Coca Cola European Partners : Cola Euro Ptnrs - H1 2020 Results & COVID-19 Update

COCA-COLA EUROPEAN PARTNERS

Results for the six months ended 26 June 2020 & COVID-19 update

Resilient performance despite the challenging backdrop; pandemic impact gradually improving

H1 2020 Metric[1]	As Reported		Comparable		Change vs H1 2019
	As Reported		Comparable		Comparable Fx-Neutral
Volume (m unit cases)[2]	1,040					(14.5)	%		(14.0)	%
Revenue (€M)	4,837			4,837			(16.5)	%		(16.5)	%		(16.0)	%
Cost of sales (€M)	3,168			3,168			(12.0)	%		(12.0)	%		(11.5)	%
Operating expenses (€M)	1,401			1,271			(5.5)	%		(11.5)	%		(11.0)	%
Operating profit (€M)	268			398			(63.0)	%		(48.5)	%		(48.0)	%
Profit after taxes (€M)	126			259			(75.0)	%		(52.0)	%		(52.0)	%
Diluted EPS (€)	0.28			0.57			(74.0)	%		(50.0)	%		(50.0)	%
Revenue per unit case (€)			4.68							(2.0)	%
Cost of sales per unit case (€)			3.07							3.5	%
Free cash flow (€M)			(5)

DAMIAN GAMMELL, CHIEF EXECUTIVE OFFICER, SAID:

'This crisis has had an unprecedented impact on our business and the communities we serve across Europe. I thank our colleagues who have worked tirelessly to support our customers, consumers and communities throughout these challenging times, while at the same time protecting the long-term health of our business.

'We entered the year with good momentum, and I am proud of the resilience of our business and the speed at which we were able to respond to the challenges we faced as we entered the second quarter. We saw lower demand for immediate consumption and widespread outlet closures in the away from home channel but we quickly adapted, placing greater emphasis on the home channel, including the growth in online and future consumption, and I am particularly pleased that continued to gain overall market share. We are supporting our away from home customers as they start to re-open, and encouragingly, trading improved throughout the quarter as restrictions were lifted. However, many of our customers continue to operate at significantly reduced capacity and on-the-go consumption remains under pressure.

'We are focused on leveraging our solid capabilities to drive a robust second half recovery and we are confident about the future of our business, led by an even stronger sustainability and digital agenda. The pandemic has strengthened our determination to go further and faster in building a better and greener future for our business, for people and for the planet. And as people evolve the way they live, work and shop, our digital capabilities will continue to set us apart. We are advancing at pace and will strive to be the best online partner for retailers and food delivery platforms, and the easiest and most efficient B2B online partner for retailers and food delivery platforms, and the easiest and most efficient B2B online partner for our customers and wholesalers.

'Despite the uncertainty that surrounds us today, we continue to take actions to protect our performance, conserve cash and plan for future growth, all underpinned by a strong balance sheet. Our business is built upon three pillars: great people, great service and great beverages. This foundation gives us the confidence to navigate through this crisis, helping society rebuild and recover, and ultimately build a stronger and even more sustainable business for the future.'

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[1] Refer to 'Note Regarding the Presentation of Alternative Performance Measures' for further details

[2] Unit Case = approximately 5.678 litres or 24 8-ounce servings

Q2 & H1 HIGHLIGHTS[1]

Q2 Revenue (-26.0%)^[2]

• Comparable volume -22.0%^[3] driven by the impact of the COVID-19 pandemic across our markets

◦ Immediate consumption (IC) & small priority packs significantly impacted (affecting both away from home (AFH) & home channels)

◦ Sharp declines in AFH volumes (-50%) reflecting varying lockdown measures

◦ Home channel also impacted (-3.5%) given exposure to IC packs, however offset by future consumption (FC) packs performing better (e.g. more large PET & multipack cans)

◦ Sequential improvement in volumes across the quarter as lockdown measures gradually lifted (April -36%; May -26%; June -9%); July volumes in line with June

• Revenue per unit case -5.0%^[2],[4] reflecting negative geographic, channel & pack mix, driven by AFH closures

H1 Revenue (-16.0%)^[2]

