Coca-Cola Enterprises' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Coca-Cola Enterprises, Inc. (CCE)

Q1 2012 Earnings Call

April 26, 2012 10:00 a.m. ET


Thor Erickson – Vice President of Investor Relations

John F. Brock – Chairman and Chief Executive Officer

William W. Douglas III – Executive Vice President and Chief Financial Officer

Hubert Patricot – Executive Vice President and President, European Group


Judy Hong – Goldman Sachs

Steve Powers – Sanford C. Bernstein & Co.

Kaumil Gajrawala – UBS

Bill Schmitz – Deutsche Bank

Ian Shackelton – Nomura

Bonnie Herzog – Wells Fargo

Mark Swartzberg – Stifel Nicolaus

Bryan Spillane – Bank of America/Merrill Lynch

John Faucher – JPMorgan



Good day, and welcome to the Coca-Cola Enterprises First Quarter 2012 Conference Call. At the request of Coca-Cola Enterprises, this conference is being recorded for instant replay purposes.

At this time, I’d like to turn the conference over to Mr. Thor Erickson, Vice President of Investor Relations. Please go ahead, sir.

Thor Erickson

Thank you, and good morning, everybody. We appreciate you joining us this morning to discuss our first quarter 2012 results and our outlook for the remainder of 2012.

Before we begin, I’d like to remind you of our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook for future periods. These comments should be considered in conjunction with the cautionary language contained in this morning’s earnings release as well as the detailed cautionary statements found in our most recent annual report on Form 10-K and subsequent SEC filings. A copy of this information is available on our website at

This morning’s prepared remarks will be made by John Brock, our CEO, and Will Douglas, our CFO. Hubert Patricot, President of our European Group is also with us on this call this morning. Following the prepared remarks, we will open the call for your questions. In order to give as many people as possible the opportunity to ask questions, please limit yourself to one question, and we will take follow-up questions as time permits.

Now, I will turn the call over to John Brock.

John Brock

Thank you, Thor and thanks to each of you for joining our conference call and webcast. As we discuss our results for the first quarter of 2012 and review our outlook for the remainder of this year. As you saw in our news release this morning we managed to achieve continued growth and made good progress toward our full-year financials goals in spite of a challenging operating environment.

Comparable earnings per diluted common share totaled $0.36 up 9%. Revenue grew 5% and comparable operating income grew 6% both on a currency neutral basis. Net pricing per case increased 2.5%, while strong comparisons from the prior year and the impact of the excise tax increase in France were to limit volume, which declined a 0.5% including a modest decline in France.

Trademark Coca-Cola volume for the quarter grew 1% and the energy category grew more than 30%. Still beverages declined in a mid-single-digit range as we hurdled the impact of 2011 brand expansion as well as new products particularly in Great Britain.

While we’re never content with even the modest decline in volume, it is important to remember that the first quarter is our smallest. Looking forward we’re confident that our operating strategies, promotions, and marketplace execution leave us well positioned to achieve our targets for the full-year.

As you know we have plans to maximize the benefits of key marketplace opportunities this year including the London 2012 Olympic and Paralympic Games and the Euro 2012 Soccer Championship.

We’ve made excellent progress in activating these events, which include the Olympic torch relay. This 70-day event begins less than a month from now on May 19 th, and will come within one hour of 95% of the UK population.

Of the 8,000 torchbearers, 1,300 will be future flames a group of outstanding young people selected by Coca-Cola for their inspirational lives. We’re also playing a key part in making these the Greenest Olympic Games ever.

We’re using environmentally friendly production, transportation and cooling processes along with the focus and sustainable packaging and recycling to reach our low carbon zero waste Olympic goal.

Our Olympic programming, which will feature the Coca-Cola POWERADE and vitamin water brands, is a significant opportunity for us. As we partner with key retailers create a solid platform from, which to engage consumers and continue to build our relationships with our customers.

In addition to Olympic related events we have other marketing activation in place like a renewed emphasis and campaigning free beverages and later in the year a tie end would be new James Bond’s film called Skyfall. We will also work to enhance the performance of our sparkling flavor portfolio and that includes energy. This will include new sweetener alternatives such as stevia and new Fanta flavors such as mango and passion fruit. Still beverages which provided more than 10% of our growth last year will benefit from both new flavors and packaging for Capri Sun, Oasis and POWERADE. Additionally, a new vitamin water flavor was created from suggestions by consumers through Facebook and we will also create a renewed focus in the tea category with the Nestea brand which is now being relaunched in France and Belgium.

Beyond product innovation we also have new packaging initiatives including a new 375 milliliter packet size bottle and 250 ml cans both targeted to meet specific consumer demands. We also continue to enhance consumer, I’m sorry, customer relationships to create even higher levels of execution.

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