UPDATE: Coca-Cola Hellenic 3Q Net Profit -3% On Weak Revenues
(Adds details, analyst, CFO comment.)
By Alkman Granitsas
Of DOW JONES NEWSWIRES
ATHENS -(Dow Jones)- Coca-Cola Hellenic Bottling SA (CCH), the world's second-
largest bottler of Coca-Cola products, reported Thursday a 3% drop in net
profit, as cost cuts failed to offset lower revenues, and warned of more tough
months ahead.
"We expect the economic environment in (our developing and emerging market)
segments to continue to remain highly challenging for the balance of this year
and into next year, and we continue to believe the timing of the recovery will
lag that of our established markets," said Chief Executive Officer Doros
Constantinou.
Net profit for the three-month period ending Oct. 2 fell to EUR206.1 million
from EUR213 million in the same period a year ago. Revenue fell 9% to EUR1.88
billion from EUR2.07 billion.
Operating earnings, measured by earnings before interest, taxes, depreciation
and amortization, were also lower, down 2% at EUR374.7 million. The volume of
unit cases sold was down 4% at 583.6 million.
The net profit figures for the third quarter - traditionally the most
significant quarter for the bottler - were in line with analyst expectations,
but the revenue was below estimates.
"The results were weak regarding volumes and the top line, but as expected at
the Ebitda margin and bottom line level," said Nikos Katsenos, an analyst at
Alpha Finance who has an outperform rating and EUR19 target on the stock.
"That's due to the company's cost-cutting program and the lower cost
environment for raw materials."
At 0834 GMT, Coca-Cola Hellenic shares were unchanged at EUR17.49.
CCH - which has operations in 28 countries, mainly in eastern Europe - has
been hit hard by the economic crisis in those countries as a result of lower
consumer spending and adverse foreign exchange movements.
The company does not break down its sales by countries, but revenues from
emerging markets, which includes the large Russian market that alone makes up
some 15% of group volumes, were down 21% to EUR709.7 million.
At the same time, the company has also seen key third quarter sales in its
more developed Mediterranean markets, such as Italy, Greece and Cyprus, suffer
as a result of a weak travel and tourism market this summer.
The company said sales in its developed markets, which also include Ireland,
Switzerland and Austria, were up 9% to EUR814.5 million. But that was mainly due
to the EUR270 million acquisition of Socib SpA, Italy's second-largest Coca-Cola
bottler, in the second half of last year.
CCH has targeted EUR120 million in cost savings this year in an effort to
offset the sales slump stemming from the economic crisis.
In an interview with Dow Jones Newswires, Chief Financial Officer Robert
Murray said the company will be stepping up its efforts to cut costs.
"We are on target to achieve our goal of EUR120 million cost savings for this
year and we have captured the majority of those cost savings in the first nine
months," he said. "But we are not resting there, we are working on further cost
cutting for next year."
Company Web Site: www.coca-colahellenic.com
-By Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881;
alkman.granitsas@dowjones.com
(END) Dow Jones Newswires
11-05-090412ET
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