TORONTO - Soft drink bottler Cott Corp (TSX:BCB; NYSE:COT) reports its net profits fell by nearly half in the latest quarter due to tax-related adjustments on its balance sheet.

The Toronto company said Wednesday it earned US$12 million or 14 cents a share in the first quarter, down from net profits of $20 million or 28 cents last year.

Revenues fell 1.1 per cent to $363 million, mainly because of currency exchange effects.

The company, which reports in U.S. dollars, said the net earnings decline reflected an income tax expense of $4 million in the first quarter, reversing an income tax benefit of $6 million a year ago.

However, operating results were better, rising to $25 million from $22 million, while expenses fell.

"I am pleased with another quarter of improvement in operating income which benefited from strong performances from the UK and Royal Crown International," said CEO Jerry Fowden.

"In what we had previously communicated would be a challenging quarter for volume comparisons, lower North America volumes were more than offset by strong contributions from our other operating segments and lower overhead expenses. Our North America volume comparisons become easier as the year progresses, and we were pleased to see a stronger North America volume performance in April."

Cott supplies private branded soft drinks to major retailers. Last year it lost the its exclusive deal with Walmart (NYSE:SMT) to be the supplier of store-brand pop to the world's biggest retailer.

The company said at the time that it would wind down the exclusivity deal over three years, and that it represented nearly 40 per cent of its overall business.

However, the company still supplies numerous other retail giants including Loblaw (TSX:L), Costco (NYSE:COST), Metro Inc. (TSX:MRU.A) and convenience chain 7-Eleven Inc.

At Cott's annual meeting Tuesday, Fowden said the company is sticking to what has worked best over the past year: nurturing relationships with the retailers who stock its store-branded drinks on their shelves.

He told investors that Cott spent much of last year reining in expenses, and ensuring the supermarkets, convenience stores and news stands that carry its product were happy.

The plan worked and so the world's third-largest soft drink provider, plans to keep pushing it forward.

"We will remain focused on further strengthening our customer relationships (and) on additional operating cost reductions," he told the meeting.

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