Argus has increased its price target for Coca-Cola Europacific Partners (CCEP, Financial) from $97 to $102, maintaining a Buy rating following the company's first-quarter performance. The firm highlights that CCEP has successfully restored its volume sales to levels seen before the pandemic, with expectations for further growth. This growth is bolstered by effective pricing and advertising strategies aimed at retaining and expanding its customer base.
Additionally, Argus anticipates that the company will see positive earnings impact from its strategic expansion into the APS region, following the acquisition of Coca-Cola Beverages Philippines. This move is expected to enhance CCEP's market reach and drive future financial success.
CCEP Key Business Developments
Release Date: February 14, 2025
- Revenue: EUR20.7 billion, an increase of 3.5%.
- Operating Profit: EUR2.7 billion, up 8% with an operating margin of 12.9%.
- Diluted Earnings Per Share: EUR3.95, up 6.5% on a comparable and FX-neutral basis.
- Comparable Free Cash Flow: EUR1.8 billion.
- Dividend Per Share: EUR1.97, up just over 7% for the year.
- Share Buyback Program: New EUR1 billion program announced.
- Volume Growth: APS volumes up 4.9%, driven by the Philippines.
- Operating Margin Expansion in the Philippines: Around 200 basis points.
- Cost of Sales Per Unit Case: Increased by 2.6%.
- Return on Invested Capital: Increased by 50 basis points to 10.8%.
- Efficiency Program Savings: EUR80 million delivered, ahead of guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Coca-Cola Europacific Partners PLC (CCEP, Financial) reported robust top-line growth with a revenue increase of 3.5% to EUR20.7 billion, driven by strong performance in the Asia-Pacific and Southeast Asia (APS) markets.
- The company achieved impressive comparable free cash flow of over EUR1.8 billion, demonstrating strong cash generation capabilities.
- CCEP announced a new EUR1 billion share buyback program, highlighting its commitment to delivering shareholder value.
- The Philippines market delivered double-digit volume growth and significant value share gains, contributing to a healthy operating margin expansion.
- CCEP maintained its strong sustainability credentials, retaining its inclusion on CDP's A List for Climate for the ninth year and maintaining its MSCI AAA ESG rating.
Negative Points
- European volumes were down 2.4%, impacted by adverse weather conditions and softer demand in the away-from-home channel.
- The Indonesian market faced significant challenges due to geopolitical events, leading to a noncash impairment charge of EUR175 million.
- The company experienced higher business transformation costs, impacting reported operating profit, which declined by just under 9%.
- CCEP anticipates continued inflationary pressures, particularly in labor costs, which could affect future profitability.
- The energy drink category, while still growing, showed a slowdown in growth compared to previous years, raising concerns about future performance.
