US: Coca-Cola Bottling profits hit by weather
Earnings at the soft drinks company Coca-Cola Bottling Co Consolidated fell in the third quarter of this year. The company said yesterday that it earned US$6.1m or US$.67 per share for the third quarter of 2004.
The results compare to net income of US$13.8m or US$1.53 per share in the third quarter of 2003. In the third quarter of 2003, the dompany's results reflected a net favourable adjustment to income tax expense of US$4.6m or US$.51 per share.
Net sales declined by 1.3% in the third quarter of 2004 reflecting a 3.8% decline in bottle/can volume and an increase in average revenue per case of approximately 2.5%. Income from operations in the third quarter of 2004 decreased approximately 19%.
J. Frank Harrison, III, chairman and CEO, said: "The company's financial results in the third quarter were weak, reflecting the impact of soft sales, especially in our immediate consumption business."
The group said that parts of its franchise territory experienced unseasonably cool weather in August and several tropical storms in September. The combination of adverse weather, higher fuel prices and less aggressive promotions by retailers led to lower net sales in the quarter.
The softness in the quarter was felt most in the company's higher margin immediate consumption business, which had been growing at approximately 2% through the first half of 2004, but was down nearly 5% in the third quarter.
William B. Elmore, President and COO, said: "Our results in the third quarter were disappointing. Due to the high fixed cost nature of our business, a decline in sales directly impacts profit margins, especially when immediate consumption sales are down."
Despite the soft sales environment, the company's diet carbonated soft drink portfolio continued to grow, up 4% in the third quarter. PowerAde was also up, growing 19% in the third quarter. Operating expenses increased approximately 1%, reflecting increases in wage rates, benefit costs and fuel prices which were partially offset by a combination of productivity improvements and reductions in other expenses.
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