Coca-Cola Enterprises Inc.'s (CCE) third-quarter 2011 adjusted earnings of 72 cents per share outpaced the Zacks Consensus Estimate of 69 cents. This also compares favorably with earnings of 60 cents in the year-ago quarter. A solid volume growth coupled with price increases and favorable currency translation effect led Coca-Cola Enterprises to deliver better-than-expected quarterly result.
The results for the reported quarter include operations of Norway and Sweden, excluding the North American operation of the company. During the fourth quarter of 2010, Coca-Cola Enterprise divested its North American bottling business to the beverage giant The Coca-Cola Company (KO).
Coca-Cola Enterprises is at present a newly registered company comprising its legacy European bottling operations and the bottling operations acquired from the Coca-Cola Company in Norway and Sweden.
Quarterly Details
During the third quarter, Coca-Cola Enterprises' sales increased 10.7% to $2,140.0 million on a comparable basis from $1,933.0 million in the year-ago period. The sales increase was attributable to a rise of 1.0% in volume in all territories, followed by a surge of 2.0% in product prices. However, revenue missed the Zacks Consensus Estimate of $2,158.0 million.
Gross profit for the quarter increased 8.0% to $810.0 million on a comparable basis from $750.0 million recorded in the year-ago quarter. Operating income also surged 11.7% to $335.0 million from $300.0 million recorded in the year-ago quarter. Moreover, Coca-Cola Enterprises' operating margin improved 20 basis points to 15.7% in the reported quarter.
Balance Sheet, Cash Flow and Dividend
Coca-Cola Enterprises exited the quarter with cash and cash equivalents of $811.0 million. Year-to-date, the company generated $653.0 million of cash from operations and deployed $252.0 million toward capital expenditure.
Share Repurchase
During the reported quarter, Coca-Cola Enterprises repurchased $200.0 million of shares under its $1.0 billion share repurchase program, started in the fourth quarter of fiscal 2010. Since the announcement of the share repurchase program, the company has bought back $800.0 million shares and is expecting to close the program by the end of fiscal 2011.
The company has recently announced a new share repurchase program worth $1.0 billion, which will be started after the completion of the ongoing share repurchase program. The company is anticipating to buyback at least $500.0 million worth of shares in fiscal 2012, subject to economic, operating and other factors.
Fiscal 2011 Guidance
With the expectation of mid single-digit growth in revenue, management has raised its full-year 2011 adjusted earnings expectation in the range of $2.14 to $2.18 per share from $2.10 to $2.15 forecasted earlier.
For fiscal 2011, the company now anticipates to generate free cash flow of at least $500.0 million, up from its previous range of $475.0 million to $500.0 million. Moreover, the company will deploy in the range of $375.0 million to $400.0 million toward capital expenditure instead of $400.0 million forecasted earlier.
Coca-Cola Enterprises, which competes with Kraft Foods Inc. (KFT) and Pepsico Inc. (PEP), currently has a Zacks #3 Rank, implying a short-term ‘Hold’ rating. Moreover, we maintain a long-term Neutral recommendation on the stock.
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