Coca-Cola Enterprises Inc. 's ( CCE ) first-quarter
2013 adjusted earnings of 39 cents per share beat the Zacks
Consensus Estimate of 38 cents by a penny. Currency translation had
an adverse impact of 1 cent per share. Adjusted earnings rose 8.3%
year over year driven by operating income growth and lower share
count resulting from share repurchases in the quarter.
The company's right to acquire the German bottling business from
The Coca-Cola Company ( KO ) will expire on May
25. However, management has decided not to go ahead with the
proposed buyout deal at this moment. This decision enabled
Coca-Cola Enterprises to increase its share repurchase goal for the
Revenues and Margins
During the quarter, net sales dipped 1.0% to $1.90 billion.
Reported revenues missed the Zacks Consensus Estimate of $1.91
The company's overall results in the quarter were impacted by
several challenges such as steep price competition in Great
Britain, overall soft macro economic conditions and difficult
beverage market conditions in France due to increase in French
excise tax (FET).
The company's net pricing per case increased 2.0% whereas cost
of sales per case increased 3.0% in the quarter. Volumes (bottle
and cans) declined 1.5% in the quarter owing to difficult
macroeconomic conditions. However, the rate of decline was lower
the year-ago period. Volumes declined 3.0% in continental Europe
but improved 1.0% in Great Britain.
The volume of Sparkling drinks declined about 2%. Still
beverages witnessed a modest decline, partially offset by a
respective 3.5% and 4.0% volume growth in Coca-Cola Zero and energy
Adjusted operating income increased 3.5% to $180 million due to
lower operating expenses reflecting the impact of one fewer selling
day and the benefits of ongoing expense control and timing.
Coca-Cola Enterprises began its third share repurchase program
worth $1.5 billion in Jan 2013. The company expects to repurchase
shares worth at least $1 billion during 2013, up from the prior
expectation of $500 million.
Fiscal 2013 Outlook
Although the company increased its prior guidance for fiscal
2013 earnings to reflect higher share repurchase and it reduced its
expectation for revenues. The company continues to expect currency
neutral adjusted earnings growth to be in the range 11%-12%, up
from 10% guided earlier. The target looks encouraging, considering
it is higher than the company's long-term target of
At the current rates, currency translation is expected to reduce
full-year earnings per share by approximately 1% to 2% in contrast
to a 2% to 3% benefit expected earlier.
The company expects net sales to grow in the low to mid-single
digits range (previous guidance was a mid-single digit increase)
while operating income is expected to remain in mid-single digits.
Management expects a moderately favorable commodity cost outlook
for the remainder of the year.
Coca-Cola Enterprises expects free cash flow for fiscal 2013 to
be around $450 to $500 million. Capital expenditure is expected to
be around $350 million. The company expects the weighted average
cost of debt to be around 3% and effective tax rate to be in the
range of 26% to 28%.
Coca-Cola Enterprises carries a Zacks Rank #4(Sell).
Some other beverage companies including PepsiCo
Inc. ( PEP
), Coca-Cola Companyand Dr Pepper Snapple Group
Inc. ( DPS
) also delivered mixed results this season by beating our earnings
estimate but missing out on revenues.COCA-COLA ENTRP (CCE): Free Stock Analysis
ReportDR PEPPER SNAPL (DPS): Free Stock Analysis
ReportCOCA COLA CO (KO): Free Stock Analysis ReportPEPSICO INC (PEP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment