COCA COLA EUROPEAN PARTNERS (CCEP) Q2 2021 Earnings Call Transcript | The Motley Fool

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COCA COLA EUROPEAN PARTNERS (NYSE:CCEP)
Q2 2021 Earnings Call
Sep 2, 2021, 7:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, and thank you for standing by. We would like to welcome everyone to today’s Coca-Cola Europacific Partners H1 2021 Conference Call. [Operator Instructions] After the speakers’ remarks, we will have a question-and-answer session. [Operator Instructions]

It’s now my pleasure to hand today’s conference over to Vice President of Investor Relations, Sarah Willett. Ma’am, I give it to you.

Sarah WillettVice President of Investor Relations

Thank you all for joining us today. I’m here with Damian Gammell, our CEO, and Nik Jhangiani, our CFO.

Before we begin with our opening remarks on our results for the second quarter and half year 2021, a reminder of our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook. These comments should be considered in conjunction with the cautionary language contained in today’s release, as well as the detailed cautionary statements found in reports filed with the U.K., U.S., Dutch and Spanish authorities. A copy of this information is available on our website, www.cocacolaep.com.

Prepared remarks will be made by Damian and Nik and accompanied by a slide deck. We will then turn the call over to your questions.

Many of the metrics presented today will be on a pro forma basis. These reflect the results of CCEP and our Australian, Pacific and Indonesian business unit API, as if the Coca-Cola Amatil transaction had occurred at the beginning of this year. Comparable measures reflect the timing impact of the Amatil deal, which completed in May. The slides and our prepared remarks will distinguish between these two methodologies accordingly. Following the call, a full transcript will be made available as soon as possible on our website.

I will now turn the call over to our CEO, Damian.

Damian GammellChief Executive Officer

Thank you, Sarah, and many thanks to everyone joining us today. Let’s start with our half one key takeaways. A strong performance delivered by highly engaged colleagues in quite a dynamic environment. So to all my colleagues, I am sincerely grateful for the hard work and commitment that you’ve all shown to CCEP and continue to show as we close out 2021.

We are again the Number 1 FMCG customer value creator in Western Europe, and I’m very pleased to say that we continue to win market share both in-store and online across the NARTD category. Critically, we are continuing to accelerate our investments across two key areas, our sustainability agenda, alongside our ongoing digital transformation. And I’m very pleased that the integration of API is well underway, and we are working on joint growth plans with The Coca-Cola Company as we look forward to an even more exciting 2022.

We have a simple, but vital purpose as we move forward as Coca-Cola Europacific Partners: to refresh Europe, the Pacific and Indonesia and critically to make a difference for all our communities and our stakeholders We do believe in a bright future for our business, led by our aspiration to be the world’s most digitized Coca-Cola bottler, and as I mentioned earlier, our strong commitment to delivering on our ambitious sustainability agenda. We have a solid track record of delivery and execution. And I’m very pleased we do retain our Number 1 position as customer value creator in Western Europe.

We are fortunate to operate in a highly attractive, valuable and growing category. With our exciting portfolio of brands, products and packaging, we enjoy scale and a leading position across all our geographies. We also have a great opportunity to continue to unlock the potential of our newly acquired business unit, API.

We continue to position ourselves to be fit and competitive for the longer-term. Despite COVID, we have continued to invest for long-term growth, particularly in our portfolio, our people, our digital journey and our sustainability agenda. We know we will go further together, creating greater, more sustainable value for all of our stakeholders. We have a simple focus around great people, great service, great beverages done sustainably for a better shared future. So now I’d like to touch on each of these areas as we look back on the first half of this year.

As you know, the well-being and safety of our colleagues is our absolute Number 1 priority. We continued to support our colleagues through the evolving challenges of the pandemic, as well as the recent widespread flooding that unfortunately occurred in Belgium and Germany. We continue to work to break down barriers to inclusion. Our colleagues celebrated pride across many of our sites and offices, and shared photos and stories on our digital communication platform, Redline.

