Drinks bottler Coca-Cola Enterprises Inc went deep into the red in 2008, hurt in part by a $7.6 billion impairment charge. The Atlanta-based Coca-Cola products marketer and distributor had a net loss of $4.4 billion and a loss of $9.05 a share, compared with net income of $711 million and earnings of $1.46 a share in 2007. Annual revenue rose 4 per cent to $21.8 billion.
The results for 2008 include a $7.6-billion non-cash, pre-tax impairment charge that the company said was necessary to trim the book value of the its North American franchise license intangible assets to their estimated fair value due to financial market conditions and the company's stock price.
Soda bottlers have struggled with weakened volumes as North Americans turn to other drinks, including bottled water and vitamin-infused beverages. The industry is seeing some benefit, as commodity costs moderate from last summer's high.
Coca-Cola Enterprises posted a fourth-quarter net loss of $1.45 billion, or $ 2.99 a share, compared with year-earlier net income of $158 million, or 32 cents a share. Excluding items such as the write-down, caused in part by its tumbling stock price, earnings fell to 22 cents from 29 cents. Revenue decreased 1.2 per cent to $5.24 billion as higher prices nearly offset a 5 per cent volume drop.
Gross margin edged down to 37 per cent from 37.7 per cent. North American volume slumped 7 per cent amid a 9.5 per cent price increase while European volume rose 1.5 per cent while prices per case rose a more modest 2.5 per cent.
Coca-Cola Enterprises, which reiterated its 2009 earnings forecast, sees volume falling again this year in North America, but the region's revenue should grow by the mid-single digits on a percentage basis because of the price hikes. The same revenue increase is seen for Europe as volume will grow "modestly."
Coca-Cola Enterprises in December announced a restructuring aimed at boosting operating profit by $150 million by 2011 for the company and Coca-Cola. The moves will include efforts to better coordinate capacity and transportation planning with concentrate producer Coca-Cola.
''We are moving forward with several significant initiatives in North America as we meet the challenges of the current economic environment,'' said John F. Brock, chairman and CEO, in an earnings statement. ''These initiatives are focused on improving supply chain operations, implementing a new price/package architecture that will balance channel and package profitability while enhancing brand value, and improving our execution to strengthen our marketplace presence. We believe this work, coupled with an improved relationship with The Coca-Cola Company, will ultimately restore long-term, profitable growth for our company.''
Coca-Cola Enterprises shares closed Tuesday at $11.95 and there was no pre-market trading. The stock has lost more than half its value since March.