Coca-Cola Europacific Partners plc Announces Preliminary Unaudited Results Q4 & FY 2023

Preliminary unaudited results for the full year ended 31 December 2023

Solid end to a great year, well placed for FY24 and beyond

UXBRIDGE, UK / ACCESSWIRE / February 23, 2024 / (NASDAQ:CCEP)(LSE:CCEP)

DAMIAN GAMMELL, CHIEF EXECUTIVE OFFICER, SAID:

"2023 was a great year for CCEP. This is testament to the hard work of our colleagues to whom we are extremely grateful, alongside our customers and brand partners. Our focus on leading brands, strong customer relationships and solid in-market execution served us well. We delivered solid top and bottom-line growth and generated impressive free cash flow. We drove solid gains in revenue per unit case through our revenue and margin growth management, along with our price and promotion strategy across a broad pack offering. Across our developed markets, transactions outpaced volume and we grew both share and household penetration. We progressed our long-term transformation strategy in Indonesia, and today, we completed the exciting acquisition, with Aboitiz^[4], of Coca-Cola Beverages Philippines^[5].

"We are well placed for FY24 and beyond. We are stronger and better, more diverse and robust, and our categories remain resilient despite ongoing macroeconomic and geopolitical volatility. We have fantastic activation plans, focusing on the Paris Olympics and the UEFA Euros, to engage customers and consumers. And we continue to actively manage our pricing and promotional spend to remain relevant to our consumers, balancing affordability and premiumisation. Along with our focus on productivity, this will all ultimately drive our free cash flow.

"We remain confident in the future, continuing to invest for the long-term. A record dividend in FY23 and our recent inclusion into the Nasdaq 100, combined with our FY24 guidance, demonstrate the strength of our business and our ability to deliver continued shareholder value. Supported by strong relationships with our brand partners, we have the platform and momentum, now including the Philippines, to go even further together whilst continuing to be a great partner for our customers and a great place to work for our colleagues."

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Note: All footnotes included after the ‘About CCEP' section

FY & Q4 HIGHLIGHTS^[1]

Revenue

FY Reported +5.5%; Fx-neutral +8.0%^[6]

• Delivered more revenue growth YTD for our retail customers than any of our FMCG peers in Europe & our NARTD peers in Australia & New Zealand (NZ)^[7]

^• NARTD value share gains^[7] across measured channels both in-store (+10bps) & online (+90bps), & increased household penetration in Europe (+70bps)^[8]

• Transactions ahead of volume growth in Europe, Australia & NZ

• Comparable volume -0.5%^[9]

◦ By geography:

▪ Europe +0.5%^[9] reflecting solid in-market execution, resilient consumer demand offset by mixed summer weather

▪ API -5.0%^[9] reflecting solid in-market execution driving continued volume growth in Australia & NZ offset by softer consumer spending in Indonesia & the strategic SKU portfolio rationalisation

◦ By channel: Away from Home (AFH) -1.5%^[9] & Home 0.0%^[9]

• Strong revenue per unit case +8.5%^[2],[6] (Europe: +8.0%; API: +11.0%) driven by positive headline price increases & promotional optimisation alongside favourable mix

Q4 Reported +5.0%; Fx-neutral +7.0%^[6]

• Comparable volume +1.0%^[9]

◦ By geography:

▪ Europe +2.0%^[9] reflecting solid in-market execution & cycling disruption last year relating to a customer negotiation

▪ API -3.0%^[9] reflecting solid in-market execution driving underlying volume growth in Australia & NZ offset by softer consumer spending in Indonesia & the strategic SKU portfolio rationalisation

◦ By channel: AFH -1.0%^[9] & Home +3.0%^[9]

• Strong revenue per unit case +6.0%^[2],[6] (Europe: +5.5%; API: +8.5%) driven by positive headline price increases & promotional optimisation alongside favourable mix

Operating profit

FY Reported +12.0%; Fx-neutral +13.5%^[6]

• Cost of sales per unit case +7.5%^[2],[6] reflecting increased revenue per unit case driving higher concentrate costs, inflation in commodities & manufacturing

• Comparable operating profit of €2,373m, +13.5%^[6] reflecting strong top-line, our efficiency programmes & continuous efforts on discretionary spend optimisation

