US: "Unprecedented" costs hammer Coke Consolidated Q1
Coca-Cola Bottling Co. Consolidated has posted a net loss in its first quarter in what it has described as an "extremely challenging" cost environment.
The US-based company said yesterday (29 April) that net loss for the first three months of 2008 hit US$4.3m, compared to a net profit in the corresponding quarter a year earlier of $4.7m. Net sales held steady at $337.6m, while operating profit slumped to $3.7m from $20.5m in Q1 2007.
"We face many of the same macro economic cost and consumer spending pressures that much of the American business community is facing currently," said Coca-Cola Consolidated's chairman and CEO, Frank Harrison. "At Coca-Cola Consolidated, we continue to experience unprecedented levels of cost increases in our raw materials and energy costs, particularly fuel prices.
"We are also experiencing an impact from the economic pressures affecting consumer spending patterns, which affected our volumes and pricing for the quarter. The combination of the consumer spending pressure on revenues and the commodity cost pressure on expenses caused a significant decline in our year over year gross margin performance."
William Elmore, Coca-Cola Consolidated's president and COO, added: "The current commodity cost environment is extremely challenging and requires that we execute price increases sufficient to offset higher product costs while also growing revenue."
The company is looking to increase efficiencies in its supply chain going forward, especially in the selling and delivery expense structure.
"The American economy is in difficult economic times right now," Harrison concluded. While we are disappointed with our results this quarter, we are working on many things that we believe position us for excellent long-term success.
"We will remain diligent and faithful to our mission and continue to evolve our business strategy to capitalise on the long term opportunities."
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