Cott Q2 Revenue Climbs With DS Services Integration Ahead Of Schedule

TORONTO -- Canadian beverage manufacturer Cott Corp., which entered the office coffee service segment last November with its acquisition of Atlanta-based DS Services, said plans to integrate the OCS and water delivery giant are ahead of schedule.

In its second-quarter financial report, Cott said its revenue climbed 49.4% to $710 million, compared with $475 million in last year's second quarter, as a result of the acquisition of DS Services and increased volumes in its traditional beverage business. Gross profit was $201 million, compared with $56 million, which resulted in gross profit as a percentage of revenue of 28.4%, compared with 11.8%.

DS Services revenue reportedly increased 4.2% to $240 million, due primarily to growth in home and office delivery of water, single-cup coffee demand and retail sales. This gain was offset by a declining energy surcharge as a result of lower diesel fuel prices and reduced sales in "traditional brew basket coffee."

Revenue on an adjusted basis increased 5.1%. Home and office delivery average returnable five- and three-gallon consumption increased 1.7%, which the company attributed primarily to improvements in overall service levels and a continued focus on attracting new customers.

Cott said the DS Services integration is ahead of plan, with $1 million of cost synergies realized during the first quarter. Synergy targets are being increased from $25 million to $30 million over the first three years with approximately $10 million of this benefit expected to be realized in year one. In addition, DS Services recently launched a new line of Cott-manufactured Sparkletts sparkling water to residential and office customers and retailers.

Cott's 2Q consolidated statements of operations is available here.