US: European hurdles hold back Coca-Cola Enterprises in H1

By | 23 July 2012

  • Net profits in first six months of 2012 slide by 10.8% to US$314m
  • Sales in the half-year also dip, by 4.1% to $4.08bn
  • Operating profits decrease by 9.8% to $472m
  • Poor weather, French excise tax hampers volumes in Q2
A strong Q1 for Coca-Cola Enterprises has given way to a tough Q2

A strong Q1 for Coca-Cola Enterprises has given way to a tough Q2

Coca-Cola Enterprises has seen "unfavourable weather and ongoing marketplace challenges" in its second quarter hold back a strong start to its half-year.

Rises across the board in CCE's Q1, announced in April, were wiped out in the second quarter, although the company had warned of a tough three months earlier this year.

CCE will be hoping for an improvement in the weather this summer, to coincide with the London Olympics, which start later this week.

To read just-drinks' coverage of Coca-Cola Co's results conference call, click here.

To read the company's official release, click here, or view below.

Show the press release

Coca-Cola Enterprises, Inc. Reports Second-Quarter 2012 Results

Second-quarter diluted earnings per share totaled 67 cents on a reported basis or 73 cents on a comparable basis.

Net sales were $2.2 billion, down 8½ percent on a reported basis, flat on a currency neutral basis, and down 2 percent on a currency neutral basis excluding the impact of the French excise tax increase.

Operating income was $301 million on a reported basis and $328 million on a comparable basis; comparable operating income was down 11 percent, and down 2 percent on a currency neutral basis.

Second-quarter volume declined 6 percent reflecting the impact of unfavorable weather, the French excise tax increase, and prior year growth hurdles.

CCE now expects to repurchase at least $600 million of its shares by the end of 2012.

CCE expects full-year 2012 comparable diluted earnings per share in a range of $2.18 to $2.24, including a negative currency impact of approximately 10 percent at recent rates.

ATLANTA--(BUSINESS WIRE)--Jul. 23, 2012-- Coca-Cola Enterprises, Inc. (NYSE: CCE) (Euronext Paris: CCE) today reported second-quarter 2012 diluted earnings per share of 67 cents on a reported basis and 73 cents on a comparable basis. Reported operating income for the quarter totaled $301 million; comparable operating income totaled $328 million, down 11 percent on a comparable basis and down 2 percent on a comparable and currency neutral basis versus second-quarter 2011 results. Currency translation negatively affected second-quarter 2012 earnings per diluted share by 8 cents, or 10½ percent. Items affecting comparability and other pro forma adjustments are detailed on pages 11 through 15 of this release.

Second-quarter net sales totaled $2.2 billion, a decline of 8½ percent from the same quarter a year ago, flat on a currency neutral basis, and down 2 percent on a currency neutral basis excluding the impact of the French excise tax increase.

“As we face a unique combination of unfavorable weather and ongoing marketplace challenges, we continue to closely manage each element of the business to drive results and deliver against our objectives,” said John F. Brock, chairman and chief executive officer. “By executing against our strong sales and operating plans, controlling costs, and leveraging our strong balance sheet, we remain confident in our ability to create increasing value for our customers, and importantly, for our shareowners.”


Total second-quarter volume declined 6 percent, reflecting unfavorable weather, the impact of the French excise tax increase, and prior year hurdles. Despite unfavorable weather throughout the second quarter, there was sequential improvement in volume growth late in the quarter. Declines were consistent in both the sparkling and still categories. Energy continued to achieve growth, up 16 percent, and Coke Zero grew 2½ percent. Total volume in Great Britain declined 4½ percent, while volume in continental Europe (including Norway and Sweden) declined 7 percent.

Second-quarter net pricing per case grew 6½ percent and cost of sales per case grew 6½ percent, both including the impact of the French excise tax increase. Excluding the impact of the French excise tax increase, net pricing per case increased 4 percent, and cost of sales per case increased 3 percent. Operating expenses were essentially flat, reflecting timing of market initiatives offset by continued expense control and volume declines. These figures are comparable and currency neutral.

“The challenges of the second quarter demonstrate the importance of our commitment to outstanding day-to-day execution, exceptional customer service, and sustained cost control efforts,” said Hubert Patricot, executive vice president and president, European Group. “Maximizing these strengths is essential as we work to deliver our full-year objectives.

“Looking ahead, we will work to successfully execute our initiatives in support of the London Olympics and Paralympics, which remain a unique multi-year opportunity for CCE to build brands, enhance relationships with our customers, and demonstrate our world-class capabilities,” Mr. Patricot said. “We believe our support of the Olympics and Paralympics will prove an enduring, long-term benefit to our company and I am confident that everyone at CCE is fully prepared to make our Olympic effort a success.”


As previously announced, CCE began a new $1 billion share repurchase program in January 2012. During the second quarter, CCE repurchased $225 million of its shares and has repurchased $375 million year to date.

The current share repurchase program allows for a total repurchase of $1 billion, and as previously disclosed, is capped at a total of 65 million shares, including the prior repurchase program completed in 2011. Through the second-quarter 2012, CCE has repurchased 51.5 million shares under both programs. CCE now expects to repurchase at least $600 million of its shares by the end of 2012 subject to the cumulative share cap of 65 million shares. These plans may be adjusted depending on economic, operating, or other factors, including acquisition opportunities.


For 2012, CCE expects comparable earnings per diluted share in a range of $2.18 to $2.24, including the negative impact of currency translation. Based on recent rates, currency translation would decrease full-year and third-quarter earnings per diluted share approximately 10 percent and 12 percent, respectively. Net sales are expected to grow in a mid-single-digit range, with operating income growth in a mid-single-digit range. Our outlook for earnings per diluted share, net sales, and operating income include the impact of the French excise tax increase and is comparable. Net sales and operating income guidance is also currency neutral.

Based on recent currency rates, the company now expects 2012 free cash flow in a range of $475 million to $500 million, with capital expenditures in a range of $375 million to $400 million. Weighted average cost of debt is expected to be approximately 3 percent and the effective tax rate for 2012 is expected to be in a range of 26 percent to 28 percent.

Original source: Company Release

Expert analysis

Coca-Cola Enterprises, Inc. (CCE) - Financial and Strategic SWOT Analysis Review

Coca-Cola Enterprises, Inc. (CCE) engages in marketing, production, and distribution of non alcoholic beverages. The product portfolio of the company includes energy drinks, sparkling waters, juices, sports drinks, fruit drinks, coffee-based beverages, tea and non alcoholic beverages. Its products are sold under the brands. In addition, CCE is also engaged in the distribution of Dr Pepper and other notable brands. CCE serves consumers throughout Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, and Sweden. The company’s focuses on utilizing its operational and marketing capacity and leveraging the upcoming events including London Olympics and the European soccer championships. The company is headquartered at Atlanta in Georgia, the US.

Sectors: Company results, Soft drinks

Companies: Coca-Cola Enterprises, Coca-Cola Co

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