Coca-Cola HBC posts positive forecast following bumper Q1

Coca-Cola HBC (Hellenic Bottling Company) AG (LON:CCH), the third largest Coca-Cola (NYSE:KO) bottling anchor targets a steady annual rate of growth for the next six years.

The company has produced a sales record of over two billion unit cases and achieved an Ebit margin of 10.2% in 2018.

Its forecast released earlier today targeted a comparable earnings before interest margin of 11% by 2020, and a margin improvement of 20 to 40 basis points per annum from 2020.

The most notable forecast however, is that the company are targeting an average revenue growth of 5-6% per year on a constant currency basis, until 2025.

Coca-Cola HBC comments

“In 2016 we set out a bold plan for 2020 to deliver strong growth in revenue and margins,” said Coca-Cola HBC Chief Executive, Zoran Bogdanovic.

“We are delivering against these targets and we go into the final stages of this plan as a considerably stronger and more capable organisation.”

“Today we have announced a new and ambitious plan to continue our strong growth to 2025 which, guided by our vision to become the leading 24/7 beverage partner, targets another step up in financial performance.”

“The plan builds on our recent consistent, strong performance and the considerable progress we have made in strengthening our business.”

Bumper Year for Coca-Cola HBC continues

This forecast follows news from earlier in the year, that the company’s Q1 revenue had jumped 4.7% on-year,

On the posting of the results, Bogdanovic commented,

“We have started the year well, delivering solid growth in revenues despite the impact of this year’s late Easter. Volume growth accelerated compared to last year and our ongoing revenue growth management initiatives continue to deliver improvements in price/mix.”

“This good start sets us up well to deliver on our plans and make 2019 another year in which we achieve FX-neutral revenue growth above our targeted range with another step up in margins.”

Further, the company successfully acquired Serbia’s foremost confectionery company, Bambi (LON:BMBI).

“This acquisition represents an excellent opportunity to create additional value for Coca‑Cola HBC, its customers and shareholders. It adds iconic, complementary consumer brands to our portfolio of leading beverage brands, as well as consumer-focused innovation capabilities. It further strengthens our relevance with customers and allows us to increase our presence in key consumption occasions, such as the start of the day, on the go and at home snacking and refreshment.” said the company’s Chief Executive.

Investment notes

Despite the positive news, the company’s shares dipped during trading on Monday, down 4.73p or 0.17% and closing at 2,847.27p per share 03/06/19 16:39 GMT. UBS and Deutsche Bank analysts reached a consensus with their ‘Buy’ stances on Coca-Cola HBC stock, while Shore Capital have their rating ‘Under Review’.

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.