GREECE: Cost savings boost Coca-Cola HBC profits

Soft drinks bottler Coca-Cola Hellenic Bottling Corp has reported an increase in full-year net profits, as cost savings offset weaker sales.

For the year to the end of December, net profits amounted to EUR437m (US$605m), 3% above 2008 earnings.

The company said that cost savings helped offset a drop in demand for its soft drinks, which it blamed on the current economic downturn as consumers turn to cheaper alternatives.

Net sales for the 12-month period declined by around 6% to EUR6.54bn, hit by a 4.5% decrease in volume sales and 7.5% negative currency impact.

Comparable operating income for the full-year decreased by 1%, reflecting lower volumes, negative channel and package mix and “significant” unfavourable currency movements. This was partly offset by the benefit of the Socib acquisition, increased pricing, lower commodity costs and the realisation of cost efficiencies.

The Socib acquisition contributed approximately 5% of growth to comparable operating profit in the full-year.

Sparkling beverages volume declined by 4% in the year, following a 3% decline in sales of the Coca-Cola trademark and a high-single digit decline in sales of Fanta and Sprite.

Volume in the combined water and still beverage category declined 5%, with a low-single digit decline in water and low double digit decline in juice. The decline in water was partly mitigated by solid gains in Italy where outlet distribution of Fonti del Vulture products was increased.

Doros Constantinou, CEO of Coca-Cola Hellenic, said: "We remain cautious on near-term trading conditions as we continue to witness weak consumer sentiment, with purchasing power affected by the difficult economic environment. We will therefore continue our focus on identifying cost efficiencies, reducing working capital and further strengthening our market positions.”

For the fourth quarter, the world’s second largest bottler of Coca-Cola swung to net profits of EUR437m from a loss of EUR194.8m last year.

Sales fell 12% to EUR1.39bn.

The firm said it expects free cash flow of about EUR1.5bn by the end of 2012.

In November, the firm announced the launch of a EUR300m (US$450m) bond issue. The proceeds of the bond will be partly used to fund a previously announced capital return payment and will allow Coca-Cola Hellenic to extend its maturity profile, the company said.