Coca-Cola HBC Shares Dip 4% On African Acquisition, Q3 Trading Update

Coca-Cola HBC’s share price dropped on Tuesday after the company announced significant acquisition activity in Africa and published third-quarter trading numbers.

Shares in the FTSE 100 soft drinks bottler were last 4% lower on Tuesday, at £33.98 per share.

Coca-Cola HBC said it had agreed to buy a 75% stake in in Coca-Cola Beverages Africa for $2.6 billion. It has also entered an option agreement to purchase the remaining 25% at a later stage.

The company said that the deal “[creates] the second largest Coca-Cola bottling partner by volume globally, with leading market positions across Africa and Europe.”

African Expansion

The deal will be funded using a €2.5 billion bridge financing facility, and the issuance of Coca-Cola HBC shares to the Gutsche Family Investment Company, equivalent to 5.47% of the enlarged entity.

Coca-Cola Beverages Africa supplies product into 14 African markets. This represents roughly 40% of all products owned by Coca-Cola that are sold on the continent by volume.

The enlarged group “will represent two-thirds of Africa’s total Coca-Cola system volume and cover over 50% of the continent’s population,” Coca-Cola HBC said. On a pro forma basis, its 2024 volumes were 4 billion cases, generating revenues and EBIT of €14.1 billion and €1.4 billion respectively.

Coca-Cola HBC said the deal is expected to close by the end of 2026. It is tipped to boost earnings per share by low-single-digit percentages in the first full year after completion.

Q3 Sales Rise

Coca-Cola HBC also reported organic revenue growth of 5% during quarter three, resulting in year-to-date growth to 8.1%.

Organic volume growth was 1.1%, the FTSE 100 company said, thanks to strength in its Sparkling and Energy portfolio. Organic revenue per case increased 3.8% year on year.

The business said “successful rollout of the ‘Share a Coke’ campaign over the summer, supported by tailored consumer and customer experiences across markets” drove the top line higher.

Strength Across The Board

Coca-Cola HBC said organic revenues rose across its territories “despite a mixed market environment and less favorable weather.”

Organic revenues in its established markets rose 1.2%, despite lower volumes.

In its developing markets, organic revenues were up 4.8% from the same 2024 period. Organic sales in its emerging markets improved 7.9%.

Sparkling volumes rose 0.7% between June and September, with sales of trademark Coke, Coke Zero and Sprite rising by low-single-digit percentages. Fanta volumes dropped by high-single digits due to tough comparatives.

Energy volumes leapt 34.3%, helped by new product launches. Coffee volumes dropped 34% as the firm scaled back its lower-margin retail channel, while Still volumes dipped 4.8%.

Full-Year Guidance Unchanged

Chief executive Zoran Bogdanovic said the firm’s third-quarter performance “highlights the strength of our portfolio and our ability to drive growth in volume, revenue-per-case and market share, even in mixed markets.”

He commented that “thanks to our resilient 24/7 portfolio, bespoke capabilities, passionate teams, and broad geographic reach, we are well placed to navigate ongoing macroeconomic and geopolitical uncertainty.”

The company kept its full-year guidance unchanged. Organic revenues are tipped at the top end of a 6% to 8% range, while organic EBIT growth is expected at the upper end of a 7% to 11% band.

Royston Wild owns shares in Coca-Cola HBC