20-F: Coca-Cola Europacific Partners Reports Strong 2025 Growth

CCEP delivered robust revenue and operating profit growth in 2025, driven by strategic execution, market expansion, and strong cash flow generation.

Summary

• Reported revenue increased by 2.3% to 20.9 billion EUR, or 2.8% on an adjusted comparable and FX neutral basis.
• Reported operating profit surged by 31.0% to 2.8 billion EUR, reflecting a full year of Philippines profit and lower transformation costs. On an adjusted comparable and FX neutral basis, operating profit grew by 7.1%.
• Diluted earnings per share (EPS) were 4.26 EUR, up 38.3% on a reported basis, or 4.11 EUR on a comparable basis, up 6.2% on a comparable and FX neutral basis.
• Net cash flows from operating activities reached 3.0 billion EUR, with comparable free cash flow at 1.8 billion EUR.
• Return on invested capital (ROIC) increased by 280 basis points to 10.9% on a reported basis, and 40 basis points to 11.5% on a comparable basis.
• The company returned 1.0 billion EUR to shareholders through a share buyback program in 2025, and announced a further 1.0 billion EUR program for 2026.
• Sustainability efforts include an 18.9% reduction in absolute GHG emissions (Scope 1, 2, and 3) versus 2019, 75.7% of primary packaging collected for recycling, and 105.2% water replenished as a percentage of sales volume.
• Investment of approximately 1.0 billion EUR was made across the business, expanding manufacturing capacity, evolving packaging, and advancing digital transformation.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, with significant financial growth, effective strategic execution, and robust shareholder returns. While risks are acknowledged, the company's performance and forward-looking initiatives demonstrate resilience and a clear path for continued value creation.

Positives

• Reported revenue increased by 2.3% to 20.9 billion EUR, demonstrating top-line growth.
• Reported operating profit increased significantly by 31.0% to 2.8 billion EUR, boosted by the Philippines acquisition and reduced costs.
• Comparable diluted EPS grew by 6.2% on an FX neutral basis, indicating strong underlying profitability.
• Generated strong net cash flows from operating activities of 3.0 billion EUR and comparable free cash flow of 1.8 billion EUR.
• Return on invested capital (ROIC) improved by 280 basis points to 10.9% (reported) and 40 basis points to 11.5% (comparable), reflecting capital efficiency.
• Successfully completed a 1.0 billion EUR share buyback program in 2025, returning significant capital to shareholders.
• Achieved an 18.9% reduction in total value chain GHG emissions versus 2019, progressing towards Net Zero 2040 target.
• Exceeded water replenishment target, returning 105.2% of water used in finished drinks to nature and communities.
• Maintained high packaging collection rates, with 75.7% of primary packaging collected for recycling.
• Invested 1.0 billion EUR in business expansion, including new production facilities and digital transformation, signaling future growth confidence.
• Achieved Top Employers Institute accreditation in more markets, indicating strong employee satisfaction and workplace environment.

Negatives

• Adjusted comparable volume was up only 0.2%, with Europe experiencing a 0.2% decline due to consumer focus on affordability and increased sugar taxes.
• Indonesia experienced a volume decline reflecting a weaker consumer backdrop and macroeconomic environment.
• Juice volume declined by 10.0% due to the strategic de-listing of Capri-Sun in Europe.
• The 2025 LTIP CO2e reduction targets appear more stretching than initially set due to the inclusion of the Philippines, potentially impacting vesting outcomes.
• The company has not yet met the UKLR 6.6.6(9) target of 40% women on the Board as of December 31, 2025, though it is expected to be met in 2026.

