Company Announcements

THIRD QUARTER 2019 TRADING UPDATE

SOLID QUARTER DESPITE ADVERSE WEATHER CONDITIONS

Coca-Cola HBC AG, a leading bottler of the brands of The Coca-Cola Company, today announces its 2019 Q3 trading update.

Third quarter highlights

Solid performance in a quarter where poor weather impacted industry volumes in our geographies.

FX-neutral revenue growth of 3.4%, or 2.3% excluding the impact of the Bambi acquisition.

Continued strong progress on our key areas of strategic focus:

-  Innovation supporting market share gains and contributing 3.7 pp of growth in the quarter

-  FX-neutral revenue per case accelerated with price increases and positive pack and category mix

Volumes increased by 1.1% in the quarter, -0.1% excluding Bambi. Transactions grew faster than volume and our brands gained or maintained share in the majority of our markets, while poor weather caused industry volumes to fall in several key countries.

-  Established markets volumes increased by 1.2%, an acceleration on the first half and prior-year period.

-  Developing markets volumes declined by 4.0%, cycling very strong volume growth of 11.3% in the
prior-year period, particularly impacted by poor weather across all major countries in August.

-  Emerging markets volumes increased by 3.0%, or by 0.8% excluding Bambi.  Ongoing volume growth in Romania, Ukraine and Nigeria, where the market is responding well to our strategic initiatives, was partially offset by a decline in Russia due to poor weather and tough comparatives.

FX-neutral revenue per case increased by 2.3%, or 2.4% excluding Bambi; an acceleration of more than 1% compared to the first half, and prior-year period.

-  Established markets FX-neutral revenue per case increased by 0.3%, as price increases and positive category and pack mix were offset by adverse channel mix.

-  Developing markets FX-neutral revenue per case increased by 4.6%, helped by the strong execution of our strategy for price, package and category mix to drive more revenue growth.

-  Emerging markets FX-neutral revenue per case increased by 3.4%, 3.1% excluding Bambi, with strong improvements in price/mix in all markets except Nigeria. In Nigeria, recently concluded successful pricing investments have enhanced our competitive position, driving strong volume growth in October.

We expect to deliver full year FX-neutral revenue growth of 4.0-4.5%, including a c.70bps contribution from Bambi.

Currency movements during the quarter were better than expected. We now expect a negative impact for the full year of €15 million, an improvement of €5 million compared to prior guidance.

¹For details on Alternative Performance Measures ('APMs') refer to 'Alternative Performance Measures' and 'Definitions and reconciliations of APMs' sections.

Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG, commented:

"In a quarter in which unseasonably cold and wet weather significantly depressed industry volume growth in a number of our countries, we are pleased to have gained or maintained share in the majority of our markets and to have made progress with our commercial strategy which delivered a step-up in price/mix and ongoing growth in key areas of strategic focus such as Trademark Coke, Adults, Zeros and innovation. We are also proud to have been named by the Dow Jones Sustainability Index as Europe's most sustainable beverage company for the 6th time in 7 years.

"As we look to the full year, we are pleased to have seen an acceleration in Q4, giving us confidence that 2019 will be a year of solid top-line growth and good margin expansion."

Trading

We continued to gain or maintain share in the majority of our markets and made good progress on our areas of strategic focus despite the impact of unseasonably cold and wet weather during the summer months leading to weaker than usual growth in the NARTD industry in several of our markets.

We are pleased to see continued good, broad-based volume growth from Trademark Coke, Adult Sparkling and our low- and no-sugar portfolio, our areas of strategic focus, whilst innovation also continues to be an important contributor to our growth. This quarter these drivers of our long-term growth plans were set against adverse weather that particularly impacted Switzerland, Austria, the Developing segment and Russia. Overall, volumes grew by 1.1%, or -0.1% excluding Bambi.

FX-neutral revenue per case growth of 2.3%, or 2.4% excluding the impact of Bambi, was an acceleration of more than 1% compared to the pace of growth of the first half and the prior-year period. This was due to price increases, positive category mix and changes to our packaging formats resulting in an increase to single-serve mix by 260 basis points compared to the prior-year quarter. This positive effect was partly offset by the adverse impact of our pricing strategy in Nigeria, where we are pleased to see strong results in terms of volume growth as a result of bringing in new, more affordable, price points in the market place, setting the base from which to accelerate momentum. Excluding the impact of Nigeria, FX-neutral revenue per case grew by 3.0%, further highlighting the good results from our strategy to improve the value we get from every case we sell. Reported revenue per case grew by 3.8%, helped by a positive FX impact.

