ATLANTA – Coca-Cola Enterprises (NYSE: CCE) today reported full-year 2007 net income of $711 million, or $1.46 per diluted share. Excluding items that impact comparability, the company achieved net income of $679 million, or $1.39 per diluted share. The following table provides a reconciliation of reported and comparable earnings per diluted share and a reconciliation of reported and comparable items is available on pages 12 through 16 of this news release.
For full-year 2007, total revenues grew 5 1/2 percent reflecting a consolidated comparable volume decline of 1 percent and a comparable, currency-neutral net pricing per case growth of 4 percent. Comparable operating income grew 3 1/2 percent and, on a consolidated basis, cost of sales increased 7 1/2 percent as a result of sharply higher commodity costs in North America. Full year comparable results include approximately 7 cents per diluted share benefit from currency translations.
In the fourth quarter, earnings per diluted share totaled 32 cents. On a comparable basis, earnings per diluted share were 29 cents, revenue grew 10 1/2 percent and operating income increased 17 percent. These results reflect the benefits of volume and pricing growth in North America and Europe.
“Our 2007 results reflect success in becoming more effective and efficient, in providing customers with improving levels of execution, and in developing our brand portfolio,” said John F. Brock, president and chief executive officer. “We are encouraged by our 2007 performance, which leaves us well-positioned to begin achieving our long-term objectives of revenue growth of 4 percent to 5 percent, operating income growth of 5 percent to 6 percent, and high single-digit earnings per share growth.
“We recognize that much hard work lies ahead, and that reaching these levels of performance requires constant focus on the execution of the three strategic objectives that guide our efforts – to strengthen our product portfolio, to improve our go-to-market model, and to create a talented, diverse workforce,” Mr. Brock said.
“Our strategies, coupled with the dedication and hard work of more than 70,000 employees, have created a sense of momentum in our company,” Mr. Brock said. “This momentum is an asset as we work throughout 2008 to successfully execute our restructuring, to maximize the value of our brands, and to manage through a continued high cost environment in North America.”
NORTH AMERICAN RESULTS
For full-year 2007, comparable North American volume declined 2 percent, while net pricing per case grew 4 1/2 percent. In the fourth quarter, North America achieved comparable volume growth of 1 percent, reflecting the positive impact of the November launch of glaceau brands, the benefits from the addition of both Campbell and FUZE, and the continued growth of Coca-Cola Zero, Dasani, and Powerade. Full year cost of sales per case increased 9 1/2 percent, driven primarily by prices for aluminum and sweetener.
“Our fourth quarter volume results demonstrate the benefits created by our expanded still portfolio and the strength of our “Red, Black, and Silver” execution initiative,” Mr. Brock said. “We believe that in 2008 we can build on the increasing strength of Coca-Cola Zero, which grew nearly 40 percent in 2007, and capture still category growth through glaceau, Dasani, Powerade, FUZE, and Campbell. We will accomplish this while working with The Coca-Cola Company to further strengthen our still beverage portfolio, particularly in teas.
“Strong execution is essential to capture these opportunities and we will continue to improve our effectiveness and achieve customer service gains through our Customer Centered Excellence initiative,” Mr. Brock said. “Initial results of this effort are encouraging, and we will expand implementation of this initiative throughout all of our North American territories during this year.”
For the full-year 2008, CCE continues to expect performance in-line with its long-term growth objectives. Revenue is expected to increase in a high single-digit range reflecting the positive impact of the full year distribution of glaceau, FUZE, and Campbell. These new brands, sold primarily in single-serve packages, create a mix impact because of their higher selling price per case, which will be partially offset by additional investment against sparkling beverage brands and operations.
Operating income is expected to increase at the high end of the long-term target range of 5 percent to 6 percent, with earnings per diluted share expected to be in line with the long-term objective of high single-digit growth.
In North America, brand initiatives will help create volume growth in a low to mid single-digit range. Driven by the mix impact of higher cost glaceau and other still beverage brands, pricing per case will increase in a mid single-digit range and cost of goods per case will increase at a low double-digit rate. Core raw material costs will increase less than 2007 rates but remain above historical averages.
In Europe, strong marketing and brand plans will drive 2008 volume growth in a low to mid single-digit range. Pricing per case will 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.
The company also expects return on invested capital to improve in line with the long-term goal of 30 basis points or more annual improvement, strong free cash flow (cash flow from operations less capital spending, net of asset disposal) of more than $700 million, and capital expenditures of approximately $1 billion. The effective tax rate for 2008 is expected to be 29 percent to 30 percent. Guidance excludes items affecting comparability and is foreign currency-neutral.