(Adds details, analyst, CFO comment.)
By Alkman Granitsas
Of DOW JONES NEWSWIRES
ATHENS -(Dow Jones)- Coca-Cola Hellenic Bottling SA (CCH), the world's second-largest bottler of Coca-Cola products, reported Thursday a 3% drop in net profit, as cost cuts failed to offset lower revenues, and warned of more tough months ahead.
"We expect the economic environment in (our developing and emerging market) segments to continue to remain highly challenging for the balance of this year and into next year, and we continue to believe the timing of the recovery will lag that of our established markets," said Chief Executive Officer Doros Constantinou.
Net profit for the three-month period ending Oct. 2 fell to EUR206.1 million from EUR213 million in the same period a year ago. Revenue fell 9% to EUR1.88 billion from EUR2.07 billion.
Operating earnings, measured by earnings before interest, taxes, depreciation and amortization, were also lower, down 2% at EUR374.7 million. The volume of unit cases sold was down 4% at 583.6 million.
The net profit figures for the third quarter - traditionally the most significant quarter for the bottler - were in line with analyst expectations, but the revenue was below estimates.
"The results were weak regarding volumes and the top line, but as expected at the Ebitda margin and bottom line level," said Nikos Katsenos, an analyst at Alpha Finance who has an outperform rating and EUR19 target on the stock.
"That's due to the company's cost-cutting program and the lower cost environment for raw materials."
At 0834 GMT, Coca-Cola Hellenic shares were unchanged at EUR17.49.
CCH - which has operations in 28 countries, mainly in eastern Europe - has been hit hard by the economic crisis in those countries as a result of lower consumer spending and adverse foreign exchange movements.
The company does not break down its sales by countries, but revenues from emerging markets, which includes the large Russian market that alone makes up some 15% of group volumes, were down 21% to EUR709.7 million.
At the same time, the company has also seen key third quarter sales in its more developed Mediterranean markets, such as Italy, Greece and Cyprus, suffer as a result of a weak travel and tourism market this summer.
The company said sales in its developed markets, which also include Ireland, Switzerland and Austria, were up 9% to EUR814.5 million. But that was mainly due to the EUR270 million acquisition of Socib SpA, Italy's second-largest Coca-Cola bottler, in the second half of last year.
CCH has targeted EUR120 million in cost savings this year in an effort to offset the sales slump stemming from the economic crisis.
In an interview with Dow Jones Newswires, Chief Financial Officer Robert Murray said the company will be stepping up its efforts to cut costs.
"We are on target to achieve our goal of EUR120 million cost savings for this year and we have captured the majority of those cost savings in the first nine months," he said. "But we are not resting there, we are working on further cost cutting for next year."
Company Web Site: www.coca-colahellenic.com
-By Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881; alkman.granitsas@dowjones.com