High commodity costs hinder Cott income
May 4, 2011
by Eric Schroeder
TORONTO — Higher commodity costs weighed on earnings at Cott Corp. during the first quarter. Net income in the period ended April 2 was $6.8 million, equal to 7c per share on the common stock, down 41% from $11.5 million, or 14c per share, in the same period a year ago. Excluding Cliffstar integration expenses and purchase accounting adjustments, adjusted net income in the first quarter was $8.3 million, which compared with income of $11.1 million in the same period a year ago.
Net sales, meanwhile, rose 47% to $534.1 million from $362.9 million. The increase included a contribution of $166 million related to the Cliffstar business.
“Our first-quarter results included the impact of substantially higher commodity costs without the full benefit of higher 2011 prices, which were only in place for part of the quarter,” said Jerry Fowden, chief executive officer. “This pricing lag eroded our gross margins, particularly in the U.S. While commodity inflation will remain a headwind, we remain committed to doing all we can to mitigate these increases as we continue to work to successfully integrate Cliffstar and drive cash generation alongside debt reduction.”
Operating income in North America totaled $20.8 million in the first quarter, down slightly from $20.9 million in the same period of fiscal 2010. Revenues were $428.8 million, up sharply from $263.2 million. Excluding Cliffstar, revenues declined 1%.
“Slightly higher soft drink volumes were primarily attributable to stable levels of national brand promotions during the quarter,” Cott said.