Coca-Cola Europacific Partners plc Announces Q3, Investor Event & Interim Dividend Declaration

This announcement contains inside information

COCA-COLA EUROPACIFIC PARTNERS

Trading update for the third quarter ended 30 September 2022 & interim dividend declaration

UXBRIDGE, UK / ACCESSWIRE / November 2, 2022 / Strong third quarter, upgrading FY22 guidance, declaring record dividend & raising mid-term objectives

Damian Gammell, Chief Executive Officer, said:

"We are pleased to have delivered another strong quarter following a great first half. We achieved solid top line growth and value share gains across our markets. Key to this was the continued recovery of the away from home channel, a return to travel and tourism for many consumers, great summer weather in Europe and a resilient home channel. Our focus on core brands, leading in-market execution, and further price and mix, delivered volume and revenue, across both channels, ahead of 2019. And we continued to make progress against our sustainability commitments, globally recognised as the recipient of the Coca-Cola system's 2021 ESG award.

"Given our strong year to date performance, we are raising top line, bottom line and free cash flow guidance for FY22 and declaring a record dividend. We are confident in the resilience of our robust categories and the strength of the relationships we have with our customers, who continue to share in our success, despite a more uncertain outlook. We are also effectively managing key levers of pricing* and promotional spend across our broad pack offering, alongside our focus on efficiency.

"Our success will continue to be determined by our great people, great service, great beverages, done sustainably. We are a bigger and better, more diverse and resilient business, enhanced by our bold and fantastic acquisition last year. Alongside our strong performance this year, we are today committing to even more ambitious objectives over the mid-term. In combination with over €5bn of shareholder returns since 2016, this demonstrates the strength of our business and ability to deliver continued shareholder value. We have the platform and momentum to go even further together for a greater future. We look forward to providing more details at today's Capital Markets Event in London."

Note: All footnotes included after the 'About CCEP' section; *refers to headline pricing

Q3 HIGHLIGHTS[2],[3]

Q3 Reported revenue +20.0%; Fx-neutral revenue +18.0%

• NARTD YTD value share gains[4] across measured channels both in-store (+20bps) & online (+100bps)
• Comparable volume +11.5%[6] (+5.5% vs 2019) driven by the continued recovery of the away from home (AFH) channel, with the return of tourism & favourable weather supporting volume growth in Europe & soft comparables in API due to prior year restrictions (API Q3 2021 volume -2.0% vs 2020)
• Strong AFH comparable volume: +16.0% (+2.0% vs 2019) reflecting the continued recovery of the AFH channel across both Europe (+16.5% vs 2021) & API (+13.5% vs 2021)
• Resilient Home comparable volume: +8.5% (+8.5% vs 2019) driven by continuing at-home consumption trends & solid in-market execution
• Revenue per unit case +6.0%[1],[5] (+10.0%[7] vs 2019) reflecting favourable price realisation across all markets, including the benefit of additional underlying pricing coming through in some markets, alongside positive pack & channel mix led by the continued recovery of the AFH channel

Dividend

• Declaring second half interim dividend per share of €1.12 (to be paid December)
• Resulting in record full year dividend per share of €1.68 (+20.0% vs 2021 & +35.5% vs 2019), maintaining annualised total dividend payout ratio of approximately 50%[8]. Equating to a total absolute dividend of €767m

Other

• Reorientation of the API portfolio to maximise system value creation to enable greater focus on NARTD, RTD alcohol & spirits well advanced. Sale of NARTD own brands to The Coca-Cola Company for A$275m substantially complete. Expected to be fully complete by the end of the year
• Innovation highlights: new limited edition Coca-Cola Creations flavour, Dreamland, Sprite Lemon+ & Monster flavour extensions (including Monster Ultra Rosa & Monster Reserve White Pineapple)
• Sustainability highlights:
  • Winner of 2021 J. Paul Austin Award, recognising ESG performance in the Coca-Cola System
  • Launched sustainability-linked supply chain finance programme
  • Achieved 100% renewable electricity commitment three years early in New Zealand (NZ)
  • Continued rollout of new attached caps to PET bottles, now in GB, Germany, Spain, Sweden & the Netherlands

The outlook for FY22 reflects current market conditions. Unless otherwise stated, guidance is provided on a pro forma comparable & FX-neutral basis. FX is expected to increase FX-neutral guidance by approximately 150 basis points for the full year.

Revenue: pro forma comparable growth of 15-16% (previously 11-13%)

• Weighted towards volume over price/mix reflecting recovery of the AFH channel

Cost of sales per unit case: pro forma comparable growth of ~8.5% (previously ~7.5%)

• Stronger volume recovery supporting favourable overhead absorption
• Commodity inflation expected to be up low twenties (previously high teens)
• FY22 hedge coverage >95%

Operating profit: pro forma comparable growth of 11-12% (previously 9-11%)

• Remain on track to deliver on previously announced efficiency savings & API combination benefits & continued focus on optimising discretionary spend

Comparable effective tax rate: ~22% (previously 22-23%)

Diluted EPS: pro forma comparable growth of 14-15% based on actual FX rates

Free cash flow: at least €1.8bn (previously at least €1.6bn) reflecting strong year to date performance & working capital initiatives

FY23 OUTLOOK[2]

Top line

• Market remaining resilient, mindful of uncertain outlook
• Annualisation of FY22 second underlying pricing increases
• NARTD category (retail sales value) expected to grow high single digit, driven by price & mix

Bottom line

• Cost of sales
  • Commodities: expected to be up mid-teens (previously high single digit); ~60% hedge coverage
  • Concentrate: directly linked to revenue per unit case through the incidence pricing model
  • Low overall FX transactional exposure (