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Coca-Cola HBC full year earnings rise on demand for Monster Energy and water

The bottling company expects continued volume growth for the 2018 financial year but foreign exchange headwinds will impact earnings
Monster grew volumes by 48.3%

Coca-Cola HBC AG (LON:CCH) lifted its full year dividend by 23% as it delivered earnings growth on the back of strong demand for the Monster Energy drinks and water.

The bottling firm for The Coca-Cola Co (NYSE:KO) said comparable underlying earnings (EBIT) rose 20% to €521mln in the year to 31 December 2017, as margins improved by 120 basis points to 9.5%.

READ: Britvic and Coca Cola HBC fizz on broker upgrades

Net sales revenue rose 4.9% to €6.5mln and volume increased 2.2% to more than two billion unit cases.

Volume growth was driven by a 2.2% gain in its sparkling beverages, a 20% jump in energy drinks, and a 3% rise in water, offsetting a 7.1% drop in ready-to-drink tea and a 0.8% dip in juice. Monster was the main contributor to growth in the energy drinks category with volumes up 48.3%.

Across its markets – established, developing and emerging – volume grew despite declines in Russia and Nigeria.

Free cash flow fell by 1.2% to €425.9mln, reflecting an increase in capital expenditure of which more than half included investment in production equipment and facilities.

The company raised its dividend for the year to €0.54 each.

New CEO sounds confident outlook 

Zoran Bogdanovic, who was appointed as chief executive in December after Dimitris Lois died two months earlier, said: “I am fortunate to have taken over a business performing well and with a clear strategic direction. 2017 was an exceptional year for us, and we are delighted to have delivered strong growth in volume, revenue and margin, overall demonstrating significant progress towards our 2020 objectives.”

READ: Coca-Cola HBC appoints Zoran Bogdanovic as new chief executive officer after previous incumbent's death

He added: “We are excited about the year ahead, which has a particularly strong pipeline of product innovation and commercial activity around our route to market and in-store execution. There is good momentum in the business and a determination to build on our success. We are confident that 2018 will be another successful year."

For the 2018 fiscal year the company expects global economic conditions to continue to improve with growth and “healthy inflation”.

The group sees another rise in volume across its segments with emerging markets accelerating as Russia and Nigeria return to growth.

However, the company said foreign exchange headwinds will result in an estimated €30mln hit to EBIT for the year.  

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