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Coca-Cola HBC suspends guidance, still intends to pay divi

By Josh White

Date: Friday 27 Mar 2020

Coca-Cola HBC suspends guidance, still intends to pay divi

(Sharecast News) - Coca-Cola HBC updated the market in light of the Covid-19 coronavirus pandemic on Friday, reporting that it had seen trading disrupted in some markets.
The FTSE 100 soft drinks bottler said the pandemic was an "unprecedented event" and that as a food and beverage business, it had a "recognised and important" role to play in the crisis.

It said the safety of our employees, customers, partners, consumers and products remained its 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."

At the same time, HBC said it had implemented appropriate contingency and business continuity plans in order to safeguard that its production plants and supply chain remained 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."

Coca-Cola HBC said trading in January and February was in line with its expectations.

During March, however, trading across its markets had been dependent 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 was severely affected.

In those markets, 'out of home' represents between 35% and 40% of sales.

"Given this situation, we are already looking at cost-saving measures and reassessing marketing and capital expenditure investments," the board said.

"These actions will help to support our profitability."

It said it was still too early to quantify the impact that the Covid019 -19 pandemic would have on the 2020 full-year results, but added that given the uncertainty of the duration and economic impact of the pandemic, it no longer believed that it was prudent to provide guidance for the current financial year.

Coca-Cola HBC said it benefitted from a "very strong" balance sheet, and had adequate liquidity for working capital and investment needs.

As at the end of 2019, its net debt-to-EBITDA ratio was 1.54x, and none of its debt facilities were subject to any financial covenants that would impact its liquidity or access to capital.

Therefore, as things stand , it was still the board's intention to propose an ordinary dividend of 62 euro cents per share to its shareholders at the annual general meeting in June.

"Our 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," the directors said.

"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."

At 0838 GMT, shares in Coca-Cola HBC were down 1.62% at 1,718.7p.


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