Coca-Cola HBC reported its first quarter trading update on Thursday where the group noted an increase of 24% in net sales revenue on an organic basis and a 31% rise in volumes on a reported basis as the group managed inflationary pressures and manufacturing suspensions in Russian and Ukraine which sent shares to gain 5% to 1,677p.

Strong performance was secured by effective delivery in the out-of-home channel to harness the potential of returning to markets, as well as additional shelf space in the at-home channel and faster development in e-retail.

Coca-Cola HBC said out-of-home channels regained traction as restrictions eased in certain locations across the globe supporting volume growths of 22.9% in Coca-Cola’s Adult Sparkling brands and 13.5% in Still drinks.

Coca-Cola HBC reported that its Sparkling portfolio performed well in the first quarter due to targeted campaigns and successful launch of the the new Coke Zero recipe which rose volume growth of Trademark Coke by 10.6%.

The group’s low and no sugar variants noted a 45.3% rise contributing to 27.1% of CCHBC’s Sparkling portfolio. Under Stills, the group’s Water volumes grew by 11.3% with support in all 3 markets.

Price and other revenue growth management activities accelerated revenue per case growth to 11.6% on an organic basis, as pricing remained a significant instrument that the group controlled according to plan in light of rising inflationary pressures, with no negative impact on volumes.

Coca-Cola HBC Segmental Analysis

Established Markets

Volume in established markets increased by 9.6%, driven by double-digit growth in Stills, primarily driven by Water, which benefitted from out-of-home channels gaining traction with the ease of restrictions.

Despite severe comparatives, Sparkling volumes climbed in the high single digits, while Energy volumes grew in the low twenties.

Stills volume growth grew in the mid-teens in Greece, double digits in Ireland, and in the high teens in Switzerland, owing to a solid performance by Water, according to CCHBC.

In Ireland, volumes increased by the mid-teens and Sparkling volumes increased by the low-double digits, thanks to Trademark Coke and Adult Sparkling, whereas in Switzerland, volumes increased by the mid-single digits, owing to strengthening out-of-home trends despite Sparkling volumes falling slightly.

Volumes increased by low-double digits in Italy, driven by Sparkling and Energy, while ready-to-drink tea surged by double digits as limitations were eased in February, benefiting out-of-home channels.

CCHBC benefited from price changes in all of its markets, as well as a favourable package mix and positive channel mix, as organic growth in net sales revenue per case increased by 7.9%.

On an organic and reported basis, the company’s net sales revenue increased by 18.2% and 19.5%, respectively.

Developing Markets

Sparkling volume climbed by 24% in developing markets, led by CCHBC’s great success in low- and no-sugar variations, while both Energy and Stills volumes grew by double digits.

Volumes in Poland climbed by the mid-thirties, in Hungary by the low-twenties, and in the Czech Republic by the low-double digits.

As the firm battled the sugar levy, Trademark Coke, low/no-sugar versions, and Adult Sparkling experienced a high success in Poland. In Sparkling, Hungary and the Czech Republic both had double-digit and mid-single-digit increase.

Organic net sales revenue per case climbed by 13.3%, while reported net sales revenue jumped by 40.2%.

Emerging Markets 

The volume of emerging markets increased by 8.5 percent organically and by 28.8 percent on a reported basis, which incorporates Egypt’s consolidation from January.

Against strong comparables, Sparkling volumes increased by the single digits, while Adult Sparkling and Energy increased by the thirties.

Stills volumes increased by high single digits, thanks to strong performances from Water and Juice.

Russia’s volume increased by double digits in the first half of the quarter, boosted by soft comparatives and strong momentum, but Ukraine’s volume plummeted by the high twenties in the quarter.

The conflict has disrupted Coca-Cola HBC’s activities since February 24, and the group has only been selling small amounts where it was safe.

In Nigeria, volume climbed by the low double digits, with Sparkling up by the high single digits and Stills rising by the mid-teens. Predator nearly doubled volumes this quarter, indicating that energy is still performing strongly.

Despite a minor drop in Sparkling volumes, volume in Romania climbed by the low single digits. Water, on the other hand, drove a continuous rebound in Stills, which increased by high single digits.

Despite a more adverse macro background, volume performance in Egypt is moving in line with objectives; nonetheless, integration continues to move well and infront of forecasts.

Due to the consolidation of Egypt from mid-January, net sales revenue per case climbed 13.1% organically and 36.2% on a reported basis, which was only somewhat offset by the lower Russian Rouble.

Coca-Cola HBC Ukraine and Russia Operations

Coca-Cola HBC continues to put its people’s safety first, giving urgent financial assistance and partnering with the Coca-Cola Foundation and the Red Cross to deliver humanitarian aid in the region. The Coca-Cola System has pledged $15m to humanitarian aid organization across the world.

Coca-Cola HBC has ceased operations in Russia and is working to put this decision into effect in close collaboration with The Coca-Cola Company, with whom it has enjoyed a fruitful cooperation for over 70 years. As a result of this choice, the company will have a significantly smaller market presence, focusing on local businesses.

The group said organic revenue increase excluding Russia and Ukraine was 25.9%, owing to the group’s other markets’ continued excellent performance.