On 19 March 2020, in connection with the release of our 2019 Annual Report and full year 2019 audited results announcement, Coca-Cola HBC AG (LON:CCH) acknowledged the COVID-19 outbreak and its potential greater impact in people’s life, communities and global economy.
The COVID-19 global pandemic is an unprecedented event that will in some way touch everybody on the planet. As a food and beverage business, we have a recognised and important role to play in this crisis. The safety of our employees, customers, partners, consumers and products remains our highest priority. Wherever and whenever we can, we are actively supporting those who continue to have their lives changed or impacted by the virus, and those who are tirelessly and selflessly supporting the affected. We remain incredibly grateful for the extraordinary efforts that all our people are making in ensuring business continuity and continued product supply to our customers.
In parallel, we have implemented appropriate contingency and business continuity plans in order to safeguard that our production plants and supply chain remain fully operational. We have implemented global best-practice precautionary and hygiene measures at all our locations, including even stricter sanitation protocols, social distancing, travel restrictions and, where possible, our people are working from home. To-date this has meant that our supply chain is operational. As we move forward and governments step up their efforts to control the spread of COVID-19 we may see some disruption, although the extent and duration is unknown.
Current trading
Trading in January and February was in line with our expectations. During March, trading across our markets has been dependant on the severity of restrictions on mobility. In markets with heavy restrictions, such as Italy as well as central and southern Europe, demand in the ‘out of home’ channel has been severely affected. In these markets, ‘out of home’ represents c. 35-40% of sales.
Given this situation, we are already looking at cost-saving measures and reassessing marketing and capex investments. These actions will help to support our profitability.
It is still too early to quantify the impact that the COVID-19 pandemic will have on our full year 2020 results. Given the uncertainty of the duration and economic impact of this global pandemic, we no longer believe that it is prudent to provide guidance for the current financial year.
Balance sheet and liquidity
We benefit from a very strong balance sheet and have adequate liquidity for working capital and investment needs. As of the end of 2019, our net debt to EBITDA ratio was 1.54x. None of our debt facilities are subject to any financial covenants that would impact the Group’s liquidity or access to capital. Therefore, as things stand, it remains the Board’s intention to propose an ordinary dividend of €0.62 per share to our shareholders in the June 2020 Annual General Meeting.
Coca Cola HBC’s strong balance sheet and liquidity position, our leading market shares and largely variable cost base, together with our unique portfolio of brands and resilient and talented people will allow us to weather this unprecedented crisis. When we emerge, we will be able to focus on capturing the many opportunities that we have in front of us. In the meantime, we continue to monitor the COVID-19 pandemic and its impact on our business and will provide further updates as necessary.
