Coca-Cola Hellenic Bottling Earnings Call Insights: NSR, Price and Mix

On Thursday, Coca-Cola Hellenic Bottling Company S.A. ADR (NYSE:CCH) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what the C-suite revealed.


Lauren Torres – HSBC: It seems just directionally your comments following this quarter; you seem more cautious negatives than we previously heard for obvious reasons. I’m just trying to get a sense as we course through the year and I understand the first quarter is a small quarter for you. How do you manage some of these increasing pressures? Obviously, you talked about higher taxes, austerity measures, things that are affecting you and may continue to impact or will continue to impact you. But you talked about pricing the OBPPC strategy and levers that you have to pull to get to growth for the year. I was just curious about the guidance that you’ve given, the outlook for this year, if you think there is more ability to kind of push those levers or if you have good visibility that if conditions get worse in most of your markets, the ability to do that for 2012 is limited?

Dimitris Lois – CEO: This is Dimitris. Let me start and focus a little bit on the NSR. First of all, you are absolutely correct that we have seen taxes in different countries for the first quarter. On top of that the austerity measures and the confidence is not getting better. So, as we said, our number one target is definitely NSR and revenue growth. As we saw this quarter, the currency neutral NSR per case and taking out the balance effect grew by 3%. Now, if we unbundle a little bit we see that the driver was emerging where we saw an 8% increase per case and also on the developing segment that was a 2% increase. At the same time, the revenue growth initiatives fully covered the input cost increases in absolute terms, and here as we heard from Michalis also, in Q1 we are cycling a quarter where we have not seen in Q1 2011 the real increase of input costs. So the variance between Q1 ’12 and Q1 ’11 in input costs is the largest that we will see within the year. Consistent with our revenue growth management strategy, we will continue to focus on NSR per case through OBPPC initiatives and single-serve. We continue to respect and address affordability and then we want to remain relevant to our consumers, so this is something that we definitely keep and this is something that will allow us to continue winning in the marketplace. We expect currency neutral NSR per case to grow year-on-year 2012 and also we expect that our revenue growth management strategy will enable us to cover this year total input costs in absolute terms in euro terms.

Lauren Torres – HSBC: Can I just ask as a follow-up to that, you mentioned the relationship with Coke is strong. I am just curious, in times like this when you are kind of facing macro headwinds. Does anything change? Is there more ways they could support you or that you ask for support to get through a year like this?

Dimitris Lois – CEO: Yes, we do have excellent relationship and specially taking into consideration that this year we have two very important assets and that’s the Euro 2012 and also Olympics. We are activating the Europe markets and we are activating all of our markets. The only market that we have not really activated was Nigeria. Also we are activating more than 10, 11 markets with regards to Olympics. So this relationship has been developing extremely well and we have full support from Coca-Cola Company with regards to the initiatives behind both Euro 2012 and Olympics.

Price and Mix

Jonathan Fell – Deutsche Bank: Yes, three questions actually. First of all, just continuing on price and mix, I think in established you managed to get net revenue per case up 3% in the fourth quarter last year, but that was down 1% again in the first quarter this year. What’s behind that? Is that a movement in prices or is there some sort of package or country mix thing going on there? Secondly, on shared services you have moved a few more countries across now to the shared service platform. When you move Poland and Cyprus, are you able to shutdown the current cost structure or are you having to actually run with dual cost structure for a little while until you get everything embedded in? Last question, I was looking at the overall value of the Greek stock market yesterday and came out with a it’s a fairly staggering statistic that you account for 25% of the value of the top 59 companies. Is there going to come a point where you think we’re just domiciled and listed in the wrong place? (Technical Difficulty)