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European FTSE 100 coke bottler Coca-Cola HBC (CCH) has reported a 6.4% first half jump in sales as the World Cup and warm weather boosted volumes in the second quarter.
Net sales revenue of €3.2 billion was up by 6.4% on an FX-neutral basis. Although the negative impact from currency movements and the fall in the value of the pound meant reported net sales revenue was up just 0.5%.
Net sales accelerated in the second quarter, supported by new product launches, good weather and the FIFA World Cup
FX-neutral revenue per case increased by 1.8%, primarily through increased pricing as well as continued improvements in category and package mix.
Volume accelerated in the second quarter, resulting in 4.6% growth in the first half. Sparkling beverages volumes were also strong, rising by 4.6%
Established markets volume increased by 0.9%, with good performances in Greece and Ireland
It saw stronger growth in its developing markets continues, with volume up 8.9%, led by Poland and Hungary
Emerging markets delivered 5.1% volume growth, supported by a return to growth in Nigeria and Russia in the second quarter
Input costs were marginally lower on an FX-neutral and per case basis compared to the prior-year period, helping to drive a 60 basis point expansion in comparable operating margin to 9.6%.
The increased margin came despite a 30 basis point increase in marketing investments to support product launches and FIFA world cup activations.
Comparable EBIT was €310.5 million, up 6.7% compared to the prior-year period. On a reported basis, CCH delivered €303.9 million of EBIT in the period, a 14.1% improvement on the prior-year period.
CEO Zoran Bogdanovic commented: “The evolution of our portfolio is gathering pace and gaining traction with customers across our markets. We have delivered a strong set of results as product launches and tailored commercial activation enabled us to capitalise on favourable market conditions and the FIFA World Cup. Revenue growth was excellent driven by both volume and price/mix improvements across all three of our geographic segments. Margins continue to improve as we keep our focus on driving top-line growth and cost control.
“We continue to make good progress against the 2020 targets and expect to deliver another year of revenue growth and improvement in margins.”
CCH shares have opened down 1.5% to 2,710p so far this morning.
Morning update
Irish food group Kerry Group (KYGA) has reported a 1.4% increase in first half revenues to €3.2bn, despite a negative impact from currency movements.
The rise in headline revenues reflected strong volume growth in the first six months of the year and contribution from acquisitions.
Business volumes grew by 3.6% and pricing increased by 0.6% in the period. Acquisitions boosted headline growth by 3.9%, but an adverse translation currency impact of 6.6% and an adverse transaction currency impact of 0.1% dragged back reported growth.
Its taste & nutrition division delivered 4.1% volume growth and pricing increased by 0.6%. Consumer foods’ business volumes increased by 1.3% and pricing increased by 0.9%.
In consumer foods, Kerry said “changing consumer behaviours in the UK and Ireland and the evolving market landscape continue to drive heightened competition”.
‘Everyday Fresh’ enjoyed solid growth, as the Richmond range delivered good growth across the period, with Richmond chicken sausages also being successfully launched in the second quarter.
The traditional spreads category continues to be challenged, however the division’s softer butter technology delivered good growth with private label brands within the UK, as did the Dairygold brand in Ireland.
‘Convenience meal solutions’ were impacted by reduced promotional activity as well as the extended warm weather spell towards the end of the period, while ‘food to go’ performed well with strong growth in Cheestrings and the relaunch of Fridge Raiders.
Group trading margin reduced by 10 basis points to 10.5%, reflecting a 10 basis points improvement in taste & nutrition, positive underlying margin improvement in consumer foods offset by adverse sterling exchange rates resulting in a 60 basis points margin reduction.
Constant currency adjusted earnings per share increased by 9.0% to 144.2 cents, with basic earnings per share increased by 0.5% to 128.3 cents.
CEO Edmond Scanlon said: “Evolving consumer trends and the changing marketplace have provided increased opportunities and demand for Kerry’s industry leading RD&A and broad technology portfolio. This, along with the Group’s enhanced end use market focus, drove healthy volume growth and underlying margin expansion in the first half of 2018. We also continued to make progress with and invest in business development initiatives aligned to our strategic growth priorities.
