Economy Coca-Cola HBC falls short on profit in tough European market

Coca-Cola HBC falls short on profit in tough European market

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Coca-Cola HBC falls short on profit in tough European market

Swiss-based soft drink bottler Coca-Cola HBC AG (CCH.L) fell way short of market expectations for operating profit in the first half of 2019, hit by sluggish growth in its established markets and an unseasonable start to the European summer.

HBC, which produces Coca-Cola (KO.N) drinks under franchise for 28 mostly European markets and is one of the world’s biggest soft-drinks bottlers, said net sales revenue rose 3.8% to 3.35 billion euros (£3.09 billion) for the six months ended June 28, beating company supplied estimates of 3.34 billion euros.

But it reported a 4.9% dip in operating profit to 288.9 million euros, missing company supplied estimates of 319.8 million euros.

“We are pleased with this solid first half given the challenging combination of tough comparators and unseasonably cold and wet weather,” Chief Executive Officer Zoran Bogdanovic said.

With the euro zone economy slowing and consumers in some of its markets facing the threat of Brexit, the company reported a rise of just 0.4% in volumes in its established markets.

That was outstripped by greater demand in Nigeria and other emerging markets in eastern Europe, which got a boost at the end of June from the first days of one of the hottest summers on record.

Coca-Cola Co’s general business model is to sell syrup to a network of franchise bottlers in different markets who do the heavy lifting of bottling and delivering the drinks.

Rival Coca-Cola European Partners Plc CCEPC.L separately reported a 10.5% rise in comparable operating profit, but said bad weather in the second quarter in Britain, Northern Europe and Germany partially offset growth. HBC also said rainy weather in the second quarter was a headwind to revenue growth.