Release Details

Coca-Cola European Partners plc (CCEP) (ticker symbol: CCE) today announces its interim results for the third-quarter ended 30 September 2016, and affirms full-year 2016 outlook.

Highlights

• Third-quarter diluted earnings per share were €0.67 on a reported basis or €0.66 on a pro forma comparable basis, including a negative currency translation impact of €0.03.
• Third-quarter reported revenue totaled €3.0 billion. Pro forma comparable revenue was €3.0 billion, flat vs. prior year, or up 3.5 per cent on a pro forma comparable and fx-neutral basis. Volume increased 3.5 per cent on a pro forma basis.
• Third-quarter reported operating profit was €405 million; pro forma comparable operating profit was €459 million, up 2.0 per cent or up 7.0 per cent on a pro forma comparable and fx-neutral basis.
• CCEP affirms its full-year guidance for 2016, including flat revenue growth, modest mid-single-digit operating profit growth, and diluted earnings per share growth in a mid-teen range, all on a pro forma comparable and fx-neutral basis. After including an expected negative currency impact of approximately 4.5 per cent, pro forma comparable diluted earnings per share is expected in a range of €1.86 to €1.90.
• CCEP remains on track to achieve pre-tax savings of €315 million to €340 million through synergies by mid-2019.
• Separately today, CCEP announced Damian Gammell will succeed John F. Brock as chief executive officer.

“This marks the first full quarter of operation for CCEP since our merger, and we are encouraged by the return to growth in our third-quarter results,” said John F. Brock, chief executive officer. “These results support the opportunities we see for growth and our long-term outlook for CCEP.

“We remain focused on successfully integrating the territories of Coca-Cola European Partners, enhancing customer service, realising the synergies we have communicated, and ensuring we capture the growth opportunities in the market,” Mr. Brock said. “This will enable us to better meet the needs of our customers, serve our communities effectively, and importantly, drive shareowner value.”

Note Regarding the Presentation of Financial Information

Unless otherwise noted, the financial information included in this release is provided on a pro forma comparable basis to allow investors to better analyse CCEP’s business performance and allow for greater comparability. To do so, we have given effect to the Merger as if it had occurred at the beginning of the periods presented, thereby including the financial results of Coca-Cola Enterprises, Inc. (“CCE”), Coca-Cola Erfrischungsgetränke GmbH (“Germany”, “CCEG”) and Coca-Cola Iberian Partners S.A.U. (“Iberia”, “CCIP”) and acquisition accounting adjustments for the full periods presented. We have also excluded items affecting the comparability of year-over-year financial performance, including merger and integration costs, restructuring costs, the out-of-period mark-to-market impact of hedges and the inventory step-up related to acquisition accounting. See the Supplementary Financial Information for a full reconciliation of our reported results to our pro forma comparable results.

For purposes of this review, the following terms are defined as follows:

‘As reported’ includes the financial results of CCE only, as the accounting predecessor, for all periods prior to 27 May 2016 and combined CCEP (CCE, Germany and Iberia) for the period from 28 May 2016 through 30 September 2016.

‘Pro forma’ includes the results of CCE, Germany and Iberia as well as the impact of the additional debt financing costs incurred by CCEP in connection with the Merger for all periods presented, as if the Merger had occurred at the beginning of the period presented.

‘Pro forma Comparable’ represents the pro forma results excluding the items impacting comparability during the periods presented for CCE, Germany and Iberia.

‘Fx-Neutral’ represents the pro forma comparable results excluding the impact of foreign exchange rate changes during the periods presented.

Operational Review

“Our return to growth reflects the impact of brand and package innovations, strong in-market execution, improving operating effectiveness, and the benefits of favourable weather,” said Damian Gammell, chief operating officer. “Going forward, we recognise that the soft consumer environment that has affected our business is still present.

“In this environment, we are focused on three key areas: delivering against our objectives for 2016, partnering with The Coca-Cola Company to drive long-term growth, and successfully delivering our synergy objectives, with a pretax goal of €315 million to €340 million by mid-2019.

“Ultimately, we are working to reignite the type of consistent, value-building growth that creates benefits for our stakeholders and drives shareowner value,” Mr. Gammell said.

