Coca-Cola Enterprises Post Profit in Q2

Consolidated comparable second quarter operating income grew 12 percent. In North America, operating income grew $43 million or 13 percent, and in Europe, operating income grew $20 million, or 7 percent, including a negative currency impact of approximately $57 million. Comparable EPS results include a negative currency impact of approximately 8 cents.

30 Jul 2009 Coca-Cola Enterprises has reported second-quarter 2009 net income of $313 million, or 64 cents per diluted common share. These results include restructuring charges of approximately 3 cents per diluted common share. Excluding restructuring charges, second-quarter 2009 net income was $328 million or 67 cents per diluted share.

Second quarter operating results reflect the benefits of price and package initiatives in North America, volume and pricing growth in Europe, and efficiency and effectiveness initiatives. In the quarter, total revenues declined ½ percent. Excluding a negative currency impact of 6½ percent, total revenues increased 6 percent. Consolidated comparable second quarter operating income grew 12 percent. In North America, operating income grew $43 million or 13 percent, and in Europe, operating income grew $20 million, or 7 percent, including a negative currency impact of approximately $57 million. Comparable EPS results include a negative currency impact of approximately 8 cents.

"We have responded to macroeconomic conditions with solid brand and marketplace initiatives, including enhancements to our price/package architecture, and successful execution of efficiency and effectiveness programs," said John F. Brock, chairman and chief executive officer.

"Our continued success will demand diligence in our revenue and brand building efforts, even stronger execution, and an absolute commitment to cost control," Mr. Brock said. "We continue to work closely with The Coca-Cola Company to enhance the synergy of our system and achieve consistent, balanced growth."

For the quarter, consolidated results include a comparable physical case bottle and can volume decline of 1 percent, net pricing per case increase of 8 percent, and 6 percent increase in cost of sales per case. Both pricing and cost of sales results exclude the effects of currency translations. Pages 11 through 15 of this release provide a reconciliation of reported and comparable operating results.

The company also announced an increase of 4 cents per share in its annual dividend and declared a regular quarterly dividend of 8 cents per common share. The quarterly dividend rate is equivalent to an annual dividend of 32 cents per common share. The dividend is payable September 24, 2009 to shareowners of record on September 11, 2009.

"The board's decision to increase our dividend reflects an improving, but cautious, outlook for the future, as well as the strengthening of our balance sheet," said Mr. Brock. "We are pleased to increase returns to shareowners as we continue to generate strong free cash flow and reduce debt."

In North America, operating results reflect the benefits of price/package architecture initiatives, operating expense controls, and higher cost of sales. Second quarter volume declined 3½ percent. This reflects slightly improved sparkling category trends, including solid growth for Coca-Cola Zero with volume up more than 15 percent, and growth in energy drinks of more than 25 percent with the addition of Monster brands. Pricing per case grew 8½ percent and cost of sales per case increased 7 percent.

"We continue to face important challenges in restoring consistent growth to our operations despite improvement in North American financial results," said Mr. Brock. "Stronger revenue management capabilities, cost control, and greater efficiency are essential in providing the resources to strengthen our brands and seize opportunities for balanced long-term growth."

Second quarter European volume grew 6½ percent, driven by Coca-Cola trademark growth of 8½ percent, including growth of over 20 percent for Coca-Cola Zero and strong growth for brand Coca-Cola. With the continued development of Coca-Cola Zero, the brand now represents more than 5 percent of total European volume. European net pricing per case was up 4 percent, and cost of sales per case increased 1½ percent.

"Our second quarter results demonstrate the health of our core Coca-Cola trademark brands and our executional capabilities," Mr. Brock said. "These second quarter results in Europe are encouraging, but economic conditions remain challenging and will demand continued execution excellence."

Management now expects full-year comparable 2009 earnings per diluted common share to be in the range of $1.44 to $1.49. This range includes an expected negative currency impact of approximately 15 cents per share and excludes nonrecurring items. The company also expects strong free cash flow of approximately $650 million and capital expenditures of approximately $900 million. Free cash flow will continue to be used primarily for debt reduction. The effective tax rate for 2009 is expected to be 26 percent to 27 percent.

In North America, the company expects full-year 2009 revenue to increase in a low to mid single-digit range. Volume will decline and cost of goods per case is expected to increase in a mid to high single-digit range, driven principally by the mix impact of increased sales of purchased finished goods and increased commodities cost. North American operating income will increase approximately 10 percent.

European revenue will grow in a mid single-digit range. Volume will grow in a low single-digit range and cost of goods per case is expected to increase in a low single-digit range, reflecting a continued moderate commodity cost environment. Operating income will grow approximately 10 percent.