Reuters

Coca-Cola Enterprises has given its 2007 earnings estimate a healthy boost, partly by adding Glaceau vitamin water to its system, sending the bottler's shares up nearly 6 per cent.


The world's largest bottler of Coca-Cola Co drinks also offered guidance on its 2008 earnings, which analysts said implied a range that was above current Wall Street estimates.

The company cited cost savings, growth in Europe and a tax benefit for its positive outlook.

Stifel Nicolaus analyst Mark Swartzberg said he expects those benefits, and a more fundamental turn, to make 2008 the company's first year of significant growth since 2003.

"We do not believe our '08 view is because we're starry-eyed about vitaminwater, cost-cutting, or new management," wrote Swartzberg in a research note. "Rather, we think it is a function of each of these items being a theoretically significant and, in fact, real component of positive structural change."

Swartzberg has a "buy" rating on the shares.

Coke Enterprises said it now expects 2007 earnings of $US1.36 ($NZ1.74) to $US1.39 per share, up from a prior forecast for $US1.31 to $US1.36 per share.

The company also said 2008 earnings would be in line with its long-term target of high-single-digit percentage growth, which Morgan Stanley analyst William Pecoriello said implied a range of $US1.47 to $US1.52 per share.

Analysts, on average, had been expecting $US1.34 per share for 2007 and $US1.47 per share for 2008.

The company said 2007 results would include $US125 million in restructuring expenses, and an additional $US175 million in restructuring costs would be recorded in 2008 and 2009.

Coke Enterprises, which began distributing Glaceau products in the United States in November following Coca-Cola's acquisition of the successful start-up, also said it is talking with Coke, its largest shareholder, about bringing vitaminwater to Europe.

"I think you could logically think about Great Britain as being the first market that we would look at to make (Glaceau) work in Europe, said Steve Cahillane, president of the bottler's European group. "It will be one part of our Great Britain water strategy, which clearly needs addressing in 2008 and which we aim to address in 2008."

Chief executive John Brock also said top priorities included boosting North American sales of carbonated soft drinks and bottled teas, and expanding sales of noncarbonated drinks in Europe.

In North America, where many health-conscious consumers have been favouring bottled teas and water drinks instead of traditional soft drinks, the bottler estimated that sales volume will decline in a low-single-digit range this year.

In 2007, the bottler raised prices on some products in an effort to offset soaring costs for raw materials including corn for sweetener and aluminum for cans. As a result, it said pricing per case should rise in the mid-single-digit range this year, while costs per case are expected to grow in the high-single-digit range.

Next year will be the company's first full year distributing Glaceau and Fuze drinks, which Coca-Cola Co acquired this year, and Campbell Soup Co's V8 vegetable juices and other drinks, which the companies agreed to in June.

Since these products have higher selling prices than traditional soft drinks, Coca-Cola Enterprises said it will see a high single-digit increase in yearly revenue. But that benefit will be partially offset by additional investments aimed at boosting sales of carbonated drinks like Coca-Cola, Diet Coke and Coke Zero.

Coca-Cola Enterprises shares rose $US1.27 to $US25.85 on the New York Stock Exchange late on Wednesday afternoon.

Source: http://www.stuff.co.nz/stuff/4322895a6026.html