US: CCE earnings hit by restructuring costs

Coca-Cola Enterprises has reported a 6.3% fall in first quarter net income, as the soft drinks bottler dealt with restructuring charges and a loss on equity securities.

The company yesterday (26 April) recorded net income of US$15m on $4.6bn in revenue, compared with net income of $16m on $4.3bn in sales in the first quarter of 2006.
 
CCE said first quarter results reflected the impact of ongoing operating expense controls, cost of sales increases in North America, higher North American pricing, and continued European operating improvement. These factors contributed to a modest 1% increase in consolidated comparable operating income. On a segment basis, comparable North American operating income declined 14%, while comparable European operating income rose 25%.

"We are encouraged by our first quarter results, though we will continue to face significant business headwinds for the balance of the year," said John Brock, CCE's president and CEO. "Going forward, we will focus on improving topline trends in North America, while continuing to control operating costs, and ensuring ongoing growth in Europe in order to reach our full-year 2007 financial targets.

"We have made important progress in several key areas despite the challenging market conditions we face," said Brock. "First, we are executing well against solid brand and marketing plans, including an aggressive schedule of product initiatives, such as Diet Coke Plus, Vault Red Blitz, and the expansion of Coca-Cola Zero in Europe.

"Second, we are on-target with the progress of our restructuring program, which will enhance operating consistency and efficiency, provide improved customer service, and allow us to reach our operating expense savings targets through the remainder of the year," Brock said.

In the first quarter, operating metrics were in line with management's expectations, CCE said. Consolidated physical case bottle and can volume declined 2%, while consolidated net revenue per case was up 4%. Cost of sales per case grew 6.5% and comparable operating expenses grew 2%. Pricing and cost of sales growth statistics exclude the effects of currency translations.

Looking forward, CCE said it continues to expect full-year 2007 earnings per diluted share to decline 5% to 10% from comparable full-year 2006 results.