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unit of HBC will buy about 94.7% of the Egyptian company from
its major shareholders including affiliates of The Coca-Cola Co
and MAC Beverages, HBC said.
The deal, which would allow HBC to expand in its largest market
Nigeria and grow in Egypt, was announced shortly after the
company reported a nearly 68% surge in comparable operating
profit to 350.3 million euros for the six months ended July 2.
The company, which bottles and sells Coca-Cola Co drinks in 28
countries and is 23.16% owned by the U.S. company, warned that
operating profit margins would be lower in the second half
compared with a year earlier due to rising cost inflation.
Nonetheless, the company expects margins to expand by 20 to 30
basis points in 2021, thanks to strength in the first half and
as revenue is expected to recover with people eating and
drinking out more as restrictions lift.
HBC CEO Zoran Bogdanovic told Reuters that higher raw material
costs are expected to continue into 2022.
"Given rising input cost inflation, we struggle to see upside
risk to consensus margin expectations in FY22," said analysts at
Jefferies.
A host of factors, including disruptions in global supply chains
and rising demand, has pushed up raw material prices, forcing
packaged food companies such as PepsiCo and rival Coca-Cola Co
to pass on costs to consumers.
HBC said it expects the Egypt deal to add to earnings in the
near term.
($1 = 0.8518 euros)
(Reporting by Priyanshi Mandhan and Yadarisa Shabong in
Bengaluru; Editing by Shounak Dasgupta and Jason Neely)
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