Revenue

Third-quarter 2016 reported revenue totaled €3.0 billion, up 82.5 per cent vs. prior year, reflecting the inclusion of Germany and Iberia in the quarter. Pro forma comparable revenue was flat, or up 3.5 per cent on a pro forma comparable and fx-neutral basis. Revenue per unit case was down 0.5 per cent on a pro forma comparable and fx-neutral basis. Volume grew 3.5 per cent on a pro forma basis. These results reflect favourable weather conditions, the benefits of our marketing and brand initiatives, execution, and our focus on driving top-line growth.

On a territory basis for the third quarter, Iberia revenues were up 6.5 per cent benefiting from favourable weather and solid execution, as both revenue per unit case and volume grew. Revenue in Germany declined 1.0 per cent, reflecting the impact of a transition to recyclable PET from returnable PET, promotional plans, and slight negative mix, partially offset by positive volume growth. Great Britain revenues were down 13.0 per cent, driven primarily by volume growth and favourable weather, offset by a 16 per cent decline of the British pound vs. the Euro. Revenue in France grew 1.0 per cent, primarily due to favourable weather partially offset by slight negative price and mix driven by promotional plans. Revenue in the Northern European territories (Belgium, the Netherlands, Norway and Sweden) grew approximately 5.5 per cent driven by promotional plans, favourable weather, and favourable price and mix.

As for volume, total third-quarter volume grew 3.5 per cent vs. prior year on a pro forma basis. These results reflect growth in all categories including regular colas, favourable weather, and the benefits of our brand and marketing initiatives. Sparkling brands grew 3.0 per cent. Coca-Cola trademark grew approximately 2.0 per cent, with regular Coca-Cola up 1.0 per cent. Coca-Cola Zero trademark brands grew at a mid-teen per cent rate, led by growth in Iberia and Great Britain. The introduction of Coca-Cola Zero Sugar in Great Britain continues to be successful and will be introduced in all CCEP territories by early 2017.

Sparkling flavors and energy grew 6.5 per cent with continued strong growth in energy combined with solid growth in Fanta and the benefits of the expansion of Vio. Energy is benefiting from year-over-year comparisons as we have not yet lapped the newly acquired distribution of Monster in Iberia. Still brands grew 4.5 per cent with water brands up 4.0 per cent driven by smartwater and Vio.

Cost of Sales

Third-quarter 2016 reported cost of sales totaled €1.8 billion, up 80.0 per cent vs. prior year, driven by the inclusion of Germany and Iberia in the quarter. Pro forma comparable cost of sales totaled €1.8 billion, flat vs. prior year, or up 3.0 per cent on a pro forma comparable and fx-neutral basis.

Third-quarter cost of sales per unit case declined 0.5 per cent on a pro forma comparable and fx-neutral basis. This reflects the benefit of favourable year-over-year costs in some key commodities, principally sugar, partially offset by an increase of cost of sales in Germany from a shift from returnable to recyclable packages.

Operating Expense

Third-quarter 2016 reported operating expenses totaled €756 million, up 90.5 per cent vs. prior year, reflecting the inclusion of Germany and Iberia in the quarter. Pro forma comparable operating expenses were €701 million, down 1.5 per cent, or up 1.5 per cent on a pro forma comparable and fx-neutral basis. This includes the impact of volume growth and expense timing, partially offset by the early benefits of restructuring.

Restructuring Charges

During the third quarter of 2016, the Company recorded €53 million in restructuring charges principally related to restructuring initiatives in Germany that were in-flight at the time of Merger and the transition of Atlanta-based headquarters roles to Europe. Additionally, in October 2016, the Company announced several restructuring proposals including those related to further supply chain improvements including network optimisation, productivity initiatives, continued facility rationalisation in Germany, and end-to-end supply chain organisational design. These announcements also included transferring of Germany transactional related activities to the Company’s shared services centre in Bulgaria, and other central function initiatives. All of these proposals are subject to consultation and agreement with relevant employee representative bodies.

Outlook

For 2016, CCEP expects revenue growth to be flat, with operating profit growth in a modest mid-single-digit range and mid-teens diluted earnings per share growth. Each of these items are on a pro forma comparable and fx-neutral basis. Pro forma comparable diluted earnings per share is expected in a range of €1.86 to €1.90, including a negative currency translation impact of approximately 4.5 per cent. In addition to operating profit growth, full-year 2016 diluted earnings per share growth is benefiting from differences in interest and tax rates between pro forma comparable 2015 figures and our 2016 outlook.

Weighted average cost of debt is expected to be approximately 2 per cent and the pro forma comparable effective tax rate for 2016 is expected to be approximately 25 per cent. CCEP does not expect to repurchase shares in 2016.

