Coca-Cola Enterprises Inc.
's (
CCE
) fourth quarter 2012 adjusted earnings of 45 cents per share
beat the Zacks Consensus Estimate of 43 cents by
4.7%. Earnings rose 25% year over year from 36 cents
driven by operating income growth and a lower share count
resulting from significant share repurchases in the quarter.
Revenues and Margins in Fourth Quarter
The company's overall results in the quarter were hurt 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 hike in French excise tax was introduced by French
regulatory authorities from Jan 2012. An increased excise tax was
levied on beverages with added sweeteners, which is applicable to
almost all drinks that the company sells in France.
During the quarter, net sales rose 1.0% to $1.92 billion.
Excluding the impact of both FET and currency headwinds, organic
revenues were flat year over year. Excluding currency headwinds,
revenue growth was 2.0%. Reported revenues were in line with the
Zacks Consensus Estimate of $1.92 billion.
The company's net pricing per case increased 4.0% and cost of
goods per case increased 3.5% in the quarter, both excluding FET
impact. Volumes (bottle and cans) declined 5.5% in the quarter,
owing to difficult macroeconomic conditions. Volumes declined
5.5% in the continental European territories and 6.0% in Great
Britain. The volume decline in the quarter is in line with the
company's guidance.
Adjusted gross profit in the quarter decreased 0.5% year over
year to $667 million. Adjusted operating income increased 13.0%
to $208 million (up 13.5% excluding currency impacts).
Fiscal 2012
Coca-Cola Enterprises reported fiscal 2012 adjusted earnings
(excluding the impact of restructuring charges and mark-to-market
commodity hedges) of $2.26 per share beating the Zacks Consensus
Estimate of $2.24 by 0.9%. The company results exceeded the
company guidance range of $2.20-$2.24 for fiscal 2012.
During fiscal 2012, net sales declined 2.5% to $8.06 billion.
Excluding the impact of both FET and currency headwinds, organic
revenues were up 1.0%. Excluding currency headwinds, revenue
growth was 3.0%. Reported revenues lagged the Zacks Consensus
Estimate of $8.08 billion.
Share Repurchase
A strategic bottling partner of
The Coca-Cola Company
(
KO
), Coca-Cola Enterprises completed the repurchase of 27 million
shares worth $780 million in fiscal 2012, thereby completing the
share repurchase program of 65 million shares authorized by its
board of directors.
Its third share repurchase program worth $1.5 billion commenced
in January 2013. The company expects to repurchase shares worth
at least $500 million during 2013.
Fiscal 2013 Outlook
The company maintained its prior guidance for fiscal 2013
earnings, revenues and operating income. The company expects to
return to positive volume growth during fiscal 2013. The company
continues to expect currency neutral adjusted earnings growth to
be 10%.
The currency translation is expected drive full year earnings
by 2% to 3%. The target looks encouraging, considering it is
higher than the company's long-term target of high-single-digit
growth.
The company expects net sales and operating income to grow in a
mid-single digit range. However, gross margin is expected to
decline as the increase in net pricing per case will be less than
the increase in cost of sales per case.
According to the guidance provided on its Analyst Day, gross
margins are expected to be hurt by re-organization initiatives in
Norway and higher input costs. Higher costs of European
sugar are expected to result in a higher rate of commodity
inflation in 2013 versus prior years. As such, organic operating
income margins are also expected to be weak in fiscal 2013.
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 #3 (Hold).
Other related companies to consider include
Coca-Cola Hellenic Bottling Company S.A.
(
CCH
) and
Coca-Cola FEMSA S.A.B. de C.V.
(
KOF
) both carrying a Zacks Rank #2 (Buy).
COCA-COLA ENTRP (CCE): Free Stock Analysis
Report
COCA COLA HELNC (CCH): Free Stock Analysis
Report
COCA COLA CO (KO): Free Stock Analysis Report
COCA-COLA FEMSA (KOF): Free Stock Analysis
Report
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