Coca-Cola Enterprises, Inc. Reports Fourth-Quarter and Full-Year 2012 Results

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Coca-Cola Enterprises, Inc. Reports Fourth-Quarter and Full-Year 2012 Results

  • CCE achieved full-year earnings per diluted share of $2.25 on a reported basis, or $2.26 on a comparable basis.
  • Full-year net sales totaled $8.1 billion, down 2½ percent on a reported basis, up 3 percent on a currency neutral basis, and up 1 percent on a currency neutral basis excluding the impact of the French excise tax increase.
  • Full-year reported operating income was $928 million, down 10 percent; full-year comparable operating income was $1.0 billion, down 4 percent, and up 2½ percent on a currency neutral basis.
  • Fourth-quarter earnings per diluted share totaled 34 cents on a reported basis, or 45 cents on a comparable basis; free cash flow totaled $582 million.
  • Initiated a new $1.5 billion share repurchase program in 2013, with a goal of purchasing at least $500 million by year end.
  • CCE continues to expect 2013 comparable and currency neutral earnings per diluted share growth of approximately 10 percent.

ATLANTA--(BUSINESS WIRE)-- Coca-Cola Enterprises, Inc. (NYSE/Euronext Paris: CCE)today reported full-year 2012 earnings per diluted share of $2.25, or $2.26 on a comparable basis.


Reported operating income for the year totaled $928 million; comparable operating income totaled $1.0 billion, up 2½ percent on a comparable and currency neutral basis versus a year ago. Currency translation negatively affected full-year comparable earnings per diluted share by 16 cents. Items affecting comparability are detailed on pages 12 through 15 of this release.

"We achieved solid earnings per share growth in 2012 while working through significant marketplace challenges and the ongoing macroeconomic softness that continues to affect our territories," said John F. Brock, chairman and chief executive officer. "Managing through these factors, we also delivered modest comparable, currency neutral net sales and operating income growth, and strong free cash flow.

"We remain confident in our ability to restore, over time, our sales and operating income growth to levels in line with our long-term targets," Mr. Brock said. "Our optimism is fueled by the popularity of our brands, the effectiveness of our marketplace initiatives, the benefits of our Business Transformation Program, and the skill and dedication of our people.

"Going forward, we will continue to focus on value-creating opportunities in order to achieve sustained growth and to deliver on our most important goal - creating value for our shareowners," Mr. Brock said.

OPERATING REVIEW

Full-year 2012 net sales totaled $8.1 billion, a decline of 2½ percent versus prior year results, up 3 percent on a currency neutral basis, and up 1 percent on a currency neutral basis excluding the impact of the French excise tax increase. For the fourth quarter, net sales grew 1 percent on a reported basis, 2 percent on a currency neutral basis, and was flat on a currency neutral basis excluding the impact of the French excise tax increase.

Full-year comparable operating income declined 4 percent over prior year results, and increased 2½ percent on a comparable and currency neutral basis. For the quarter, operating income grew 13 percent on a comparable basis and 13½ percent on a comparable and currency neutral basis, driven by modest gross margin improvement after excluding the impact of the French excise tax increase, and focused expense controls.

Free cash flow for 2012 totaled $582 million, including benefits from favorable year-over-year changes in working capital.

Full-year volume declined 3 percent. Sparkling brands declined 3½ percent; however, Coca-Cola Zero continued to perform well with growth of 6½ percent, and energy grew over 15 percent, led by Monster. Still brands were flat for the year, as growth in Capri-Sun, Nestea, and Chaudfontaine and Abbey Well waters was offset by declines in juices, juice drinks, and sports drinks. On a territory basis, volume was down 3 percent in both Great Britain and continental Europe.

For 2012, excluding the impact of the French excise tax increase, net pricing per case grew 3 percent and cost of sales per case grew 2½ percent. Operating expenses were flat as volume declines and expense controls offset increases, including incremental costs associated with our support of the Olympic Games. These figures are comparable and currency neutral.

For the fourth quarter, volume declined 5½ percent, driven by ongoing challenging conditions and cycling strong growth in the prior year. Volume in continental Europe declined 5½ percent, and volume in Great Britain declined 6 percent. Net pricing per case grew 4 percent and cost of sales per case increased 3½ percent, both excluding the impact of the French excise tax increase. These figures are comparable and currency neutral.

"In a year marked by unique operating challenges, we continued to focus on marketplace excellence while positioning our company to take advantage of the growth opportunities we see ahead," said Hubert Patricot, executive vice president and president, European Group. "We expect a return to volume growth in 2013 through a combination of marketing efforts, solid customer plans, and effectiveness initiatives. "We also are on track to realize benefits from our Business Transformation Program, including a restructured commercial organization that we believe will deliver increased productivity, operating efficiency, and enhance best practices while maintaining our world class levels of customer service," Mr. Patricot said.

SHARE REPURCHASE

CCE completed its most recent share repurchase program in the fourth quarter of 2012, resulting in 27 million shares or $780 million in repurchases last year. In January of this year, a new $1.5 billion share repurchase program began with a goal of purchasing at least $500 million of our shares in 2013. These plans may be adjusted depending on economic, operating, or other factors, including acquisition opportunities.