Risks

• Market competition and customer consolidation could lead to lower net pricing, loss of market share, and reduced profitability.
• Adverse weather conditions, particularly cold or wet summers, can negatively impact demand for products and sales.
• Imports from outside territories, especially from the European Economic Area, can adversely affect sales.
• Deterioration of global and local economic and political conditions, including inflation, higher interest rates, and geopolitical tensions, could reduce demand, increase costs, and impact financial results.
• Foreign exchange shortages and an overvalued Kina (PGK) in Papua New Guinea present ongoing risks to local operations and financial translation.
• Increases in raw material costs (e.g., aluminum, PET, sugar, energy) could harm financial results if not passed on to customers.
• Changes in interest rates or a downgrade in debt rating could increase borrowing costs and limit access to financing.
• Deterioration of political unity within the EU could cause volatility in currency values, disrupt the global economy, and affect access to capital and demand for products.
• Default or failure of counterparty financial institutions could lead to losses.
• Future changes to tax laws, including global minimum effective tax rates (Pillar Two) and taxes on packaging or sugar, could increase costs or reduce demand.
• Waste and pollution, particularly plastic packaging, and related regulations (e.g., DRS, recycled content mandates, plastic taxes) could increase costs, damage reputation, or reduce consumer acceptance.
• Health concerns regarding product contents (e.g., sugar, sweeteners) could reduce consumer demand or increase costs due to stricter regulations.
• New recycling technologies may not develop quickly enough or be cost-effective, limiting ability to mitigate plastic restrictions.
• Global or regional catastrophic events (natural disasters, pandemics, wars) could disrupt supply chains, reduce profitability, and impact employee wellbeing.
• Cyber attacks or IT/OT system failures could disrupt operations, compromise data, damage reputation, and lead to financial losses.
• Failure to successfully execute business transformation initiatives could divert management focus, disrupt operations, and fail to deliver expected value.
• Miscalculation of infrastructure investment needs could result in investments not generating projected returns.
• Difficulties in executing acquisition strategy or integrating acquired businesses could lead to unexpected costs, delays, or failure to achieve intended results.
• Product safety, quality, food defense, or food fraud issues could harm consumers, lead to litigation, regulatory fines, and damage brand image.
• Adverse effects on employee health, wellbeing, safety, and security could impact business performance and engagement.
• Water scarcity and additional regulations on water supply or use could increase production costs, limit capacity, and damage reputation.
• Climate change impacts (extreme weather, agricultural productivity decline) and related legal/regulatory responses could disrupt business and increase costs.
• Litigation or legal proceedings, including 'greenwashing' claims, could expose the company to significant liabilities and reputational damage.
• Loss of foreign private issuer status could require compliance with more extensive US reporting requirements, increasing legal and compliance costs.
• Failure to attract, retain, and motivate employees, or to foster a diverse and inclusive workplace, could impact strategic objectives and business performance.
• Misalignment of incentives and strategy with TCCC and other strategic partners could negatively impact business relationships and ability to deliver objectives.
• Significant shareholdings by TCCC and Olive Partners could lead to differing views from public shareholders on matters requiring approval.

Future Outlook

The company anticipates continued profitable growth, with full year 2026 guidance of 7% operating profit growth on a comparable and FX neutral basis. Strategic focus areas include accelerating sparkling beverage growth, elevating execution for key selling moments like the FIFA World Cup, maintaining Monster's momentum with innovations, and continuing investments in next-generation energy-efficient coolers, vending innovations, and supply chain infrastructure to support demand in growing categories. The company aims to reach Net Zero emissions (Scope 1, 2 and 3) by 2040, with a 30% reduction by 2030, and will continue to drive water replenishment projects and support deposit return schemes.

Management Comments

• "2025 was a strong year for CCEP, marked by continued progress and momentum across the business. I am proud of the passion and commitment our teams have shown – delivering results today while building for tomorrow."
• "Our focus remains clear: driving profitable growth through a customer and consumer led approach, powered by technology, innovation and investment. This is underpinned by our long-term strategy: great brands, great people and great execution, done sustainably."
• "Our strong partnerships with TCCC, Monster Energy Corporation (MEC or Monster) and other brand owners remain central to our success. Together, we are building a portfolio that meets evolving consumer needs."
• "Our success is driven by our people – bringing energy, commitment, and passion to CCEP every day. To support them, we continue to invest in capability building across commercial, customer service, supply chain, leadership and AI."
• "2025 was a record year for CCEP across all key financial metrics. We delivered robust top and bottom line growth, generated strong free cash flow and again grew shareholders returns."
• "As we look ahead to 2026 and beyond, our ambition is clear: to lead with purpose, powered by exceptional people, iconic brands and a strategy built for long-term success."
• "With bold innovation, great execution and continued investment in sustainability and technology, we are building a business fit for the future."

Industry Context

StockSavvy.ai notes that Coca-Cola Europacific Partners operates in a robust and resilient beverage category, demonstrating strong performance despite a complex macroeconomic landscape and increased consumer focus on value. The company's strategic emphasis on a diverse portfolio, including growth in alcohol ready-to-drink (ARTD) and low/no-calorie options, aligns with evolving consumer trends towards healthier and more varied beverage experiences. Its reported position as the 'number one value creator' for retail customers in Europe, surpassing Fast Moving Consumer Goods (FMCG) peers, highlights its strong market execution and customer partnerships. The significant investment in digital transformation, AI-powered tools, and sustainable packaging solutions reflects broader industry trends towards operational efficiency, technological adoption, and environmental responsibility.

