Coca-Cola Hbc Ag CAPEX increased on 6.7% and Revenue increased on 2.1%

14 Feb 2019 • About Coca-Cola Hbc Ag ($CCH) • By InTwits

Coca-Cola Hbc Ag reported 2018 financial results today. Here are the key drivers of the company's long term financial model:

Coca-Cola Hbc Ag has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.8%. At the same time it's a lot of higher than industry average of 4.6%.
CAPEX is quite volatile: £102m in 2018, £75m in 2017, £97m in 2016, £29m in 2015, £55m in 2014
The company has highly profitable business model: ROIC is 13.0%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue increased on 2.1%. Revenue decline was slowing down on average by 2.2 pp per annum in 2014-2018. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.9 pp from 29.9% to 32.8% in 2018. EBITDA Margin grew at 0.92 pp per annum in the last 5 years.

Gross Margin showed almost no change in 2018. Gross Margin stuck to a growing trend at 0.51 pp per annum in 2014-2018. SG&A as a % of Revenue showed almost no change in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2015 at 29.1% and was declining since that time.

Net Income margin showed almost no change in 2018. Net Income margin followed a growing trend at 0.65 pp per annum in the last 5 years.

Investments (CAPEX, working capital and M&A)

Coca-Cola Hbc Ag's CAPEX/Revenue was 6.6% in 2018. CAPEX/Revenue increased slightly on 1.3 pp from 5.2% in 2015 to 6.6% in 2018. Average CAPEX/Revenue for the last three years was 6.1%. CAPEX as a % of Revenue stuck to a growing trend at 0.31 pp per annum in 2014-2018.

Return on investment

The company operates at good ROIC (13.0%) and ROE (14.6%). ROIC increased slightly on 0.58 pp from 12.5% to 13.0% in 2018. ROE showed almost no change in 2018. ROIC followed a growing trend at 1.6 pp per annum in 2014-2018. ROE stuck to a growing trend at 1.3 pp per annum in the last 5 years.

Leverage (Debt)

Debt level is 0.9x Net Debt / EBITDA and 1.7x Debt / EBITDA. Net Debt / EBITDA decreased on 0.1x from 1.0x to 0.9x in 2018. Debt decreased slightly on 1.3% while cash decreased slightly on 1.5%. Net Debt/EBITDA followed a declining trend at -0.3x per annum in the last 5 years.

Coca-Cola Hbc Ag has no short term refinancing risk: cash is higher than short term debt (522.2%).

Valuation and dividends

The company's trades at EV/EBITDA 10.4x and P/E 19.9x.

Management team

Zoran Bogdanovic is a Coca-Cola Hbc Ag's CEO. Zoran Bogdanovic is a founder and has spent 2 years with the company. Coca-Cola Hbc Ag's CFO is Michalis Imellos. Michalis Imellos has 2 years tenure at the company.

Financial and operational results

FY ended 31 Dec 2018

Coca-Cola Hbc Ag ($CCH) key annual financial indicators

mln. €	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	6,510	6,346	6,219	6,522	6,657	2.1%
Gross Profit	2,318	2,327	2,299	2,439	2,515	3.1%
SG&A	1,733	1,846	1,755	1,820	1,843	1.3%
EBITDA	698	727	812	891	945	6.1%
Net Income	295	280	344	426	447	5.0%
Balance Sheet
Cash	636	487	573	724	712	-1.5%
Short Term Debt	549	782	157	166	136	-18.0%
Long Term Debt	1,556	923	1,468	1,460	1,468	0.6%
Cash flow
Capex	363	332	348	410	437	6.7%
Ratios
Revenue growth	-5.3%	-2.5%	-2.0%	4.9%	2.1%
EBITDA growth	-4.5%	4.1%	11.8%	9.7%	6.1%

Gross Margin	35.6%	36.7%	37.0%	37.4%	37.8%	0.4%
EBITDA Margin	10.7%	11.5%	13.1%	13.7%	14.2%	0.5%
SG&A, % of revenue	26.6%	29.1%	28.2%	27.9%	27.7%	-0.2%
Net Income Margin	4.5%	4.4%	5.5%	6.5%	6.7%	0.2%
CAPEX, % of revenue	5.6%	5.2%	5.6%	6.3%	6.6%	0.3%

