Investment: CCB finds the rouble hurts `the real thing'
Wednesday 30 September 1998
The soft drink bottler joined the stock market in July, weeks before shares around the world tumbled.
But fund managers, who forced the share price up to 191p in July in their desperation to get hold of the scarce stock, look less canny. Yesterday, a gloomy set of interim results sent shares in CCB down 21.5p to a new low of 134p.
The immediate culprit is Russia. Although CCB has no direct exposure to the country, the devaluation of the rouble dragged down currencies in Ukraine and Belarus, forcing up prices and denting sales volumes.
True, the region accounts for just 8 per cent of sales and adjacent markets in Poland and the Czech Republic are apparently unaffected. But the new areas also offered some of the greatest potential - turnover in the Ukraine grew by almost 30 per cent last year.
With the help of its parent company, CCB is switching cash earmarked for advertising into cutting prices in those markets.
However, any immediate recovery looks unlikely.
The episode has probably put back CCB's growth plans by a year or more. For a company whose valuation leans heavily on discounted cash flow projections - forecasts for earnings before tax, depreciation and amortisation were yesterday scaled back to pounds 115m from pounds 135m - this is a major setback.
CCB points out that consumers in its region spend much less on the black sticky stuff than their peers in more prosperous economies.
The company will continue to spend heavily on fridges and cooled vending machines in an attempt to boost consumption.
Ultimately, however, demand for Coca-Cola is a function of economic welfare.
While prospects in Eastern Europe remain uncertain, the shares look anything but the real thing. Avoid.
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Man to be beheaded in Saudi Arabia after ripping up a Koran and hitting it with his shoe
- 3 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 4 PornHub turns masturbation into energy in bid to save the planet
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
Stephen Hawking's wife Jane Wilde on their marriage breakdown: 'The family were left behind'
British are sexually uptight, dirty and drink too much – according to Spanish book
PornHub turns masturbation into energy in bid to save the planet
White and gold or blue and black – what colour is the dress? An eyewitness gives a definitive answer
Kelly Osbourne leaves Fashion Police after Zendaya dreadlocks racism row
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...