Results round-up: Coca-Cola, Drax, Lancashire Holdings

Drinks bottler Coca-Cola Hellenic Bottling Company upped its dividend 10% after a calendar year that saw flat volumes and a dip in sales due to currency but much improved profits thanks to improved costs and efficiencies.

With economic conditions anticipated to be slightly better in 2017, the FTSE 100-listed group expects volumes to continue to grow in developing and emerging markets and to stabilise in more established markets, while margins expansion is predicted despite higher input costs.

Currency effects are difficult to forecast due to uncertainty around the Nigerian naira and volatility in Russia's rouble, but with some hedging in place for sugar and aluminium and based on current spot rates, management expect the adverse impact on operating profit of around €15m for the full year.

For 2016, the impact of currencies saw net sales revenue fall 2% to €6.2bn while on a forex-neutral basis, net sales revenue rose 3% to €6.2bn.

This came as volume inched 0.1% higher to 2.1bn cases, with growth in Nigeria and Romania offset by continuing decline in Russia and weaker volume performance in Italy and Austria.

Drax Group

Electricity generation company Drax Group posted its preliminary results for the 2016 calendar year on Thursday, reporting a “good operational performance”, with 65% of electricity generated from renewable biomass during the year and progress made with its strategic initiatives.

The FTSE 250 firm saw its EBITDA fall to £140m from £169m, with underlying earnings less than half what they were in 2015, at £21m against £46m.

Underlying earnings per share stood at 5p, down from 11.3p, although net debt narrowed to £93m from £187m.

Total dividends were also less than half those in the prior year, at 2.5p compared to 5.7p per share.

On a statutory basis, profit before tax improved to £197m from £59m, while basic earnings per share were 48p compared to 14p in 2015.

Drax said the 2016 EBITDA figure was in line with guidance, with the year-on-year reduction driven by “challenging commodity markets” and the loss of levy exemption certificates.

It said those issues were mitigated by growth in system support, improving retail and pellet supply profitability.

“We are playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future,” commented chief executive Dorothy Thompson.

“With the right conditions, we can do even more, converting further units to run on compressed wood pellets."

Lancashire Holdings

Despite macroeconomic uncertainty insurer Lancashire Holdings' results for 2016 held up and while the company remains confident about 2017, it expects "market conditions to remain difficult for the foreseeable future”.

For calendar 2016, return on equity remained flat at 13.5% and for the final quarter it fell to 2.8% from 3.5% the previous year. Chief executive Alex Maloney said this was “an exceptional outcome” despite the trading environment.

He said: "The 2016 year proved a turbulent one for the global political and macroeconomic environment and the insurance market remained very challenging. Risk capital remains abundant, and there is continuing pressure upon pricing and terms and conditions. Against this background I am particularly pleased with the results for both the fourth quarter and the full year.”

The return on equity for 2016 also included relative contributions from the Lancashire, Cathedral and Kinesis businesses which were 9.1%, 3.6% and 0.8%, respectively, and were consistent with the previous year.

Chief financial officer Elaine Whelan said that while the company’s investment portfolio returned a small loss of 0.1% for the quarter, it performed in line with expectations in a rising yield environment, with risk assets and interest rate hedges protecting the portfolio.

The compound annual return since inception, excluding the impact of warrants, was 18.6%.

Gross premiums written slipped to $633.9m from $641.1m while net premiums written were down to $458.7m from $481.7m.

Pre-tax profit fell to $150.4m from $171.7m and profit after tax dipped to $153.8m from $181.1m.