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UPDATE: US/EUROPE: CCE to axe 3,500 jobs

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Coca-Cola Enterprises (CCE) chief executive John Brock has revealed that the "majority" of the company's planned 3,500 job cuts will be in North America.

Brock was speaking as the world's largest bottler of Coca-Cola Co. products outlined a restructuring programme designed to boost its business in North America and Europe.

"The majority (of the job cuts) will be in North America. There will be some at our corporate headquarters here in Atlanta and some in Europe," Brock said today (13 February).

The restructuring is expected to cost CCE about US$300m in restructuring charges over the next two years.

Terry Marks, president of CCE's North American operations, said the company would look to cut administrative jobs and "designate rather than dedicate" administrative functions to its business units. "It's an effectiveness and an efficiency play," he said.

Yesterday, CCE and The Coca-Cola Co. said they would work with other US bottlers to develop alternative routes-to-market.

As a consequence, Marks said CCE would change the way it sold its products to smaller outlets to move towards more telephone and web-based ordering.

In Europe, CCE would look to "standardise" its operating structure and business practices, Brock said. The company has operations in the UK, France and the Benelux.

Brock said CCE would also look to "strengthen and expand" its brand portfolio to drive sales. "Particularly in Europe, we are too dependent on carbonated soft drinks, even though volume growth in the non-alcoholic, RTD category will come from water and juices."

Brock "applauded" Coca-Cola Co.'s recent acquisition of Fuze Beverage in the US. He added that CCE would also look at Coca-Cola Co.'s work with products including Diet Coke, Coke Zero and Vault to "restore interest and excitement with CSDs" in its markets.

However, the company's CFO Bill Douglas warned that CCE would face an "unprecedented cost of goods increase" in North America this year.

Douglas said rising aluminium and concentrate costs would contribute to a rise in the cost of goods per case of 9%.

CCE had today reported its full-year financial figures for 2006. The company posted a net loss of US$1.1bn for 2006 after absorbing a US$2.9bn impairment charge.

CCE said the charge was taken to reduce the book value of its North American franchise license intangibles to their estimated fair value.

Annual revenues rose 6% thanks to price increases and a 1% increase in volumes. Stripping out the impairment and other one-off charges in 2006, CCE said operating income rose 5% to US$1.5bn.


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