Sell into the share price recovery at leading Coke brands bottler Coca-Cola HBC (CCH). Impressive 2016 results (16 Feb) have sustained the rally for now, although the 2017 outlook for the drinks group’s territories remains mixed.

Full year results showed a 90 basis point EBIT margin improvement to 8.3% driven by self-help measures, benign input costs and improved free cash flow of €431.2m (£365.3m).

Chief executive Dimitris Lois expressed confidence 2017 will be ‘a year of currency-neutral revenue growth and margin expansion as we continue to make progress towards our 2020 targets’, while analysts predict acquisitions and special dividends.

So far, so good, but Coca-Cola HBC’s three largest markets are Russia, growing-yet-turbulent Nigeria and economically distressed Italy. Further devaluation of the rouble or naira would be distinctly unhelpful, while another important market, Greece, remains distressed.

Numis forecasts 2017 pre-tax profit of €516.7m (2016: €469m).

At £19.86, Coca-Cola HBC trades on more than 20 times prospective earnings, too rich a rating given a cocktail of risks. (JC)

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