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Coca-Cola Europacific Partners Q1 2025 Update: Revenue Growth & Mixed Volume Trends

$CCEP
Form 6-K
Filed on: 2025-04-29
Source
Coca-Cola Europacific Partners Q1 2025 Update: Revenue Growth & Mixed Volume Trends

Coca-Cola Europacific Partners PLC (CCEP) Q1 2025 Trading Update: Key Insights & Analysis

Recommendation: Hold Reason: CCEP's performance in Q1 2025 shows resilience amidst macroeconomic challenges, but mixed volume trends and strategic de-listings warrant a cautious approach.

Snapshot of Key Information

  • Total Revenue: €4,689 million (up 5.0% YoY)
  • Adjusted Comparable Revenue: Down 0.8%
  • Volume Change: Adjusted volume decreased by 0.6%
  • Operating Profit Growth Forecast: 7%
  • Interim Dividend: €0.79 per share
  • Share Buyback Plan: €1 billion over the next 12 months

Performance Overview

Coca-Cola Europacific Partners PLC (CCEP) reported a mixed bag of results in its Q1 2025 trading update, revealing a robust revenue growth of 5.0% year-over-year, amounting to €4,689 million. However, adjusted comparable revenue saw a slight decline of 0.8%. This divergence in revenue highlights the ongoing challenges faced by the company, particularly in the European market, which experienced a notable volume decline driven by strategic de-listings and seasonal impacts tied to the Easter holiday.

Volume Trends

The adjusted comparable volume decreased by 0.6% year-over-year, revealing a troubling trend in consumption patterns. Specifically, Europe reported a more significant drop of 2.1%. The de-listing of Capri Sun is a pivotal factor affecting this decline. Conversely, the Australia/Pacific (APS) region saw a growth of 2.1%, showcasing the diverse performance across geographic segments.

Financial Highlights

The company's revenue per unit case saw a 3.1% increase, attributed largely to effective pricing strategies and promotional optimizations. Looking ahead, CCEP anticipates a 7% growth in operating profit for the fiscal year, indicating confidence in its operational strategies despite the current challenges. The projected free cash flow is expected to be at least €1.7 billion, enhancing the company’s ability to return value to shareholders through dividends and share buybacks.

Cost of Sales

CCEP expects a comparable growth of 2% in sales per unit case, aided by stable commodity prices due to effective hedging strategies. This stability in costs is crucial as it allows for more predictable profit margins amidst fluctuating market conditions.

Dividend and Shareholder Returns

The announcement of an interim dividend of €0.79 per share, representing approximately 40% of the FY24 dividend, reflects the company's commitment to returning capital to shareholders despite the mixed performance. Furthermore, the planned €1 billion share buyback over the next 12 months signals management's confidence in the intrinsic value of its shares.

Market and Operational Insights

Geographic Performance

  • Europe: The decline in revenue can be largely attributed to the strategic de-listing of Capri Sun and the timing of Easter, impacting consumption patterns.
  • Australia/Pacific: The region demonstrated resilience with a 2.1% growth, primarily driven by the Pacific Islands, even as Australian markets faced challenges.
  • Southeast Asia: Growth in the Philippines was noted, countered by a weaker consumer backdrop in Indonesia.

Product Highlights

Several product categories showed varied performance:

  • Coca-Cola Zero Sugar and Monster: Both brands performed strongly, contributing positively to revenue.
  • New Product Launches: Innovative promotions and the introduction of new flavors (e.g., Fanta's Tutti Frutti) have bolstered certain categories despite overall declines in volume for some beverages.

Sustainability and Corporate Governance

CCEP's continued recognition on the Carbon Disclosure Project's A List for Climate for the ninth consecutive year emphasizes its commitment to sustainability. Investments aimed at reducing the carbon footprint further enhance its corporate governance profile, appealing to socially conscious investors.

Forward-Looking Statements and Guidance

While the company reaffirms its full-year guidance, investors should remain cautious due to potential risks stemming from macroeconomic factors. Market volatility and changing consumer preferences could impact performance in subsequent quarters.

Conclusion

In summary, Coca-Cola Europacific Partners has displayed resilience in Q1 2025 with strategic pricing and growth in specific markets, yet faces challenges with volume declines in Europe and strategic de-listings impacting overall performance. While the outlook remains cautiously optimistic with planned dividends and share buybacks reflecting strong cash flow, mixed beverage performance and macroeconomic uncertainties suggest holding positions in the stock for the time being. The company's focus on product innovation and sustainability will be key drivers as it navigates the competitive landscape in the coming months.

Final Recommendation: Hold Investors should keep an eye on CCEP's performance in the next quarters, especially how it adapts to market conditions and consumer trends.