Bloomberg News

Coca-Cola Hellenic Profit Falls on Austerity, Commodities

May 10, 2012

Coca-Cola Hellenic Bottling Co. (EEEK), the world’s second-largest bottler of Coke drinks, posted a wider loss in the first quarter as bad weather and austerity measures in European markets hit demand.

The company’s net loss in the three months to March 31 widened to 28.4 million euros ($36.8 million) from 8.9 million euros a year earlier, Coca-Cola HBC said today in a statement on its website. The higher cost of sugar also hurt profit.

“Despite a challenging external environment, we grew or maintained volume share in sparkling beverages, while on a currency-neutral basis, excluding the hyperinflation impact of Belarus, net sales revenue per case of drinks rose 3 percent,” Dimitris Lois, chief executive officer, said in a telephone interview today.

Excluding the cost of reorganization, the net loss was 18.6 million euros, up from a loss of 1 million euros. “We are on target with restructuring,” Lois said.

The Athens-based company plans to book about 50 million euros for restructuring this year, which will bring savings of 35 million euros a year from 2013, while steps taken last year will see benefits of about 40 million euros this year, according to the statement.

While cases of drinks sold fell 2 percent to 425 million, as the effect of austerity measures in countries such as Greece and Ireland and cold weather in central and eastern Europe hurt demand, revenue rose 1 percent to 1.14 billion euros. Greece accounts for 6 percent of sales, Lois said.

Volatile Outlook

“The economic outlook in Europe is volatile and we expect consumer confidence to remain weak throughout this year,” Lois said. There will also be “a high single-digit increase” in input costs; however, the company is confident that managing revenue growth will offset the impact, he said.

Higher costs, especially that of sugar, had a greater effect this quarter as there was a steep rise after the first quarter of 2011, magnifying the year-on-year effect, Lois said.

The company hopes to benefit from the London Summer Olympic Games and the Euro 2012 soccer championship, Lois said.

The final tournament of the soccer championship will be hosted jointly, between June 8 and July 1, by Poland and Ukraine, both Coca-Cola HBC territories, while another five participating countries are also company markets.

Coca-Cola HBC reiterated capital spending guidance for 2012-14 of 1.45 billion euros and the same amount in free cash flow generation. The company also plans to seek approval for a share buyback program.

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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