Bloomberg News

Coca-Cola Hellenic Profit Falls on Austerity, Commodities

February 15, 2012

(Updates with CEO comment from third paragraph.)

Feb. 15 (Bloomberg) -- Coca-Cola Hellenic Bottling Co. SA, the world’s second-largest bottler of Coke drinks, said full- year profit fell 37 percent as austerity measures in many of its markets hit demand and as commodity prices increased.

Net income in 2011 was 268.9 million euros ($354 million), down from 426.6 million euros in 2010, according to an e-mailed statement from the Athens-based company today. In the fourth quarter, the company posted a net loss of 11.8 million euros compared with a 22 million-euro profit a year ago.

“Despite a very challenging environment with consumer confidence deteriorating further in key markets, we grew revenue ahead of sales volume,” after stripping out unfavorable currency fluctuations against the euro, Dimitris Lois, chief executive officer, said in a telephone interview today.

Excluding the cost of continuing reorganization measures, profit was 330.4 million euros, compared with 453.1 million euros, Coca-Cola Hellenic said. The company forecast savings of 35 million euros a year from 2013 after identifying additional restructuring measures to be implemented this year that will cost around 50 million euros.

While cases of drinks sold fell 1 percent to just over 2.08 billion in 2011, as falling consumer confidence in countries such as Greece, Poland and Hungary hurt demand, sales revenue per case increased by 4 percent for the whole year and by 9 percent in the fourth quarter as the company increased its market share in most of its 28 markets.

“We expect the economic and consumer environment to remain weak in 2012, especially in Greece, where we anticipate further disposable income and liquidity challenges,” Lois said. “We also see another year of significant input cost pressures, but we will continue to pursue our strategy of winning in the marketplace and growing revenue ahead of sales volume.”

Costs

The cost of sugar, juice concentrate and PET resin used to make plastic increased by the “low double digits” in 2011 and is expected to rise by the “high single digits” in 2012, the company said.

“A key priority for the first six months of 2012 will be investing to support brands ahead of the London Summer Olympic Games and the Euro 2012 soccer championship, which are both very big assets for the Coke system and for CCHBC in particular,” Lois said.

The final tournament of the European Football Championship will be jointly held between June 8 and July 1 by Poland and Ukraine, both Coca-Cola Hellenic territories, while another six participating countries are also company markets which will give “great momentum,” Lois said.

The first quarter, while small in terms of its overall contribution to full-year results, “will be challenging” with severe winter weather in many markets hitting demand and disrupting distribution of products to consumers, he said.

Coca-Cola Hellenic said free cash flow will be 1.45 billion euros this year and the following two ending Dec. 31, 2014 and the company will invest the same amount over the same period. The company said it still sees free cash flow at 1.35 billion euros in the three years to Dec. 31 2013.

The company said that while it will not pay a dividend for 2011, given uncertainty over changes to corporate tax laws, it will propose a capital return to shareholders.

On Greece: NI GREECE <GO>

--Editors: Chris Peterson, Alan Purkiss

To contact the reporter on this story: Paul Tugwell in Athens at ptugwell1@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net


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