UPDATE 2-Coca-Cola Hellenic confirms targets despite Q2 drop

(Adds further details, background, CEO comment)

By George Hatzidakis

ATHENS, July 31 (Reuters) - Greece's Coca-Cola Hellenic (CCH) HLB.AT confirmed its 2008 earnings targets on Thursday, despite concerns the global economic downturn and high commodity prices will weigh on its performance.

The world's No.2 Coke drinks bottler reported its first quarterly profit drop in more than five years on high raw material costs, bad weather and economic slowdowns in key markets, which led to fewer people buying their products.

"It's our first quarterly drop in 21 quarters and, yes, we are concerned," Doros Constantinou, CCH's managing director told Reuters. "We have to remain watchful as does the rest of the industry. We are confident we can meet our targets."

Bottlers globally have been hard hit as costs for basic commodities, such as oil used for plastic bottles (PET) and corn syrup used to sweeten drinks, continue to rise.

Coupled with a downturn in economic sentiment worldwide and adverse weather conditions, which has seen people less willing to spend money on soft drinks, concerns have been stoked that businesses such as CCH are headed towards a downturn.

CCH reported an 8 percent fall in second-quarter net profit to 182 million euros ($284.3 million), above expectations, with operating profit down 9 percent to 247 million euros. Sales volume in the quarter rose 3 percent to 585 million unit cases.

"For the second half, our main concern is commodity prices and sustained bad weather," said Constantonou. "For the time being, we can cope with the challenges, but if problems persist, not just us, but other businesses will be affected as well."

However, CCH has taken cost cutting and other measures to combat concerns which forced it last month to cut full year earnings per share (EPS) growth targets by about half to 1.37-1.40 euros a share, down from previous guidance of 1.46-1.49 euros a share.

"Most of our commodities (costs) are locked in, such as for sugar, aluminium and juice so we have good visibility on those, but PET does remain an open item that we will watch," CFO Nik Jhangiani told Reuters.

CCH, 23.3 percent owned by Coca Cola (KO.N), reaffirmed its revised targets.

"While we remain cautious at this point we believe we can deliver on the revised guidance. We are obviously doing things to ensure we can protect our profitability," Jhangiani said.

CCH shares rose rose 4.3 percent to 15.90 euros in early trade in Athens, partly on market optimism that the group's targets would be met.

"The company reiterated its guidance. Investors were afraid the company would further downgrade its targets, after the initial cut in June. There is relief in the market that bad news was avoided," George Doukas, Piraeus Securities.

The stock trades at about 12 times its estimated 2008 earnings, on a par with Coca Cola Enterprises (CCE.N), the world's largest bottler of Coke drinks, and at a premium to Australian based Coca-Cola Amatil (CCL.AX) which trades at about 14 times. (Editing by David Cowell)