Coca-Cola HBC FY25 Results Rise, Lifts Dividend, Sees Organic Growth In FY26; Stock Gains

Coca-Cola HBC reported stronger fiscal 2025 results with profit before tax rising to €1.31bn from €1.13bn and net profit attributable to owners up 14.6% to €940.4m (EPS €2.59, +14.9%). Comparable EBIT increased 13.8% to €1.36bn with a comparable EBIT margin of 11.7% (+60 bps), and net sales grew 7.9% to €11.61bn driven by volume (+2.8% to 3.0bn unit cases), price and mix; organic revenue growth was 8.1% and organic net sales per case rose 5.1%. The board is proposing a €1.20/share dividend (+17%) and the company guides 2026 organic revenue growth into its 6–7% medium-term target range and organic EBIT growth of 7–10%, which together with a management statement of confidence sent shares higher on the London market.

Analysis

Market structure: Coca‑Cola HBC (CCH.L / CCHGY) is a clear beneficiary — organic revenue +8.1%, volume +2.8% and net sales/ case +5.1% signal durable pricing power in sparkling and energy categories. Winners include large diversified bottlers and concentrate owners (KO) via stable pass‑through; losers are smaller, single‑market packagers and private‑label incumbents who cannot match multi‑channel distribution. Cross‑asset: expect modest tightening in European high‑grade credit spreads (reduced idiosyncratic risk), slight downward pressure on equity implied volatility for the name, and a muted positive effect on EUR given improved euro‑area cash flows.

Risks: tail risks are geopolitical shocks in Eastern Europe, punitive sugar/soda taxes, and a sudden concentrate price reset by Coca‑Cola Co that could compress bottler margins; FX volatility is a medium tail (EUR/EM currencies). Timeframes: immediate (days) = price reaction ~+4% already; short (weeks–months) = dividend approval and FX/commodity moves; long (quarters–years) = delivery against 6–7% organic revenue and 7–10% EBIT growth targets. Hidden dependency: margins depend on concentrate pricing lags and input cost pass‑through; catalysts include Q1 trading update, commodity CPI prints and shareholder vote on the €1.20 dividend.

Trade implications: establish a 2–3% NAV long in CCH.L (current ~4,460p) targeting 5,200p in 6–12 months with a stop at 3,900p (~‑12%). Use a 9–12 month bull‑call spread to express upside with limited capital: buy ~10% ITM call, sell ~25% OTM call sized at 0.5–1% NAV. Implement a relative value pair—long CCH.L (1.5%) and short US Consumer Discretionary ETF XLY (1.5%) to capture rotation into staples; overweight European staples and underweight cyclicals by ~3–5%.

Contrarian: the market likely underappreciates upside if input costs (PET/aluminium/sugar) ease 50–100bps — an incremental 50–150m EUR to EBIT could be unlocked, implying further upside beyond the +4% move. Conversely, consensus misses the concentrated risk from concentrate pricing or punitive regulation which could reverse gains swiftly; historical parallels show bottlers can re‑rate quickly when volume recovery pairs with margin expansion, but the path is binary enough to warrant option hedges and FX risk management.

Key Decisions for Investors

• Establish a 2–3% NAV long position in Coca‑Cola HBC (LSE:CCH) at current levels (~4,460p). Target 5,200p in 6–12 months; place a hard stop at 3,900p (≈‑12%).
• Implement a 9–12 month bull‑call spread on CCH (buy ~10% ITM call, sell ~25% OTM call) sized 0.5–1% NAV to lever upside while capping premium exposure.
• Execute a relative value pair: long CCH.L (1.5% NAV) and short XLY (US Consumer Discretionary ETF, 1.5% NAV) to capture rotation into staples over a 3–9 month horizon; rebalance after the next trading update or dividend vote.
• If total CCH exposure >1% NAV, hedge 50% of EUR economic exposure via EURUSD forwards or options for 6–12 months to limit FX tail risk from EM/EUR volatility tied to bottler cash flows.