Coca-Cola Enterprises, Inc. (NYSE:CCE) Q2 2015 Earnings Conference Call - Final Transcript

Jul 30, 2015 • 10:00 am ET


Coca-Cola Enterprises, Inc. (NYSE:CCE) Q2 2015 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Coca-Cola Enterprises Second Quarter 2015 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, VP of IR. Please go ahead, sir.

Thor Erickson

Thank you, and good morning, everybody. We appreciate you joining us today to discuss our second quarter 2015 results, and our full-year outlook for 2015.

(Forward-Looking Cautionary Statements)

This morning's prepared remarks will be made by John Brock, our CEO; and Nik Jhangiani, our CFO. Hubert Patricot, President of our European Group, is also with us on this call this morning.

Following 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'll take follow-up questions as time permits. Now, I'll turn the call over to John Brock.

John Brock

Thank you, Thor, and we thank each of you for joining us. We are in our London office today following our Board Meeting earlier this week here. As you've seen in our news release this morning, our results include comparable, diluted earnings per share of $0.79. We also achieved 2% growth in comparable currency neutral operating income. This operating income growth comes as we continue to face the impact of a soft consumer environment. These conditions, coupled with cycling strong volume growth of 3.5% in the same quarter a year ago, were factors in the second quarter's low single digit declines in net sales and volume.

We remain focused on managing each of the levers of our business effectively, maximizing our efficiency, and seizing opportunities created by an ongoing benign cost of goods environment. In addition, we continue to seek ways to improve our growth outlook. Given these factors, and our ability to adapt as marketplace conditions evolve throughout the year, we have affirmed our full year 2015 guidance for both net sales and operating income growth, and now expect diluted earnings per share at the upper end of our guidance range of 6% to 8%. We have confidence that our operating and marketing strategies, activated by the skill and commitment of our people, will enable us to achieve this guidance.

Now, looking at our second quarter results, net sales declined 2%, and operating income grew 2%, both on a comparable and currency neutral basis. Our total volume for the quarter declined 1%. On a territory basis, volume in both Great Britain and Continental Europe decreased 1%.

Importantly, while net pricing per case was down 1%, cost of sales per case declined 3%, creating gross margin expansion. Nik will provide more details on this in a few minutes. A key element of our volume results was the benefit of our ongoing brand innovation and expansion, notably Coca-Cola Life is now in all of our markets; SmartWater expansion continues throughout Great Britain; and we've recently took over distribution of Capri-Sun in Sweden and Monster