased 36.2% to €2.54bn. Operating profits declined on a reported basis by 8.1% to €260m while on a comparable basis, it grew 31.5% to €317m.
Total volumes for the group were up 13.8% to 1.85 billion unit-cases, while revenues increased 9.5% to €9.82bn. Operating profits declined 2.4% on a reported basis to €1.14bn and grew 11.2% on a comparable basis to €1.29bn.
Discussing the results in a call yesterday (7 August), CCEP CEO Damian Gammell said the group had faced a “weaker volume quarter than we would have liked in Europe” but expected “a stronger second half in volume revenue” for the region.
When asked about the health of the consumer in Europe, Gammell added: “I don't see it getting worse. I think as we look at Europe, potentially with lower interest rates and talk to some of the commodity pressures easing, you know, that's not only going to benefit us but will probably benefit the more macro consumer spending environment.”
When it came to specific channels, CCEP said the out-of-home space in Northern Europe was facing “a footfall challenge”. At the time of its first-quarter results in April, Gammell also referred to a lack of consumer presence in away-from-home spaces following its first-quarter results, but had expected “that to pick up as we go through Q2 and into the summer”.
Speaking to analysts yesterday (7 August), Gammell reiterated Q1 sentiments, as he said he still expected an improvement in away-from-home moving forward. “So as we look at [20]25, I see a similar environment, maybe some more potential for a mixed benefit, as potentially consumers go out a bit more and eat out a bit more.
“I'd expect in the medium term, the away-from-home channel to do slightly better than it's done, and I think that's going to be a big benefit as well.”
Gammell was also questioned on his opinion on Carlsberg's acquisition of Britvic, agreed last month, to which he replied: “In the near term, you know, we expect a strong competitor and I think that's good for the category. It's good for us. And we'll adapt accordingly.
“Obviously, we've got some ideas in that space, but I won't be sharing them on a call like this as you can appreciate.”
When asked about any future M&A plans, he was coy to provide details but said it wasn't out of the question. “Certainly a question that we'll look at with Atlanta going forward... we certainly have the financial power to do more M&A, [we] certainly have the ambition. And if we can add more markets, that makes sense.
“I don't expect that to be a near-term conversation. I think it would probably be a couple of years out, just based on what's happening in that space. But more to come on that.”
