Coca-Cola Enterprises’s Inc. (CCE) fourth-quarter adjusted earnings of 58 cents per share beat the Zacks Consensus Estimate of 56 cents by 3.6% and increased 7.4% year over year. A decline in cost of sales, lower share count and a decline in expenses resulted in the strong earnings. However, currency had a negative impact of 5 cents on adjusted earnings.
Adjusted earnings exclude restructuring costs, mark-to-market effects, and other items impact. Including the charges, earnings stood at 46 cents per share, down 9.8% year over year.
Revenues
During the quarter, net sales declined 5.5% year over year to $1.93 billion but came ahead of the Zacks Consensus Estimate of $1.92 billion by 0.5%. On a currency neutral basis, net sales were up 1.5%.
Ongoing macroeconomic softness in Europe, a challenging retail environment in key markets like Great Britain, and poor weather conditions in France in the early part of the quarter hurt sales.
The company’s cost of sales per case declined 2.5%. Adjusted operating income declined 2% to $227 million. On a currency neutral basis, adjusted operating income grew 5%.
Volume & Pricing Update
Volumes increased 2%, comparing favorably with a decline of 4% in the preceding quarter. The upside was driven by an increase in Coca-Cola trademark brands, particularly Coca-Cola Zero and Coca-Cola Life.
Volumes increased 6% in Great Britain but declined 1% in continental Europe.
Volumes of sparkling beverage increased 1%. The energy portfolio increased 11%. Volume of still beverages rose 7.5%, driven by a 4% increase in juices and 12.5% increase in water.
Coca-Cola Zero grew 9%, improving from 2% growth in the previous quarter.
Net pricing per case declined 2%, worse than flat results in the previous quarter.
2014 Numbers
Full year adjusted earnings of $2.85 per share beat the Zacks Consensus Estimate of $2.84 by 0.4% and increased 13.5% year over year. Operating income growth and currency benefits led to the earnings beat. On a currency neutral basis, adjusted earnings increased 11%.
Full-year net sales rose 0.6% year over year to $8.26 billion and came in line with the Zacks Consensus Estimate. Excluding currency impact, revenues declined 0.5%.
2015 Outlook
On a comparable and currency-neutral basis, management expects 2015 adjusted earnings per share to grow in a range of 6% to 8%. Currency translation is expected to hurt earnings per share by 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 a range of $600 million to $650 million for 2015.
Coca-Cola Enterprises carries a Zacks Rank #4 (Sell).
Other Stocks to Consider
Better-ranked stocks in the consumer staples sector include SUPERVALU Inc. (SVU), Youngevity International, Inc. (YGYI) and Dr Pepper Snapple Group, Inc. (DPS). While SUPERVALU sports a Zacks Rank #1 (Strong Buy), Youngevity International and Dr Pepper Snapple carry a Zacks Rank #2 (Buy).
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