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|Coca-Cola Enterprises Inc. Reports First-Quarter 2007 Results|
ATLANTA, April 26, 2007 - Coca-Cola Enterprises (NYSE: CCE) today reported first-quarter 2007 net income of $15 million, or 3 cents per diluted share. After adjusting for items affecting comparability, including restructuring charges and a loss on equity securities, net income totaled $43 million, or 9 cents per diluted share. The following table reconciles reported and comparable earnings per share:
First quarter results reflect the impact of ongoing operating expense controls, cost of sales increases in North America, higher North American pricing, and continued European operating improvement. These factors contributed to a modest 1 percent increase in consolidated comparable operating income. On a segment basis, comparable North American operating income declined 14 percent, while comparable European operating income rose 25 percent. Pages 9 through 11 of this release provide a reconciliation of reported and comparable operating results.
"We are encouraged by our first quarter results, though we will continue to face significant business headwinds for the balance of the year," said John F. Brock, president and chief executive officer. "Going forward, we will focus on improving topline trends in North America, while continuing to control operating costs, and ensuring ongoing growth in Europe in order to reach our full-year 2007 financial targets.
"We have made important progress in several key areas despite the challenging market conditions we face," said Mr. Brock. "First, we are executing well against solid brand and marketing plans, including an aggressive schedule of product initiatives, such as Diet Coke Plus, Vault Red Blitz, and the expansion of Coca-Cola Zero in Europe.
"Second, we are on-target with the progress of our restructuring program, which will enhance operating consistency and efficiency, provide improved customer service, and allow us to reach our operating expense savings targets through the remainder of the year," Mr. Brock said. "Each of these efforts supplement our continued execution against our long-term business plan, which centers on three strategic priorities:
"By executing against these objectives and each of our 2007 initiatives, we will maximize our performance in spite of the challenges of this year, and create the operating improvements and momentum necessary for renewed growth beginning in 2008."
In the first quarter, operating metrics were in line with management's expectations. Consolidated physical case bottle and can volume declined 2 percent, while consolidated net revenue per case was up 4 percent. Cost of sales per case grew 6½ percent and comparable operating expenses grew 2 percent. Pricing and cost of sales growth statistics exclude the effects of currency translations.
Higher prices for aluminum and increased sweetener costs drove cost of sales per case in North America up 7½ percent in the first quarter. Net pricing per case grew 4 percent, reflecting the benefit of price increases last fall and in the first quarter. Volume in North America declined 4 percent in the first quarter, reflecting price increases and weak category performance for regular sparkling beverages. North America achieved continued strong growth in water, energy, and sports drinks.
Europe achieved a balance of pricing and volume growth, with net pricing per case growth of 3 percent and volume growth of 4 percent. Volume benefited from growth across all product categories and the continued execution of the three-cola strategy with the launch of Coca-Cola Zero in France and the Netherlands. Sales of Coca-Cola Zero in the first quarter accounted for 4 percent of total European volume. However, we continue to face challenges in the sparkling beverage category in Great Britain.
Full-Year 2007 Outlook
Management continues to expect full-year 2007 earnings per diluted share to decline 5 percent to 10 percent from comparable full-year 2006 results. The implementation of FIN 48, relating to the recognition of income tax contingencies, is not expected to have a significant impact on 2007 results. The company also expects continued strong free cash flow from operations less capital spending of more than $600 million, including cash restructuring expense. Capital spending will total approximately $1 billion. Our 2007 guidance is currency neutral.
CCE will host a conference call with analysts and investors today at 10:00 a.m. ET. The call can be accessed through the company's website at www.cokecce.com.
Coca-Cola Enterprises Inc. is the world's largest marketer, distributor, and producer of bottle and can liquid nonalcoholic refreshment. Coca-Cola Enterprises sells approximately 80 percent of The Coca-Cola Company's bottle and can volume in North America and is the sole licensed bottle for products of The Coca-Cola Company in Belgium, continental France, Great Britain, Luxembourg, Monaco, and the Netherlands.
Included in this news release are forward-looking management comments and other statements that reflect management's current outlook for future periods. As always, these expectations are based on the currently available competitive, financial, and economic data along with our operating plans and are subject to future events and uncertainties. The forward-looking statements in this news release should be read in conjunction with the risk factors found on pages 14 through 16 in the Form 10-K section of CCE's 2006 Annual Report.
CLICK HERE for Q1 2007 Financials.
Thor Erickson - Investor Relations
Laura Asman - Media Relations