Coca-Cola Enterprises Inc.’s CCE first-quarter 2015 adjusted earnings of 42 cents per share beat the Zacks Consensus Estimate of 41 cents by 2.4%. However, adjusted earnings per share decreased 8.5% year over year.
Moreover, currency had a negative impact of 11 cents on adjusted earnings. Excluding the currency impact, adjusted earnings per share increased 15% year over year.
Adjusted earnings exclude restructuring costs, mark-to-market effects, and other items impact. Including the charges, earnings stood at 40 cents per share, down 9% year over year.
First quarter 2015 results were driven by volume increase in Great Britain and four extra selling days in the quarter, partially offset by softer consumer environment, and unfavorable currency translations,
Revenues
During the quarter, net sales declined 13% year over year to $1.63 billion and missed the Zacks Consensus Estimate of $1.68 billion by 3%. On a currency neutral basis, net sales were up 4%.
The company’s cost of sales per case declined 2%, worse than flat results in the prior-year quarter. Adjusted operating income declined 15% to $165 million. On a currency neutral basis, adjusted operating income grew 4%.
Volume & Pricing Update
Volumes increased 1%, an improvement from a decline of 1.5% in the prior year quarter. The upside was driven by mid-single digit increase in still brands, partially offset by flat volumes in Coca-Cola trademark brands. However, volume increase in the reported quarter compared unfavorably with an increase of 2% in the preceding quarter.
Volumes increased 8.5% in Great Britain on the back of a solid increase in Coca-Cola trademark brands. However, volumes declined 3.5% in continental Europe, which compared unfavorably with 3.5% increase in the prior year quarter.
Net pricing per case declined 2%, consistent with the previous quarter results. However, net pricing per case decline in the reported quarter compared unfavorably with 1% increase in the prior year quarter.
2015 Outlook
As Coca-Cola Enterprises enters the summer selling season, it maintained most of its guidance for 2015. 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 full year 2015 earnings per share by 18%, which is higher than the prior expectation of a negative impact of 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. The company expects to repurchase about $600 million worth of its shares in 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, Monster Beverage Corp. MNST and Dr Pepper Snapple Group, Inc. DPS. While SUPERVALU and Monster Beverage sport a Zacks Rank #1 (Strong Buy), Dr Pepper Snapple carries a Zacks Rank #2 (Buy).
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