TORONTO - Cott Corp. earned a second-quarter profit of $25 million in its latest quarter, down from $27 million a year ago, as the beverage maker reported lower sales volume and revenue.
The company (TSX:BCB), which keeps its books in U.S. dollars, said the profit amounted to 26 cents per share, down from 28 cents per share a year ago.
Revenue totalled $626 million, down from $640 million.
The average analyst estimate had been for a profit of 25 cents per share on $612 million in revenue, according to estimates compiled by Thomson Reuters.
Despite the drop in revenue and profits, Cott chief executive Jerry Fowden said the company improved its gross margins, a key priority.
"Lower volume and revenue reflected a combination of this previously communicated shift in prioritizing margin restoration versus volume and revenue growth as well as poor weather in the UK," Fowden said.
"Overall, I believe we had another solid quarter as we continue to improve the business and margin mix."
Gross profit as a percentage of revenue was 14.7 per cent for the quarter compared with 12.1 per cent in the first quarter of 2012 and 13.8 per cent in the second quarter of 2011.
During the quarter, Cott sold 240 million cases compared with 264 million cases a year ago due to its move to get out of the case pack water business and other low gross margin business in North America as well as poor weather in Britain.
Stifel Nicolaus analyst Mark Swartzberg called the report positive for the company.
"Margins are being restored, and volumes are likely to improve in (the second half of the year) due to laps in a consumer environment that favours continued private label category health, in our opinion," Swartzberg wrote in a note to clients.
Swartzberg noted that higher corn prices could raise sweetener costs for Cott, but expected the company to find savings as its aluminum hedges come off and prices for plastic falls.
"We reiterate our $10 target price and buy recommendation on an improving balance sheet," he said.
Cott is the world's largest distributor of store-brand beverages, with about 4,000 employees and soft drink, juice, water and other beverage bottling plants in the United States, Canada, the United Kingdom and Mexico.
Shares in the company closed up eight cents at C$8.58 on the Toronto Stock Exchange on Friday.