FX-neutral net sales revenue growth was 3.4% or 2.3% excluding the impact of the acquisition of Bambi. Reported net sales revenue increased by 5.0% compared to the prior-year quarter.

Established markets segment

Established markets volumes accelerated in the third quarter to 1.2%. Growth in Sparkling, ready-to-drink tea (RTD tea) and Energy was partially offset by declines in Water and Juice. 

In Italy, volumes increased by mid single digits, maintaining the encouraging growth momentum we have experienced in the country since the third quarter of 2018. We are growing at a faster pace than the overall NARTD industry with growth in all categories except for Juice, which was relatively flat. We continue to benefit from changes made to pack/price architecture in Sparkling as well as work done to improve our coverage in Out of Home which is gaining us share in both Modern Trade and Out of Home. We are particularly encouraged by the strong growth from FUZETEA.

In September we announced that, jointly with The Coca-Cola Company, we entered into an agreement for the acquisition of Acque Minerali S.r.l. ("Acque Minerali" or "Lurisia"), a privately-held natural mineral water and adult sparkling beverages business in Italy. Lurisia products enjoy high brand awareness and are associated with quality, authenticity, taste and the Italian lifestyle. We believe this presents a significant growth opportunity in Italy and, in time, beyond. Completion of the deal is expected in Q4, with subsequent focus on its integration and brand scalability.

Volumes in Greece declined by low single digits, with declines in Sparkling partly due to customer frontloading ahead of the price increases implemented in July. We continue to see strong momentum in Adult Sparkling and have gained both volume and value share in Sparkling in the quarter. We saw mid-single digit volume declines in Juice where we are facing a highly competitive environment and focusing on driving value in the category.

Ireland has continued its good results with volumes growing high single digits. Sparkling was supported by the growth in Coke Zero as well as Coca-Cola Regular following the full cycling of the sugar tax implementation in 2018. Fanta maintained positive momentum helped by Fanta Zero and the launch of the new Wild Berry flavour. Energy has maintained its double-digit growth momentum, with ongoing strong results from Monster and supported by the launch of Coke Energy.

In Switzerland volumes declined by mid single digits in the third quarter, reflecting unfavourable weather conditions which impacted the whole NARTD industry whose volumes declined 12% in the month of August. We saw volume declines across the majority of categories except for Energy and Coffee.

Austria volumes declined in the third quarter by low single digits, driven by Sparkling, Juice, Water and RTD Tea partially offset by good performance in Energy. Sparkling volumes were impacted by the end of our distribution agreement for a local brand.

Net sales revenue in the Established markets grew by 2.1% in the quarter. The benefit of the positive impact of price and package mix, mainly as a result of pack/price architecture changes in Switzerland and Italy, as well as the favourable movements of the Swiss Franc, more than offset the negative channel mix. FX-neutral net sales revenue per case increased by 0.3% in the quarter.

Developing markets segment

Volume in the Developing markets declined by 4.0%, cycling tough comparatives of 11.3% expansion in the prior year period, particularly in the Water category. Poor weather across all the larger markets in the segment in the key trading month of August impacted NARTD industry growth.

Volume in Poland declined by low single digits, following lower temperatures during the period coupled with tough comparatives. Volume growth over a two-year period is up double digits. The negative impact from poor weather was particularly evident in the key month of August, and we were not immune to the decline of just over 9% witnessed in NARTD industry volumes. Energy had another quarter of double-digit growth supported by the launch of Coke Energy and strong performance from Monster. RTD tea volumes declined in an intensely competitive environment, also affected by the poor weather.  

In Hungary, volume declined by high single digits driven by lower volumes in Water, RTD tea and Juice, despite growth in Sparkling and Energy. Unfavourable weather conditions in August and competitive pressure in RTD tea were the key drivers of this performance, while FX-neutral revenue grew by low single digit in the period.

Volume in the Czech Republic declined by high single digits, as it laps a very strong comparative period; volumes are still growing at a low single digit pace over the past two years. Meanwhile strong price/mix improvements in all categories apart from RTD tea drove a low single-digit expansion in FX-neutral revenue growth in the country in the quarter.

Net sales revenue in the Developing markets remained flat in the quarter, as volume declines and adverse currency movements were offset by favourable category and pack mix coupled with positive price impacts. FX-neutral net sales revenue per case increased by 4.6%.

Emerging markets segment

Emerging markets volumes increased by 3.0% or 0.8% excluding the impact of Bambi. Growth in the segment was led by low single-digit improvement in Sparkling and double-digit growth in Energy.

