Atlanta-based Coca-Cola Enterprises, struggling with a challenging European economy that’s led to softer demand for Coke products, reported a nearly 12 percent drop in its fourth-quarter profit Thursday.
The company said its volume results, a key indicator of how much consumers are interested in a beverage company’s brands because it tracks the number of cases sold, also were lower for the quarter and the year.
Chairman and Chief Executive Officer John Brock said the company continues to work through “significant marketplace challenges and the ongoing macroeconomic softness that continues to affect our territories.” The company, the dominant soft drink bottler in Western Europe, has faced more competition in the United Kingdom, higher taxes in France and the negative impact of currency translations.
CCE became primarily a Western European bottler two years ago after selling its North American operations to Atlanta-based Coca-Cola Co.
CCE reported a fourth-quarter profit of $100 million, or 34 cents a share, compared with a profit of $113 million, or 36 cents a share, in the same period a year ago. Sales rose slightly during the fourth quarter to $1.92 billion, compared with $1.89 billion previously.
Excluding “special items,” comparable fourth-quarter net income was $131 million, or 45 cents a share, a penny more than analysts polled by Thomson Reuters expected. Special items can be large expenses or sources of income a company does not expect to recur. Analysts exclude them to get a more accurate picture of a company’s financial performance over time.
CCE said volume declined 5.5 percent for the fourth quarter and 3 percent for the year. The company said it expects to return to volume growth this year.
Beverage Digest Editor John Sicher called case volume the “pure indicator” of whether consumers are drinking more or less of a beverage company’s product. Sicher believes CCE’s results will improve when the European economy improves.
“The results are not a surprise,” Sicher said Thursday. “The whole economic and consumer picture in Europe is very challenging. I think that if the economy picks up, people will start buying more soft drinks.”
To keep shareholders happy, CCE announced earlier this week it was raising its regular quarterly dividend 25 percent to 20 cents. The dividend is payable March 21, 2013 to shareowners of record on March 8, 2013. The company’s board also has approved a $1.5 billion stock repurchase program, which could influence the stock price. CCE is expected to buy back at least $500 million of stock this year.
On Wall Street, CCE’s shares reached as high as $35.19 Thursday before closing at $34.92, up 2 cents.
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