Rapid growth over the last year has paid dividends for soft drink bottler Coca-Cola Hellenic Bottling Company (CCHBC), which has reported a significant rise in net profits for the first six months of 2003.
The Greek company has extensive operations in central and eastern Europe, and has actively pursued a programme of expansion there over the last few months, acquiring bottled water companies Dorna in Romania and Valser in Switzerland since last year's first half.
These acquisitions, as well as a number of new product launches, helped lift the company's total volume sales for the first half of 2003 by 6 per cent to 647 million unit cases, although turnover grew by a much more modest 1 per cent to €1.95 billion, mainly as a result of poor exchange rates in Nigeria, Poland, Russia, Ukraine and Belarus.
Second quarter sales revenues - boosted by the hot early summer weather and the late Easter period - were up by a much more impressive 6 per cent on the previous year, and would have been 11 per cent higher at constant exchange rates, the company said.
Operating profit for the half increased by 31 per cent to €135 million, helped by the company's ongoing efforts to control its costs, while net profits were up by more than 100 per cent to €48 million from €17 million a year earlier as result of lower interest and tax rates.
EBITDA (earnings before interest, tax, depreciation, amortisation and other non-cash items), which CCHBC calculates as operating profit plus depreciation and amortisation and uses as a key measure of performance, was ahead 12 per cent to €324.6 million during the half.
The company said it was particularly pleased with the new water business, with both Valser and Dorna contributing 3 per cent to volume sales and 2 per cent to EBITDA. Two more bottled water businesses will help boost sales further in the second half, with Multivita in Poland and Romerquelle in Austria set to join CCHBC's portfolio by the end of the year.
In the bottler's established markets - Austria, Greece, Italy, Northern Ireland, Republic of Ireland and Switzerland - volumes were up 3 per cent to 273 million unit cases, with positive growth in all countries during the second quarter helped by the heat wave. Established markets contributed €182 million to group EBITDA for the first half, 11 per cent above prior year driven by both volume growth and cost management, with Italy being a major contributor.
In the developing markets of Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, volumes were again up 3 per cent for the half at 128 million unit cases, with Poland in particular performing extremely well Developing markets contributed €47 million to group EBITDA for the first half, up 3 per cent, although this would have been higher if not for the loss of toll filling contracts because of the German deposit legislation, the company said.
In the company's emerging markets - Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, FYRO Macedonia, Moldova, Nigeria, Romania, Russia, Serbia and Montenegro and Ukraine - unit case volume was 246 million for the first half, 9 per cent above the prior year, helped by an exceptional performance from Romania which offset a decline in Nigeria due to uncertainty over the elections there. Emerging markets contributed €96 million to group EBITDA for the first half, 17 per cent up on last year, again driven by the Romanian market but also by a significant improvement in the Russian business.
Coca-Cola HBC is one of the world's largest bottlers of products of The Coca-Cola Company and has operations in 26 countries serving a population of more than 500 million people.