UPDATE 3-Russia, cuts lift Coke bottler CCH, offset austerity

Wed Oct 27, 2010 11:10am EDT

* Q3 comparable net profit rises to 216 million euros

* Strong volume in Russia, cost savings help

* Shares close down 1.55 pct

(Adds closing share price, analyst comment)

By Angeliki Koutantou

ATHENS, Oct 27 (Reuters) - Greek Coke bottler Coca-Cola Hellenic (CCH) HLBr.AT eked out a modest rise in quarterly profit, driven by a sharp rebound in Russia and cost cuts that offset the impact of austerity measures in several countries.

CCH, the world's second-largest bottler of Coca-Cola (KO.N), has been cutting costs since late 2008 to deal with the impact of the credit crisis and shaky economies, which have crimped product demand.

The cuts appeared to be bearing fruit on Wednesday as the bottler posted a 3-percent increase in comparable net profit to 216 million euros ($301.4 million) from 210.2 million in the same period last year.

The profit was slightly below an average forecast of 219.6 million euros in a Reuters poll, but within the estimate range.

Its shares closed the session down 1.55 percent.

"Tough economic conditions negatively affected the company's product mix and its pricing," said National Securities analyst Iakovos Kourtesis. "This creates some concern over 2011 sales revenue."

CCH reiterated it expected this year's cost cuts to boost 2010 operating profit by about 6 million euros, on top of around 30 million euros saved by other measures taken in 2009. It is eyeing additional cost-reduction benefits of 20-25 million euros a year going forward but declined to provide profit guidance.

"Looking forward, we remain cautious with regards to macroeconomic developments across our geographies and expect the timing and degree of recovery to vary across our markets," CCH Managing Director Doros Constantinou told Reuters.

A 30-percent sales volume rise in Russia thanks to an exceptionally hot summer and economic recovery there more than offset tough conditions in austerity-hit countries such as Greece, Hungary, Bulgaria and Romania, the company said.

Sales volume rose 5 percent year on year to 611 million unit cases, more than expected, after four quarters of decline. Foreign exchange gains also supported profit and CCH said it expected a total benefit of 65 million euros for the full year.

CCH bottles and distributes Coke, Sprite and Fanta in 27 countries in Europe and in Nigeria. It trades at 15.8 times its estimated 2010 earnings versus a multiple of 13.7 for Coca-Cola Enterprises (CCE.N), the world's largest Coke bottler, according to data from Thomson Reuters I/B/E/S.

The firm will wait for the Greek government to complete a review of corporate taxation by the end of November before deciding if it will pay a dividend, Constantinou said. CCH has paid dividends for the past nine years.

Greece is implementing a multi-billion-euro plan to slash its debt and budget deficit, including a windfall tax on large companies' profits and a 40 percent tax on dividends. [ID:nLDE67I108] [ID:nLDE67519A]

(Editing by David Hulmes)

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