ECONOMY

Drinks bottler Coke HBC optimistic about second half

drinks-bottler-coke-hbc-optimistic-about-second-half

Soft drink bottler Coca-Cola HBC said on Thursday it was optimistic about the rest of the year, with conditions in some markets beginning to show improvement.

The European company, which bottles and sells Coca-Cola drinks in 28 countries, reported a 31 percent increase in core profits and a slight decline in first-half revenue. It said it was on track to deliver volume growth for the year.

Its shares rose 6.4 percent.

Bottlers like Coke HBC have been grappling with deflation, a slowdown in soft drink consumption due to economic weakness and a shift in consumer tastes.

Three other European bottlers of Coca-Cola drinks have just agreed to merge, hoping that greater scale and cost cutting will help to revitalise sluggish soft drink sales.

"Difficult conditions remain in many of our markets, particularly in Russia," Chief Executive Dimitris Lois said in a statement.

"Conditions are more favourable in eastern Europe and Nigeria, where we are confident of further growth. We have become more optimistic as the year has progressed and remain confident that 2015 will be a year of volume growth and progress on margins."

Coke HBC said revenue fell 1 percent to 3.15 billion euros in the six months ended July 3. Volume of product sold rose 3.8 percent but currency fluctuations, including the weak rouble, reduced sales by 4.6 percent.

Comparable earnings before interest and tax (EBIT) jumped 31 percent to 219 million euros.

The company expects cost-cutting measures to result in 44 million euros of savings in 2015 and 30 million euros of annualised savings from 2016 onwards.

The company started life in Greece in 1969 but has moved its headquarters to Switzerland and its stock listing to London. It is one of the companies in Europe with the biggest exposure to Greece, where banks had to close earlier in the year because of the country's debt crisis.

In the first half, Coke HBC derived 6 percent of its revenue from Greece, where volume continued to rise. It also derived 3 percent of non-current assets. It said cash and cash equivalents of 4.5 million euros were subject to capital controls as of July 3.

"We are continuously monitoring developments in Greece," the company said, noting that further hits to consumers' disposable income could hurt its operations there in the second half.

[Reuters]