Wed, Aug 20, 2014, 5:08 PM EDT - U.S. Markets closed

Recent

% | $
Quotes you view appear here for quick access.

Coca-Cola Enterprises Inc. Message Board

  • canucanoe1 canucanoe1 Mar 15, 2008 7:06 AM Flag

    Delivery Pressures

    Funny how the airlines are sinking under cost pressures. Fuel is a focus, but airlines too have huge employee cost pressures like health insurance. On top of this, airlines don't have the commodity cost increases like aluminum, plastic and 'sugars'.

    Here, we have CCE with poor margins too trying to escape the whirlpool with volume and limited price increases. Currency exchange and tax rate reductions - can they save the day? I don't think so - in Europe, increasing cost pressures are priced in Euros, CCE doesn't export from the US.

    Someday soon this stock begins its single digit stock price march. At its completion, KO buys it. It will mark the end of an era of off balance sheet accounting practices in America just as it marked the beginning in the mid '80s.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Is it just in certain area that dispatch is insane or is it just mine? @$4.50/gallon the routing should be a little better thought out...don't you think?

      I mean really, how hard it is to get feedback from locals, or here's a idea, visit the facilities you are dispatching to???? ARG!!!!

    • Fuel soaring. American Airlines now wants to charge for the first checked bag?
      Plastic, sweeteners, aluminum... costs rising.
      CCE's balance sheet and margins leave little for error.
      Inflection point near?

      • 1 Reply to canucanoe1
      • How can anyone believe this preannouncement? It doesn't mention fuel costs. There's deep significance as to why, imo.

        CCE has a broken business model and KO has a broken financial/business strategy. There is no such thing as a "brand company" and a bottling/delivery company. There is only the soda business with an artificial off balance sheet financial structure between KO and its anchor bottlers.

        Rising fuel and commodity costs breaks the back of Ivester's Wizard of Oz financial structure. Let's not go into detail. Just consider why Brock didn't even mention "fuel" in the Press Release. CCE has a pitiful ROI and its margins are tight. Looking at just fuel cost impact - delivery efficiency is needed. One of the best ways is to get rid of marginal customers. Marginal defined as low profit. Oops, lowered volume.

        But KO keeps getting paid primo $$. When does CCE tell KO its brand just isn't worth it? After all, how long has it been since KO released a winning drink? Heck, they can't even buy a brand and grow it profitably enough for CCE to prosper. And when they do buy a brand, invariably it forces CCE to adjust.

        There's a spiral going on here. One month ago, CCE tells all that profit will be on target and higher (Yahoo estimate about 7% higher). Now high single digit decline.

        If Brock wants to preannounce, it would be good to see the full picture, the plan. Its been more than 2 decades since Ivester took advantage of the off balance sheet solution with his financial restructuring. There's been no real plan since. How can shareholders pay a CEO bodacious $$ without seeing a true new plan?

    • Or maybe it is people who are ignorant about the simplest of concepts regarding material handling or even ignorant of DOT regulations for hours of service who are the real source of the problem. Or maybe it is people who don't understand incremental analysis.

      What are the economics of moving goods from source plant to a market area by sideload or OFS versus 48ft modes ?

      There is no cookie cutter answer. Each market must be evaluated seperately, but in general, any sideload market mass over 2 million cases more than 75 miles from a source is worth creating a satellite facility, whether it be cross dock or stand alone facility. Once the satellite facility is in place, you create efficiencies by adding some bulk to go with it.

      Oversimplified, it costs less than a nickel a case to load/unload a tractor trailer of product.

      What is the incremental cost of moving 2 million cases in 500-600 case increments instead of 1300 case increments ?

      If you can't do the math on the items above you are probably one of the idiots that merged bulk operations into a production facility and forgot to recognize the increased stem time back to the local market area ?

    • I wrote the below just a short 2 months ago. Fuel, aluminum, etc. were priced so much lower. I wonder when the blanket contracts get adjusted? Now the USD has dropped a bit. That's not good news as the relentless advance has disguised operational issues for those that only invest by looking at the bottom line. Even just a flattening USD/EUR exchange rate can have significant impact on CCE's income line. Are we reaching a tipping point?
      ~~~
      Funny how the airlines are sinking under cost pressures. Fuel is a focus, but airlines too have huge employee cost pressures like health insurance. On top of this, airlines don't have the commodity cost increases like aluminum, plastic and 'sugars'.

      Here, we have CCE with poor margins too trying to escape the whirlpool with volume and limited price increases. Currency exchange and tax rate reductions - can they save the day? I don't think so - in Europe, increasing cost pressures are priced in Euros, CCE doesn't export from the US.

      Someday soon this stock begins its single digit stock price march. At its completion, KO buys it. It will mark the end of an era of off balance sheet accounting practices in America just as it marked the beginning in the mid '80s.

      • 1 Reply to canucanoe1
      • Canoe:

        In my mind there's no reason for KO to purchase CCE at any price. CCE can continue to struggle, pay down some debt. Worst case KO has CCE sell a territory to another bottler who can handle it.

        There are other assets that can be liquidated. Warehouse consolidation alone, selling old facilities and moving into efficient leased facilities with lower headcount is a first step.

        KO's return on assets would drop like a rock with CCE back in the fold.