• Comparable diluted EPS of €3.71, +12.0%^[6] (reported +10.5%)

Dividend

• Full year dividend per share of €1.84^[3], +9.5% vs 2022, maintaining annualised total dividend payout ratio of approximately 50%

Joint acquisition of Coca-Cola Beverages Philippines, Inc. (CCBPI)

• CCEP confirms it has, together with Aboitiz Equity Ventures Inc., completed the acquisition of CCBPI from The Coca-Cola Company

• See separate release on Investors section of our website for more detail including provision of adjusted financial information on a FY basis for FY23 (https://ir.cocacolaep.com/financial-reports-and-results/financial-releases)

Other

• Comparable free cash flow: generated impressive comparable free cash flow of €1,734m^[1][10] reflecting strong performance & working capital initiatives (net cashflows from operating activities of €2,806m)

◦ Supporting return to the top end of our target leverage range (2.5 to 3.0x Net debt: Comparable EBITDA^[1],[11]) by the end of 2023, as previously guided

◦ At the end of 2023, Net debt: Comparable EBITDA^[1][11] was 3.0x (end of FY22: 3.5x). This excludes the acquisition of CCBPI, which is expected to have a modest impact

• Comparable ROIC^[1] increased by 120bps to 10.3% (reported 9.5%) driven by the increase in comparable profit after tax & continued focus on capital allocation

• Strategic portfolio choices: CCEP will move forward independently from both Beam Suntory & Capri Sun. See H1 2023 release on our website for more detail

(https://ir.cocacolaep.com/financial-reports-and-results/financial-releases)

SUSTAINABILITY HIGHLIGHTS

• Retained MSCI AAA rating, inclusion on Carbon Disclosure Project A List for Climate & on the Bloomberg Gender Equality index

• Received approval from the Science Based Targets initiative (SBTi) of CCEP's long-term 2040 net zero & 2030 greenhouse gas reduction targets

• Exceeded target of 50% recycled plastic in our packaging: closed 2023 at 54.9%^[12] (2022: 48.5%)

• Achieved carbon neutral certification for a further six manufacturing sites (five in Iberia and one in NZ); now a global total of 14 sites

• Partnered with The Coca-Cola Company, other bottlers & Greycroft, a seed-to-growth venture capital firm, to create a sustainability-focused venture capital fund

FY24 GUIDANCE^{[1], [13]}

The outlook for FY24 reflects our current assessment of market conditions. Unless stated otherwise, guidance is on an adjusted^[13] comparable & FX-neutral basis. Guidance is therefore provided on the basis that the acquisition of CCBPI occurred on 1 Jan 2023.

• Revenue: comparable growth of ~4% in line with our mid-term strategic objectives

• More balanced between volumes & price/mix than FY23

• Two extra selling days in Q4

• Cost of sales per unit case: comparable growth of 3-4%

• Expect commodity inflation to grow low single-digit

• FY24 hedge coverage at ~80%^[14]

• Taxes increase driven by Netherlands

• Concentrate directly linked to revenue per unit case through the incidence pricing model

• Operating profit: comparable growth of ~7% in line with our mid-term strategic objectives

• Continued focus on optimising discretionary spend & delivering efficiency programmes

• FY24 supported by first year of next €350-400m efficiency programme to be delivered by the end of FY28 (cash cost to deliver included within FCF guidance): expect ~€60-70m to be delivered in FY24

• Other:

• Finance costs: weighted average cost of net debt of ~2%

• Comparable effective tax rate: ~25%

• Comparable free cash flow: ~€1.7bn in line with our mid-term strategic objectives

• Capital expenditure: ~5% of revenue excluding leases

• Dividend payout ratio: ~50%^[15] based on comparable EPS

Fourth-quarter & Full-Year Revenue Performance by Geography^[1]

France

• Q4 volume decline reflects poor weather conditions & cycling strong Q4 World Cup activation.

• Fuze Tea continued to perform well achieving double-digit volume growth for both Q4 (+29.5%) and FY (+41.0%). Monster, Sprite & Powerade also outperformed in Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented in the first quarter.

Germany

• Q4 volume growth reflects cycling disruption last year relating to a customer negotiation.

