CANADA: Cott lowers 2007 outlook
Soft drinks own-label specialist Cott Corporation has lowered its earnings and sales forecasts for 2007, and is now expecting revenue growth to be flat and operating income to be "substantially lower" than 2006.
The company said it had lowered its guidance in response to market volume declines in key markets, increased promotional activity by national brands, and the continuing impact of commodity costs not sufficiently offset in the short term by growth and cost-cutting initiatives.
The carbonated soft drink market in the US and Canada experienced steeper declines than anticipated in the four weeks ending 11 August 11, Cott said, down 7% on a volume basis, while abnormally cool and wet summer weather in the UK adversely impacted category volume in that market. Start-up issues with the new aseptic line in the UK resulted in additional costs, the company added.
"Passing through commodity cost increases and dealing with higher than anticipated CSD industry declines are proving to be too significant to absorb this year," said CEO Brett Willis. "Although we have closed manufacturing facilities and cut significant other costs, begun expansion of new products, new channels, and new markets, and taken significant pricing, these actions have not been sufficient to offset the negative environment impacts and some of our own internal execution and new product start-up challenges.
"As a result, we no longer feel we can meet the previously announced targets for 2007 and we expect year over year revenue growth to be flat and operating income to be substantially lower than 2006. We underestimated how much time and effort it was going to take to fully implement our strategy and to capture the return on that strategy."
Willis said the company's focus for the remainder of 2007 and into 2008 will be to continue to take "aggressive actions" to turn the business around and drive profitability in line with Cott's long-term business model. He described 2007 as "one of the most challenging years in Cott's history".
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Cott Corporation has updated its senior secured credit facility....
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