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US: Coca-Cola Enterprises upbeat on FY despite flat Q3

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Coca-Cola Enterprises has posted flat operating income for its third quarter, despite a slight lift in sales.

The Coca-Cola marketer, distributor and producer said today (24 October) that operating income for the three months to the end of September rose by only 0.5% to US$450m. Sales increased by 3.5% on the corresponding period a year earlier, to $5.40bn.

Net income rose to $268m from $213m in Q3 last year.

The company highlighted strong pricing growth, driven by "a high cost environment in North America", during the period, while volume trends in both North America and Europe were described as "soft".

Sales volumes in North America fell by 2.5%, with sparkling beverage performance remaining weak. Still beverages grew in the low single-digit range for the quarter, while the company pointed to its pending distribution of the Glaceau brands as a cause for optimism.

In Europe, meanwhile, volumes were down by 3%, in part due to the poor summer weather in the region. While Coca-Cola Zero performed well in the quarter, CCE highlighted the low to mid single digit volume rises for juices and isotonics in the region.

For the nine months of the year so far, operating income remained flat at $1.16bn, with sales inching up 4% year-on-year to $15.64bn. Net profit slipped to $553m from $568m.

"We continue to make solid progress against our strategic objectives, driving improving levels of customer service, efficiency and effectiveness through our restructuring efforts as we significantly expand and enhance our brand portfolio in conjunction with The Coca-Cola Company," said CCE's president and CEO, John Brock. "These efforts are strengthening our company for the long-term and will enable us to reach our long-term performance targets more quickly as we move beyond this year's unusually high increase in the cost of goods environment in North America."

Moving forward, the company said it now expects comparable 2007 earnings per diluted common share in the range of $1.31 to $1.36, up from the $1.27 to $1.32 range estimated in July. Restructuring charges are expected to be approximately $125m for the year, CCE concluded.

In August, CCE was confirmed as the distributor for the Coca-Cola Co.'s recently acquired Glaceau brands. The company will distribute the unit's smartwater, vitaminwater and vitaminenergy products across the US starting on 5 November. CCE said at the time, however, that the impact of the Glaceau brands on its 2007 results was "not expected to be significant".


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