tag:blogger.com,1999:blog-5389144729834496735.post9180925716779766239..comments2024-03-17T05:15:55.634-04:00Comments on The Brooklyn Investor: Coca-Cola Hellenic Bottling CoUnknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5389144729834496735.post-68334542706601143262013-08-07T12:50:10.066-04:002013-08-07T12:50:10.066-04:00Hi,
Yes, I don't disagree. The thing about ...Hi, <br /><br />Yes, I don't disagree. The thing about the bottlers is that many of them seem limited to certain markets whereas KO will benefit from new markets around the world, and the listed bottlers tend to be in mature markets. <br /><br />I think that's the part that makes it not as interesting as KO itself. <br /><br />But as you say, share repurchases etc. can still make these good investments. <br /><br />Thanks for reading. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-27578568039533502142013-08-03T12:19:43.323-04:002013-08-03T12:19:43.323-04:00I would agree on the normal comment, but I think t...I would agree on the normal comment, but I think this could be a "great company, pretty good price" situation. I have seen that you comment on Coke sometimes, and I think CCE could do better than Coke over the long term.<br /><br />I think that CCE's net income growth should be around that of Coke itself, maybe 1% or so lower per year, but I think returns from buybacks and dividends should more than make up for the difference. Coke tends to issue a lot of shares and spend a lot of its earnings on buybacks that barely reduce shares outstanding. CCE doesn't issue so many, plus it tends to trade a little cheaper, so it should be able to buy back more over time. It also has a debt/EBITDA target, which I like because it usually means management will be disciplined in share repurchases (see AutoZone, for example).<br /><br />Anyways, take all that to say that maybe CCE could be good to really look into if you like the bottling business.Anonymoushttps://www.blogger.com/profile/05291366443166602738noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-48838962632189040382013-07-28T07:15:26.532-04:002013-07-28T07:15:26.532-04:00Hi,
Thanks for reading. I haven't really fol...Hi, <br /><br />Thanks for reading. I haven't really followed this too closely. I looked at it as a potential opportunity in Europe during crisis times. I do think coke bottlers in general are very well managed companies but don't often trade 'cheap'. <br /><br />So I would put it in the 'normal' category. I do wonder about growth opportunity, though.<br /><br />Sorry for not having much more thought on this one. <br />kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-5761038274589519322013-07-26T22:24:07.914-04:002013-07-26T22:24:07.914-04:00I've been reading through your blog and just s...I've been reading through your blog and just stumbled on this old post. I have been looking at CCE for the past few months, and wondered what you thought of the European bottlers after a couple more years of business results. Not a lot of other people seem to pay attention to them.<br /><br />They obviously have strong competitive advantages because of their relationships to Coke; however, it does appear that there is a tendency for large profit drops if either volumes are down a percent or two or if they have a soft pricing year. It looks to me that CCH doesn't have very good pricing power in their markets, which has lead to really bad results over the past few years. However, CCE has done well through the recession. It looks like there is better brand presence in their more established markets enabling them to pass on costs much better.<br /><br />I do like CCE. They have struggled this year through bad weather, a big tax increase in France, and soft pricing (to be fair, management said pricing would be soft at the beginning of the year). Volumes have been slightly down for about a year now, but management just said on their call that volumes should be up in the second half of the year, and they guided for full year EPS of $2.45-2.50. <br /><br />I think they could have a very good year in 2014. If they can increase revenues by about 3-4%, possibly 1% on volume and 2-3% on price, revenue would be around $8.3B, which is what they did in 2011. While COGS might be a little higher than 2011, they will save on some productivity measures that they have undertaken, so I could see similar margins as 2011, which gave net income of about $750M. By the end of next year, I expect around 250M shares as a result of another year and a half of buybacks, so EPS could be around $3.<br /><br />Longer term, I think the company can increase revenues by about 2-4% on maybe 0-1% volume growth coupled with pricing gains around inflation. Adding in 1% more due to margin improvements (an increase in margins from 9-10% over perhaps 10 years seems reasonable, especially with management saying that it is committed to long term margin growth), and you could see mid-single digit net income growth. Couple that with dividends and repurchases from strong cash flow, and you could easily have 10% earnings growth, including reinvested dividends. <br /><br />Management actually does provide long term targets, with revenue growth of 4-6% and operating income growth of 6-8%. To me, they would need to hit some kind of inflation plus pricing model (I'm thinking similar to the railroads) to hit those numbers, and I'm not sure if that's really feasible, but I could be wrong.<br /><br />Even though I think their numbers might be hard to hit, I trust management. They often talk about the importance of shareholder returns, capital stewardship, high ROE, and margin expansion, and they have delivered on their promises over the past few years. They also decided not to acquire the German bottler and spend the money on repurchases, where I feel most management teams would have just overpaid for an acquisition in that situation.<br /><br />As far as price goes, earnings for this year are guided at $2.45-2.50, and I believe management when they say that. That gives a PE around 15. If they can hit around $3 in earnings next year, and continue to grow earnings at around 10% after that, then shares would be a huge bargain, in my eyes. Even if they just increase at high single digits or low double digits off of the $2.50 base, shares should still offer good long-term returns.<br /><br />So, there are some updated numbers on what I have been seeing. I would be interested to know what you think about them or the bottling business in general as of now.Anonymoushttps://www.blogger.com/profile/05291366443166602738noreply@blogger.com