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UK: Coca-Cola Enterprises Q3 profit down, slashes guidance

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Coca-Cola Enterprises has cut full-year earnings guidance following a fall in profit in its third quarter, blaming its problems on a tough soft drinks market in North America.

Profit for the three months ended 30 September fell to US$214m, down from $268m in the same period last year, Coca-Cola Enterprises (CCE) announced today (23 October).

The soft drinks bottler predicted full-year operating profit would fall 10%, and chopped 2008 earnings per share guidance to a range of $1.25 to $1.29, down from $1.40 to $1.45.

CCE's pessimistic outlook will serve as another warning of troubled times ahead for North America's soft drinks market. Parent firm Coca-Cola Co last week reported a 14% rise in third quarter net earnings, but only because international sales offset a decline in the US.

"Our performance remains below our expectations as we work through a combination of significant marketplace challenges, including a weakened North American economic environment, changing consumer purchasing patterns, and the impact of volatile fuel costs," said John Brock, CCE chairman and CEO.

CCE revenue grew 6.5% to $5.7bn for the third quarter. European volumes grew 5%, with North America up 1.5%, the group said.

Results of a comprehensive review of operations are expected to be announced by CCE in December.

Brock said today: "We continue to move forward with the fundamental business review that we announced at the end of the second quarter, seeking solutions to structural issues in our business as we work to renew profit growth as soon as possible."

The firm said that, while operating profit would likely fall 10% overall in 2008, this would reflect an expected 20% decline in North America.

This guidance excludes various other costs, including a $35m funding cut by The Coca-Cola Co and a high single-digit rise in concentrate costs. These extra items, CCE warned, "will significantly impact fourth quarter results".


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