The Coca-Cola HBC (LSE: CCH) share worth was on the transfer right now (13 February), surging 9.3% to an all-time excessive of three,246p. This made it the highest riser within the FTSE 100 by far.
I’m relieved that I lastly added this inventory to my portfolio late final yr. For months beforehand, I meant to take a position however by no means received spherical to it.
Why is the top off right now?
For these unfamiliar, the corporate is likely one of the main bottlers for The Coca-Cola Firm.
Based mostly in Switzerland, it produces, sells and distributes drinks like Coca-Cola, Fanta, Schweppes, Sprite, and Monster throughout 28 markets in Europe, Africa, and Eurasia. Coca-Cola nonetheless owns greater than 20% of the FTSE 100 agency.
At the moment, it launched a powerful annual earnings report for 2024, which is why the inventory is up. Natural web gross sales rose 13.8% yr on yr to €10.7bn, which barely beat the consensus estimate for 13% development.
Nevertheless, reported income development was 5.6%, as this sturdy natural efficiency was partially offset by foreign money headwinds in rising markets.
Volumes elevated by 2.8% on an natural foundation, led by power and low classes. Certainly, power drink volumes grew by 30.2%, marking the ninth yr of consecutive double-digit development. Monster led the best way, whereas Predator is rising strongly in Africa. Costa Espresso drinks are additionally doing rather well.
In the meantime, natural working revenue was up 12.2% to €1.2bn, whereas adjusted earnings per share elevated 9.5% to €2.28. The dividend was hiked 11% to €1.03 per share, giving a ahead yield of about 2.9%.
Looking forward to this yr, Coca-Cola HBC forecasts natural income development of 6%-8%, in comparison with market expectations of seven.3%. And it sees working revenue growing 7%-11%, versus analysts’ prior anticipation for a ten.7% rise.
Whereas the corporate is forecasting slower development, many consumer-facing corporations would snap your hand off in the event you supplied them this stage of anticipated development in 2025.
An excellent combine
One factor to remember right here is that overseas foreign money adjustments can hit reported earnings. In 2024, the enterprise noticed a destructive foreign money affect from the depreciation of the Nigerian Naira, Russian Rouble and Egyptian Pound.
So it is a threat, whereas there may be an ongoing pushback towards some Western manufacturers in Egypt (thought of a development market, with a youthful inhabitants above 110m).
However, this numerous geographical footprint generally is a power, as weak point in a single market (developed Europe, for instance) might be offset by power in one other (most of Jap Europe is rising strongly).
This is applicable to drinks too. For instance, Coke Zero grew mid-single digits final yr whereas Monster is rising a lot quicker.
Total, I actually just like the sturdy mixture of markets and types right here.
What about valuation?
The inventory is buying and selling at round 15.5 instances forecast earnings for 2025. I don’t suppose that’s notably demanding for a high-quality firm like this.
Additionally, an finish to the Russia/Ukraine battle can be a constructive for Coca-Cola HBC. It nonetheless sells merchandise in Ukraine whereas additionally working in Russia, the place it focuses on native manufacturers. An finish to the struggle may additionally enhance client sentiment in neighbouring international locations like Poland and Romania.
Regardless of the rise right now, I nonetheless suppose the inventory is price contemplating for a diversified portfolio.
