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Coca-Cola HBC’s annual profit beats, warns of price increases
Global Banking & Finance Review®
Company
By Radhika Anilkumar
(Reuters) -Coca-Cola HBC AG on Tuesday reported better-than-expected full-year operating profit and said it will increase prices this year to tackle an increase in costs.
Energy and commodity prices have increased since Russia invaded Ukraine, sending companies across the globe scrambling for ways to rein in costs, while households struggle to manage their bills.
Most companies have hiked prices in a bid to pass on some of these costs to their consumers. Although a cost of living crisis has seen a shift in consumer spending, packaged beverage and food makers have continued to see resilient demand.
“The environment in terms of input costs is very challenging and pricing is very important to manage inflation,” Ben Almanzar, chief financial officer at the soft drinks bottler, told Reuters.
The Switzerland-headquartered company, in which U.S beverage giant Coca-Cola owns 20% stake, said it expects 2023 organic operating profit growth in the range of +3% to -3% as glass manufacturing prices and input costs continue to rise.
London-listed bottled drinks maker Fevertree warned last month that its 2023 profit would fall short due to rising costs of glass bottles, ingredients and packaging.
Coca-Cola HBC said costs it incurred per case in 2022 rose 17% and it expected this to increase by low teens percent this year.
Full year earnings fell about 12% to 703.8 million euros ($755.5 million), beating company-compiled analysts’ consensus of 658.2 million euros.
Still, full-year net sales revenue rose 28.3% to 9.20 billion euros.
Shares of the company were up about 4% at 2,024 pence as of 1020 GMT.
“CCH is better able to navigate a tough external environment vs history given investments made over the past years around commercial capabilities with the cost base having also been reset during the pandemic,” analysts at Jefferies said.
($1 = 0.9316 euros)
(Reporting by Amna Karimi and Radhika Anilkumar in Bengaluru; Editing by Uttaresh.V and Mike Harrison)
Operating profit is the income generated from normal business operations, excluding any income derived from non-operational activities such as investments or sales of assets.
Input costs refer to the expenses incurred by a company to produce goods or services, including materials, labor, and overhead costs.
Organic operating profit growth measures the increase in profit from existing operations, excluding any impacts from acquisitions or divestitures.
Net sales revenue is the total revenue from sales of goods or services after deducting returns, allowances, and discounts.
A cost of living crisis occurs when the prices of essential goods and services rise significantly, making it difficult for households to afford basic necessities.
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