Accordingly, for fiscal year 2007, the Atlanta, Georgia-based company now forecasts comparable earnings in a range of $1.36-$1.39 per share compared to its prior outlook in a range of $1.31-$1.36 per share. On average, sixteen analysts polled by First Call/Thomson Financial expect the company to report earnings of $1.34 per share for the year.
The revised earnings outlook includes foreign currency impact and excludes items affecting comparability. While announcing its third quarter results, the company had lifted its full-year earnings outlook from the prior range of $1.27-$1.32 per share.
Coca-Cola Enterprises raised its outlook for free cash flow for the year to approximately $700 million from the previous forecast of $675 million and maintained its forecast for capital spending of approximately $1 billion. The company said free cash flow is expected to remain strong and enhance its ability to return cash to shareowners.
The company noted that North America would generate full-year results that include low single-digit volume decline, mid single-digit pricing per case growth and high single-digit cost of goods per case growth. In Europe, the company expects volume, pricing per case and cost of goods per case each to increase in a low single-digit range.
However, the reported results for fiscal year 2007 will include about $125 million of expenses related to the company's multi-year $300 million restructuring initiative in North America and Europe, while the remaining costs would be recognized in 2008 and 2009.
John Brock, President and CEO of Coca-Cola Enterprises, said that the addition of glaceau brands added depth to the company's North American portfolio, while its Customer Centered Excellence Initiative was driving improved effectiveness and improved customer service. Brock added that the company continued to enhance the efficiency of its operations in Europe while working with the Coca-Cola Company to broaden portfolio.
Looking ahead to fiscal year 2008, Coca-Cola Enterprises expects earnings per share to grow in a high single-digit range over the comparable results of fiscal year 2007 and in line with its long-term objective of high single-digit growth. Wall Street analysts expect the company to report earnings of $1.48 per share for the year.
The company stated that the consolidated financial results for the year would reflect the positive revenue impact of the increased volume and changing mix in North America related to the distribution of glaceau, Fuze and Campbell's in the year.
Revenue for fiscal year 2008 is expected to increase in high single digits, driven by the mix impact and the higher selling price per case of the new brands, partially offset by additional investment against sparkling brands and operations. Analysts have a consensus revenue estimate of $22.12 billion for the year.
Coca-Cola Enterprises expects operating income for the year to increase at the high end of the long-term target range of 5-6% and expects return on invested capital to improve in line with long-term goals. In addition, free cash flow is expected to be more than $700 million, while capital expenditures are forecast to be approximately $1 billion. The effective tax rate for 2008 is expected to be 29-30%.
In North America, the company expects volume growth for the year in a low to mid single-digit range, driven by the marketplace benefits of the glaceau, Fuze and Campbell's brands, coupled with the impact of sparkling initiatives such as the "Red, Black, Silver" focus on core Coca-Cola trademark brands.
Pricing per case is forecast to increase in a mid-single digit range on changing mix, while cost of goods per case is anticipated to increase at a low double-digit range. Excluding the mix impact, pricing per case is expected to increase in a low single-digit range and cost of goods per case is forecast to increase in a mid single-digit range. In addition, core raw material costs are expected to increase less than the rates in 2007, but remain above historical averages.
Coca-Cola Enterprises forecast strong marketing and brand plans to drive volume growth in Europe for fiscal year 2008 in a low to mid single-digit range. Pricing per case is forecast to increase at a low single-digit rate reflecting a low single-digit increase in cost of goods per case and a moderate commodity cost environment.
Brock said, "Overall, our operating results have improved, we continue to achieve strong free cash flow, and our continued debt reduction efforts have been successful. This performance, coupled with our outlook for increased growth in 2008, provides us the flexibility to return additional cash to our shareowners. We are evaluating options and will confirm our plans during the first half of next year."
For the recent third quarter, Coca-Cola Enterprises reported a 25% increase in net income to $268 million from $213 million in the previous-year quarter, helped primarily by favorable tax items. Earnings per share for the quarter increased to $0.55 from $0.44 in the prior-year quarter. Excluding restructuring charges, favorable tax items and certain other items, the company's comparable net income for the quarter declined to $213 million or $0.44 per share from $216 million or $0.45 per share in the same quarter last year. Quarterly net operating revenues increased 3.5% to $5.41 billion from $5.22 billion in the prior-year quarter.
Among the company's peers, Pepsi Bottling Group Inc. (PBG | charts | news | PowerRating) forecast adjusted earnings for fiscal year 2007 in a range of $2.15-$2.18 per share, while reporting its financial results for the third quarter. Including the one-time items, the company anticipates fiscal year 2007 GAAP earnings of $2.19 to $2.25 per share. In addition, the company forecast adjusted operating income growth of 10-11% and expects capital expenditures of about $780 million.
CCE closed Tuesday's regular trading session at $24.58, down $0.72 on a volume of 3.79 million shares. In the 52-week period, the stock has been trading in a range of $19.78-$26.32.
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