Today, as one of the two largest bottlers of Coca Cola in China, Swire Coca Cola released its latest semi annual report.
According to the latest report card, in the first half of 2022, in the Chinese mainland market, although the revenue and sales volume of Swire Coca Cola declined as a whole due to the impact of the epidemic, many categories still achieved growth. At the performance meeting held this evening, Su Wei, President of Swire Coca Cola, pointed out that the business in mainland China has recovered significantly since June, and it is expected that there will be “great improvement” in the second half of the year.
Swire Coca Cola is the fifth largest Bottling Group by sales volume of Coca Cola’s global bottling system. It operates beverage business in mainland China, Hong Kong and Taiwan and the US market. As one of the two largest bottlers of Coca Cola in China, Swire Coca Cola provides services to 700 million mainland Chinese consumers. Therefore, its financial report is also an important “window” to see Coca Cola’s business in China.
Su Wei, President of Swire Coca Cola, was at the performance meeting today
Next, the snack generation will take you to understand.
First, let’s focus on the mainland market.
According to the financial report read by snack generation, in the first half of 2022, Swire Coca Cola earned HK $14.021 billion (about RMB 11.747 billion) in the Chinese mainland market. Revenue in local currency (including revenue from a joint venture and excluding sales to other bottling companies) decreased by 6%. The profit attributable was HK $586 million (approximately rmb503 million), a year-on-year decrease of 41%.
Raw material costs, operating expenses and depreciation expenses increased. EBITDA and EBIT in local currency (including EBITDA and EBIT of a joint venture and excluding central and other costs) decreased by 27% and 42% respectively. The EBITDA margin decreased from 14.1% in the same period of last year to 11.1% in the first half of 2022, and the EBIT margin decreased from 10.1% to 6.3%.
“Mainland China (the largest market for Swire Coca Cola) contributed 53% of our total revenue, followed by the United States, which contributed 40%.” Su Wei said at the meeting today that in the first half of the year, the income of the Chinese mainland market was affected by the travel and social restrictions related to the epidemic. “At the same time, our investment (cost) also increased, resulting in a 41% drop in profits.”
In addition, the financial report pointed out that in the first half of 2022, the total sales volume in the mainland market of China fell by 10%. “In early March 2022, many cities took restrictive measures to deal with the epidemic, which adversely affected sales.” Su Wei explained.
The Coca Cola bottler expects its business to improve in the second half of the year.
“Despite the challenging environment, our team will continue to focus on implementing our long-term strategy, with a particular focus on revenue growth plans.” Su Wei said at the meeting that this has played a great role after the mitigation of the epidemic control measures.
“In mainland China, since June, we have observed a significant recovery of business and a rapid recovery of market vitality. Therefore, we are confident that with the improvement of the external environment, our business will continue to grow in
The company pointed out that in mainland China and Hong Kong, both revenue and sales volume declined; In Taiwan, revenue increased but sales decreased. “Due to the epidemic raging in mainland China, Hong Kong and Taiwan, and the rising cost, the business has been adversely affected.” Guy Bradley, chairman of Swire Pacific, explained.
The financial report shows that in the first half of this year, due to the impact of the epidemic, the profit attributable to Swire Coca Cola’s Hong Kong business was HK $62 million, a year-on-year decrease of 13%; Revenue (excluding sales to other bottling companies) fell by 8%. By category, the revenue of soft drinks decreased by 8%, that of non-alcoholic beverages decreased by 8%, while the revenue of coffee, tea drinks, fruit juice drinks and drinking water decreased by 7%, 1%, 24% and 6% respectively. Total sales fell by 10%.
As for Taikoo Coca Cola’s Taiwan business, affected by the epidemic in early May, the profit attributable to Taikoo Coca Cola in the first half of this year was HK $53 million, a year-on-year decrease of 12%. Revenue in local currency increased by 1%. The revenue of soft drinks increased by 8%, the revenue of non-alcoholic beverages decreased by 5%, the revenue of tea drinks decreased by 10%, and the revenue of energy drinks increased by 26%.
The financial report shows that in the first half of 2022,
Looking forward to the second half of 2022, Martin Murray, financial director of Swire cola, said today that for Swire Coca Cola, the adverse impact of the epidemic on the beverage markets in mainland China, Hong Kong and Taiwan “is expected to be alleviated in the second half of the year”. In addition, it is expected that the increase in raw material costs and operating expenses will continue to put pressure on profit.
Although the “first half” encountered challenges, from the perspective of Swire Coca Cola, 2022 is also full of “exciting development opportunities”.
Su Wei described at the meeting today that for Swire Coca Cola, 2022 is an “exciting expansion year”. She mentioned that in July this year, Swire Coca Cola and Coca Cola reached an agreement to merge (part of) the non gas beverage business of the original Coca Cola bottler production Holding Co., Ltd. in the Chinese mainland market through equity transfer. The completion of the equity transfer is subject to a number of conditions (including applicable anti-monopoly approvals) and is expected to be completed on or before March 31, 2023.
“After the completion of the acquisition, our bottling system will add 6 factories and a total of 21 non aerated beverage production lines. This will help to speed up production deployment, launch new products, provide consumers with a richer non aerated beverage category and packaging portfolio, save a lot of logistics and office expenses, and create synergy with our existing manufacturing facilities.” Su Wei said at the meeting today.
According to the snack representative, in the next five years, Swire Coca Cola’s investment in China is expected to reach 5.5 billion yuan, including 20 production lines. Among them, this year, Swire Coca Cola invested five production lines in Hefei, Huizhou, Jiangxi, Hainan and Hangzhou, and two bottle embryo lines in Hefei and Yunnan, with a total investment of about 450 million yuan. At the beginning of this year, Swire Coca Cola announced that it would invest 1.25 billion yuan to expand its new production base in Guangdong, setting a new record
Swire Coca Cola, coffee “refreshing”
展望2022年下半年，太古公司财务董事马天伟（Martin Murray）今天表示，对太古可口可乐而言，疫情对中国内地、 香港及台湾饮料市场的不利影响，“预计将于下半年减轻”。另外，预计原料成本及营业开支增加，将继续令溢利受压。