• NARTD value share gains across measured channels^[5]

• Comparable volume -14.0%^[3] driven by Q2 (see above) alongside some customer disruption as a result of our planned pricing strategy partially offset by innovation (particularly Monster & Fuze Tea)

• Revenue per unit case -2.0%^[2],[4] reflecting positive momentum in Q1 (+1.5%) benefiting from favourable price & promotions offset by Q2 (see above)

H1 Comparable Operating Profit -48.0%^[2] (Reported Operating Profit -63.0%)

• Cost of sales per unit case +3.5%^[2],[4] reflects under-recovery of fixed manufacturing costs given lower volumes, offset by the decline in revenue per unit case driving lower concentrate costs

• Comparable operating profit of €398m^[6], -48.0%^[2] reflecting the revenue decline & higher cost of sales per unit case offset by a reduction in discretionary spend

• Comparable diluted EPS of €0.57^[6], -50.0%^[2] (Reported -74.0%)

Other

• Dividend: FY19 dividend of €1.24 per share fully paid during 2019. The Board continues to recognise the importance of cash returns to shareholders. Given the continued uncertainty of the effect of the ongoing pandemic, the Board has determined to defer consideration of the 2020 FY dividend, in lieu of two interim dividends, until Q3 when visibility will have improved and in line with normal cadence

• Share buyback: repurchased c.€130m (3m shares) of the €1bn programme announced Feb 2020 (suspended until further notice as previously announced)

• Sweden became first 100% recycled PET market, eliminating the use of 3,500 tons of virgin plastic per year. Launched 2020 long-term incentive plan incorporating inaugural GHG^[7] reduction target

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[1] Refer to 'Note Regarding the Presentation of Alternative Performance Measures' for further details[2] Comparable and FX-neutral [3] Adjusted for selling day shift. No selling day shift in Q2, reported H1 volume -14.5% [4] A unit case equals approximately 5.678 litres or 24 8-ounce servings [5] NARTD (non-alcoholic ready to drink) Nielsen Data to w/e IS 14.06.20, GB 27.06.20, ES PT DE FR BE NL SE & NO 28.06.20[6] Comparable [7] GHG = greenhouse gas; 15% of the 2020 long-term incentive award will be based on the extent to which CCEP reduces its greenhouse gas emissions over the next 3 years Note: Comparisons are against equivalent 2019 period.

COVID-19 RESPONSE UPDATE: RESPOND, RECOVER, SUSTAIN

Our rapid response has prioritised our people, customers& communitieswhilst protecting our businessfor the long term alongside preparing for recovery.

People: implemented comprehensive measures in line with official guidance from governments & health authorities to keep our people safe

Customers: working closely with our suppliers, partners & TCCC^[1] to ensure we best serve our customers, including shifting production resource to higher demand channels & packs by prioritising core SKUs^[2]

Communities:working closely with TCCC^[1] to provide substantial financial aid through the Red Cross & other local NGOs; donating over 650k unit cases of product & giving access to our logistics network for relief work

Business:

• Governance: increased cadence of reviews with leadership teams, Board of Directors & TCCC^[1] whilst incorporating learnings from across the Coca-Cola system

• Costs: reducing discretionary spend in areas such as trade marketing, promotions, merchandising, incentives & travel - amounting to a potential FY20 reduction of c.€200-250m (on track at H1)

• Capital expenditure^[3]: delaying c.€200m (on track at H1), resulting in FY20 total capex^[3] of c.€350m^[4]

• Finance: withdrawal of FY20 guidance given uncertainty (as previously announced); suspension of share buyback programme; deferred consideration of 2020 FY dividend until Q3; issued 6-year €600m bond & tapped existing 2027 bond by €250m to add to an already balanced mix of long-term maturities (with no covenants on debt or facilities)

Alongside CCEP's strong cash generation & balance sheet (net debt/adjusted EBITDA of 2.7 times^[3],[5]), CCEP has a solid position on liquidity given the following: €0.9bn cash & cash equivalents^[6]; €1.5bn sustainability linked committed undrawn^[6] RCF^[7]; €1.5bn multi-currency commercial paper programme (€0.3bn issued^[6]); unutilised CCFF^[6],[8]

