At a recent investor conference, Coca-Cola Enterprises Inc. (CCE) warned that its second-quarter results could be weak, as worse-than-expected weather conditions and operating environment have dampened results. The share price declined sharply on announcement of the news.
At the Deutsche Bank Global Consumer Conference in Paris, CCE warned that cold and wet weather conditions in the second half of May and the beginning of June have hurt volumes significantly in this key summer selling season.
CCE, one of the largest bottlers of The Coca Cola Company (KO), has been facing many other challenges lately. These include steep price competition in Great Britain, overall soft macro economic conditions and difficult beverage market condition in France due to increase in French excise tax.
Some of these challenges have been more persistent than expected, thus tempering the second-quarter results and forcing the company to withdraw its previously provided outlook for fiscal 2013. The company will update its outlook for the rest of 2013 when it discusses its second-quarter results on Jul 25 after it better understands the impact of these challenges on the entire year.
At the first-quarter conference call, the company had increased its prior guidance for fiscal 2013 earnings to reflect accelerated share repurchase guidance. However, CCE had reduced its expectation for revenues due to ongoing macroeconomic challenges. Though volumes were expected to increase for full year 2013, management had warned then that the second quarter would be challenging in terms of volume growth. The second-quarter adjusted currency-neutral operating income was also expected to be flat to decline slightly despite easy comparisons. It seems that the actual second-quarter results would be even worse than management’s already-pessimistic outlook for the quarter.
Other Stocks to Consider
Coca-Cola Enterprises carries a Zacks Rank #3 (Hold). In the beverage sector, stocks worth mentioning are Dr Pepper Snapple Group Inc. (DPS) and SodaStream International Ltd. (SODA), both carrying a Zacks Rank #2 (Buy).
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