Coca-Cola HBC AG, the Swiss bottling partner for The Coca-Cola Company, has revised its 2024 revenue and profit forecasts upwards following a robust performance in the first half of the year. The company reported a significant increase in revenue, driven by strategic measures to combat high inflation and currency fluctuations. Despite this positive news, the stock experienced a slight decline due to a lower-than-expected earnings per share (EPS) and EBIT.
Key Financial Metrics
Half-Year Revenue: Coca-Cola HBC achieved a 13.6% increase in organic revenue for the first half of 2024.
EBIT Growth: Organic EBIT grew by 7.5%, compared to the forecasted 7.9%.
EPS: Comparable EPS came in at £1.04, missing the anticipated £1.08.
Stock Performance: Shares fell nearly 2% in early trade following the announcement, despite having risen nearly 19% year-to-date as of the previous close.
Revised Forecasts
Revenue Growth: The company has raised its full-year 2024 revenue growth forecast to between 8% and 12%, up from the previous target range of 6% to 7%.
EBIT Growth: The forecast for organic EBIT growth has been adjusted to between 7% and 12%, an increase from the earlier estimate of 3% to 9%.
Market Reaction and Analyst Views
Jefferies noted that while the company’s forecast revisions are positive, the slight miss on EPS may lead to some short-term weakness in the stock. The stock’s recent strong performance may also contribute to this reaction.
Sector Insights
Demand Resilience: The company reported continued strong demand for packaged beverages and food, despite price hikes. This trend reflects a resilient consumer base and an improving economic environment.
Economic Outlook: Coca-Cola HBC acknowledged the ongoing challenges posed by the macroeconomic and geopolitical climate, which could impact the company’s performance in the latter half of the year.
Comparison with The Coca-Cola Company
Coca-Cola, the parent company of Coca-Cola HBC, recently raised its annual sales and profit forecasts. This adjustment is attributed to successful price increases and enhanced advertising efforts, particularly in international markets where demand for Coca-Cola’s beverages remains strong.
Conclusion
Coca-Cola HBC’s upward revision of its 2024 revenue and profit forecasts highlights the company’s strong operational performance and resilience in the face of economic pressures. However, the slight miss on EPS and EBIT has led to a modest decline in stock value. Investors will need to weigh the company’s robust growth prospects against the challenges of an uncertain economic and geopolitical landscape as they consider their positions.
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