“In light of the above, we update our guidance and now expect to achieve growth in adjusted earnings per share of 7% to 10% in constant currency.”
Irish nutrition group Glanbia (GLB) said it has delivered a first half performance “in line with expectations”, though headline profits fell considerably during the period as currencies weighted on the bottom line.
Wholly owned revenue from continuing operations rose by 3.6% on a constant currency basis to €1.12bn, though this represents a 6.2% fall on a reported basis.
Its Glanbia Performance Nutrition business posted revenue growth of 4.9% constant currency (down 4.4% reported) and EBITA decline of 16.4% constant currency (down 24.6% reported);
Glanbia Nutritionals delivered revenue growth of 2.4% constant currency (down 7.8% reported) and EBITA growth of 4.5% constant currency (down 6.2% reported).
Wholly owned EBITA from continuing operations was €123.7 million, down 7.3% constant currency (down 16.6% reported). Wholly owned EBITA margins from continuing operations were 11.1%, down 130 basis points constant currency (down 140 bps reported).
Total group profit (after discontinued activities and exceptional items) for the period was €98.2 million, down €16.7m on prior half year.
Group EBITA, on a pro-forma basis, including Glanbia’s share of EBITA from JVs was €150.5 million, down €35.1 million versus the prior year.
The group reiteration full year 2018 guidance of 5% to 8% growth in pro-forma adjusted earnings per share on a constant currency basis.
Group MD Siobhán Talbot commented: “Glanbia delivered in line with expectations in the first half of 2018 and reiterates guidance for 2018 full year earnings growth. We continue to drive volume momentum with 5.7% growth in the first half and reiterate guidance for full year volume growth in the key portfolios of Glanbia Performance Nutrition and Glanbia Nutritional Solutions in the mid-to-high single digit range.
“We expect margins for the full year to be similar to 2017; we prioritised investment in our brands and operational infrastructure in the first half in advance of input cost reductions which are materialising as expected in the second half of the year.”
On the markets this morning, the FTSE 100 has opened down 0.6% to 7,732.4pts.
Early risers include Majestic Wine (WINE), up 2.6% to 433p, Premier Foods (PFD), up 2.6% to 42.3p and Hotel Chocolat (HOTC), up 1.5% to 350p.
Fallers include PZ Cussons (PZC), down 1.9% to 234.3p, Diageo (DGE), down 1.2% to 2,797.5p and Britvic (BVIC), down 0.7% to 797p.
Kerry Group is up 1.5% to €93.25, while Glanbia has fallen 4.4% to €14.56.
Yesterday in the City
The FTSE 100 gained 0.8% yesterday, rising to 7,776.8pts as the weakening pound – which has fallen below $1.29 for the first time in a year on ‘no deal’ Brexit worries – boosted shares in the UK’s biggest international companies.
Amongst those companies to receive a currency-driven share price boost yesterday were PZ Cussons (PZC), up 1.4% to 238.8p, Imperial Brands IMB), up 1.4% to 2,975p, Compass Group (CPG), up 1.2% to 1,664.5p, Greencore (GNC), up 1.1% to 178.6p and British American Tobacco (BATS), up 1% to 4212p.
Other risers included Greggs (GRG), up 1.7% to 1,070p, Marks & Spencer (MKS), up 1.3% to 302.7p, SSO Group (SSPG) up 1.1% to 697.5p and Morrisons (MRW), up 0.9% to 263.8p.
In the leisure sector, Domino’s Pizza Group was up a further 3.9% to 298.3p after strong first half sales on Tuesday, which Costa Coffee owner Whitbread (WTB), was up 2.2% to 3,991p.
Also on the up were McBride (MCB), up 2.4% to 138.2p, Stock Spirits Group (STCK), up 2.2% to 212p after first half profits growth yesterday and Glanbia, up 1.9% to €15.23 ahead of this morning’s half year report.
Notable fallers included McColl’s (MCLS), down 4% to 132p, Majestic Wine (WINE), down 3.7% to 422p, Fever-Tree Drinks (FEVR), down 2.6% to 3,485p and Ocado (OCDO), down 0.9% to 1,050p.
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