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Coca-Cola Hellenic | Momentum intact but re-rating room narrowing

Sweet 2025 outlook – CCH entered 2025 with strong momentum, backed by strong execution and encouraging signals from Russia/Ukraine negotiations. Mgt is guiding for +7–11% organic EBIT growth in 2025e, underpinned by +6–8% organic sales growth, driven by disciplined pricing and tight cost control. CCH is c60% hedged on 2025 raw material needs, with COGS/case inflation expected in the low-to-mid single digits.

… building on a strong 2024 – 2024 delivered another strong performance, with organic revenue up 13.8% and EBIT up 12.2% yoy. All CCH segments grew, across diverse macro environments, thanks to strong pricing, consumer-centric revenue initiatives and good cost control. Adjusted net profit rose 8.5% yoy to €829m while mgt proposed a gross DPS of €1.03 (+10.8% yoy) pointing to a 45.3% payout.

Raising our 2025e EBIT by c5% – Incorporating CCH’s profitability momentum and strong portfolio adaptability, we raise our 2025 EBIT forecast by 4.6%. We now project adjusted EBIT of €1.31bn (+9.9% yoy) on €11.6bn in sales (+7.8%), with the EBIT margin shaping at 11.3% (+0.2pps yoy). Despite slower volumes, pricing remains the key growth lever, particularly in Emerging markets. Our 11.5% organic EBIT growth forecast stands just above the high end of CCH’s guided range. We caveat that, while the weaker USD and easing raw material prices offer some cost tailwinds, ongoing trade disruptions and supply chain volatility weigh on near-term visibility to an extent.

Confident on the medium-term story, expecting high single digit EBIT growth – Looking ahead, we remain confident on CCH’s growth and margin trajectory. Given the strategic mix enhancement policies, we model a 2024-27e EBIT CAGR of c9%, with sales growing at c7% annually. This is driven by a balanced mix of volume and top-line strength, steady margin improvement, and easing cost inflation with blended input costs already at pre-Russia/Ukraine conflict levels. With net financial expenses also easing, we calculate c10% net profit CAGR, vs. c9% for CCH’s broad peer group.

Capital deployment optionality – CCH continues to invest behind its brands and markets, with target capex/sales at 6.5–7.5%. Its high-conversion model has supported both reinvestment and returns, with FCF conversion averaging c50% in recent years. We expect this to stay above 40%, underpinned by operating leverage and efficient working capital. With net debt/EBITDA below 1.0x from 2025 onwards, we see ample balance sheet optionality (higher shareholder returns or bolt-on M&A).

Valuation – The market has been fast in repricing both the near-term profit momentum (2-digit growth) and the possibility of a Russia/Ukraine ceasefire (c21% of group EBIT from the 2 countries), with the stock rallying 32% ytd eclipsing the 3% return of the MSCI EU Beverages index. As a result, it has closed the valuation gap vs its peers now trading at EV/EBITDA valuations similar to beer peers. Following this rally, we estimate that the current share price discounts the cash flows from the war-affected operations at what we consider ‘normal’ 13-14% WACC (c7-7.5% for the remaining business), thus pointing to relatively limited further optionality from re-rating, in our view. Filtering through the aforementioned earnings upgrades, slightly lower WACC (8.0%), better WC trends and higher earnings from the Russia/Ukraine business in the medium term, we lift our PT to €45, reiterating our Hold rating on valuation grounds.