Coca-Cola HBC Q2 Earnings Call Highlights

Key Points

• Strong first-half performance: Organic revenue increased 9.6%, driven by 7.5% volume growth, while comparable EBIT rose 15.2% to €760 million and margins expanded 60 basis points to 12.2%.
• Growth led by priority categories: Energy and sports-drink volumes each grew about 25%, while sparkling beverages increased 6.4%. Emerging markets delivered the strongest segment performance, with EBIT up 23.9%.
• Outlook raised, but costs remain a risk: Coca-Cola HBC expects 2026 revenue growth near the top of its 6%–7% range while maintaining its 8%–10% organic EBIT-growth target. The company also warned of higher second-half energy and cost-of-goods pressures and remains on track to complete the CCBA acquisition in the second half of 2026.

Coca-Cola HBC LON: CCH reported volume-led growth and higher profitability in the first half of 2026, prompting the beverage bottler to raise its full-year outlook toward the upper end of its revenue-growth range while maintaining an 8% to 10% organic EBIT growth target.

Chief Executive Officer Zoran Bogdanovic said organic revenue rose 9.6% during the first half, supported by 7.5% organic volume growth. Second-quarter volume growth was 5.8%, which the company said represented an underlying acceleration after the first quarter benefited from four additional selling days. The period marked Coca-Cola HBC's 13th consecutive quarter of volume growth.

Comparable EBIT increased 15.2% organically to €760 million, while comparable EBIT margin expanded 60 basis points to 12.2%. Comparable earnings per share also rose 15.2% to €1.51.

Priority categories drive volume growth

Sparkling beverages, energy drinks and sports drinks were among the largest growth contributors. Sparkling volumes rose 6.4% in the first half, with Trademark Coke posting mid-single-digit growth and Coke Zero Sugar increasing by mid-teens. Coca-Cola Zero Sugar Zero Caffeine recorded triple-digit volume growth, according to Bogdanovic.

The company said Sprite volumes rose by high single digits, aided by the launch of Lemon Mint Chill in 12 markets, while Schweppes also grew by high single digits. Energy-drink volume increased more than 25%, supported by Monster innovation and local affordable offerings in Africa, including Fury in Egypt.

Sports-drink volumes grew about 25% in the period. Coca-Cola HBC introduced Powerade Active Water in seven markets and cited its FIFA World Cup activation program as a contributor to growth in both Trademark Coke and Powerade. The campaign included special-edition packaging, Panini collectible-sticker promotions, consumer experiences and a digital penalty-kick challenge.

Coffee volumes declined overall as the company continued to shift its focus toward out-of-home consumption. However, out-of-home coffee volume increased 24.5%, supported by growth in existing locations and the addition of more than 1,300 new outlets. The company expects the coffee category to return to volume growth in the second half.

Premium spirits volumes fell 1.55%, affected by tough comparisons and retail issues involving Finlandia in Poland. Bogdanovic said those retail challenges have been resolved and that, excluding their effect, the category would have grown and Finlandia would have posted low-double-digit growth.

Margins improve despite higher marketing investment

Chief Financial Officer Anastasis Stamoulis said comparable gross profit margin improved 110 basis points to 37.8%, benefiting from revenue growth, easing cost-of-goods inflation, hedging and efficiency actions. The company used part of that improvement to increase direct marketing spending behind the FIFA World Cup, Winter Olympics, innovation and Coke Zero Sugar's new visual identity.

Operating expenses as a percentage of revenue increased 50 basis points, but the company still expanded EBIT margin by 60 basis points.

• Established segment: Revenue rose 6.2% and volume grew 4.8%. Comparable EBIT increased 6.9%, with 10 basis points of margin expansion.
• Developing segment: Revenue increased 9% and volume rose 5.3%. Comparable EBIT grew 1.8%, while margin declined 70 basis points amid higher marketing costs.
• Emerging segment: Revenue increased 12% and volume grew 9%. Comparable EBIT rose 23.9%, supported by operating leverage and higher gross profit.

In the emerging markets segment, Nigeria recorded low-double-digit volume growth and Egypt delivered low-teens growth. The company said faster growth in African markets, where revenue per case is lower than the group average, weighed on group revenue-per-case trends.

Organic revenue per case rose 1.9% in the first half and 2.1% in the second quarter. Management said pricing was more moderate in a lower-inflation environment, particularly in Africa, while revenue growth management initiatives and improved category and packaging mix remained supportive. Single-serve package mix improved by 110 basis points across the group.

Outlook reflects stronger first half and cost caution

For 2026, Coca-Cola HBC now expects organic revenue growth around the top end of its 6% to 7% range and organic EBIT growth of 8% to 10%.

Stamoulis said second-half profit growth is expected to be lower than in the first half, partly due to four fewer selling days in the final quarter. The company also expects increased energy-related cost pressure tied to the Middle East conflict, particularly in costs that cannot be hedged. It expects cost of goods sold per case to rise from low- toward mid-single digits in the second half and for the full year.

The company said it is more than 85% hedged for key commodity positions in 2026. It also updated full-year finance-cost guidance to €40 million to €50 million, reflecting interest expense on bonds issued to fund the planned acquisition of Coca-Cola Beverages Africa, partially offset by finance income.

CCBA acquisition remains on track

Coca-Cola HBC said it remains on track to complete its acquisition of Coca-Cola Beverages Africa in the second half of 2026. The company has received antitrust clearances in four of six jurisdictions. In July, South Africa's Competition Commission recommended approval of the transaction, subject to expected conditions, with a decision from the Competition Tribunal still pending.

Management said integration planning is continuing while the regulatory process advances, including preparations for a secondary listing on the Johannesburg Stock Exchange. Bogdanovic said the company sees its role as supporting CCBA's existing operations with additional investment, capabilities and expertise following completion.

About Coca-Cola HBC (LON:CCH)

Coca-Cola HBC is a growth-focused consumer packaged goods business and strategic bottling partner of The Coca-Cola Company. We open up moments that refresh us all, by creating value for our stakeholders and supporting the socio-economic development of the communities in which we operate. With a vision to be the leading 24/7 beverage partner, we offer drinks for all occasions around the clock and work together with our customers to serve 760 million consumers across a broad geographic footprint of 29 countries.

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