US: Challenges continue for Coke Consolidated
Coca-Cola Bottling Co. Consolidated has posted a slump in its earnings for the year so far.
The US company said yesterday that, for the first nine months of 2006, net income came in at US$14.6m - or US$1.61 per share - compared to $21m - or $2.32 per share - in the corresponding period a year earlier.
While the figures benefited from the settlement of a US lawsuit related to high fructose corn syrup, to the tune of $3.7m, Coke Consolidated highlighted a debt exchange offer in June last year which incurred costs of $700,000.
For the third quarter of this year, Coke Consolidated earned $4.9m against $8.8m in the same period in 2005.
"Despite revenue growth of 2.4% in the third quarter, the company's gross margin and operating income were negatively impacted by competitive pricing pressures, a decrease in significant product innovation and an increase in the cost of certain raw materials," said company chairman and CEO Frank Harrison III.
"The company is focused on increasing its bottle/can net pricing in the fourth quarter of 2006 and improving its overall bottle/can gross margin percentage going forward."
William Elmore, president and COO, added: "Competitive pricing pressures, primarily in the supermarket channel, resulted in reduced net pricing and lower than anticipated gross margin.
"While reduced net pricing resulted in an adverse impact on margins, we improved market share in the supermarket channel and believe these actions were appropriate for the long- term health of our business."
Elmore added that the company has increased prices across all key channels, beginning this month. "Growth in sports drinks and energy products continues to generate substantial gross margin and will continue to be important contributors to our overall results," he continued.
"With respect to carbonated soft drinks, our pricing plans in the near term will target improving our gross margin, which will be especially important as we move into 2007 when we anticipate a significant increase in the cost of certain commodities."
Separately, Coke Consolidated said it would pay a fourth quarter dividend of $0.25 per share on its common and class B common stock. The dividend will be paid on 24 November to shareholders of record as of 10 November.
Coke Consolidated is the second-largest bottler of Coca-Cola products in the US.
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