GREECE: Commodity costs, "economic challenges" hamper Coca Cola Hellenic Bottling Co H1

• H1 net profits tumble by 28% to EUR146m (US$207.7m)
• EBIT down by 23% to EUR249m
• Net sales hold steady, rising by 3% to EUR3.40bn
• Slower volume sales in established markets bolstered by developing and emerging markets

Greece's dire financial state and higher commodity costs wiped out the benefits of a first-half sales rise for Coca-Cola Hellenic Bottling Co (CCHBC), with the group reporting a slide in profits.

The Greece-based soft drinks bottler reported net profits down by 28% to EUR146m (US$207.7m) for the six months to the end of June. Operating profits (EBIT) declined by a 23% on the same period of last year, to EUR249m.

High commodity costs and turmoil in the group's domestic market are to blame for the fall, CCHBC said. The profits drop marred a rise in sales for the half-year, by 3% to EUR3.4bn.

On Greece it said: "All nonalcoholic ready to drink beverage categories, except ready-to-drink tea, are on a declining trend and we are witnessing a significant number of sales outlet closures." It added that consumer spending will likely drop further following more government austerity measures. Unemployment in Greece is running at about 15%, but it is much higher for young people and as much as 40% for those aged between 25 and 34.

Elsewhere, CCHBC said that consumer confidence has been lower-than-expected. "The extent and timing of economic recovery in other markets has varied and has generally been weaker than anticipated," it said.  

"In some countries such as Russia, the pace of recovery that we initially experienced has not been maintained."

The bottler said that it continues to expect low-double-digit increases in raw materials prices for the year. It plans to raise prices to offset this, but said that many of the price rises will be below inflation in several markets. It added that a restructuring programme to save EUR35m in costs in 2011 is on-track.

For the official release, click here.