        The Fed appears to be starting to steady the dollar. If it starts rising against the EURO, there go the European profits. A stronger dollar will also bring down the commodity prices. In reality there isn't a shortage of any of them except Natural Gas where the US price is so low we're having trouble getting LNG ships in country. So Natural gas will continue to climb.

        But, heck, if commodities were free CCE would miss earnings and blame it on an increase in traffic tickets in NYC, Chicago, LA, Boston...

        Shareholders would be better off if the NE fleet was used to smuggle cigarettes into New York.

        There is just no way KO will take out the shareholders of CCE.

    • same in the SWBU!!!

    • if what you point out is on track i would hate to see what our off track results would look like. please don't reference the GLBU as any source of business trends or expertise. their results have been terrible for the last several years under MM the midgets leadership. the only way he keeps his job is that he is another one of TMs boys! i am part of a historically top performing BU and our business is tanking! the new ce sales reps are lasting at best 4 weeks. what a joke this company is. ce=confused executives! bring back schimberg or even dyson. at least dyson was smart enough to give stock options to the lower levels and execute trip incentives that drove you to do all of the little extras that made a difference in customer service and performance.

    • "importantly,both our full consumption sparkling and glaceau business are on track and we are winning in the market place.......". If ccetou is truly just an employee that works his/her ass off everyday as stated, then their first problem is that they believe everything the company is telling them. The quote was company propaganda. Here's another one that's been repeated time and again "vitamin water will be bigger than Gatorade in 4 years". Well, cce has 3.5 years to make that happen. I'm betting that it won't. Don't get me wrong, I think VW is a great product. But pc is doing a great job of advertising and getting displays of Life Water.

    • "ccetou must be a part of the ivory tower or one of their whipping boys."

      No I'm just an employee that works my ass off everyday for a company full of mostly great people. I realize their are a lot of unhappy current and former employees especialy in WPA. There was a lot of much needed house cleaning done in that market which will make a stronger team moving forward.

      "Coke IS losing share, even with their millions and millions in investments of products such as VW and Fuze. Hate to think of how much worse first quarter would have been without those additions"

      I love your inability to get the facts right. But we are in luck as independent firms provide share and scan data and as published yesterday:

      "Importantly, both our full-consumption sparkling and glacéau businesses are on track, and we are winning in the marketplace. In the first quarter, we grew our total beverage market share relative to Pepsi in both immediate and full consumption packages."

      I do agree with you in part that Full Service can be and has been very profitable in the past. Even though you failed to account for the capital expense involved in running a truck for 150 cases and the $3000 vendor to vend the product. Most vendors over 75 cases VPO are still profitable to the system and we have been stupid in the "Sours" slash and burn aproach to Full Service. PBG wrote well over $55,000,000 (18,000+ vendors)in vending equipment in Q4 or 07' so they are not seeing FS or FLO volume growth either. In your neck of the woods AVI and Canteen are struggling.

      I have lots of good friends in the GLBU and they keep me grounded in the facts you seem to avoid.

      CCE has lots of issues but overall is on the right track for the first time in years. The economy will straighten out later this year and the over speculation in commodities will fall back into reality based values reducing COG's Q3 & 4.

    • You need to have someone educate you on full service and on premise business. See if you can grasp this concept:
      vend rate of $1.25 for a bottle of Dasani times 24 units (one case) is equal to $30. Allow $5.00 for floor cost case. Now pay your customer a commission of 20%, which is equal to $6.00. With an efficient route there is no reason why a driver shouldn't put through 150 cases per day. That's a gross of $4,500 per day, less floor cost of $750, less commissions of $900 leaving $2,850 per day to cover driver wage, fuel, vehicle expense, and other overhead. If you can't make this work I pray that you are not still in a position to influence business decisions. Most observers can easily see what transpired when CCE moved away from local full service control to regional full service supervisors, route planners, and full service vice presidents. With these additional expenses, loss of local influence, idiotic decisions not to fill an empty vendor because "it is not on the schedule", terrible routing, no one has to wonder why CCE full service continues it's steep decline. You have made PEP and full line operators laugh and enjoy the profits. Sorry, but when new executives with clear thinking are finally appointed you will be looking for work.

    • you have been sheep dunked at wildwood. we make money on FS and On Premise sectors of our business model. the problem is that these two functions are the most difficult to manage. FS is much easier to manage than OP with all of the ADMs and CDAMs running around out there or srewing around out there. i have numerous friends with independant bottlers and FS and OP are still a top priority and they have not lost thousands of accounts to pepsi and FLOs like we have over the last 3 years! our fleet is old and depreciated, our cold equipment for the most part is old and depreciated and we now have VM to work with. our leadership is a bunch of idiots not to go after the OP business again. just like there will be a freeze in hiring there will be a huge emphasis behind IC moving forward which will include FS and OP. we have spent over $50,000,000 on mckinsey consulting fees over the last few years only to have our leadership drink their kool-aid that said we don't make money in FS and OP. this is bs!! i bet JB and TM wish they had those dollars back now! TB and EH will get this OP crap fixed. yeah right!!

    • View More Messages
 
CCE
47.69-0.64(-1.32%)Aug 20 4:03 PMEDT

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.