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Apr-24-2008UPDATE 2-Coca-Cola Enterprises Q1 net falls, misses view(topic overview)
CONTENTS:
- Atlanta-based Coca-Cola Enterprises, Coke's largest bottler, reported Thursday a 47 percent drop in first-quarter profits to $8 million, or 2 cents a share, as the company was hurt by flat sales in its core market of North America. (More...)
- The results included $30 million in one-time charges, primarily restructuring costs. (More...)
- For the full year, CCE said it expects earnings per share to come in between $1.50 and $1.55. (More...)
- On average, analysts polled by Thomson Reuters expected per-share earnings of 10 cents on revenue of $4.91 billion. (More...)
- Before Tuesday's meeting, CCE declared a quarterly dividend of 7 cents a share, one cent higher than last year's quarterly dividend. (More...)
- The marketer, distributor and producer of Coca-Cola_Co. brands said today (24 April) that operating income in the first three months of 2008 slipped by 10.5% to US$163m, despite a 7% increase in net sales to $4.89bn. (More...)
- The company blamed softer than expected volume in North American single-serve packages, particularly in sparkling beverages and Dasani for the quarter's performance. (More...)
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Atlanta-based Coca-Cola Enterprises, Coke's largest bottler, reported Thursday a 47 percent drop in first-quarter profits to $8 million, or 2 cents a share, as the company was hurt by flat sales in its core market of North America. [1] NEW YORK, April 24 (Reuters) - Coca-Cola Enterprises Inc (CCE.N: Quote, Profile, Research ) reported a lower-than-expected quarterly profit on Thursday, saying the weak U.S. economy weighed on soft drink sales, sending shares of the largest bottler of Coca-Cola Co (KO.N: Quote, Profile, Research ) products down almost 6 percent.[2]
The largest bottler of Coca-Cola Co (KO.N: Quote, Profile, Research ) drinks said it expects 2008 pricing to increase at a mid-to-high single-digit rate in North America. The company, which said its first-quarter results were hurt as the weak U.S. economy weighed on convenience store sales of single-serve refrigerated drinks, said trends have improved modestly in April.[3] Coca-Cola Enterprises (NYSE: CCE) sells about 80 percent of The Coca-Cola Co.'s (NYSE: KO) bottle and can volume in North America and is the sole licensed bottler for products of The Coca-Cola Co. in Belgium, continental France, Great Britain, Luxembourg, Monaco, and the Netherlands, according to the company.[4] ATLANTA -- Coca-Cola Enterprises Inc., a bottler of Coca-Cola beverages, said Thursday its first-quarter profit dropped 47 percent due to higher commodity costs and soft performance in North America.[5]
NEW YORK, April 24 (Reuters) - Coca-Cola Enterprises Inc (CCE.N: Quote, Profile, Research ) said on Thursday that for 2008 it expects sales volume of its beverages to grow at a low single-digit rate in North America and a low to mid-single digit rate in Europe.[3] NEW YORK-Coca-Cola Enterprises Inc reported a lower quarterly profit Thursday despite a rise in sales, hurt by higher expenses, restructuring charges and weak sales in North America.[6]
"While weakness in North America's economic environment tempered our first quarter results, we remain focused on executing against our three strategic objectives, ensuring the continued success of our restructuring programs, and controlling our operating expenses," CCE Chairman and CEO John Brock said in a statement with the results.[1] "While weakness in North America's economic environment tempered our first-quarter results, we remain focused on executing against our three strategic objectives, ensuring the continued success of our restructuring programs, and controlling our operating expenses," said John F. Brock, chairman and CEO. "We continue to believe that our operating and brand initiatives, coupled with the outstanding marketplace execution generated by our skilled, dedicated work force, will create increasing levels of growth."[7]
The results included $30 million in one-time charges, primarily restructuring costs. Excluding those, CCE made $38 million in the first quarter, or 8 cents a share. Analysts, who typically exclude one-time costs from their estimates, expected CCE to make 10 cents a share, according to a survey of analysts by Tomson Financial. [1] Excluding restructuring costs and other items, Coca-Cola posted income of $38 million, or 8 cents a share.[8]
The company said first-quarter net income fell to $8 million, or 2 cents per share, from $15 million, or 3 cents per share, a year ago.[2] For the quarter ended March 29, net income fell to $8 million, or 2 cents per share, from $15 million, or 3 cents per share, in the prior-year quarter.[5]
