Coca-Cola Enterprises 1Q Net Soars On Margin, Europe Gains

   DOW JONES NEWSWIRES 
 

Coca-Cola Enterprises Inc.'s (CCE) first-quarter net income soared as Coca-Cola Co.'s (KO) biggest bottler saw continued strength from Europe and improved margins and volumes in North America.

The results were well above analysts' expectations.

The company also said 2009 operating earnings will be slightly higher than previously expecting, resulting in earnings excluding items of $1.24 to $1.29 a share. Analysts surveyed by Thomson Reuters expected $1.20. But Coca-Cola Enterprises sees North American revenue up by the low- to mid-single digits on a percentage basis, compared with its prior view of mid-single-digit growth.

While the industry has felt some relief from lower commodity costs, U.S. soft-drink bottlers - the manufacturing facilities of which are geared mostly toward producing soda - have suffered in recent years as consumers increasingly turn to vitamin water and other noncarbonated beverages instead of soda, pressuring volumes and sales.

But early numbers that track store sales and other data suggest bottlers may be done with the worst volume declines in the U.S. as companies begin to see some sequential improvement from last year in the region.

Coca-Cola Enterprises saw U.S. volumes fall 3%, compared with a 7% slump in the fourth quarter, helped by strong growth from Coca-Cola Zero and the addition of new energy drinks. European volumes jumped 5.5%. Earlier this month, rival Pepsi Bottling Group Inc. (PBG) reported U.S. and Canada volumes fell 3% compared with a 7% decline in the fourth quarter.

Coca-Cola Enterprises posted net income of $61 million, or 13 cents a share, up from $8 million, or 2 cents a share, a year earlier. Excluding restructuring costs and tax impacts, earnings grew 20 cents from 8 cents.

Revenue increased 3% to $5.05 billion, helped by continued demand in Europe.

Analysts predicted earnings of 5 cents a share on revenue of $4.86 billion, according to Thomson Reuters.

Gross margin grew to 37.2% from 36.5%.

Shares closed Monday at $15.13 and there was no premarket trading. The stock is up 26% this year.

-By Katherine E. Wegert, Dow Jones Newswires; 201-938-5294; [e-mail]