Coca-Cola HBC hit by exchange rate headwinds despite sales growth

Coca-Cola HBC, bottling giant behind Coca Cola and other major soft drinks, has announced 12 per cent sales revenue growth despite exchange rate headwinds.

The bottling giant however said revenue only grew by one per cent in the quarter, primarily due to foreign exchange turbulence, the company said. 

This comes after the firm said in February, that its organic volume growth exceeded expectations over the previous 12 months, increasing 1.7 per cent.

Net sales grew by 19 per cent in emerging markets but reported revenue declined by 8.3 per cent for the same reason, the company said. 

Higher organic sales revenues were driven by growth in sparkling, energy and coffee; with the the latter two areas growing by 37.3 per cent and 34.3 per cent in the first three months of the financial year.

“During the period… we have accelerated investment in our unique 24/7 portfolio and in our bespoke capabilities, with several new brand launches and targeted initiatives across our markets,” Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG, said. “This ensures our continued strong in-market execution, in close collaboration with our customers. 

Coca-Cola HBC expects the macroeconomic climate to “remain challenging” but have restated plans to target revenue growth of 6-7 per cent in 2024.

This comes after the company was criticised for departing Russia quite late following a swathe of international sanctions levelled against the Kremlin, after the full-scale invasion two years ago.

Last year the company’s exit from Russia saw Coca-Cola HBC’s overall sales volumes fall 2.7 per cent, while impairments related to its exit from Russia, saw the firm take a £160m hit to its balance sheet, also saw the company’s earnings-per-share drop 24.3 per cent.

In February of this year, the company also felt the heat of criticism over its continued presence and operations in Israel, amid the ongoing war in Gaza. Coca Cola’s chief Chris Kempczinski said boycotts had a “meaningful business impact”.

The company expects production costs to rise due to inflation and unfavourable exchange rates, which are expected to be a £25-42mn headwind.  

“Although we are mindful of the broader macroeconomic backdrop, we are confident in delivering our financial guidance in the year ahead and on making further progress against our medium-term growth targets,” Bogdanovic added.

The only area to suffer a drop in demand was sparkling, which includes Coca-Cola, Sprite and Fanta. Demand declined across establish markets, by mid-single digit figures in Italy, Ireland and Switzerland.