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LONDON (Alliance News) - Coca-Cola HBC AG, the world's second largest bottler of Coca-Cola products, said Thursday its pretax profit rose in the second quarter despite a continued fall in net sales revenue, and said the strong second quarter drove profit growth in the first half as whole.
The bottling group reported a pretax profit of EUR178.7 million for the three months to June 27, up from EUR120.0 million a year earlier, supported by an increased operating profit and lower total net finance costs.
Its profit for the first half of the year was EUR129.2 million, up from EUR89.0 million in the first half of 2013, but lower than its profit in the second quarter alone as the bottler suffered a loss in the first quarter.
However, the group said that due to difficult economic and trading conditions, and a sudden deterioration of trading in Russia and a small number of other markets, means it now expects the volume decline trend seen in the first half to persist in the remainder of the year.
Coca-Cola HBC shares were the biggest fallers on the FTSE 100 Thursday morning, trading at 1,330.00 pence, down 3.3%.
The group said its gross profit margin increased on the prior year both in the second quarter and the half year, supported by an acceleration in the growth rate of its currency-neutral net sales revenue per case and by a favourable input cost environment. Net sales revenue per unit case not on a "currency-neutral" basis fell in both the second quarter and first half, hit by "adverse foreign exchange movements", Coca-Cola HBC said.
"For the full year, we expect the positive trends in currency-neutral net sales revenue per case, input and operating costs, combined with less foreign exchange pressure than previously anticipated, to offset the continuing challenging volume environment in our markets," said Chief Executive Officer Dimitris Lois in a statement.
Coca-Cola HBC said it now expects foreign exchange movements to wipe between EUR80 million and EUR90 million off its profit for the full financial year, EUR10 million less than it forecast back in May, helped by additional pricing and cost-cutting initiatives, primarily in Russia and Ukraine.
"We continue to take action to mitigate the impact of the difficult trading conditions caused by depressed consumer sentiment and foreign exchange headwinds, while input cost pressures have abated," Lois added.
Coca-Cola HBC saw a fall in net sales revenue both in the recent quarter and in the first-half as a whole.
Net sales revenue in the second quarter fell to EUR1.85 billion from EUR1.95 billion in the second quarter of last year.
In the six month period net sales revenue fell to EUR3.18 billion, from EUR3.38 billion in the same period a year earlier.
The group faced a tough first quarter when it posted wider losses and a drop in both volumes and sales. Volume declined by 3% in the second quarter and in the first-half.
Coca-Cola HBC said trading in the first quarter was hit by weaker trading in both developed and emerging markets, including Italy, Romania, Poland and the Czech Republic.
The group said volume declined in the second quarter at a slower pace than in the first quarter as a result of an overall improvement in established and developing markets, including Nigeria's return to growth.
"While Nigeria resumed growth in the quarter after a slow start to the year, we saw a decline in volumes in Russia and continued volume weakness in Ukraine and Romania," it said.
Sparkling beverage volumes decreased by 2% in the second quarter and by 4% in the first-half. Juice on the other hand sustained its upward trend and grew by 2% in the quarter and in the first half.
At the end of June, the company said it was planning to delist its American Depositary Receipts from the New York Stock Exchange, as the UK has become the main trading market for its shares.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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