In Russia, volumes declined by high single digits in the quarter. The underlying NARTD industry saw volume declines of nearly 7% this quarter, impacted by cold and wet weather. Despite the challenging conditions, we have gained volume and value share in Sparkling, and have driven strong price/mix in the market. Sparkling saw strong performance in Trademark Coke and Adult Sparkling. Energy had another quarter of double-digit growth with strong performances from both Monster and Burn, supported by the launch of Monster Ultra and Burn Lemon Ice. Juice volumes declined, driven by the industry dynamic, as we continue to take share and to focus our efforts on premiumization.

In Nigeria, volume grew by low single digits. The competitive environment in Nigeria continues to be intense and affordability concerns remain an issue for the consumer. Our investments in pricing in the returnable glass package type are delivering results and in September we expanded these investments into PET with very positive early signs including strong double-digit volume growth in the month of October. Within Sparkling, growth in Coke Zero maintained its momentum, driving a rapid acceleration in volumes. Fanta grew by double digits during the quarter fuelled by our returnable glass bottle packs. Energy grew double digits in the quarter supported by growth in all flavours.

In Romania, volumes grew by high single digits, with strong growth in Sparkling and Water. Sparkling grew mid single digits with contributions from both Coca-Cola Regular and Coke Zero. Fanta's good performance in the quarter was boosted by the launch of new flavours in Zero variants. Strong execution plans drove the continuation of the excellent performance in Schweppes. RTD tea volumes declined double digits, impacted by the delisting of Nestea. Energy grew by double digits supported by the launch of Coke Energy. Water also grew double digits in the quarter with a positive contribution from the launch of GLACÉAU smartwater.

Net sales revenue increased by 9.8%, benefitting from price, package and category mix. The segment was positively impacted by the stronger Russian Rouble and Nigerian Naira. FX neutral net sales revenue per case increased by 3.4%, or 3.1% excluding the impact of the Bambi acquisition. If we remove the impact of Nigeria, where we had a clear strategy to invest in pricing, Emerging FX neutral net sales revenue per case was up 4.9%.

Category highlights

In the third quarter, 3.7% of our volume growth came from categories, brands, flavours and packages launched in the last 12 months, a similar pace compared with the first half as we focus on increasing distribution and repeat sales of these innovations. Highlights include flavour innovations across our Sparkling brands as well as in Energy, Water and RTD tea.

We continue to work to limit the impact the business has on the environment and have just added Croatia as the fourth market where we sell Water in 100% recycled PET packaging. We are proud to have been named by the Dow Jones Sustainability Index (DJSI) as Europe's most sustainable beverage company for the sixth time in seven years. For nine years in a row we have now been ranked in the top three of both Global and European beverage companies by the DJSI; we are committed to remaining a leader in this field. 

Sparkling volumes increased by 1.3% with low single digit volume growth in both the Established and Emerging market segments, while volumes in the Developing markets declined. During the period we gained Sparkling value share in the majority of our markets and saw continued strong growth from our areas of strategic focus. Low- and no-sugar variants grew by 21.4% and we continue to work to reduce our sugar footprint, in line with our 2025 commitment to reduce the amount of sugar per 100 ml of product by 25%, versus a 2015 base year. Adult Sparkling grew by 7.7% with strong results from Schweppes. Trademark Coke volume grew by 4.0% with Coke Zero up 19.9%, maintaining strong momentum. Meanwhile volumes declined in Sprite and Fanta despite ongoing strong growth from both brands' Zero variants.

Water, a category particularly sensitive to the weather, saw a volume decline of 2.4%. We also faced a high base of comparison in Poland where we are lapping a strong programme specifically designed to increase Water volumes in the market.

Juice declined in the quarter by 3.3%, driven by lower volume in all three segments, in part offset by strong price/mix developments in the category.

Energy continues to have strong momentum with volume growth of 25.3%. We saw ongoing growth in Monster, with volumes up 32.3%, as well as high single digit volume growth from Burn. We are also seeing the benefit of strong innovation in the category with the addition of new brands, Coke Energy and Predator, as well as successful flavour innovations which maintain excitement in the category.

In RTD Tea, volumes declined by 13.1% impacted in part by the de-listing of Nestea in its three remaining markets and a 6.1% decline in FUZETEA. The RTD tea category is particularly impacted by poor weather, which contributed to the declining volume. We also faced strong competitive pressures in a small number of markets. FUZETEA is a relatively new brand and one we believe has strong potential as we build recognition and brand loyalty among consumers and customers. This is evidenced by the success of the brand in Italy where volumes grew by over 40% and we have taken the third position in the market less than two years from launch.

Supplementary information

¹For details on APMs refer to 'Alternative Performance Measures' and 'Definitions and reconciliations of APMs' sections.

