Source: Cott Corporation
Cott Corporation announced its results for the second quarter ended July 3, 2010.
August 05 - Second quarter 2010 revenue was $425 million compared to $439 million, a decline of 3%, or 4% excluding the impact of foreign exchange. Significant promotional activity by the national brands resulted in lower revenue in North America, partially offset by increased international revenue. Operating income increased 15% to $39 million from $34 million, benefiting from lower costs and strong international performance. Net income and earnings per diluted share were $22 million and $0.28, respectively, compared to $34 million and $0.48, respectively. The decrease in net income and earnings per diluted share was due to higher taxes; Cott recognized an income tax benefit of $5 million in 2009, compared to a tax expense of $9 million in 2010.
"I am pleased with our second quarter results, which were at the upper end of the volume and operating income ranges disclosed in early July," commented Cott’s Chief Executive Officer, Jerry Fowden. "The much publicized deep discounting of national brands in North America during the quarter obviously hindered our performance. However, despite these challenges we grew total global volume in 8 oz. equivalents, including concentrate sales, by 11%, and maintained filled beverage case volume within 1% of last year, while increasing operating income by 15%," continued Mr. Fowden.
SECOND QUARTER 2010 PERFORMANCE SUMMARY
- Revenue declined 3%, or 4% excluding the impact of foreign exchange. Filled beverage volume growth in the United Kingdom / Europe operating segment ("U.K.") and Mexico almost fully offset lower volumes in North America (company-wide filled beverage case volume was down 1%), while a 60% increase in Royal Crown International ("RCI") sales volume drove total global volume in 8 oz. equivalents (including concentrate sales) up 11%.
- Gross margin as a percentage of sales was 17.3% compared to 16.7%, driven by the ongoing benefit of operational efficiencies and lower cost of goods, including the favorable impact of transactional foreign exchange on commodities.
- Selling, general and administrative ("SG&A") expenses declined to $34 million from $35 million. Second quarter 2010 SG&A include $1 million of costs related to the previously-announced acquisition of Cliffstar Corporation.
- Operating income was $39 million compared to $34 million. Second quarter 2009 operating income included $4 million of restructuring and asset impairment charges.
- Income tax expense was $9 million compared to a tax benefit of $5 million in 2009.
SECOND QUARTER 2010 OPERATING SEGMENT HIGHLIGHTS
- North America revenue declined 7%, or 9% excluding the impact of foreign exchange. Filled beverage case volume declined 6% to 147 million cases. The volume decline was primarily attributable to national brand discounting during the quarter. Operating income increased by $4 million to $30 million. Second quarter 2009 operating income included $3 million of asset impairment charges.
- U.K. revenue increased 2%, or 6% excluding the impact of foreign exchange. Filled beverage case volume increased 7% to 50 million cases. The volume increase was primarily due to the continued growth in energy, sports and isotonic products. Operating income increased to $9 million primarily due to a more favorable sales mix and operational cost savings.
- Mexico revenues increased 33% to $14 million from $11 million, primarily as a result of new business.
- RCI revenue increased 51% to $9 million from $6 million, primarily as a result of increased volume to existing customers. RCI concentrate volumes increased to 92 million cases from 57 million cases.
"Compared to the estimated second quarter 2010 financial results released in early July, our actual second quarter 2010 operating income of $39 million with a 1% filled beverage case volume decline was at the upper end of the estimated ranges. These results continue to show the benefit of our focus on the 4 C’s of customers, costs, capex optimization and cash management," commented Cott’s Chief Financial Officer, Neal Cravens.
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Cott Corporation
Address: 6525 Viscount Road Mississauga, ON L4V 1H6 Canada
Telephone: +1-905-6721900
Fax: +1-905-6725229
About Cott Corporation
Cott Corporation (Cott) is a non-alcoholic beverage company and a provider of retailer brand soft drink. In addition to carbonated soft drinks (CSDs), the Company’s product lines include clear, still and sparkling flavored waters, juice-based products, bottled water, energy drinks and ready-to-drink teas. The Company operates in five segments: North America (which includes the United States reporting unit and Canada reporting unit); United Kingdom (which includes its United Kingdom reporting unit and its Continental European reporting unit); Mexico; Royal Crown International (RCI), and All Other (which includes its Asia reporting unit and its international corporate expenses). During the fiscal year ended December 27, 2008 (fiscal 2008), Cott closed its Asian operations.