TURKEY: Coca-Cola Içecek sees forex hammer FY net profit
Coca-Cola Içecek (CCI) has posted a plunge in full-year net profit, despite a lift in sales in both value and volume.
The Turkey-based company, which operates in Southern Eurasia and the Middle East, said yesterday (6 April) that net profit in 2008 fell by 47% year-on-year to TRY81m (US$50.4m), due to "financial expenses generated by non-cash forex losses from forex denominated financial debt".
Sales in the year, however, rose by 11% in volume and 17% in value, to 533m unit cases and TRY2.26bn, respectively.
EBIT, or operating profit, was up by 13% on 2007, hitting TRY260m.
In Turkey, the launch last year of Coca-Cola Zero, Sprite 3G, and the extension of both sparkling and juice beverage portfolios, as well as increased penetration of HOD (home and office delivery) and PET water, contributed to market share gains and volume growth.
Outside of Turkey, Central Asia "lagged well behind expectations" in 2008. However, "sluggish growth" in Kazakhstan, the largest contributor to the region's overall volume with 52%, failed to stem volumes in the area, which reached a positive figure in the year.
In the final quarter of 2008, CCI recorded a net loss of TRY102.6m, compared to a net loss of TRY12.8m due to the aforementioned forex issues. Sales hit TRY430.2m, versus TRY361.4m a year earlier, while EBIT stayed in the red, delivering a loss of TRY11.4m compared to a loss of TRY9.7m in Q4 '07.
"Coca-Cola Içecek performed well in 2008 despite the economic crisis," said company CEO, Michael O'Neill.
"In 2009, while delivering top-line growth, we are going to focus on supply chain efficiencies, effective working capital management and seek further efficiencies in our capital expenditure. We will also benefit from the sector we are in as non-alcoholic beverages is one of the least and last affected sectors during economic downturns."
Separately, CCI confirmed that negotiations with The Coca-Cola Co. for the acquisition of a 50% stake in Turkish soft drinks company Dogadan Gida Ürünleri Sanayi ve Pazarlama have been suspended. The two companies said last year that they had begun talks
regarding Dogadan, after CCI began distribution for the herbal and fruit infusions producer in Turkey.
Talks between CCI and Coca-Cola are expected to resume "at a future date", CCI said.
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