Coca-Cola HBC Records Surge In Operating Profits For Six Month Period That Ended On July 2; Sale Of PepsiCo Juice Brands Will Not Impact Company's Operations In Co. Cork
Swiss-based soft drinks bottler Coca Cola HBC has recorded a surge in operating profits for the six month period that ended on July 2 and agreed to buy a majority stake in Coca-Cola Bottling Company of Egypt for $427 million.
A unit of HBC will buy approximately 94.7% of the Egyptian company from its major shareholders including affiliates of The Coca-Cola Co and MAC Beverages, HBC said.
The deal, which would allow HBC to expand in its largest market Nigeria and grow in Egypt, was announced shortly after the company reported a nearly 68% surge in comparable operating profit to €350.3 million for the six months ended July 2.
The company, which bottles and sells Coca-Cola Co drinks in 28 countries and is 23.16% owned by the US company, warned that operating profit margins would be lower in the second half compared with a year earlier due to rising cost inflation.
Nonetheless, the company expects margins to expand by 20 to 30 basis points in 2021, thanks to strength in the first half and as revenue is expected to recover with people eating and drinking out more as restrictions lift.
HBC CEO Zoran Bogdanovic told Reuters that higher raw material costs are expected to continue into 2022.
"Given rising input cost inflation, we struggle to see upside risk to consensus margin expectations in FY22," said analysts at Jefferies.
A host of factors, including disruptions in global supply chains and rising demand, has pushed up raw material prices, forcing packaged food companies such as PepsiCo and rival Coca-Cola Co to pass on costs to consumers.
HBC said that it is expecting the Egypt deal to add to earnings in the near term.
Sale Of PepsiCo Juice Brands Will Not Impact Company's Operations In Co. Cork
In other soft drinks news, PepsiCo's decision to sell its Tropicana and other juice brands in North America to French private equity firm PAI Partners, which was reported earlier this week, will not impact the company's operations in Co. Cork.
PepsiCo operates three significant facilities in Co. Cork, which are located in Carrigaline and Little Island and employ close to 1,000 people, and, as reported by The Irish Examiner, it is understood the deal with PAI will not impact operations in Ireland as there are no juice production facilities in Ireland.
As noted by The Irish Examiner, PepsiCo's Co. Cork operations are headquarters for global concentrate operations servicing customers in more than 125 countries and also include the research and development campus in the areas of measurement science, beverages, packaging and dairy.
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