20-F: Coca-Cola Europacific Partners PLC Releases 2023 Integrated Report, Demonstrating Strong Financial Performance and Sustainability Progress

Coca-Cola Europacific Partners PLC (CCEP) reports a 5.5% increase in reported revenue and significant advancements in its sustainability initiatives in its 2023 Integrated Report.

Summary

• Coca-Cola Europacific Partners PLC (CCEP) released its 2023 Integrated Report, highlighting a year of strong financial performance and progress in sustainability.
• Reported revenue increased by 5.5% to €18.3 billion, with a comparable and FX neutral increase of 8.0% to €18.7 billion.
• Comparable volume decreased slightly by 0.5%, but revenue per unit case increased by 8.5%.
• Reported operating profit increased by 12.0% to €2.3 billion, with a comparable and FX neutral increase of 13.5% to €2.4 billion.
• The company achieved a comparable free cash flow of €1.7 billion.
• CCEP exceeded its target for recycled PET (rPET) use, reaching 54.6% across the Group and 59.2% in Europe.
• The company's GHG emissions reduction targets were approved by the Science Based Targets initiative (SBTi).
• CCEP expanded its geographic footprint through a joint venture to acquire Coca-Cola Beverages Philippines, Inc. (CCBPI).
• The company invested approximately €1 billion in technology, coolers, capacity, and sustainability.
• CCEP is committed to reducing sugar in its drinks and offering more low or no calorie options.
• The company is focused on creating a better future for people and the planet, with targets to reduce GHG emissions by 30% by 2030 and reach Net Zero by 2040.
• CCEP aims to have 45% of management positions held by women by 2030.
• The company is committed to sourcing 100% of its main agricultural ingredients and raw materials sustainably.
• CCEP aims to replenish 100% of the water it uses in its beverages.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and progress in sustainability. The management comments are optimistic, and the company is taking strategic actions to drive future growth. However, there are some risks and challenges mentioned, which temper the overall sentiment.

Positives

• Strong financial performance with increased revenue and operating profit.
• Significant progress in sustainability, exceeding rPET targets and achieving SBTi approval for emissions reduction targets.
• Expansion of geographic footprint through the acquisition of CCBPI.
• Commitment to reducing sugar in drinks and offering low or no calorie options.
• Investment in technology, coolers, capacity, and sustainability.
• Focus on employee wellbeing, inclusion, diversity, and equity.
• Strong customer service and value creation for customers.
• Commitment to sustainable sourcing and human rights in the supply chain.

Negatives

• Comparable volume decreased slightly by 0.5%.
• Hydration volume decreased by 7.0% versus 2022 on a comparable basis.
• RTD teas, coffees, juices and other drinks volume decreased by 3.0% versus 2022 on a comparable basis.

Risks

• Macroeconomic impacts on consumer spending and potential recession.
• Geopolitical volatility and high inflation.
• Business disruption from natural disasters, health crises, or cyber attacks.
• Increasingly stringent laws and regulations related to packaging and recycling.
• Potential for increased taxes on sugar-sweetened beverages.
• Climate change and water scarcity.
• Inability to attract, retain, and motivate employees.
• Misconduct by third parties relating to human rights.
• Dependence on relationships with TCCC and other franchisors.

Future Outlook

CCEP will continue to invest in the business to meet the needs of customers, consumers, and people, while focusing on affordability and relevance. The acquisition of CCBPI is expected to create value for more customers and reach more consumers. The company will continue to advance on its sustainability commitments and invest in technology and capabilities to ensure its people can grow with the business.

Management Comments

• Damian Gammell, CEO: 'I am delighted with our progress across the business in 2023.'
• Damian Gammell, CEO: 'We have the momentum and platform, now including the Philippines, to go even further together.'
• Sol Daurella, Chairman: 'We continued to sharpen our focus on driving profitable revenue growth and delivering best in class customer service.'
• Sol Daurella, Chairman: 'The acquisition of CCBPI creates a more diverse footprint for CCEP geographically while providing the opportunity to leverage best practice and talent.'

Industry Context

CCEP's announcement reflects the ongoing trends in the beverage industry, including a focus on sustainability, portfolio diversification, and geographic expansion. The company's emphasis on reducing sugar content and offering low-calorie options aligns with consumer demand for healthier beverages. The acquisition of CCBPI demonstrates a strategic move to expand into high-growth markets in the Asia Pacific region.

Comparison to Industry Standards

• CCEP's commitment to using 54.6% recycled PET (rPET) in its bottles exceeds the industry average, but is in line with leading companies such as PepsiCo, which aims for 50% rPET content in Europe by 2022.
• CCEP's GHG emissions reduction targets are aligned with the Science Based Targets initiative (SBTi), demonstrating a commitment to climate action comparable to other industry leaders like Unilever and Nestlé.
• The company's water replenishment efforts are in line with The Coca-Cola Company's global water strategy, which aims to replenish 100% of the water used in its beverages.
• CCEP's focus on employee wellbeing and diversity is comparable to other large multinational corporations, such as Danone and L'Oréal, which have implemented similar initiatives to promote inclusion and equity.

Management Changes

Stakeholder Impact

• Shareholders: The company is focused on delivering continued shareholder value.
• Employees: The company is committed to the wellbeing of its people and creating an inclusive work environment.
• Customers: The company is focused on providing world class execution and excellent service.
• Communities: The company is committed to supporting local community partnerships.
• Consumers: The company is committed to providing great tasting drinks to refresh consumers.
• Franchisors: The company is committed to aligning joint long-term growth plans and to pursue solid ways of working together with a joint investment mindset and aligned portfolio management across all territories.

Next Steps

• Continue to drive the reduction of GHG emissions across the full value chain.
• Evolve and continue to develop the climate transition plan.
• Continue to take action to drive down the footprint of packaging.
• Continue to engage with all of our suppliers to reduce our Scope 3 GHG emissions.
• Continue to regularly engage with our customers on strategy, planning and understanding key priorities around new packaging solutions and product offers to meet changing consumer trends.
• Continue to prioritise our people’s physical and mental wellbeing, and provide an inclusive, safe and healthy work environment.
• Continue to invest in developing our people, strengthening our leadership, commercial, customer service and supply chain capabilities in particular.
• Continue to enhance our employee volunteering programme, ensuring that we continue to create positive social impact that genuinely improves the lives of millions of people in our communities.
• Work with local markets to create roadmaps to help us reach our commitment to support the skills development of 500,000 people facing barriers in the labour market by 2030.

Key Dates

Keywords

Coca-Cola Europacific Partners, financial results, sustainability, revenue, operating profit, volume, rPET, GHG emissions, CCBPI, acquisition, recycling, water stewardship, sugar reduction, renewable energy, supply chain, employee wellbeing