- As per GlobalData's proprietary risk methodology, Coca-Cola HBC AG's overall risk score is 3.04, signifying medium risk
- The financial risk pillar has boosted the overall risk profile of the company with healthy liquidity ratios
- The company's operational risk is at par with the industry average, driven by its scale and business positioning
Coca-Cola HBC AG (Coca-Cola HBC) has a good risk profile and is one of the top fifteen companies based on our proprietary risk assessment of the non-alcoholic beverages sector in the consumer industry. Industry and financial risk pillars boosted the overall risk score for Coca-Cola HBC AG. The company's focus on healthier drinking options and operational excellence are its strengths, while a recent decline in revenue remains a cause for concern.
About the Company
Coca-Cola HBC, the bottling partner of The Coca-Cola Company (TCCC), manufactures, markets, and distributes non-alcoholic beverages. It sources concentrate bases and syrups from TCCC for developing sparkling soft drinks, iced teas, sports drinks, energy drinks, and water. It markets products under Amita, Bambi Biscuits, Bambi Wafers, AVRA, Deep River Rock, Fruice, Frulite, Kykkos, Lanitis, Next, Next Joy, Tsakiris Chips, and Plazma brand names.
Coca-Cola HBC is one of the leaders in the non-alcoholic beverages industry, with reported revenue of $6.99 billion in the financial year 2021 (FY2021), a decline of 11.14% over FY2020. Net income also witnessed an annual decline of 13.37% in FY2021.
Risk Pillars
Our proprietary risk assessment uses a combination of four risk pillars – Country, Industry, Operational, and Financial. Scores are based on a scale of 1 to 5, 1 being the lowest risk and 5 being the highest.
Coca-Cola HBC's overall risk score is better than the sector's average. Companies like Monster Beverage Corp, National Beverage Corp, and Nongfu Spring Co Ltd are the leaders in the sector.
Country Risk: Coca-Cola HBC has a presence in various countries, insulating it from the risk associated with economic and political factors of a specific region. The company has a country risk score of 2.93, with the majority of the revenue derived from Russia (12.61%), followed by Italy (12.26%), Nigeria (8.30%), Switzerland (6.00%), and Other International regions (60.83%).
Industry Risk:
The company's primary exposure is to the non-alcoholic beverages sector. Moderate profit margins and weak growth projections compared to other sectors characterizes the non-alcoholic beverages sector, resulting in an industry risk score of 3.0
Operational Risk:
The company has a below-average operational risk score of 2.98, primarily driven by its business positioning and scale of operations. The company's enhanced operating network enables it to improve its production and supply chain activities. It operates and manages 56 bottling plants, including 32 bottling plants in various emerging markets, 15 bottling units in established markets, and nine bottling plants in developing markets. However, recently, the company witnessed a decline in revenues due to the negative impact of the change in accounting treatment of its Russian juice business and unfavorable changes in foreign exchange risk. The mid-teens profitability margins and return on equity weigh down the overall operational risk score.
Financial Risk:
The company has a financial risk score of 3.2, slightly above the industry average. The company has a healthy liquidity position, which increases its ability to repay its short-term obligations . A lower proportion of debt on its balance sheet has also strengthened the leverage and cash flow ratios.
About our Methodology:
GlobalData risk scorecard for a sector provides the analysis of various risks a company is vulnerable to. Our risk framework comprises four pillars – country, industry, operational and financial. The country risk for an entity signifies the risk of operating in a particular country. GlobalData's proprietary country risk assessment framework is used to calculate the risk for individual countries. Industry risk is an integral part of risk analysis, and it implies the riskiness and stability of the industries in which a company operates. The operational and financial risk profile comprises a company's risk and return potential based on its key operational and financial metrics. Our scores are based on an average of the latest three fiscal year data.
