(CCE) Coca-Cola Enterprises Profits Soar

Coca-Cola Enterprises Inc. (CCE) posted first quarter 2012 adjusted earnings (excluding the impact of restructuring charges and mark-to-market commodity hedges) of 36 cents per share. The result exceeded both the Zacks Consensus Estimate and the prior-year quarter earnings of 33 cents per share. The results were driven by an improved top line.

Quarterly Details

During the quarter, Coca-Cola Enterprises’ sales increased 2.5% to $1.868 billion on a currency neutral basis, excluding the impact of the French excise tax increase. Sales were almost in line with the Zacks Consensus Revenue Estimate of $1.862 billion.

Including the impact of the excise tax increase in France, volumes declined 0.5% in the quarter, partially offset by favorable operating conditions in the quarter. The company’s net pricing per case and cost of sales per case also increased 5% and 6.5%, respectively, in the quarter.

Excluding restructuring charges and mark-to-market commodity hedges, gross profit in the quarter decreased 1.1% to $654 million on a comparable basis from $661 million recorded in the year-ago quarter. Operating income, however, increased 1.2% to $175 million from $173 million in the year-ago quarter.

Other Financial Update

Coca-Cola Enterprises exited the quarter with cash and cash equivalents of $296 million, compared with $684 million at the end of December 31, 2011.

The company also declared a dividend of 16 cents per share on April 24 to be paid on June 21, 2012 to shareholders of record as of June 8, 2012.

During the reported quarter, Coca-Cola Enterprises repurchased $150 million of its shares and anticipates to buyback at least $500 million worth of shares in fiscal 2012, under a new share repurchase program worth $1.0 billion, subject to economic, operating and other factors.

Fiscal 2012 Guidance

Looking into 2012, the company projects earnings per share (including the impact of the French excise tax increase) to rise 10%, driven by mid-single digit operating income growth and high-single digit growth in revenue. Coca-Cola Enterprises also anticipates the 2012 currency translation to decrease earnings per share by approximately 6%.

For 2012, the company expects to make a capital expenditure in the range of $400 – $425 million and, therefore, the company expects to generate free cash flows of $500 million to $525 million in 2012.

Coca-Cola Enterprises, which competes with Kraft Foods Inc. (KFT) and PepsiCo Inc. (PEP), currently has a Neutral recommendation over the long term. It also carries a Zacks #3 Rank in the near term (‘Hold’ rating).

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