It's Election Day, and what could be more American than a cold bottle of Coca-Cola
As Alyce Lomax recently reported, PepsiCo's
The name of the game in bottling is free cash flow. As fellow Fool Steven Mallas recently reported, the lowered 2004 earnings guidance did not change the company's projected $700 million in free cash flow. To do that, though, the company would cut capital spending.
Cutting capital spending makes sense when case bottle and can volume fell 6% in the third quarter. Why build capacity to meet shrinking demand? On the other hand, there is still a need to invest in productivity improvements to keep costs under control.
While a bottle of Coke is certainly an American icon, volume was down 4% in North America in the latest quarter -- and down a jaw-dropping 12% in Europe. Coke is certainly losing its fizz.
Those sipping Coke at the local McDonald's
The only good news is on the balance sheet. Cash increased, and net debt fell $587 million. But, for a company with a net debt of almost $11 billion, those balance sheet improvements are hardly heartening given the falling sales volumes.
As you would expect, Coca-Cola Enterprises sells for a price to earnings ratio below its peers, which includes Cadbury Schweppes
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Fool contributor W.D. Crotty owns stock in PepsiCo and McDonald's.