Recovery:

• Confident about the post-crisis future of our business (green & digital led)

• Green: fully committed to sustainability targets; pandemic has strengthened our determination to go further & faster in alignment with TCCC^[1]

• Digital: strong credentials but we need to advance more quickly (B2B2Home & B2B)^[9]

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[1] The Coca-Cola Company [2] Stock keeping unit [3] Refer to 'Note Regarding the Presentation of Alternative Performance Measures' for further details [4] Excluding payments of principal on lease obligations [5]As at 31 Dec 2019; [6] As at 26 June 2020; [7] Revolving credit facility; [8] UK Government COVID Corporate Financing Facility; [9] B2B = CCEP online ordering portal, partner platforms & online wholesale. B2B2Home = CCEP customer sales to consumer through their digital platforms. Note: Comparisons are against equivalent 2019 period.

Second-quarter & First-half Revenue Performance by Geography

All values are unaudited, changes versus equivalent 2019 period.

	Second-quarter		First-half
	As reported	Fx-Neutral		As reported	Fx-Neutral
	€ million	% change	% change		€ million	% change	% change
Great Britain	531		(14.5)	%	(13.5)	%		1,026		(11.0)	%	(10.5)	%
France (France & Monaco)	395		(25.0)	%	(25.0)	%		808		(16.5)	%	(16.5)	%
Germany	497		(22.5)	%	(22.5)	%		1,014		(13.5)	%	(13.5)	%
Iberia (Spain, Portugal & Andorra)	388		(48.0)	%	(48.0)	%		917		(28.5)	%	(28.5)	%
Northern Europe[1]	548		(20.0)	%	(17.5)	%		1,072		(13.0)	%	(11.0)	%
Total	2,359		(26.5)	%	(26.0)	%		4,837		(16.5)	%	(16.0)	%

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[1]Belgium, Luxembourg, Netherlands, Norway, Sweden & Iceland.

Great Britain

• Weak away from home (AFH) volumes given outlet closures, partially offset by strong growth in the home channel, led by future consumption (FC) (e.g. large PET +22.5% & multipack cans +35% in Q2). Coca-Cola Zero Sugar, Dr Pepper, Lilt, Monster & Schweppes mixers all grew volumes during Q2

• Revenue/UC^[1] negatively impacted by the outperformance of the home channel & in particular the growth in FC packs. Immediate consumption (IC) weakness in both channels also impeded revenue/UC

France

• Volumes mainly impacted by AFH weakness given outlet closures & weaker tourism trends. Home volumes negatively impacted by lower promotions, customer disruption, & hypermarket weakness reflecting lower footfall given lockdown restrictions. Coca-Cola Zero Sugar, Monster & Capri-Sun all outperformed

• Revenue/UC^[1] negatively impacted by channel mix given outlet closures & pack mix due to the weakness in IC, partially offset by lower promotions

Germany

• Volumes impacted by AFH outlet closures as well as some customer disruption in the home channel, partially offset by the additional border trade business. Coca-Cola Zero Sugar, Mezzo Mix & Monster outperformed while Vio & Apollinaris underperformed given the brands' exposure to AFH & IC

• Revenue/UC^[1] negatively impacted by channel mix given AFH outlet closures & pack mix given the outperformance of FC packs. This was partially offset by growth in the recently launched 1L glass bottle format

Iberia

• Volumes impacted by significant exposure to the AFH channel & weaker tourism trends, particularly in Spain where we over-index in exposure to HoReCa^[2]. The home channel also suffered due to the severity of lockdown restrictions in Spain versus other markets, as well as weakness in the cash & carry channel^[3]. Coca-Cola Zero Sugar & Monster outperformed

• Revenue/UC^[1] significantly impacted by channel mix given the closure of HoReCa^[2] outlets in addition to negative pack mix (e.g. glass -85%)

Northern Europe

• Negative AFH volumes reflecting outlet closures (varied by market) partially offset by growth in the home channel led by FC pack formats. Coca-Cola Zero Sugar, Monster, Burn & Tropico all grew volumes during Q2

• Revenue/UC^[1] growth negatively impacted by channel & pack mix (e.g. flat large PET volumes in Q2)

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[1] Revenue/UC = Revenue per Unit Case [2] HoReCa = Hotels, Restaurants & Cafes [3] Cash & Carry included in home channel for Iberia (~12.5% of 2019 Iberia volume), elsewhere included in AFH channel Note: comparable volumes

Second-quarter & First-half Volume Performance by Category

Comparable volumes, changes versus equivalent 2019 period.

