Coca-Cola Europacific Partners: A Masterclass in Shareholder Value Creation

Coca-Cola Europacific Partners (CCEP) has emerged as a standout example of disciplined capital allocation in 2025, combining a robust share buyback program with stellar first-half earnings to reinforce its long-term investment appeal. For investors seeking companies that prioritize shareholder value while maintaining growth momentum, CCEP's strategy offers a compelling case study.

The Buyback Program: A Strategic Move to Enhance Shareholder Value

CCEP's €1 billion share repurchase initiative, announced in February 2025, is not just a numbers game—it's a calculated effort to align with its capital return philosophy. By canceling repurchased shares, the company is effectively reducing its share count, which should drive earnings per share (EPS) growth. As of August 7, 2025, CCEP had repurchased 108,330 shares across U.S. and London venues, with prices ranging from $90.29 to $93.41 per share in the U.S. and £72.50 to £75.10 in London. These purchases, facilitated by Goldman Sachs as a “riskless principal,” ensure execution efficiency while adhering to strict regulatory frameworks like the UK Listing Rules and U.S. securities laws.

The buyback is structured in three tranches, with the first two completed by May and August 2025. The third tranche, now underway, allocates €255 million, including €80 million for London venues, and is expected to conclude by November 2025. This phased approach allows CCEP to capitalize on market conditions while maintaining flexibility. The company's decision to increase the London allocation from €55 million to €67 million in March 2025 highlights its agility in optimizing value.

First-Half Earnings: A Foundation for Sustainable Buybacks

CCEP's financial performance in H1 2025 provides the bedrock for its aggressive buyback program. Revenue grew 2.5% year-over-year to €10.3 billion, driven by a 3.8% increase in revenue per unit case and strong volume growth in key markets. Net income surged 15% to €913 million, with a profit margin expanding from 8.1% to 8.9%. Earnings per share (EPS) rose 15% to €1.99, outpacing the 3.1% FX-neutral growth, underscoring the company's operational strength.

The interim dividend of €0.79 per share, consistent with a 50% payout ratio based on comparable earnings, further demonstrates CCEP's commitment to returning capital. Meanwhile, free cash flow of €425 million in H1 2025 supports both buybacks and strategic reinvestment. The company's guidance for at least €1.7 billion in full-year free cash flow reinforces the sustainability of its capital return strategy.

Strategic Capital Allocation: Balancing Growth and Returns

CCEP's approach to capital allocation is a masterclass in balance. While returning €1 billion to shareholders via buybacks and dividends, the company is also investing in future growth. Capital expenditures (CAPEX) are projected at 5% of revenue, with a focus on AI-driven innovation and market expansion in high-growth categories like ARTD and Hot Coffee. This dual focus—reinvesting in core operations while rewarding shareholders—positions CCEP to compound value over time.

The buyback program's impact on EPS is particularly noteworthy. By reducing the share count, CCEP is amplifying the effect of its earnings growth. For instance, the 15% EPS increase in H1 2025 was partly driven by share repurchases, which are expected to continue boosting metrics as the program progresses. This creates a virtuous cycle: stronger earnings justify higher valuations, which in turn make buybacks more accretive.

Implications for Long-Term Investors

CCEP's strategy signals confidence in its financial resilience and operational discipline. Despite challenges in markets like Indonesia and the exit of the Beam Suntory partnership in Australia, the company's diversified portfolio across 31 markets and its leadership in innovation-led categories provide a buffer. The 3.69% dividend yield and 6.78% revenue growth over the past 12 months further enhance its appeal.

For investors, the key takeaway is clear: CCEP is a company that understands the value of its own stock. By leveraging strong cash flows to execute a well-structured buyback program while maintaining growth investments, it is creating a win-win scenario. The regulatory safeguards and Goldman Sachs' involvement add credibility, ensuring the program is executed without market manipulation risks.

Investment Advice: A Buy-and-Hold Opportunity

CCEP's combination of disciplined capital returns, robust earnings, and strategic reinvestment makes it an attractive long-term holding. The buyback program, coupled with a 50% payout ratio and a focus on free cash flow generation, suggests a company that is both shareholder-friendly and growth-oriented. Investors should monitor the company's progress in the third tranche and its ability to maintain its 3–4% revenue growth guidance for the full year.

In a market where many companies struggle to balance growth and returns, CCEP stands out as a model of prudence and vision. For those seeking a company that rewards patience and long-term commitment, Coca-Cola Europacific Partners offers a compelling case.