Coca-Cola Enterprises Beats on Q4 Earnings, Sales Down

Coca-Cola Enterprises Inc.'s CCE fourth-quarter 2015 adjusted earnings of 53 cents per share beat the Zacks Consensus Estimate of 51 cents by 3.9%.

However, earnings fell 8.6% year over year due to soft consumer demand trends and four fewer selling days during the reported quarter. Moreover, currency had a negative impact of 7 cents on adjusted earnings. These headwinds offset the benefits from a decline in cost of sales, a lower share count and reduced expenses.

Adjusted earnings excluded restructuring costs, mark-to-market effects and other items impact. Including these charges, earnings were 67 cents per share, up 45.7% year over year.
 

Revenues

During the quarter, net sales declined 15.5% year over year to $1.63 billion and fell short of the Zacks Consensus Estimate of $1.65 billion by 1.2%. On a currency neutral basis, net sales were down 6%.

On a comparable and currency-neutral basis, cost of sales per case was down 2.5%. Adjusted operating income tanked 12.8% to $198 million. On a currency neutral basis, adjusted operating income dipped 3%.

Volume & Pricing Update

Volumes decreased 1% year over year. The downside was caused by lower volumes of Coca-Cola trademark brands and sparkling beverage.

Volumes decreased 3% in Great Britain but were up 0.5% in continental Europe.

Coca-Cola trademark brands fell 2.5%. Volumes of sparkling beverage declined 1.5%.

On the other hand, the energy portfolio improved 5%. Volume of still beverages grew 2% driven by growth of 1% in juices and 6% in water.

On a comparable and currency-neutral basis, net pricing per case dipped 0.5%, same as the previous quarter.

2015 Results

Full-year adjusted earnings of $2.58 per share beat the Zacks Consensus Estimate of $2.55 by 1.2%. However, earnings per share fell 9.5% year over year. Currency had a negative impact of 51 cents on adjusted earnings.

In 2015, net sales tanked 15% year over year to $7.0 billion but came in line with the Zacks Consensus Estimate. Excluding the impact of currency, revenues dipped 1.5%. Revenues were soft due to the decline in volume and net pricing per case.

First-Quarter 2016 Outlook

On a comparable and currency-neutral basis, management expects first-quarter 2016 adjusted earnings per share and operating income to decline slightly owing to expense timing and one less selling day. Currency translation is expected to hurt earnings per share by 5%.

2016 Outlook

On a comparable and currency-neutral basis, 2016 net sales are expected to grow slightly. The company expects full-year free cash flow in the range of $500 million to $550 million. The company does not expect to repurchase shares in 2016.

Zacks Rank & Key Picks

Coca-Cola Enterprises carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the consumer staples sector include Keurig Green Mountain, Inc. GMCR, Primo Water Corporation PRMW and Campbell Soup Company CPB. All the companies carry a Zacks Rank #2 (Buy).

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