	Second-quarter		First-half
	% of Total	% Change		% of Total	% Change[1]
Sparkling	90.5	%	(17.5)	%		88.5	%	(11.0)	%
Coca-ColaTM	67.5	%	(16.5)	%		66.5	%	(10.0)	%
Flavours, Mixers & Energy	23.0	%	(21.5)	%		22.0	%	(14.0)	%
Stills	9.5	%	(47.5)	%		11.5	%	(31.0)	%
Hydration	5.0	%	(54.0)	%		6.5	%	(36.0)	%
RTD Tea, RTD Coffee, Juices & Other[2]	4.5	%	(37.0)	%		5.0	%	(23.0)	%
Total	100.0	%	(22.0)	%		100.0	%	(14.0)	%

Coca-Cola^TM

• H1 transactions -13.5%^[3], reflecting decline in immediate consumption (IC)

• H1 Classic -12.5%; Lights -6.0%, reflecting resilient performance of Coca-Cola Zero Sugar (-1.5%)

• Launched new lights flavours e.g. Diet Coke Sublime Lime & Coca-Cola light taste Goji Berry

Flavours, Mixers & Energy

• H1 Fanta -17.5% driven by the impact of COVID-19 on away from home (AFH)

• H1 Energy +3.5% reflecting growth in both channels; led by Monster (+7.0%). On track to double energy business^[4]

• Q2 Schweppes mixers +23.0% in GB reflecting AFH occasions switching into the home channel

Hydration

• H1 water -40.5% reflecting the impact of COVID-19 & its exposure to IC across both channels

RTD Tea, RTD Coffee, Juices & Other^[2]

• Solid value share gains in the RTD tea category driven by Fuze Tea^[5], including the launch of limited-edition Green Tea Blueberry Jasmine

• Costa Coffee RTD gaining value share in GB^[5]

• Q2 Juice drinks -35.0% reflecting exposure to on-the-go occasions

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[1] Adjusted for selling day shift [2] RTD refers to Ready To Drink [3] Defined as the serving container that is ultimately used directly by the consumer. It can be a standalone container or one part of a multipack [4] Base year of 2019 [5] Nielsen Data to w/e IS 14.06.20, GB 27.06.20, ES PT DE FR BE NL SE & NO 28.06.20

Conference Call (with presentation)

• 6 August 2020 at 12:30 BST, 13:30 CEST and 7:30 a.m. EDT; via www.cocacolaep.com

• Replay & transcript will be available at www.cocacolaep.com as soon as possible

Financial Calendar

• Third-quarter trading update: 23 October 2020

• Full 2020 calendar available here: https://ir.cocacolaep.com/financial-calendar/

Contacts

Investor Relations

Sarah Willett Claire Michael Joe Collins

[phone] [phone] [phone]

Media Relations

Shanna Wendt Nick Carter

[phone] [phone]

About CCEP

Coca-Cola European Partners plc is a leading consumer goods company in Western Europe, making, selling & distributing an extensive range of non-alcoholic ready to drink beverages & is the world's largest Coca-Cola bottler based on revenue. Coca-Cola European Partners serves a consumer population of over 300 million across Western Europe, including Andorra, Belgium, continental France, Germany, Great Britain, Iceland, Luxembourg, Monaco, the Netherlands, Norway, Portugal, Spain & Sweden. The Company is listed on Euronext Amsterdam, the New York Stock Exchange, London Stock Exchange & on the Spanish Stock Exchanges, trading under the symbol CCEP.

For more information about CCEP, please visit our website at www.cocacolaep.com and follow CCEP on Twitter at @CocaColaEP.