Coca-Cola HBC AG (“CCH” or “Group” or “Company”) is today announcing the launch of a share buyback programme starting on 21 November 2023 and which is expected to run for a period of around two years. The intention is to return up to €400 million to shareholders.
As highlighted at both our Capital Markets Day and H1 results this year, CCH regularly reviews its balance sheet in the context of its expectations of ongoing growth and levels of cash generation, its future capital requirements and its capital allocation priorities. CCH remains committed to a disciplined approach to capital allocation that continues to drive shareholder value.
The Group’s capital allocation framework follows clear priorities:
1. Organic investment in the business to drive delivery of our medium-term financial targets - capital expenditure as a percentage of net sales revenue in the range of 6.5%-7.5% per annum
2. Paying a progressive dividend – targeting a payout of 40-50% of earnings per share
3. Strategic M&A
4. Additional capital returns
With these priorities in mind, the Board believes that the current share price undervalues CCH’s future growth opportunities. Therefore, the present time represents a compelling opportunity to reduce the number of shares in circulation, while continuing to invest in the business.
As a result, CCH is announcing its intention to return up to €400 million to shareholders through a one-off share buyback programme (“Buyback Programme”), commencing on 21 November 2023 and continuing up to 31 December 2025, subject to prevailing market conditions and any requisite authority to be granted at the Company’s following annual general meetings.
It is expected that the implementation of the Buyback Programme will enhance earnings per share.
The amount allocated to the buyback, which will be at the full discretion of CCH, considers the Group’s capital allocation priorities and allows CCH to continue to operate within its 1.5 to 2.0 times target range for net debt to comparable adjusted EBITDA1, while maintaining the financial flexibility to respond to changing market conditions if necessary.
Commenting on the announced Buyback Programme, Zoran Bogdanovic, CEO of Coca-Cola HBC AG, said: “We are delivering another year of strong performance in 2023, and remain confident in our ability to deliver our medium-term financial targets and to sustain the investment necessary to build a stronger platform for future growth. With our cash-generative business and a strong balance sheet today, we believe that the current market weakness presents a compelling opportunity for us to deploy excess capital through a buyback programme and deliver enhanced shareholder value.”
For this Buyback Programme, CCH has entered into an agreement with UBS AG London Branch, acting through its investment bank (“UBS").
