Coca-Cola Europacific CEO Says German Retailer Fight 'Takes The Shine Off' A Strong Quarter
Third-quarter revenue grew 5.8% and volume 3.6%, and the bottler held full-year guidance after a one-month German dispute.
Coca-Cola Europacific Partners CEO Damian Gammell said on the bottler's third-quarter trading update call Tuesday that a September dispute with German retailers over new commercial terms is resolved, with higher pricing now in place that flows into 2027. Quarterly revenue grew 5.8% on a currency-neutral basis, with volume up 3.6%, and full-year guidance is unchanged.
A one-month dispute in Germany
Gammell called the German disruption "very much a one-month dynamic in September" and said promotional intensity dropped off during the talks. He said it "takes the shine off what was a really, really strong start to the quarter," noting that July and August volumes in Germany matched the rest of Europe.
Asked by a UBS analyst whether the matter is fully settled, Gammell said October trading was back to normal, with pricing in place for the end of this year.
Pressed by a Citi analyst to quantify the price increase, he said the company does not discuss specific in-market pricing. He added that the dispute involved a couple of customers, and most of Germany had an undisturbed September.
Quarter by region
Europe's volume rose 2.3% and revenue 5.2%, helped by favorable summer weather and the later stages of the World Cup. In Asia Pacific and Southeast Asia (APS), volume rose 6.4% and revenue 7.8%, with Indonesia posting strong double-digit volume growth.
Coke trademark volume grew 2%, and energy was up 17%. The company declared a second-half dividend of €1.42 per share, and the current €1 billion buyback concludes this year. Gammell said the fourth quarter started well, though it has six fewer consumption days, which guidance already reflects.
Costs rise, but not like 2022
CFO Ed Walker said 2027 brings more cost headwinds than 2026, but "nowhere near the levels" of 2022 or 2023. The company is not guiding for 2027 yet.
Walker said the company aims to be covered on up to 80% of hedgeable commodities for 2027 by year-end, and is broadly on track. Aluminium and sugar are very well covered; oil-related fuel and energy costs are the harder area.
On possible taxes, Gammell said the timing of a German sugar tax is still open and the company is running scenarios. He said Britain's deposit return scheme is ready to go.
Management will give 2027 guidance with full-year results in February, and Gammell said the company will then discuss how those tax challenges look on an annualized basis.
Sources
- Coca-Cola Europacific Partners: Full-Year Guidance Confirmed Despite Cost Pressure Uncertainty — morningstar.com
- LONDON BRIEFING: Coca-Cola Europacific sales up; Shell sells LNG stake — global.morningstar.com
- Bottler Coca-Cola Europacific Partners Flags Cost Pressures, Keeps Outlook — Reuters
- Here’s How Much You Would Have Made Owning Coca-Cola Europacific Stock In The Last 5 Years — benzinga.com
