US: Coca-Cola Enterprises says 'no' to German option as Q1 profits slide
- Q1 net profits fall by 44% to US$61m
- Net sales slip by 1% to $1.85bn
- Operating profits fall by 54%, hitting $111m
- Continental Europe volumes down by 3%
CCE has agreed not to buy Coca-Cola's German bottling operations
Coca-Cola Enterprises has posted a sharp drop in first-quarter profits and said it will not use an option to buy The Coca-Cola Co's German operations.
Net profits fell by 44% to US$61m in the first three months of 2013, the US-headquartered bottler said yesterday (25 April). Net sales slipped by 1% to $1.85bn over the same period while operating profits dropped by 54% to $111m.
John Brock, CCE's chief executive, said “sustained economic challenges persist”, but added he is confident the company will still hit its targets this year.
“Our results for the first quarter reflect improvement over the fourth quarter as we begin to move past some of the unusual operating conditions of 2012,” he said.
Brock also said CCE has agreed with Coca-Cola not to buy its German bottling facilities as a deadline on the potential deal looms next month. CCE's option on the facilities, part of Coca-Cola's takeover of CCE's operations in North America in 2010, expires on 25 May.
However, Brock left open the opportunity to buy facilities at a later date, saying the deal will not go ahead “at this time”.
CCE's volumes in the UK showed some resilience, increasing by 1%, but continental Europe volumes fell by 3%, leading to an overall volumes drop of 1.5%. It marks an improvement on last year's full-year numbers, when volumes dipped by 3% and Q4 volumes fell by 5.5%.
Sparkling volumes declined by 2%, with trademark Coca-Cola brands also down by 2%. Coca-Cola Zero hit 3.5% volumes growth, while CCE’s energy brands increased by 4%. Still volumes were down “modestly”, with growth in Capri-Sun and Nestea, CCE said.
Looking ahead, the company said it expects net sales to increase in a low- to mid-single-digit range for the full year.
CCE's share price dropped by 2.2% yesterday.
To read the company's official statement, click here.
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