GREECE: Coca-Cola Hellenic profits slip in "difficult" H1

Coca-Cola Hellenic has posted a slide in profits for its half-year, despite lifting sales in what the company has described as a "difficult trading environment".

The Coca-Cola bottler said yesterday (30 July) that operating and net profit for the six months to 27 June both slid by 5% on the corresponding period a year earlier, to EUR313.3m (US$489.1m) and EUR209.6m respectively. Net sales were up by 7%, however, to EUR3.31bn, with volumes rising by 5% to 1.01bn unit cases.

Trading performance in the first half was adversely impacted by poor weather in several countries, challenging economic conditions affecting consumer spending behaviour in a few of our markets, and one-off factors including a third party transportation strike in Greece and early problems with implementing SAP in two markets. A steep rise in PET costs also led to the fall in operating profits.

Volume grew by 5% in the first half of 2008, successfully cycling 13% volume growth in the comparable prior-year period. Volume growth was achieved across all beverage categories and reporting segments in the first six months, the company said. Sparkling beverage volumes grew by 2% with growth in premium brands partly offset by a planned volume decline in CCH's value brands. The launch of Coca-Cola Zero in 11 additional markets in 2008 contributed to growth in trademark Coca-Cola of 3% during the first six months and growth in light sparkling beverages of 12%. The company's Burn energy drink grew by over 50% in the first half of the year.

Still beverages and water grew by 9% in the first half, driven by double-digit growth in the juice and tea categories. CCH also expanded its premium RTD tea range with the launch of Nestea Vitao in an additional six markets including Russia, Romania and the Czech Republic.

For the second quarter, operating profit decreased by 9% to EUR246.8m, with net profit dipping by 8% to EUR181.5m. Net sales rose by 5% to EUR1.94bn, thanks to a climb in volumes, of 3% to 584.9m unit cases.

"Our market update in June highlighted the difficult trading environment that the sector is facing, said CCH's managing director, Doros, Constantinou. "With the early implementation of several initiatives to meet near term profitability challenges, we believe we can achieve our full year guidance.

"Clearly, however, the economic climate, together with input costs remains uncertain, and we will continue to be watchful of developments."

The company reiterated its full year targets of 6% volume growth, EBIT growth of between 5% and 7%, and EPS of between EUR1.37 and EUR1.40, an increase of 5%-8%.