Comparison to Industry Standards

• Ranked as the number one value creator for retail customers in Europe in 2025, outperforming FMCG peers (Source: Nielsen FY 2025).
• Recognized as a top supplier in the Advantage Group Survey, with eight markets ranking #1 or #2 among FMCG suppliers, indicating strong customer relationships and service excellence.
• Achieved a total incident rate (TIR) of 0.77 per 100 FTE, meeting the internal goal of below 1, which is considered world-class safety performance.
• Maintained a comparable net debt to comparable EBITDA ratio of 2.7, which is within the company's target range of 2.5-3.0x, indicating sound financial leverage management relative to industry benchmarks for large consumer goods companies.

Management Changes

Corporate Governance

Legal Proceedings

• The company is routinely under audit by tax authorities in the ordinary course of business in numerous jurisdictions, with inherent uncertainties in tax determination.
• Tax assessments have been received in certain jurisdictions for potential tax related to concentrate purchases, which the company is vigorously defending, believing the application of tax has no technical merit.
• In connection with ongoing litigation and tax matters, guarantees of approximately 888 million EUR have been issued as of December 31, 2025.
• On July 24, 2025, the Supreme Court of Spain issued a decision on a VAT jurisdictional dispute, requiring the STA to refund approximately 250 million EUR to the Group and the Group to repay approximately 287 million EUR to the BTA. The net difference reflected previously recognized balance sheet positions, confirming VAT neutrality.
• On March 9, 2026, the Group received a proposed VAT assessment for years 2020 to 2022, for approximately 215 million EUR inclusive of interest, related to the Spanish VAT matter. The company believes it will continue to be held neutral in respect of the dispute.
• The company is a party to various litigation claims and legal proceedings, which are evaluated to assess the likelihood of unfavorable outcomes and estimate potential losses.

Related Party Transactions

• Transactions with The Coca-Cola Company (TCCC): TCCC has significant influence over the Group, owning 17.59% of outstanding shares. The Group purchased 4,543 million EUR in concentrate, syrup, mineral water, and juice from TCCC in 2025, and received 147 million EUR in marketing funding. Amounts due from TCCC were 92 million EUR, and amounts payable were 289 million EUR as of December 31, 2025.
• Transactions with Cobega companies: Cobega, S.A. has significant influence, indirectly owning 21.26% of outstanding shares. Principal transactions include purchasing packaging materials (65 million EUR in 2025) and maintenance services. Amounts due from Cobega were 7 million EUR, and amounts payable were 20 million EUR as of December 31, 2025.
• Transactions with associates, joint ventures, and other related parties: Net amounts affecting the consolidated income statement totaled 223 million EUR in 2025, primarily related to container deposit scheme charges and raw material purchases. Amounts due from associates were 6 million EUR, and amounts payable to associates, joint ventures, and other related parties totaled 41 million EUR as of December 31, 2025.
• Transactions with key management personnel: Total remuneration paid or accrued to key management personnel was 39 million EUR in 2025, including salaries, short-term benefits, and share-based payments.

Stakeholder Impact

• Shareholders: Benefited from strong financial performance, increased diluted EPS, improved ROIC, and significant capital returns through a 1.0 billion EUR share buyback program in 2025, with another 1.0 billion EUR program announced for 2026.
• Employees: Investments in capability building, enhanced Employee Assistance Programme, and a focus on inclusion and diversity aim to create a supportive and growth-oriented workplace. The company achieved Top Employers Institute accreditation in more markets and saw record participation in its Inclusion Pulse Survey.
• Customers: The company delivered more revenue growth for retail customers than FMCG peers in Europe and was recognized as a top supplier in the Advantage Group Survey, indicating strong partnerships and value creation.
• Communities: Supported through skills development programs (146,100 people supported since 2023), grassroots initiatives, and employee volunteering (41,700 hours in 2025), contributing 15.7 million EUR to local communities.
• Suppliers: Engaged through Responsible Sourcing Policy and Principles for Sustainable Agriculture, with efforts to reduce Scope 3 GHG emissions and incentivize ESG performance through sustainability-linked finance programs.
• Franchisors (TCCC, Monster): Maintained strong partnerships, which are central to business success and portfolio development, with ongoing collaboration on innovation and marketing.

