CCHBC Earnings: Solid Volume on Emerging-Market Strength but Currency Headwinds Weigh on Pricing

Narrow-moat bottler Coca-Cola HBC posted solid first-half earnings with organic revenue up 14% and comparable operating profits up 8%, led by strong performance in the emerging and developing markets (two thirds of sales) despite geopolitical and macro headwinds. Management revised its 2024 outlook upward, calling for organic sales to grow 8%-12% (from 6%-7% previously) and comparable operating profits to climb 7%-12% (3%-9%). We plan to tick up our 2024 estimates to incorporate these changes, but we are maintaining our projections for mid-single-digit annual sales growth and an 11% average operating margin over the five-year horizon, as well as our GBX 2,800 fair value estimate. The share price has gained 13% since we called out the valuation discount relative to close peer narrow-moat CCEP in April, but the stock remains slightly undervalued.