Beverage bottler Coca-Cola Enterprises today reported better-then-expected quarterly profit excluding a $5.3 billion impairment charge related to the weak US economy.
It also lowered its full-year outlook.
The world's largest bottler of Coca-Cola drinks reported a net loss of $3.17 billion, or $6.52 per share, in the second quarter, compared to a net profit of $270 million, or 56 cents per share, a year ago.
Excluding 2 cents per share in restructuring charges and the one-time charge, related to a reduction in the value of its North American franchise licenses, Coke Enterprises earned 56 cents per share, topping analysts' average estimate by 2 cents.
The company cited favorable tax and foreign exchange rates for the beat, as well as modest operating income growth in Europe. Operating income in North America declined, it said.
The bottler said the charge was needed in light of an expected near-term decline in operating income and a recent decline in its stock price, "both largely the result of deteriorating North American macroeconomic conditions and expected substantial increases in commodity costs."
The company sells about 80 per cent of all Coke drinks in North America and is the sole licensed bottler for Coke products sold in Belgium, France, Britain, Luxembourg, the Netherlands and Monaco.
Net operating revenue rose 5 percent to $5.94 billion.
In May, the company said second-quarter profit excluding items would be in the mid- to high-single-digit percentage range. Before that, analysts had expected a gain of 5 per cent.
Coke Enterprises, which is about 35 per cent owned by Coca-Cola, said at the time that the weakening North American economy was cutting into sales volume, especially in higher-margin 20-ounce bottles, which are sold in convenience stores and petrol stations. Higher petrol prices have cut into convenience store traffic, analysts have said.
The company also lowered its full-year earnings outlook, saying it now expects to earn $1.40 to $1.45 per share in 2008, excluding items, but including a benefit from foreign exchange rates.
In May the company said it would be hard to meet its full-year earnings forecast of $1.50 to $1.55 per share if current economic and market trends did not improve.
Analysts had been expecting $1.41 per share for the year.
Reuters