TORONTO – Beverage maker Cott Corp. (TSX:BCB) says it expects the prices for materials used in its drinks and packaging to increase next year at the slowest pace since 2010.
The Toronto-based company, which announced a dividend and reported its third quarter earnings on Thursday, has faced higher expenses as costs rise for key ingredients like sugar, corn syrup and the aluminum used to make its cans.
But chief executive Jerry Fowden said some of those pressures will likely ease at Cott, which is the world’s largest distributor of store-brand beverages.
“We see overall commodity costs increases for 2013 in the low single-digit range,” he told analysts on a conference call.
That compares to what Cott expects will be an overall commodity inflation of about four to six per cent for 2012.
The company said it has recently completed negotiations to offset some of the higher costs of corn, but said that the price of both cranberry and grapes will likely climb due to bad weather conditions for the crops.
Cott has already its raised prices this year in an attempt to keep expenses down.
Also on Thursday, Cott instituted a new quarterly dividend of six cents per share payable Dec. 20 to shareholders of record at the close of business on Dec. 4.
The new payment came despite a drop in revenues and profits.
Cott says it earned net income attributable to shareholders of US$14.5 million or 15 cents per share, down from $16.2 million or 17 cents per share in the same period last year.
Revenue weakened to $584 million from $611 million in the three months ended Sept. 29.
However, gross profit as a percentage of revenue increased 140 basis points to 12.5 per cent from 11.1 per cent and EBITDA increased six per cent to $55 million from $52 million.
EBITDA, or earnings before income tax, depreciation and amortization is a non-standard accounting term that many firms believe gives a better picture of a company’s position that simple statements of revenue and profit.
Cott said the company’s exit from low-margin businesses was a factor in volume declines in both North America and the United Kingdom.
Volume in Mexico dropped by a third to six million cases primarily due to the loss of a regional brand licence, partially offset by increased contract manufacturing volume.
Revenue from RCI concentrate increased 55 per cent to $9 million due primarily to increased volume from a new customer in South America and the timing of shipments to a customer in Asia.
Cott has about 4,000 employees and soft drink, juice, water and other beverage bottling plants in the United States, Canada, the United Kingdom and Mexico.