DBRS Assigns A, R-1(low) Coca-Cola Hellenic Bottling Co S.A.

Dominion Bond Rating Service (“DBRS”) has assigned ratings for Coca-Cola Hellenic Bottling Company S.A. (“CCHBC” or the “Company”) as indicated above. The trends are Stable.

DBRS notes that CCHBC is the world’s second-largest manufacturer, seller, and distributor of Coca-Cola Company (“Coke”) beverages. The Company is the carbonated soft drink (“CSD”) industry leader in each of the countries in which it does business, reflecting the strength of the Coke brand and its well-established distribution network. CCHBC possesses good geographic diversification as it operates in a total of 26 countries (including Italy, Greece, Poland, Hungary, Russia, Ukraine, and Nigeria) representing a population of over 500 million.

The Company has also focused on growing the size and share of its markets by broadening its portfolio of beverage offerings (with mainly juices and water), and as such enhancing its product diversification in a significant manner over the past four years. Well-established brands being the basis for sales, innovative product development, higher marketing spending, capex/acquisitions, and relatively high economic growth in emerging/developing markets have driven growth.

DBRS believes that the Company has displayed a strong track record of improving profitability to a reasonably good level since the 2000 merger of Hellenic Bottling Company and Coca-Cola Beverages. Relatively high levels, but sound capex and investment, has led to solid top-line growth and good improvement in operating margins, which has effectively enhanced profitability as displayed by a steady increase in return on invested capital. This is despite recent, but sharp, increases in input costs, as the Company has been fairly effective at implementing cost-reduction initiatives, pre-emptive price increases, and achieving mix improvements.

CCHBC also has achieved a reasonably good financial profile driven by strengthening cash flow from operations. The Company should continue to generate descent free cash flow going forward; however, DBRS does not expect it will use the funds for significant debt reduction in the near-medium term as DBRS believes CCHBC will continue to pursue value-creating acquisitions/investment and/or increased cash returns to shareholders. The mature and highly competitive nature of the Western European CSD market has increased the reliance for growth on less developed markets and/or new products.

The bottler network is critical to Coke’s success, and it is unlikely that any of the key bottlers would be permitted to fail. CCHBC has the exclusive right to bottle and distribute Coke products in its markets, which represent approximately 8% of Coke’s global beverage volume. As well, Coke owns approximately 24% of CCHBC’s common stock. Although Coke does not guarantee CCHBC’s debt, the nature of its relationship with Coke is a key factor underpinning the rating.