Canadian soft drinks producer Cott Corporation has warned that it expects its 2005 earnings to be substantially lower than it previously forecast. However, while it withdrew its previous guidance, the company declined to provide a revised forecast.

Cott said that earnings will be negatively affected by continued softness in the US carbonated soft drinks market, the shift towards lower margin bottled water and escalating raw material costs. The company said it was currently reviewing a number of initiatives to cover cost increases and streamline operations while delivering improved customer service.

"The entire soft drink industry is dealing with the impact of rising PET costs," said Cott's president and CEO, John Sheppard. "When we add this to the changes we are seeing in the market and our ongoing operational challenges, we expect a substantial impact on our full-year results."