The volume, net sales revenue and net sales revenue per unit case on reported and FX-neutral basis, are provided for NARTD and premium spirits, as set out below:

 ¹ For NARTD volume, one unit case corresponds to approximately 5.678 litres or 24 servings, being a typically used measure of volume. For premium spirits volume, one unit case also corresponds to 5.678 litres.

Coca-Cola HBC Group

Coca-Cola HBC is a leading bottler of The Coca-Cola Company with an annual sales volume of more than 2 billion unit cases. It has a broad geographic footprint with operations in 28 countries serving a population of more than 600 million people. Coca-Cola HBC offers a diverse range of primarily non-alcoholic ready-to-drink beverages in the sparkling, juice, water, sport, energy, plant based beverages and ready-to-drink tea and coffee categories. Coca-Cola HBC is committed to promoting sustainable development in order to create value for its business and for society. This includes providing products that meet the beverage needs of consumers, fostering an open and inclusive work environment, conducting its business in ways that protect and preserve the environment and contribute to the socio-economic development of the local communities. Coca-Cola HBC is ranked among the top sustainability performers in ESG benchmarks such as the Dow Jones Sustainability Indices, CDP, MSCI ESG and FTSE4Good, among others.

Coca-Cola HBC has a premium listing on the London Stock Exchange (LSE: CCH) and its shares are listed on the Athens Exchange (ATHEX: EEE). For more information, please visit http://coca-colahellenic.com/.

Conference call

Coca-Cola HBC's management will host a conference call for investors and analysts to discuss the trading update for the third quarter of 2019 on Wednesday, 13 November 2019 at 09:00 am London Time. Interested parties can access the live, audio webcast of the call through Coca-Cola HBC's website (http://coca-colahellenic.com/en/investors/).

Enquiries

Special Note Regarding the Information set out herein

Unless otherwise indicated, this trading update and the financial and operating data or other information included herein relate to Coca-Cola HBC AG and its subsidiaries ("Coca-Cola HBC" or the "Company" or "we" or the "Group").

Forward-Looking Statements

This document contains forward-looking statements that involve risks and uncertainties. These statements may generally, but not always, be identified by the use of words such as "believe", "outlook", "guidance", "intend", "expect", "anticipate", "plan", "target" and similar expressions to identify forward-looking statements. All statements other than statements of historical facts, including, among others, statements regarding our future financial position and results, our outlook for 2019 and future years, business strategy and the effects of the global economic slowdown, the impact of the sovereign debt crisis, currency volatility, our recent acquisitions, and restructuring initiatives on our business and financial condition, our future dealings with The Coca-Cola Company, budgets, projected levels of consumption and production, projected raw material and other costs, estimates of capital expenditure, free cash flow, effective tax rates and plans and objectives of management for future operations, are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect our current expectations and assumptions as to future events and circumstances that may not prove accurate. Our actual results and events could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in the 2018 Integrated Annual Report for Coca-Cola HBC AG and its subsidiaries. Although we believe that, as of the date of this document, the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet these expectations. Moreover, neither we, nor our directors, employees, advisors nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. After the date of this trading update, unless we are required by law or the rules of the UK Financial Conduct Authority to update these forward-looking statements, we will not necessarily update any of these forward-looking statements to conform them either to actual results or to changes in our expectations.

Alternative Performance Measures

The Group uses certain Alternative Performance Measures (''APMs'') in making financial, operating and planning decisions as well as in evaluating and reporting its performance. These APMs provide additional insights and understanding to the Group's underlying operating and financial performance. The APMs should be read in conjunction with and do not replace by any means the directly reconcilable International Financial Reporting Standards ("IFRS") line items.

Definitions and reconciliations of APMs

FX-neutral APMs

The Group also evaluates its operating and financial performance on an FX-neutral basis (i.e. without giving effect to the impact of variation of foreign currency exchange rates from period to period). FX-neutral APMs are calculated by adjusting prior-period amounts for the impact of exchange rates applicable to the current period. FX-neutral measures enable users to focus on the performance of the business on a basis which is not affected by changes in foreign currency exchange rates applicable to the Group's operating activities from period to period.

FX-neutral net sales revenue and FX-neutral net sales revenue per unit case

FX-neutral net sales revenue and FX-neutral net sales revenue per unit case are calculated by adjusting prior-period net sales revenue for the impact of changes in exchange rates applicable in the current period.

The calculations of the FX-neutral net sales revenue and FX-neutral net sales revenue per unit case and the reconciliation to the most directly related measures calculated in accordance with IFRS is as follows:

Reconciliation of FX-neutral net sales revenue per unit case (numbers in € million unless otherwise stated)