CCE Reports Strong, Balanced Third Quarter Results
"These positive results represent an outstanding first step for our company as we work to capitalize on the excellent growth opportunities that lie ahead in Europe," said John F. Brock, chairman and chief executive officer.
Oct 29 2010 --- Coca-Cola Enterprises reported third-quarter 2010 net income of $208 million. On a pro forma basis including results from Norway and Sweden, third-quarter 2010 earnings per diluted common share were 58 cents. Items affecting comparability are detailed on page 10 of this release.
These third-quarter results are the first for the new Coca-Cola Enterprises, Inc., which, following the recent close of the transaction with The Coca-Cola Company, is a newly registered public company consisting of legacy CCE's European bottling operations, as well as the bottling operations in Norway and Sweden acquired from The Coca-Cola Company.
In the quarter, total revenue increased 4½ percent and comparable operating income increased 7½ percent, both on a currency neutral basis. These results represent performance in CCE's European territories, excluding Norway and Sweden. Third-quarter combined results of Norway and Sweden were in line with expectations.
"These positive results represent an outstanding first step for our company as we work to capitalize on the excellent growth opportunities that lie ahead in Europe," said John F. Brock, chairman and chief executive officer. "To achieve continued success, especially in a time of soft macroeconomic conditions, we must reach even higher levels of service and marketplace execution for our customers.
"We will accomplish this by continuing to work closely with The Coca-Cola Company and focusing on our three key strategic priorities - our brands, our customers, and our people - as we strive to achieve our vision of being the best beverage sales and customer service company," Mr. Brock said. "This will enable us to build increasing value for our customers, our shareowners, and each stakeholder in our company."
EUROPEAN REVIEW (EXCLUDES NORWAY AND SWEDEN)
Third-quarter volume growth of 5 percent reflected solid growth across each territory. Net pricing per case increased 1 percent, while cost of goods sold per case was flat. Sparkling brands grew 3½ percent, with solid growth in both Coca-Cola trademark brands and soft drink flavors, including energy. Still beverages increased more than 14 percent through the expanded distribution of Capri Sun and the addition of Ocean Spray.
Volume in Great Britain increased by 3½ percent through solid growth in sparkling flavor brands, including Fanta and Dr Pepper, and strong performance in energy drinks, driven by Monster. On the continent, overall volume growth of 6 percent reflects increases in both sparkling and stills, led by Coca-Cola trademark brands. Coca-Cola Zero grew more than 20 percent, while stills increased more than 20 percent through brand expansion and increased distribution.
"Our ongoing balance of volume and pricing growth in Europe, and the success of our initiatives to expand our still portfolio, demonstrate the ability of our people to deliver strong day-to-day marketplace execution," Mr. Brock said. "Our future success relies on continually enhancing our capabilities as we meet the needs of our customers and consumers in new ways. We are dedicated to achieving the highest levels of service and marketplace excellence."
NORTH AMERICAN RESULTS (FORMER CCE)
While not included in reported results, North America achieved solid growth in the third quarter, the last under the ownership of CCE. Revenue increased 2 percent with volume growth of 2½ percent including growth in both sparkling beverages and Powerade. Net pricing per case increased 1 percent while cost of goods sold per case decreased 1 percent. These results, combined with a continued focus on expense control, drove operating income growth of more than 20 percent.
"As we worked to close the transaction with The Coca-Cola Company, delivering strong performance was an unwavering goal," Mr. Brock said. "These results are outstanding, and demonstrate the skill and dedication of the North American team. We are proud of the role CCE has played in positioning North America for future success."
As previously indicated, today's reported results for Coca-Cola Enterprises, Inc. do not include results from North American territories that were owned by CCE.
FULL-YEAR 2010 OUTLOOK (PRO FORMA)
Management expects full-year comparable 2010 earnings per diluted common share in a range of $1.74 to $1.78 for new CCE on a pro forma basis. Pro forma revenue is expected to be approximately $7.4 billion with operating income just over $900 million.
This outlook includes an expected negative currency impact of approximately 9 cents per share based on year-to-date currency translation impact at actual rates and expected fourth quarter currency translation at recent rates. This also includes expectations for recurring items, capital structure, tax rate, and results for Norway and Sweden. This outlook excludes nonrecurring items and all North American results.
On a comparable and currency neutral basis, the company continues to expect legacy Europe to achieve mid single-digit revenue growth and high single-digit to low double-digit operating income growth. The company also expects the combined results of Norway and Sweden to perform in-line with previous expectations.
LONG-TERM GROWTH OBJECTIVES
Reflecting confidence in the growth opportunities ahead and its strategy to create returns for shareowners, CCE has established long-term objectives for revenue growth of 4 to 6 percent, operating income growth of 6 to 8 percent, and high single-digit growth in earnings per share. For 2011, earnings per share will likely exceed long-term objectives as a result of share repurchase activity. CCE expects to repurchase approximately $1 billion of its shares within the next 18 months. This program is expected to begin during the fourth quarter of 2010 and may be adjusted depending on economic, operating, or other factors.