Next Steps

• Accelerate sparkling beverage growth in 2026.
• Elevate execution across key selling moments like Halloween, Christmas, and the FIFA World Cup.
• Continue focus on core brands, drive distribution of Coke flavors, and support Diet Coke growth.
• Maintain Monster's momentum with new innovations.
• Continue execution of Fanta flavors and reinvigorate growth via campaigns like 'Wanta Fanta'.
• Prioritize employee physical and mental wellbeing and provide a safe and inclusive work environment.
• Deepen leadership excellence and scale adoption of critical commercial, customer service, supply chain, and technology capabilities.
• Embed digital platforms to strengthen employee experience and Ways of Working, and develop further data and AI capabilities.
• Further enhance Integrated Shared Services (ISS) capabilities in Bulgaria and the Philippines.
• Strengthen talent pipeline by attracting new talent, particularly through early careers investment.
• Accelerate investment in execution capabilities and build on strong 2025 foundations.
• Invest in next-generation energy-efficient coolers and expand Coke and Go vending innovation.
• Continue supply chain investments with new production lines and infrastructure to support demand and growing categories.
• Deliver progress on 2030 roadmaps covering Climate, Packaging, Water and Nature, and Communities.
• Continue work on climate accelerator work groups to drive decarbonization.
• Continue to drive water replenishment projects in High Risk Locations (HRLs).
• Support implementation of deposit return schemes in Portugal (2026 launch) and Great Britain (2027 launch).
• Implement a global direct tax reporting system to ensure consistent standards, improve accuracy, and support Pillar Two calculations.
• Strengthen community management and digital monitoring capabilities, enhancing collaboration with TCCC and European/APS bottlers.
• Enhance website search engine optimization (SEO) and generative engine optimization (GEO) to boost visibility and protect reputation against AI-driven inaccuracies.
• Complete implementation of new business continuity platform and enhance incident and crisis management training.
• Extend detailed cybersecurity assessments to a wider critical supplier base and integrate risk management processes into new territories.
• Drive food safety culture further with implementation of HOP concepts and governance of action plans from lessons learned.
• Amplify the use of Quality 4.0 and strengthen change management application.
• Deploy travel security program in the Philippines and strengthen security culture through awareness campaigns.
• Introduce new balanced scorecard framework to strengthen performance monitoring and global implementation of new contractor management system in APS.
• Deploy anti-collision systems for forklifts in Belgium and Australia and promote global forklift operator initiatives.
• Continue to evolve the 2030 carbon reduction roadmap, with a focus on the Philippines.
• Review and update the water reduction roadmap focusing on water security and plants with the highest water risk.
• Improve capital allocation by applying prioritization formulas to maximize return on investments.
• Continue implementing action plans for completed bribery and corruption risk assessments, conduct additional assessments, and enhance processes across markets.
• Enhance Responsible AI framework at CCEP to strengthen awareness about responsible use of data and AI.
• Advance third-party risk governance by further developing due diligence processes, introducing automated screening, and enabling scalable oversight.
• Implement the Corporate Sustainability Due Diligence Directive (CS3D) and actions from the 2025 global inclusion survey.
• Further embed the accessibility matrix across CCEP and global commitment to workplace adjustments.
• Continued governance of the enhanced Employee Assistance Programme to improve consistency and quality of care.
• Focus on the innovation pipeline and campaign calendar with TCCC and Monster to further accelerate brand growth.

Key Dates

Recommendation

The filing indicates strong financial performance in 2025, with significant increases in reported revenue, operating profit, and diluted EPS. The company's commitment to shareholder returns, evidenced by the 1.0 billion EUR share buyback program and a further program announced for 2026, along with robust comparable free cash flow generation and improved ROIC, suggests a healthy financial position. Strategic investments in digital transformation, sustainability, and market expansion, particularly in the high-growth Asia-Pacific region, position the company for continued long-term success. While macroeconomic and regulatory risks exist, the company's proactive risk management and strong market execution capabilities mitigate these concerns, making it an attractive 'buy' for seasoned investors.

Keywords

Beverages, Soft Drinks, Coca-Cola, Bottling, FMCG, Earnings, Profit, Revenue, Sustainability, ESG, Share Buyback, Philippines, Europe, Asia Pacific, Supply Chain, Digital Transformation, Climate Change, Packaging, Water Stewardship, Corporate Governance