Coke’s second-largest bottler based the figure on current spot currency prices, but also linked the loss to the Eurozone debt crisis and its effects on developing and emerging market currencies.
Announcing its results for the six months ending June 29 2012, CCH blamed a comparable operating profit decline of €28m for that period (versus 2011) principally on unfavorable currency movements.
Dimitris Lois, CEO, said: “We continue to witness prolonged macroeconomic uncertainty in all of our EU markets. The pressure from input costs is expected to ease in H2, though almost all of the benefit is expected to be offset by…unfavorable exchange rate movements.”
Volumes fell 2% in H1 2012 to 1.01bn unit cases (a unit case is x24 8 US fluid ounce servings) and despite net sales up 1% to €3.432bn, net profit fell 31% to €91.2m compared with H1 2011.
Disposable income declines and “persistently low” consumer confidence in EU markets, coupled with unseasonably wet weather in Central and Eastern Europe, all hit the top line in Q2, CCH said.
Meanwhile, a shift in demand towards at-home consumption had an impact on package mix during the quarter, the company said, while input costs rose 5% on average in Q2 as EU sugar prices rose.
CCH divides its operating regions into ‘Established’, ‘Developing’ and ‘Emerging’ markets, and the company painted a bleak picture of its performance in all bar the last.
Volumes fell across established markets to 184m unit cases in Q2: Italy (-10%), Switzerland (down mid-single digit), Greece (a high single digit decline), Ireland (low double digit slump) in Q2.
Management blamed worsening economic conditions and consumer confidence in Italy, although it insisted it maintained volume and value share – indicating a wider malaise within the category.
In Greece volumes were hit by a new2 wave of austerity measures – including a 10% VAT increase – while Swiss sales were rocked by the strength of the Franc against the Euro (leading to cross-border shopping in Germany and France).
Developed markets (Poland, Hungary, Czech Republic) were most affected by higher input cots, CCH said, while lower Q2 volumes (109m unit cases) and adverse currency movements hit revenue and operating profits.
‘Emerging markets’ accounted for just over half of CCH’s volumes in Q2 2012 (292 m.u.c) and here Russia was a bright spot, with low double-digit volume growth (Fanta 26%+, Coca-Cola +23%) and volume and value gains in both sparkling and non-alcoholic RTD beverages in the quarter.
Nigerian volumes fell single digit due to social unrest in the North, while consumer incomes were hit by a 43% cut in the government fuel subsidy, and Romanian and Ukrainian volumes also fell.
But overall emerging market sales rose 13% in Q2 year-over-year to €941m, and CCE reported that comparable EBIT grew 35% to €119m.