US: Costco dispute not material - Coca-Cola Enterprises
Costco this week returned Coca-Cola Co drinks to its shelves, after resolving an unusually public pricing dispute between it and the soft drinks firm. The retailer had removed the products around three weeks earlier.
"I wouldn't say it was any material impact [on volumes]," said Steve Cahillane, executive vice president of Coca-Cola Enterprises (CCE), Coca-Cola Co's main bottler in North America.
Cahillane, who is also president of CCE North America and was speaking in a conference call today (17 December), said that Costco remains a "very valued customer". He added: "We had a few struggles with them but we're back in business."
CCE today raised its earnings per share guidance range by $0.2 for the 12 months of 2009. It added that, while it expects the challenging economic conditions to continue in North America next year, 2010 earnings per share are likely to rise in high single digits.
Net sales for 2009 are expected to "decline slightly", with price increases in North America not enough to offset a volume sales fall and unfavourable currency rates.
CCE also announced a share repurchase scheme that is expected to generate $600m by the end of 2010.
Funds will be used to cut debt and as part of a plan to "consistently increase" shareholder dividends. Proceeds could also be used to pursue acquisitions as and when opportunities arise, CCE said in its conference call today.
Analyst group Stifel Nicolaus said that CCE's profits and sales guidance is largely in-line with its own estimates for the company.
However, it added: "A potentially perceived negative in today's news is renewal of incidence-based pricing in the US only through 2010 year-end. Many, including us, expected a three-year renewal."
It added: "In our view, the one-year term implies more than expected reluctance by Coke to share control over future system profitability with CCE."
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