* Q2 adj EPS $0.79 tops Street view of $0.69
* Revenue slips 0.5 pct to $5.88 bln
* Sees '10 EPS $1.73-$1.77; Street view was $1.72/shr
* Shares up .7 pct
(Recasts with comments from company, analysts)
By Martinne Geller
NEW YORK, July 28 Coca-Cola Enterprises Inc
CCE.N reported higher-than-expected quarterly profit and
raised its 2010 forecast, but the forecast implied weakening
North American profits and muted investor enthusiasm.
Shares of the largest bottler of Coca-Cola Co (KO.N) drinks
were up nearly 1 percent in midday trade.
The bottler forecast North American revenue to be flat to
down at a low single-digit rate and operating income to be up
at a mid single-digit rate for the full year. Analysts on a
conference call said that forecast implied declining profits
for the back half of the year.
Steve Cahillane, who runs the company's North American
business, acknowledged that the forecast was cautious.
He told analysts on a conference call that the company
would give another business update following the key summer
"We'll be less cautious, I would imagine, as we come out of
Labor Day than we are today," Cahillane said.
Coca-Cola Enterprises buys soft drink concentrate from
Coca-Cola and mixes, bottles and distributes drinks. It is in
the process of having its North American operations acquired by
Coke, its largest supplier and shareholder.
The bottler said the deal was on track to close in the
fourth quarter, after which it will operate solely in Europe,
in countries such as France, Great Britain and the
The company also expects to buy back about $1 billion in
shares in the 18 months following the deal's closing. Stifel
Nicolaus analyst Mark Swartzberg said that contributed to "an
attractive risk/reward" profile for company shares.
PepsiCo Inc (PEP.N) already bought its largest bottlers in
a bid to cut costs and have more control over distribution in
North America, where an explosion of beverage varieties has
made distributing drinks more complex.
PROFIT, OUTLOOK TOP STREET ESTIMATES
Net income rose to $356 million, or 69 cents per share, in
the second quarter, from $313 million, or 64 cents per share, a
Excluding restructuring costs and other items, the company
earned 79 cents per share, topping analysts' average estimate
of 69 cents per share, according to Thomson Reuters I/B/E/S.
Net operating revenue slipped 0.5 percent to $5.88 billion,
missing analysts' estimates, as the weaker euro reduced the
value of sales from Europe when translated into dollars.
Excluding the impact of currency, revenue rose 1 percent.
Coke Enterprises said quarterly sales volume rose 0.5
percent in North America, with an increase of 1.5 percent for
its trademark Coca-Cola, Diet Coke and Coca-Cola Zero drinks.
In addition to modest volume growth, the company cited
improving pricing trends and lower cost of goods in North
Volume rose 5.5 percent in Europe, with a 3.5 percent
increase in its trademark brands and a 15 percent gain for
noncarbonated drinks, driven by expanded distribution of the
Capri Sun brand and the addition of the Ocean Spray brand.
The company said it expects 2010 earnings of $1.73 to $1.77
per share, including a hit of 6 cents per share due to foreign
exchange rates. Excluding currency, earnings should range from
$1.79 to $1.83 per share, above the $1.76 to $1.79 per share
range implied by its earlier forecast.
In June, the bottler forecast currency-neutral growth of 10
percent to 12 percent off the $1.60 it earned in 2009. At that
time, it also said foreign exchange would shave off about 10
cents per share from its full-year results.
Analysts on average were expecting $1.72 per share.
Coke Enterprises said it expects 2010 operating income to
grow in a range of 10 percent to 12 percent, with high
single-digit growth in Europe. It expects revenue to grow at a
low single-digit rate, with mid single-digit growth in Europe.
Coca-Cola Enterprises' shares were up 20 cents, or .7
percent, at $28.68 in early afternoon trade on the New York
(Reporting by Martinne Geller, editing by Dave Zimmerman and