The Atlanta-based Coke products marketer and distributor (NYSE: CCE) had net income of $8 million on $4.9 billion in revenue, compared with net income of $15 million on $4.6 billion in revenue in the first quarter of 2007.[7] Revenue grew 7 percent to $4.89 billion from $4.57 billion in the first quarter of 2007.[5]
CCE reported first-quarter revenue of $4.9 billion, up 7 percent from the same period a year ago. Its cost of sales rose 10.5 percent to $3.1 billion.[1] When former CEO John Alm left CCE in December 2005 after serving only two years as CEO and overseeing lagging sales and earnings growth and poor stock performance, Alm was rewarded with a severance package worth more than $13 million plus healthcare. In awarding this package, the Board ignored its own severance guidelines established by the Compensation Committee exceeding the maximum allowable -- by more than 50 percent.[9] Union Wins Governance Change at Coke and Calls Directors to Task at CCE WASHINGTON, April 24 /PRNewswire-USNewswire/ -- The International Brotherhood of Teamsters' General Fund's shareholder proposal calling for an independent Chairman at the Coca-Cola Company received 28 percent support of shares cast at the company's annual meeting last week. Yesterday the company announced it would amend its bylaws to separate the positions of CEO and Chairman of the Board. "We believe that this governance change will mark a turning point for the Coca-Cola Company," said C. Thomas Keegel, General Secretary-Treasurer of the International Brotherhood of Teamsters. "After years of declining investor confidence, lagging financial performance, and a steady churn of top executives lavished with excessive payouts despite performance failures, this reform, we hope, will bring an end to management dominance of the company's board of directors.[9] For five consecutive years, the International Brotherhood of Teamsters' General Fund has proposed a resolution calling on the Board to allow shareholders to vote on certain executive severance packages. Each year the proposal receives approximately 30 percent support of the total shares cast which represents an approximate majority of the non-insider holdings including those of the Coca-Cola Company. This week 32 percent of voting CCE holders supported the proposal. "Since we began raising this issue, CCE has had a revolving door of executive leadership each cashing out extraordinary severance packages despite lackluster performance," Keegel said.[9]
For the full year, CCE said it expects earnings per share to come in between $1.50 and $1.55. [10] Analysts polled by Thomson Financial expect earnings between $1.49 and $1.58 per share, with an average of $1.52 per share.[11]
Currency translation boosted earnings by 1 cent per share, the company said. For U.S. companies that sell products abroad, the weak dollar versus other currencies boosts the value of overseas sales when they are converted into U.S. dollars.[2] Analysts polled by Thomson Financial expected earnings of 10 cents per share.[5]
Excluding restructuring charges and other items, the company earned 8 cents per share.[5] Excluding four cents per share in restructuring charges and two cents per share in tax-related items, the bottler earned eight cents per share.[6]
For 2008, the bottler said it expects to earn $1.50 to $1.55 per share, with free cash flow of more than $700 million and capital expenditures of about $1 billion.[6] The company said it expects profit between $1.50 and $1.55 per share.[11]
The company said net operating revenue rose seven per cent to $4.89 billion, helped by a 1.5 per cent increase in volume and a four per cent increase in pricing.[6] Revenue in that division rose 16 percent while revenue in the company's North America unit grew just 4 percent. Higher prices only partly offset commodity cost increases in both divisions.[5] In North America, cost of sales per case grew 9 percent while prices per case rose 4.5 percent.[5] In the first quarter, North American physical case bottle and can volume was flat, while net pricing per case was up 4.5 percent and cost of sales per case grew 9 percent.[7]
Coca-Cola Enterprises has seen "soft economic conditions" in North America hamper its first quarter performance.[10] In Europe, volume rose 7 percent, excluding the calendar shift, the company said. The company said its North America performance was impacted by soft economic conditions. Consumers have increasingly been cutting their discretionary spending to better handle high gas and food prices and the weak housing market.[5] The company said it was hurt by softer than expected sales in North America single-serve packages, particularly for carbonated soft drinks and Dasani waters.[1]
