Sales fall for Coke bottler

Sales fall for Coke bottler

                                                                                                                                                                                                                      CCE earnings top forecasts, but its revenue declines

Coca-Cola Enterprises, Coke’s largest bottler, exceeded analysts’ expectations Wednesday as it reported fourth-quarter financial results, but a weakening economy pulled down sales in North America and slowed growth in Europe.

In the fourth quarter of 2008, Atlanta-based CCE reported a net loss of $1.45 billion. The results included a $2.3 billion pretax, noncash charge for writing down the value of its franchising rights in North America.

Excluding one-time charges, CCE made $107 million, or 22 cents a share, in the fourth quarter. That beat analysts’ estimates of 19 cents a share, according to a survey of analysts by Thomson Financial.

The fourth-quarter earnings, though, were below the 29 cents a share CCE posted in the fourth quarter of 2007. Revenues in the fourth quarter fell 1 percent to $5.2 billion. 

Case volume, adjusted for the number of selling days, dropped 7 percent in North America. It rose 1.5 percent in Europe compared with 4.5 percent in the same period of 2007.

“Our fourth quarter results reflect slight improvement in our North American business trends and continued solid operating performance in Europe,” said John Brock, CCE chairman and chief executive officer, in a press statement, “However, we continue to face economic pressures in all territories, making our work to enhance margins, grow profit, protect free cash flow and improve efficiency and effectiveness vitally important.”

Brock also noted that a September price increase helped revenue and profits.

For the full year, CCE had a net loss of $4.4 billion, compared to a $711 million profit in 2007. The company took about $5 billion in net unfavorable charges for one-time items in 2008. Full-year revenues rose 4 percent to $21.8 billion.

CCE projected an increase in earnings and revenue for 2009, but said a stronger dollar could hurt reported results. When the dollar rises, profits for U.S. companies made overseas are diminished.

The company’s stock rose 9.6 percent Wednesday to close at $13.10. Coca-Cola Co. is scheduled to report earnings today.

In a note to investors, Stifel Nicolaus analyst Mark Swartzberg said several factors likely led to the spike in stock price. CCE beat consensus estimates, commented in the conference call that North America trends were improving in January and also said initial work was going well with Coca-Cola on a new pricing model for concentrate.

CCE faced a range of challenges in 2008. For much of the year, higher gas prices affected sales of 20-ounce drinks at convenience stores. The company also had higher costs for commodities, such as plastic, aluminum and sweetener.

Gas prices and commodity costs eased toward the end of the year, but the U.S. recession worsened. 

CCE officials highlighted Wednesday initiatives they believe will help the company. CCE and Coca-Cola have formed Coca-Cola Supply LLC, a joint venture that will help manage some supply chain functions. 

The bottler also is rolling out new package sizes, including 18- and 20-packs of cans and 16-ounce cans and bottles. 

“Early read is very good consumer acceptance of it,” said Steve Cahillane, president of CCE’s North American group. “So we’re optimistic we’ve got the right programs in place for 2009.”

FOURTH-QUARTER RESULTS FOR CCE

> The company had a net loss of $1.45 billion that included a $2.3 billion write-down for the estimated value of North American franchise rights. Excluding one-time costs, CCE had net income of $107 million.

> Revenues fell 1 percent to $5.2 billion. Case volume was up 1.5 percent in Europe but down 7 percent in North America.

> The company projects earnings per share, on a currency neutral basis, to grow in the range of 4 percent to 7 percent for 2009. A stronger dollar, though, could pull down reported earnings by 20 cents a share based on current exchange rates.

> New package sizes, including 18-packs, 20-packs and 16-ounce cans and bottles, are expected to give customers more choices and improve profit margins.

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