Atlanta based Novelis Inc. has agreed to supply aluminum can sheeting in a multi-year deal signed with the Coca-Cola Bottlers’ Sales & Services Company LLC (CCBSS), which is a unit of The Coca-Cola Company (KO).
As per the deal, Novelis, which will act as the primary supplier to Coca-Cola, will supply aluminum can body stock, can end stock and can tab stock to the different producers of beverage cans for Coca-Cola in North America.
Though Novelis has not disclosed the financial terms of the deal, both the companies have decided to suspend their pending litigation which was filed in the Georgia State court system, relating to the previous contractual terms.
Further, the deal will enhance the growth of packaging recovery and re-use. In addition, Coca-Cola will be able to continue to bring the recycling and sustainability benefits of the aluminum can to drinkers of Coca-Cola products throughout North America.
Novelis is the global leader in aluminum rolled products and aluminum can recycling. It is also a subsidiary of India-based Hindalco Industries Ltd., Mumbai, whereas CCBSS supports Coca-Cola bottlers by providing supply chain functions, systems and strategies on behalf of the entire Coca-Cola System in North America.
Earlier, Coca-Cola reported strong operating earnings of $1.03 per share in third-quarter 2011 in October that came ahead of the Zacks Consensus Estimate by a penny, and rose 12% from the year-ago quarter. The results were encouraged by strong growth outside the U.S. and in emerging markets.
Furthermore, Coca-Cola’s acquisition of Coca-Cola Enterprises Inc.’s North American bottling operations not only led to its expansion, but also helped it reap benefits from the manufacturing and distribution efficiencies in the U.S.
Coca-Cola, which competes with PepsiCo Inc. (PEP), currently holds a Zacks #3 Rank, which translates into a short-term Hold rating. On a long-term basis, we maintain a Neutral rating on the stock.
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