February 20, 2024

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Coca-Cola HBC “blow” and analysts’ warnings – Financial Post

Coca-Cola HBC “blow” and analysts’ warnings – Financial Post

Coca-Cola HBC shares have come under intense pressure, amid warnings from analysts that the famous soft drink bottler could be another brand feeling the financial “pain” from the boycott linked to the Israeli war on Jaws.

B McDonald's

The latest prediction comes just one day after McDonald's failed to meet key sales targets as customers turned away from its restaurants over its support for Israel.

Israel's response to the October 7, 2023 attacks by Hamas in Gaza resulted in the deaths of at least 25,000 people, including many children, while hundreds of Israeli hostages remain in captivity. Recently, Israel was taken to the International Court of Justice on charges of genocide.

The US fast food chain said on Monday, February 5, that global store sales rose 3.4% in the fourth quarter, which was less than analysts expected a 4.7% increase. While revenue was $6.41 billion, it was 0.7% below estimates of $6.45 billion.

In fact, CEO Chris Kempczinski addressed the boycott's impact on candidates, after speaking of “significant business implications.”

For “pleasant” impressions, the US president said in a LinkedIn post last month that the company “continues to stand in solidarity with communities around the world.”

“McDonald's trends are often a good indicator of Coca-Cola's global volume growth,” Jefferies analysts said.

“We believe there is likely to be a moderating impact towards the end of the fourth quarter from the conflict in the Middle East, with the risk of a boycott of Western brands remaining,” they said.

Ahead of next week's FTSE 100 trading update, analysts agreed that trading volumes would be just below the market consensus of 1.2% and would come in at 1%.

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They also forecast 2024 EBIT growth at 8.7% compared to consensus of 10.9%. However, Jefferies said she believes the company is better positioned to “absorb volatility.”

In October, Coca Cola HBC reported “strong organic growth” as part of its third-quarter trading update, with organic revenue up 15.3%.

President Zoran Bogdanovic is quietly trying to rebuild the company's reputation after questions were raised about the extent of Coca Cola HBC's operations in Russia after he promised to withdraw from the country after the war.

And Starbucks

McDonald's and Coca-Cola aren't the only global brands under fire amid the conflict in the Middle East.

Last week, the Starbucks coffee chain lowered its annual sales forecast due to the boycott that affected sales.

The world's largest café chain was also forced to plead for peace late last year after its stores were vandalized.

So far, it is estimated that about $11 billion has been wiped off the market value of coffee amid calls for a boycott.