Conference Call

CCEP will host a conference call with investors and analysts today at 15:00 GMT, 16:00 CET and 10:00 a.m. EST. The call can be accessed through the Company’s website at www.ccep.com.

Financial Details

Financial details can be found in our full third-quarter 2016 filing, available within the next 24 hours at www.morningstar.co.uk/uk/NSM (located under effective date 30 September 2016) and available immediately on our website, www.ccep.com, under the Investors tab.

About CCEP

Coca-Cola European Partners plc (CCEP) is a leading consumer packaged goods company in Europe, selling, producing and distributing an extensive range of nonalcoholic ready-to-drink beverages and is the world’s largest independent Coca-Cola bottler based on revenue. Coca-Cola European Partners serves a consumer population of over 300 million across Western Europe, including Andorra, Belgium, continental France, Germany, Great Britain, Iceland, Luxembourg, Monaco, the Netherlands, Norway, Portugal, Spain and Sweden. The Company is listed on Euronext Amsterdam, the New York Stock Exchange, Euronext London and on the Spanish stock exchanges, and trades under the symbol CCE. For more information about CCEP, please visit our website at www.ccep.com and follow CCEP on Twitter at @CocaColaEP.

Forward-Looking Statements

This document may contain statements, estimates or projections that constitute “forward-looking statements”. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “plan,” “seek,” “may,” “could,” “would,” “should,” “might,” “will,” “forecast,” “outlook,” “guidance,” “possible,” “potential,” “predict” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from Coca-Cola European Partners plc’s (“CCEP”) historical experience and its present expectations or projections. These risks include, but are not limited to, obesity concerns; water scarcity and poor quality; evolving consumer preferences; increased competition and capabilities in the marketplace; product safety and quality concerns; perceived negative health consequences of certain ingredients, such as non-nutritive sweeteners and biotechnology-derived substances, and of other substances present in its beverage products or packaging materials; increased demand for food products and decreased agricultural productivity; changes in the retail landscape or the loss of key retail or foodservice customers; an inability to expand operations in emerging or developing markets; fluctuations in foreign currency exchange rates; interest rate increases; an inability to maintain good relationships with its partners; a deterioration in its partners’ financial condition; increases in income tax rates, changes in income tax laws or unfavourable resolution of tax matters; increased or new indirect taxes in its tax jurisdictions; increased cost, disruption of supply or shortage of energy or fuels; increased cost, disruption of supply or shortage of ingredients, other raw materials or packaging materials; changes in laws and regulations relating to beverage containers and packaging; significant additional labeling or warning requirements or limitations on the availability of itsproducts; an inability to protect its information systems against service interruption, misappropriation of data or breaches of security; unfavourable general economic or political conditions in the United States, Europe or elsewhere; litigation or legal proceedings; adverse weather conditions; climate change; damage to its brand images and corporate reputation from negative publicity, even if unwarranted, related to product safety or quality, human and workplace rights, obesity or other issues; changes in, or failure to comply with, the laws and regulations applicable to its products or business operations; changes in accounting standards; an inability to achieve its overall long-term growth objectives; deterioration of global credit market conditions; default by or failure of one or more of its counterparty financial institutions; an inability to timely implement its previously announced actions to reinvigorate growth, or to realise the economic benefits it anticipates from these actions; failure to realise a significant portion of the anticipated benefits of its strategic relationships, including (without limitation) The Coca-Cola Company’s relationship with Monster Beverage Corporation; an inability to renew collective bargaining agreements on satisfactory terms, or it or its partners experience strikes, work stoppages or labour unrest; future impairment charges; an inability to successfully manage the possible negative consequences of its productivity initiatives; global or regional catastrophic events; and other risks discussed in the CCEP prospectus approved by the UK Listing Authority and published on 25 May 2016, the registration statement on Form F-4, which was filed with the SEC by CCEP, and the interim results for the first six months ended 1 July 2016, published on 22 September 2016. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. CCEP does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. CCEP assumes no responsibility for the accuracy and completeness of any forward-looking statements. Any or all of the forward-looking statements contained in this filing and in any other of its public statements may prove to be incorrect.

Coca-Cola European Partners plc
Investor Relations
Thor Erickson, +1-678-260-3110
or
Media Relations
Ros Hunt, +44 (0) 7528 251 022

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Coca-Cola European Partners plc

Source: Coca-Cola European Partners plc