Coca‑Cola HBC reports revenue dip in H1, eyes recovery as markets reopen

05 Aug 2020 --- Soft drinks bottler Coca Cola HBC has revealed a drop in H1 profits, driven by the COVID-19 pandemic and the closures of restaurants and other hospitality venues. Net profit declined to €124 million (US$146 million) during this period, compared to €195 million (US$230.9 million) a year earlier. The company also reported net sales revenue of €2.83 billion (US$3.35 billion) in the six months ended June 26, compared with €3.35 billion (US$3.96 billion) a year ago. As the market reopens, the company expects profits to recover. 

“Our fast, decisive actions ensured that our supply chain was uninterrupted and our profitability protected during a very challenging Q2. Our strong performance on market share demonstrates the power of our portfolio of brands and execution in the market; we will capitalize on this advantage now that we see early signs of recovery. Coca‑Cola HBC is a resilient business, well-positioned to adapt as markets reopen, emerge even stronger and win in the new normal,” says Zoran Bogdanovic, CEO of Coca‑Cola HBC. 

Coca-Cola HBC attributed the decline in revenue to pandemic-related lockdowns on its out-of-home business, which typically accounts for slightly more than 40 percent of its revenue. 

During the initial weeks of lockdowns, out-of-home volumes fell by 70 to 90 percent but improved to declines of 25 to 50 percent in May and June, and 10 to 40 percent in July, it reports. 

The company also revealed that it had seen an improvement in this segment as lockdown measures began to ease. It will continue to gain or maintain share in the majority of its markets in Sparkling and Non-Alcoholic ready-to-drink beverages. 

The company is “well-positioned to adapt as markets reopen and emerge even stronger,” says Bogdanovic, Coca-Cola HBC CEO. The company said strong cost controls in the first half led it to deliver €61 million (US$72.2 million) of its planned €100 million (US$118.4 million) of savings for 2020 in response to the crisis. Coca-Cola HBC says it “expects to deliver the rest of the cost savings in the second half.”

Coca-Cola HBC expects a negative impact for 2020 due to a weaker consumer environment and tourist season, as well as the threat of a second wave of the virus. 

Coca-Cola enters immunity boosting beverage space
Meanwhile, Coca-Cola India revealed it will be launching two new products under its Minute Maid brand this month, as the company looks to broaden its portfolio of functional beverages amid a shift in consumption behavior for immunity-boosting beverages. 

The move is also in line with the company’s strategy to accelerate at-home consumption, as the away-from-home consumption segment has been impacted.

Speaking during a virtual press conference, T Krishnakumar, President for Coca-Cola India said “it will take some time for away-from-home consumption to pick up” following the pandemic. 

The two new products – Minute Maid Vita Punch and Minute Maid Nutriforce – will be available in India from August 15. The introduction of Vita Punch marks the company’s first entry into immunity-boosting beverages.

“Our long-term strategy entails offering more fruit-based beverages in line with consumer preferences,” Krishnakumar says.

Edited by Elizabeth Green