Coca-Cola European Partners sees volume declines amid pandemic

Coca-Cola European Partners reported a 4% fall in comparable volume in its first quarter on Tuesday, which it said reflected “challenging comparables”, some customer disruption as a result of its planned pricing strategy, and the initial impact of the Covid-19 coronavirus pandemic across its markets.

The Britain-based bottler of Coca-Cola Company products - the world’s largest - said revenue per unit case was up 1.5%, benefiting from a favourable price environment and promotions, offset by a negative channel and pack mix, particularly in March, given emerging ‘away from home’ closures.

Value share gains across the company’s measured channels was said to have been driven by its portfolio of still beverages.

For the first quarter of 2020, the firm reported revenue of €2.48bn (£2.16bn), volume of 521 million unit cases, and revenue of €4.77 per unit case.

Looking at the impact of the pandemic, Coca-Cola European Partners said total volume declines for the Covid-19 impacted weeks to date, being the five weeks ending 17 April, was in the range of 20% to 40% lower.

Of that, it said ‘away from home’ was in the range of 45% to 85% down, while ‘home’ was between a 5% improvement and a 10% decline across its markets.

The board confirmed the 2019 financial year dividend of €1.24 per share was fully paid during 2019, adding that given the “significant uncertainty” of the effect of Covid-19, it was deferring consideration of its 2020 first half dividend until visibility was improved.

That, it said, would preserve flexibility until a better, informed decision as to appropriate quantum could be made.

The company repurchased around €130m shares during the period, out of the €1bn programme announced in February, which was suspended until further notice as it had previously indicated.

It also successfully issued a €600m senior unsecured note, due 2026, and noted that Sweden became its first 100% recycled PET market, eliminating the use of 3,500 tons of virgin plastic per year.

"Throughout the pandemic, we are prioritising the wellbeing of our people, serving our customers, supporting our communities and protecting the long-term future of our business,” said chief executive officer Damian Gammell.

“The situation is having a fundamental impact on the way people consume our products, particularly in the away from home channel. We are working closely with our customers who continue to trade, providing access to the brands and packs they need at this time, and we are adapting to focus more on the home channel including the growth in online.”

Gammell said the board was “confident” about the post-crisis future of the business.

“We have strong fundamentals built upon great brands, routes-to-market, customer relationships and of course great people.

“While we take action to respond to the immediate crisis and provide relief to communities, we are also preparing for how we enable recovery and then sustained growth.

“We will accelerate our planning based on the global consumer insights and experience of our brand partners like the Coca-Cola Company.”

Before the crisis took hold in its markets, Gammell said the company saw “good momentum” in the first quarter, including progress on its sustainability agenda.

“Despite the uncertainty that surrounds us today, our confidence in the future of our business is driving us to take the right actions to protect our performance, conserve cash and lay the foundations for recovery, all underpinned by a strong balance sheet.”

At 1255 BST, shares in Coca-Cola European Partners were up 2.96% in London, at €38.84.