• Continued volume growth in Coca-Cola Zero Sugar & Fanta. Monster, Fuze Tea & Powerade achieved double-digit volume growth for both Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented in the third quarter & positive brand mix e.g. FY Monster volume +34.0%.

Great Britain

• Q4 volume broadly flat.

• Monster realised double-digit volume growth for both Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented at the end of the second quarter & positive brand mix e.g. FY Monster volume +16.5% & successful launch of Jack Daniel's & Coca-Cola.

Iberia

• Q4 volume growth driven by the AFH channel & resilient consumer demand.

• Coca-Cola Zero Sugar, Sprite & Monster volumes performed well. Royal Bliss achieved double-digit volume growth in Q4 (+12.0%), supported by launch in Portugal.

• Revenue/UC^[20] growth driven by headline price increase implemented in the first quarter & positive mix.

Northern Europe

• Q4 volume growth reflects solid in-market execution & promotional optimisation.

• Monster, Powerade & Aquarius volumes outperformed for both Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented across our markets & positive pack mix led by the recovery of the AFH channel e.g. FY small glass volume +4.5%.

API

• Q4 volume decline reflects the strategic de-listings within Australia's bulk water portfolio & softer consumer spending in Indonesia.

• Coca-Cola Zero Sugar, Monster & Powerade volume outperformed for both Q4 & FY.

• Revenue/UC^[20] growth driven by headline price increase implemented across our markets during the first half & promotional optimisation in Australia.

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Note: All values are unaudited and all references to volumes are on a comparable basis. All changes are versus 2022 equivalent period unless stated otherwise

Fourth-quarter & Full-Year Volume Performance by Category^[1],[9]

Comparable volumes, changes versus equivalent 2022 period.

Coca-Cola^TM

• Q4 & FY growth across all key markets reflecting outperformance of Coca-Cola Zero Sugar (Q4:+3.5%; FY:+4.0%) supported by targeted campaigns & innovation.

• Coca-Cola Zero Sugar gained FY value share^[7] of Total Cola +40bps, led by GB +120bps.

Flavours, Mixers & Energy

• Fanta Q4 +1.0%, reflecting strong consumer demand supported by flavour extensions.

• Q4 & FY Energy +14.0% led by Monster, continuing to gain distribution & share through exciting innovation e.g. launch of Monster Green Zero Sugar.

Hydration

• Q4 Water -9.5%; Q4 Sport +11.5%

• FY Water -13.5% driven by strategic portfolio choices (SKU rationalisation in Indonesia, the exit of large PET packs in Germany (Vio) & Iberia (Aquabona), & Mount Franklin bulk packs in Australia).

• FY Sports +9.0% growth in Powerade across all markets^[22] driven by continued favourable consumer trends in this category.

RTD Tea, RTD Coffee, Juices & Other^[21]

• Q4 Juice drinks -6.0%

• Q4 RTD Tea/Coffee +9.0% reflecting continued growth in Fuze Tea across Europe (+27.5%).

• FY performance reflecting strategic SKU rationalisation in Indonesia, partially offset by continued growth in Fuze Tea across Europe (+23.5%).

• Jack Daniel's & Coca-Cola performed well since launch e.g. now #1 ARTD^[23] value brand in GB^[24]

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Note: All references to volumes are on a comparable basis. All changes are versus 2022 equivalent period unless stated otherwise

Conference Call (with presentation)

• 23 February 2024 at 11:30 GMT, 12:30 CEST & 6:30 a.m. EDT; accessible via www.cocacolaep.com

• Replay & transcript will be available at www.cocacolaep.com

Financial Calendar

• Integrated Report for publication: 15 March 2024

• First-quarter 2024 trading update: 25 April 2024

• Financial calendar available here: https://ir.cocacolaep.com/financial-calendar/

Contacts

Investor Relations

Sarah Willett
sarah.willett@ccep.com

Awais Khan
awais.khan@ccep.com

Raj Sidhu
raj.sidhu@ccep.com

Media Relations
ccep@portland-communications.com

Please click on the following link to view the full announcement.

http://www.rns-pdf.londonstockexchange.com/rns/1877E_1-2024-2-22.pdf

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SOURCE: Coca-Cola Europacific Partners plc