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Coca-Cola European (CCE) Reports 1H16, Offers 2017 View

Zacks

Newly formed Coca-Cola European Partners plc or CCEP CCE, formerly known as Coca-Cola Enterprises Inc., reported first-half 2016 results wherein earnings of €0.83 per share were up 10.5% year over year.

Revenues

Total revenue in the period, however, declined 3% year over year. Volumes also declined 1.5% on a comparable basis. The company highlighted the fact that soft consumer environment and persistent economic challenges continue to impact its results. Again, poor weather conditions throughout its territories during the second quarter added to the woes.

Regionally, Iberia witnessed a 1.5% revenue growth in the first half. However, Germany (down 0.5%), Great Britain (10.5%) and France (4.5%) registered a fall in revenues. Again, revenues in the Northern European territories (Belgium, the Netherlands, Norway and Sweden) were down 0.5% due to lower revenues in Belgium. Lower tourist travel in Belgium was partly offset by revenue growth in Norway and Sweden.

Operating Highlights

First-half 2016 cost of sales was up 9% due to the inclusion of Germany and Iberia during the later part of the second quarter. The same drove the company’s operating expenses by 29.5% during the first half of 2016.

COCA-COLA EU PT Price, Consensus and EPS Surprise

COCA-COLA EU PT Price, Consensus and EPS Surprise | COCA-COLA EU PT Quote


Dividend

CCEP declared an initial quarterly dividend of €0.17 per share and maintained its prior commitment to have an initial dividend pay-out ratio of 30% to 40% of profit after taxes.

Guidance

For 2016, CCEP expects revenues to remain flat. Operating profit is expected to grow in a modest mid-single-digit range and earnings in a mid-teen range.

The company also reaffirmed its pre-tax savings target at the €315 million to €340 million range through synergies by mid-2019.

Coca-Cola European Partners plc or CCEP was formed on May 28, 2016 through the combination of Coca-Cola Enterprises or CCE, Coca-Cola Iberian Partners or CCIP and CCEG or Coca-Cola Erfrischungsgetränke AG.

Based on revenues, CCEP is the world’s largest independent Coca-Cola bottler. It serves over 300 million consumers across Western Europe, including Andorra, Belgium, continental France, Germany, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, Portugal, Spain and Sweden.

Zacks Rank & Key Picks

Coca-Cola European Partners currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the beverage sector are Coca-Cola Amatil Limited CCLAY, Dr Pepper Snapple Group, Inc. DPS and Primo Water Corporation PRMW, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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