FULL-YEAR 2013 OUTLOOK

For 2013, CCE expects earnings per diluted share to grow approximately 10 percent on a comparable and currency neutral basis. Although it is too early to predict the 2013 currency impact, based on recent rates, currency translation would benefit full-year earnings per share in a range of 2 percent to 3 percent.

Net sales and operating income are expected to grow in a mid-single-digit range. This guidance reflects declining gross margins with expected net pricing per case growth less than an above-average cost of sales per case growth in 2013. While CCE remains committed to preserving or expanding margins over time, in light of sustained macroeconomic weakness and marketplace conditions we have a more modest approach in 2013. As a result, operating income margins are expected to be down modestly. This outlook is comparable and currency neutral.

The company also expects 2013 free cash flow in a range of $450 million to $500 million after including a year-over-year increase in cash restructuring expenses of approximately $125 million. Capital expenditures are expected to be approximately $350 million. Weighted average cost of debt is expected to be approximately 3 percent and the comparable effective tax rate for 2013 is expected to be in a range of 26 percent to 28 percent.

CONFERENCE CALL

CCE will host a conference call with investors and analysts today at 10:00 a.m. ET. The call can be accessed through the company's website at www.cokecce.com.

Coca-Cola Enterprises, Inc. (CCE) is the leading Western European marketer, producer, and distributor of non-alcoholic ready-to-drink beverages and one of the world's largest independent Coca-Cola bottlers. CCE is the sole licensed bottler for products of The Coca-Cola Company in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, and Sweden. We operate with a local focus and have 17 manufacturing sites across Europe, where we manufacture nearly 90 percent of our products in the markets in which they are consumed. Corporate responsibility and sustainability is core to our business, and we have been recognized by leading organizations in North America and Europe for our progress in water use reduction, carbon footprint reduction, and recycling initiatives. For more information about our company, please visit our website at www.cokecce.com and follow us on twitter at @cokecce.

FORWARD-LOOKING STATEMENTS

Included in this news release are forward-looking management comments and other statements that reflect management's current outlook for future periods. As always, these expectations are based on currently available competitive, financial, and economic data along with our current operating plans and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. The forward-looking statements in this news release should be read in conjunction with the risks and uncertainties discussed in our filings with the Securities and Exchange Commission("SEC"), including our Form 10-K for the year ended December 31, 2012 and other SEC filings.

COCA-COLA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, Except Per Share Data)
      
Fourth Quarter
 2012  2011
Net Sales$1,916$1,893
Cost of Sales 1,254  1,226
Gross Profit662667
Selling, Delivery, and Administrative Expenses 512  487
Operating Income150180
Interest Expense2523
Other Nonoperating (Expense) Income (1) 1
Income Before Income Taxes124158
Income Tax Expense 24  45
Net Income$100 $113
Basic Earnings Per Share$0.35 $0.37
Diluted Earnings Per Share$0.34 $0.36
Dividends Declared Per Share$0.16 $0.13
Basic Weighted Average Shares Outstanding 284  309
Diluted Weighted Average Shares Outstanding 291  317
 
 
COCA-COLA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, Except Per Share Data)
      
Full Year
 2012 2011 
Net Sales$8,062$8,284
Cost of Sales 5,162 5,254 
Gross Profit2,9003,030
Selling, Delivery, and Administrative Expenses 1,972 1,997 
Operating Income9281,033
Interest Expense9485
Other Nonoperating Income (Expense) 3 (3)
Income Before Income Taxes837945
Income Tax Expense 160 196 
Net Income$677$749 
Basic Earnings Per Share$2.30$2.35 
Diluted Earnings Per Share$2.25$2.29 
Dividends Declared Per Share$0.64$0.51 
Basic Weighted Average Shares Outstanding 294 319 
Diluted Weighted Average Shares Outstanding 301 327 
 
 
COCA-COLA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Millions)
     
Year Ended December 31,

 

 2012  2011 
Net income$677$749
Components of other comprehensive income (loss):
Currency translations
Pretax activity, net175(74)
Tax effect -  - 
Currency translations, net of tax175(74)
Net investment hedges
Pretax activity, net(45)23
Tax effect 16  (8)
Net investment hedges, net of tax(29)15
Cash flow hedges
Pretax activity, net(11)(13)
Tax effect 3  4 
Cash flow hedges, net of tax(8)(9)
Pension plan adjustments
Pretax activity, net(126)(82)
Tax effect 31  22 

Pension plan adjustments, net of tax

 (95) (60)

Other comprehensive income (loss), net of tax

 43  (128)
Comprehensive income$720 $621 
 
 
COCA-COLA ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(In Millions)
     

December 31,

 2012  2011 
ASSETS
Current:
Cash and cash equivalents$721$684
Trade accounts receivable, net1,4321,387
Amounts receivable from The Coca-Cola Company6664
Inventories386403
Other current assets 157  148 
Total Current Assets2,7622,686
Property, plant, and equipment, net2,3222,230
Franchise license intangible assets, net3,9233,771
Goodwill132124
Other noncurrent assets 371  283 
Total Assets$9,510 $9,094 
LIABILITIES
Current:
Accounts payable and accrued expenses$1,844$1,716
Amounts payable to The Coca-Cola Company103116
Current portion of debt 632  16 
Total Current Liabilities2,5791,848
Debt, less current portion2,8342,996
Other noncurrent liabilities276160
Noncurrent deferred income tax liabilities 1,128  1,191 
Total Liabilities6,817
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