Coca-Cola Enterprises Inc. on Thursday reported higher-than-expected quarterly profit, citing cost controls, price increases in North America and the European launch of Coke Zero, and the bottler raised its full-year outlook.

The largest bottler of Coca-Cola Co drinks has been squeezed by high raw material costs and falling U.S. soft-drink demand in the United States, its largest market.

Second-quarter net income fell 20 percent to $270 million, or 56 cents per share, from $339 million, or 71 cents per share, a year earlier, when a tax benefit boosted results. Excluding restructuring charges and other items, profit was 58 cents per share. Analysts on average were expecting 55 cents, according to Reuters Estimates.

The Atlanta-based company, which also sells Coke products in Belgium, France, Britain and the Netherlands, said the weak dollar added 2 cents per share to earnings.

Coke Enterprises, which bottles, sells and distributes more than three-quarters of the Coke drinks sold in North America, said it now expected to earn $1.27 to $1.32 per share for the full year. That's above the analysts' average estimate of $1.24 per share, according to Reuters Estimates.

The company, which is about 36 percent owned by Coca-Cola Co., had previously forecast that 2007 earnings would be 5 percent to 10 percent lower than the $1.30 it earned last year. That forecast implied earnings of $1.17 to $1.24, according to Morgan Stanley analyst William Pecoriello.

Given that consensus is too low on 2007 and we are significantly above (consensus) on 2008 due to savings and benefits of (recently-acquired) Glaceau, we expect a positive reaction with the shares, Pecoriello said in a research note.

Coke Enterprises shares were up 7 cents at $23.65 in morning New York Stock Exchange trade.

NORTH AMERICA VOLUME STILL WEAK

Quarterly net operating revenue rose nearly 4 percent to $5.67 billion, as price increases in North America helped offset volume declines.

Sales by volume, a closely watched industry metric, fell 3 percent in North America, where consumers are moving from soft drinks toward bottled water, teas and energy drinks, which they perceive to have functional or health benefits.

Volume of carbonated soft drinks fell 4.5 percent in the United States, while noncarbonated drinks -- including Powerade sports drink, Dasani bottled water and Minute Maid orange juice

-- rose in the mid-single-digit range. -- rose in the mid-single-digit range.

Price increases and cost cuts helped offset the impact of sharply higher costs for aluminum in cans and high-fructose corn syrup used for sweetener, the company said.

European volume rose 2 percent, helped by strong sales of Coca-Cola Zero, a new no-calorie cola that Coke has called the best brand launch in decades.

As of Wednesday, shares of Coca-Cola Enterprises were trading at 19 times full-year earnings estimates, a premium to Pepsi Bottling Group Inc., the largest bottler of PepsiCo Inc. drinks, which had a price-to-earnings multiple of 17, according to Reuters Data.

(Reporting by Martinne Geller)