Coca-Cola Enterprises Inc.'sCCE second-quarter 2015 adjusted earnings of 79 cents per share beat the Zacks Consensus Estimate of 76 cents by 4%. However, earnings fell 12.2% year over year from the prior-year figure of 90 cents. Currency had a negative impact of 18 cents on adjusted earnings.
Adjusted earnings exclude the impact of restructuring costs, mark-to-market effects, and other items. Including these charges, earnings stood at 75 cents per share.
During the quarter, net sales declined 17.5% year over year to $1.93 billion but were ahead of the Zacks Consensus Estimate of $1.90 billion by 1.6%. On a currency neutral basis, net sales were down 2%.
Ongoing macroeconomic softness in Europe and a challenging retail environment in key markets like Great Britain have been primarily hurting sales.
The company's cost of sales per case declined 3%, which compared favorably to the decline of 2.5% in the prior-year quarter. Adjusted operating income plunged 15% to $289 million. On a currency neutral basis, adjusted operating income grew 2%.
Volume & Pricing Update
Volumes decreased 1%, owing to challenging retail environment in the quarter and strong year-over-year comparison.
Volumes declined 1% in Great Britain and continental Europe.
Volumes of sparkling beverage decreased 2.5%. The energy portfolio increased more than 15% driven by Monster. Volumes of still beverages rose 7% driven by Capri-Sun and the launch of smartwater in Great Britain.
Net pricing per case declined 1%, which compared favorably to the 2% decline in the previous quarter.
Adjusted operating margin was $289 million, down 15% year over year. However, on a currency neutral basis, adjusted operating margin was up 2%.
Coca-Cola Enterprises reaffirmed its full-year guidance for 2015. On a comparable and currency neutral basis, management expects 2015 adjusted earnings per share to grow in the range of 6% to 8%. Currency translation is expected to hurt earnings per share by 18%, higher than the prior expectation of 16%.
On a comparable and currency neutral basis, net sales and operating income are expected to be slightly positive. The company expects free cash flow in the range of $600 million to $650 million for 2015.
Coca-Cola Enterprises carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some stocks in the beverage industry worth considering include Cott Corporation COT , and Dr Pepper Snapple Group, Inc. DPS . While Cott Corporation sports a Zacks Rank #1 (Strong Buy), Dr Pepper Snapple Group and Monster Beverage Corporation MNST carries a Zacks Rank #2 (Buy).
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