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The losses of Canada’s Cott Corp, the world’s largest producer of retailer brand non-alcoholic beverages, widened over 2007 as the company struggled with high commodity costs and declining soft drink sales in North America.
Cott’s volume in the last quarter of the year rose 13.1% to 302 million 8oz (237ml) equivalent cases, with 41.1% international growth including concentrate sales, partially offset by a 4.8% decline in North America. Excluding concentrate sales, global volume decreased 2.6%.
Q4 revenue was 3.1% up at US$412.4 million, primarily due to 18% growth in the UK and other international markets, while North American revenue declined 2.5%. Excluding currency effects, however, overall sales were flat.
Cott’s bottom line was hit not only by higher costs but by impairment charges of $65.5 million. The company closed the fourth quarter of 2007 with a net loss of $76.8 million or $1.07 per share, against a loss of $29.6 million or $0.41 per share in the same period of 2006.
Over the full 12 months of 2007, Cott’s global volume grew 3% to 1.27 billion cases, but revenue was virtually flat at $1.77 billion. The company’s net loss for the year widened to $73.1 million or $1.02 per share, from a loss of $17.5 million or $0.24 in 2006.
The company viewpoint “In 2007, we were impacted by an extreme commodity environment, CSD decline in North America, higher competitive promotional activities, and various internal challenges that prevented us from achieving our objectives,” said Cott Chief Executive, Brent Willis.
“This very difficult year is now behind us, and most importantly, in 2007 we took essential steps to remake the company in various areas such as people, structure, process changes, product manufacturing capability, pricing and cost management. We expect these initiatives to significantly improve our performance in 2008.”
Based in Toronto, Cott operates production plants in Canada, the US and the UK, and supplies beverages in more than 60 countries around the world.
As well as producing retailer and licensed brands, the company also produces its own growing portfolio of beverages under brands such as Cott, RC, Vintage, Vess, Stars & Stripes, Orient Emporium and Ben Shaws. Latest additions to the range include Fortifido vitamin-enhanced water for dogs.
Cott is trying to offset the North American decline in soft drinks by increasing its production of bottled water. The company has just concluded a $31.4 million lease financing agreement with GE Commercial Finance to install new PET blow moulding and water bottling equipment from Sidel. The new equipment will allow Cott to supply water in lighter, more environmentally friendly bottles.