Coca-Cola Enterprises Sees Currency Translation Negatively Impact 2015 Earnings

21-Dec-2015 - USA

Coca-Cola Enterprises (CCE) said it continues to expect 2015 earnings per share to grow at the upper end of the range of 6 percent to 8 percent on a comparable and currency-neutral basis. Based on recent rates, currency translation would negatively impact full-year 2015 earnings per share by approximately 18 percent.

CCE closes Wednesday trading at $51.24, up $1.24 or 2.48%. But, in after hours, the stock dropped $2.24 or 4.37%.

"While we anticipated managing through a difficult operating environment in 2015, the consumer sector and the category have been softer than originally expected," said John F. Brock, chairman and chief executive officer. "Further, we expect these conditions to continue to impact CCE's results into 2016.

Operating income for 2015 is expected to achieve slightly positive growth, while net sales growth is now expected to be slightly negative, both on a comparable and currency-neutral basis.

The company expects 2015 free cash flow in a range of $600 million to $650 million including the expected negative impact of currency translation and excluding expected cash costs of $25 million to $30 million related to the Coca-Cola European Partners or "CCEP" transaction. Capital expenditures are expected to be less than $325 million after including the impact of currency translation.

The company expects 2016 comparable and currency-neutral net sales to be up slightly. For the first-quarter 2016, given expense timing and one fewer selling day, CCE expects comparable and currency-neutral operating income and diluted earnings per share growth to be down slightly. Based on recent rates, currency translation would negatively impact first-quarter 2016 diluted earnings per share by just over 5 percent.

The company expects 2016 free cash flow in a range of $500 million to $550 million after expected CCEP transaction cash costs of $75 million to $100 million. Given the pending transaction, CCE does not expect to repurchase shares in 2016.

Separately, Coca-Cola Enterprises announced the filing with the U.S. Securities and Exchange Commission of a registration statement on Form F-4, which contains a preliminary proxy statement/prospectus regarding the proposed combination of the businesses of CCE, Coca-Cola Iberian Partners, S.A. (CCIP), and Coca-Cola Erfrischungsgetränke AG (CCEAG), a wholly owned subsidiary of The Coca-Cola Company (KO).

Subject to approval by Coca-Cola Enterprises' shareholders and satisfaction of other closing conditions, the transaction is expected to close by the end of the second quarter of 2016. (dpa)

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