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London-Listed Coca-Cola HBC Readies Russia Contingencies As Profits Rise

By Dave Simpson

Coca-Cola HBC CCH.L has said that it has contingency plans to cope with the escalating Russia-Ukraine crisis, as the London-listed soft drinks bottler reported a surge in annual profit driven in part by its large Russian business.

Considering Stockpiling

The company, one of Coca-Cola's KO.N many bottlers worldwide, said that it is considering stockpiling ingredients to limit any disruption in Russia, after Western nations threatened new sanctions following Moscow's recognition of two breakaway Ukrainian regions.

Statements By Chief Executive

"We have contingencies in place for all scenarios, including alternative sourcing, so that we can act swiftly to whatever happens," chief executive Zoran Bogdanovic told Reuters.

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He said that Coca-Cola HBC, which operates in 29 European and African countries and counts Russia and Nigeria as its two biggest markets, has learned lessons from its experience during the 2014 Russian-Ukrainian conflict.

"We ensure that we have the right level of stocks in our markets to avoid disruptions," the CEO said.

Annual Profit

Coca-Cola HBC's annual profit trounced market expectations, led by higher demand for low-sugar and energy drinks as more people dined out after COVID restrictions eased.

Local Coca-Cola Franchises

The company holds local Coca-Cola franchises to bottle and sell drinks produced by the US beverage giant, which holds a roughly 23% stake in the Switzerland-headquartered company.

Comparable Operating Profit

It that said comparable operating profit for the year ended 31 December jumped nearly 24% to €831 million, topping a company-provided market estimate of €797.6 million.

Additional Statement By Chief Executive

"The business has delivered a very strong recovery in 2021, with all key metrics above pre-pandemic levels," Bogdanovic said in a statement, adding that the firm faced inflationary pressures ahead.

Rise In Costs

Soft drink makers such as Coca-Cola KO.N and PepsiCo PEP.O have flagged profit pressures for this year from a relentless rise in costs related to labour, shipping and aluminium cans, pushing them to hike prices.

Emerging Markets Like-For-Like Revenue

Coca-Cola HBC said that emerging markets like-for-like revenue jumped 27% on a constant currency basis, with Nigeria, Russia, and Ukraine showing strong momentum.

Statements By Chief Financial Officer

On Russia, chief financial officer Ben Almanzar said that the company is considering alternative sourcing for raw materials.

"We have looked at all types of scenarios and have ensured that we have contingency plans in place in case there is disruption," he said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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