Operating income rose 31 percent in Europe but fell 32 percent in North America.[2] Revenue in North America was up only 4 percent, while revenue in Europe jumped 16 percent.[7]
On average, analysts polled by Thomson Reuters expected per-share earnings of 10 cents on revenue of $4.91 billion. [8] Coca-Cola Enterprises (nyse: CCE - news - people ) added it expects strong free cash flow of more than $700 million and capital expenditures of about $1 billion for the year.[11] Coca-Cola Enterprises President and CEO John Brock became chairman of the board of directors Tuesday as CCE held its annual shareholders meeting in Atlanta.[12] Brock joined Atlanta-based CCE, Coke's largest bottler, in 2006 as president, CEO and board member.[12]
As human resources VP, Kimmet, 49, will oversee the global operations of a department that deals with CCE's 73,000 employees and develops and implements the company's human resources initiatives, the company said in an April 21 release. The 25-year industry veteran will report directly to President and CEO John F. Brock, who said she has "proven herself to be a strategic business partner with a track record of success."[4]
Previously, Kimmet was employed for two years as senior managing director and head of global human resources administration at Bear, Stearns & Co. Inc. (NYSE: BSC). Between 2001 and 2006, she served as senior vice president of human resources for Lucent Technologies, a technology company that merged with Alcatel SA of France, to form Alcatel-Lucent (NYSE: ALU) in late 2006.[4] From 1996 to 2000, Kimmet held various leadership positions at an international financial services company, Citigroup Inc. (NYSE: C). She started her career at General Motors Corp. (NYSE: GM), where she worked in a number of human resources roles following an education at Cornell University, where she earned her B.S. degree in Industrial and Labor Relations, and Michigan State University, where she earned an M.B.A. Contact the Editor Need Assistance? [4]
Soft drink bottler Coca-Cola Enterprises Inc. has tapped Pamela O. Kimmet as the company's senior vice president of human resources.[4] Coca-Cola Enterprises Inc., a bottler of Coca-Cola beverages, on Thursday predicted its 2008 profit would be in the range of Wall Street analysts' estimates.[11]
We urge the board to select a true independent chair to represent the interest of shareholders." While Coke has been responsive to shareholder concerns on governance and executive pay issues in recent years, its top bottler, Coca-Cola Enterprises continues to turn a deaf ear to investors.[9]
Before Tuesday's meeting, CCE declared a quarterly dividend of 7 cents a share, one cent higher than last year's quarterly dividend. [12] Earnings were 2 cents a share, compared with earnings of 3 cents a share in the first quarter of 2007.[7]
The marketer, distributor and producer of Coca-Cola_Co. brands said today (24 April) that operating income in the first three months of 2008 slipped by 10.5% to US$163m, despite a 7% increase in net sales to $4.89bn. [10] Net income slumped to $8m from $15m, although stripping out items which affect comparability, including restructuring charges, would see net income hit $38m.[10]
The company blamed softer than expected volume in North American single-serve packages, particularly in sparkling beverages and Dasani for the quarter's performance. [10] "We believe positive topline trends in Europe, coupled with the improvement generated by North American operating and brand initiatives, will enable us to achieve solid earnings growth," Brock continued. "As we work to achieve this target, it is important that we respond to the marketplace challenges created by the current North American economic environment.[10]
Europe, meanwhile, produced strong volume growth of 7 percent, including 11 percent in Great Britain and 4 percent on the continent, reflecting sales growth in sparkling and still beverages.[7]
SOURCES
1. Coke bottler posts 47 percent profit drop | ajc.com
2. UPDATE 2-Coca-Cola Enterprises Q1 net falls, misses view | Reuters
3. Coke Enterprises sees '08 sales volumes rising | Industries | Consumer Goods & Retail | Reuters
4. Coca-Cola Enterprises names senior VP of HR - Atlanta Business Chronicle:
5. Coca-Cola Enterprises 1Q profit falls 47 percent | Chron.com - Houston Chronicle
6. TheStar.com | Business | Coca-Cola first-quarter net profit falls
7. Coca-Cola Enterprises dips in Q1 - Atlanta Business Chronicle:
8. Coca-Cola Enterprises 1Q Net Falls To $8 Million Vs $15 Million
9. Teamsters Lead Shareholder Push for Reforms at Coca-Cola and Its Top Bottler
10. US: "Soft" North America hits CCE in first quarter: Beverage News & Comment
11. Coca-Cola Enterprises offers guidance in range of estimates - Forbes.com
12. CCE's chief executive named board chairman | ajc.com
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