US: Cott confirms closures as Q3 profits plunge
Canadian soft drinks group Cott Corp. is set to close two sites in the US.
The announcement today (26 October) with its third-quarter figures, which highlight the difficulties Cott is facing in North America.
Cott said it will close its manufacturing plants in Elizabethtown, Kentucky and Wyomissing, Pennsylvania at the end of this year, with the loss of 350 jobs.
The move should contribute over US$8m in operating income next year, rising to $10m in 2008 and beyond. Following the closures, Cott will continue to operate 15 bottling plants and one concentrate manufacturing plant in North America.
Turning to the third quarter, Cott saw sales in volume terms slide 6.6% on the year. The fall came despite a 30% leap in volume sales internationally, driven by the UK and Mexico.
Revenue increased 1.2% in the quarter to US$475.5m but North American revenue declined by 5.4% in the quarter. International revenue rose 28% due to contributions resulting from the acquisition of Macaw Soft Drinks (Macaw), as well as strong base business growth in the UK. Excluding the impact of acquisitions and foreign exchange, consolidated third-quarter revenue declined 4% when compared to same period in 2005.
"Our third-quarter performance suffered due to weakness in the North American CSD category and other factors," said Brent Willis, Cott's CEO.
"As we've said before, the top line will take time to turn around. The impact of our expansion programs to new channels, segments and customers will not be immediate but we are making good progress in cost reduction and the processes necessary to remake Cott into a highly disciplined, high performance organisation."
Adjusted net income slid to $13.8m or $0.19 per diluted share, compared to $15.5m or $0.22 per diluted share during the same period last year.
The company concluded that it expects fourth-quarter income to come in below last year's, due to "continuing volume softness, planned curtailment in production to reduce inventories, the inclusion of stock-based compensation expense and aggressive actions to position the company for improved performance in 2007".
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