In New Zealand, we were thrilled to be named New Zealand’s Employer of Choice 2021, the only company to receive the gold award in three consecutive years. And across CCEP, we were also recognized as being a great place to work, with strong engagement shown in our first global engagement and culture survey as Coca-Cola Europacific Partners, which has been recently completed.

Great service is critical for our customer growth story and engagement. Supporting our customers and the reopening of HoReCa has been a key priority, and we launched a number of initiatives across all of our markets such as the We are HoReCa campaign in Spain and a customized digital support program in France and Germany.

In Europe, our focused and creative Euro football activation generated great excitement not just for our customers, our colleagues but also of course for our consumers as lockdown eased and people could do what they love to do across Europe during the summer, get out and about and enjoy a Coke with friends and family.

And despite these challenges of the pandemic, we have maintained high levels of customer service, in the high-90s, and we will continue to invest in capacity to support our growth and revenue growth management initiatives. This includes placing over 50,000 cold drinks equipment units in the first half this year, increasing our canning capacity and efficiency and accelerating our in-sourcing plans. This year, we have already installed can lines from Papua New Guinea and an aseptic line in France in the first half of the year. And we have launched StarStock, an online marketplace in GB, and Wabi, a B2B eco-system platform in Portugal, both via our ventures arm, CCEP ventures, as we continue to explore and progress new models that make it easier for our customers to do business with us.

And lastly, we are extremely privileged to make, move and sell the best beverages in the world. Both Coca-Cola Zero and Monster continued to outperform across all of our markets in the first half. Our new taste, new look and new campaign for Coca-Cola Zero Sugar in Europe has been a great success. Our Monster innovations have supported impressive growth, Mule, Ultra Fiesta Mango and Monarch launched in eight of our European markets, and we also launched Monster Super Fuel in Australia and New Zealand.

We are very excited about Costa Coffee, and we are readily expanding this brand outside of GB. We are making good progress in Germany, Belgium and Norway, and we have recently launched Costa Express in Spain.

In Indonesia, we launched a new and well received Fanta flavor, Coco Pandan, for Ramadan. And Topo Chico continues to be an exciting opportunity, now launched in six of our European markets.

As we progress with our commercial agenda, we do this with a mindset clearly focused around sustainability and we know we need to go further and faster on this agenda. Carbon reduction is at the heart of our business, as we move toward our net zero greenhouse gas emissions target by 2040 across our entire value chain. Contributing around 40% of these emissions, packaging is clearly front and center, and I am pleased that we are making progress on a number of fronts.

Across Europe, we are continuing to accelerate our rPET plans toward our ultimate goal of 100%. In Australia, we have signed up to a JV to build and operate a new PET recycling facility, expected to process 1 billion bottles per year and produce over 20 thousand tonnes of recycled PET across the partnership. And likewise in Indonesia, we have announced an industry collaboration to construct a recycling facility that will have the capacity to save 25 thousand tonnes of virgin plastic each year. This will help stimulate the recycling industry in Indonesia and accelerate much needed improvement in recycling rates. Both collaborations are a step forward toward creating a circular economy for PET within our industry.

Beyond packaging, I am also extremely proud to have achieved carbon neutral status at two of our manufacturing sites in Spain and Sweden, with the aim of extending this certification to a further four sites by the end of 2023. We have met the global benchmark for responsible water stewardship in the Netherlands, making this plant one of just five in the Coca-Cola system to achieve such an accreditation.

And finally, we recently signed up to the EU Code of Conduct for Responsible Business & Marketing Practices, which aims to make healthy and sustainable food choices easier for our consumers.

So, all in all, a great first half toward a better shared future with a clear acknowledgement that there’s more to do and we must go faster.

Just turning now to our performance, we are pleased to report a strong performance in the first half. We continue to win with our customers, having created more than double the absolute value sales increase compared to any of our peers in Western Europe. Supporting the reopening of HoReCa has been a key area as I touched on earlier. Strong performance from our core brands has led to some great share…

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