ROIC	6.9%	8.6%	10.8%	12.5%	13.0%	0.6%
ROE	10.3%	10.0%	12.1%	14.5%	14.6%	0.1%
Net Debt/EBITDA	2.1x	1.7x	1.3x	1.0x	0.9x	-0.1x

Peers in Beverages

Below you can find Coca-Cola Hbc Ag benchmarking vs. other companies in Beverages industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Stock Spirits Group ($STCK)		-10.3%	-0.6%	5.2%	2.8%
C&C Group ($CCR)		10.3%	-3.1%	-10.0%	-8.1%
Median (2 companies)		0.0%	-1.9%	-2.4%	-2.6%
Coca-Cola Hbc Ag ($CCH)		-2.5%	-2.0%	4.9%	2.1%

Top companies by Gross margin, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Stock Spirits Group ($STCK)	52.6%	53.5%	50.7%	50.0%	48.9%
Median (1 company)	52.6%	53.5%	50.7%	50.0%	48.9%
Coca-Cola Hbc Ag ($CCH)	35.6%	36.7%	37.0%	37.4%	37.8%

Top companies by EBITDA margin, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Stock Spirits Group ($STCK)	22.1%	20.1%	19.7%	20.5%	21.0%
C&C Group ($CCR)	21.0%	-4.9%	12.7%	-6.7%	17.0%
Median (2 companies)	21.5%	7.6%	16.2%	6.9%	19.0%
Coca-Cola Hbc Ag ($CCH)	10.7%	11.5%	13.1%	13.7%	14.2%

Top companies by CAPEX/Revenue, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
C&C Group ($CCR)	6.2%	3.2%	1.5%	3.8%	2.6%
Stock Spirits Group ($STCK)	2.4%	2.8%	2.6%	1.4%
Median (2 companies)	4.3%	3.0%	2.0%	2.6%	2.6%
Coca-Cola Hbc Ag ($CCH)	5.6%	5.2%	5.6%	6.3%	6.6%

Top companies by ROIC, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Stock Spirits Group ($STCK)	10.3%	7.9%	7.6%	8.7%	9.9%
C&C Group ($CCR)	9.7%	-5.1%	6.0%	-5.7%	8.7%
Median (2 companies)	10.0%	1.4%	6.8%	1.5%	9.3%
Coca-Cola Hbc Ag ($CCH)	6.9%	8.6%	10.8%	12.5%	13.0%

Top companies by Net Debt / EBITDA


Top	FY2014	FY2015	FY2016	FY2017	FY2018
C&C Group ($CCR)	1.1x		1.9x		2.5x
Stock Spirits Group ($STCK)	1.2x	1.1x	1.2x	1.0x	0.5x
Median (2 companies)	1.2x	1.1x	1.6x	1.0x	1.5x
Coca-Cola Hbc Ag ($CCH)	2.1x	1.7x	1.3x	1.0x	0.9x

Coca-Cola Hbc Ag stock price chart

Coca-Cola Hbc Ag financials

mln.	FY2013	FY2014	FY2015

Revenue	6,874	6,510	6,346
EBITDA	730.5	697.9	726.7
Net income	221.2	294.8	280.3
CAPEX	380.2	362.6	331.5
Debt	2,200	2,105	1,705
Cash	737.5	636.3	487.4

About Coca-Cola Hbc Ag

Coca-Cola HBC AG produces, sells, and distributes non-alcoholic ready-to-drink beverages under bottlers' arrangements, franchise arrangements with third parties, and under its own brand names. The company offers sparkling, still, and water beverages, including juices and juice drinks, waters and flavored waters, sports and energy drinks, teas, and coffees. It markets and sells non-alcoholic carbonated beverages under the Coca-Cola, Coca-Cola Light, Coca-Cola Zero, Fanta, and Sprite brand names; water and juices under the Amita, Avra, Deep RiverRock, and Fruice brand names; and iced tea, and sports and energy drinks under the Nestea and Monster brand names. The company sells its products primarily through hypermarkets, supermarkets, discounters, kiosks, petrol stations, cinemas, leisure parks, hotels, restaurants, and caf?s. It operates in 28 countries, including Austria, Cyprus, Greece, Italy, Northern Ireland, the Republic of Ireland, Switzerland, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, FYROM, Moldova, Montenegro, Nigeria, Romania, the Russian Federation, Serbia, and Ukraine. The company was founded in 1969 and is headquartered in Zug, Switzerland.