Coca-Cola Co. and bottler forecast long-term growth

By Jeremiah McWilliams

The Atlanta Journal-Constitution

The chief financial officer of Coca-Cola Co. warned of a fragile economic recovery in the U.S. and Western Europe but boasted that the Atlanta company is gaining market share versus arch rival PepsiCo.

"We're cautiously optimistic on North America and Western Europe," Gary Fayard told analysts Wednesday at a Boston conference organized by Barclays Capital.

Meanwhile, the chief executive of Coca-Cola Enterprises said the bottler's "proven track record of solid operating performance" in Europe allowed it to raise its long-term forecast.

CCE plans to sell its North American business to Coca-Cola Co. this year, pending the approval of shareholders and antitrust authorities in the U.S. and Canada. As a Europe-focused company, CCE expects its revenue to grow by 4-6 percent and earnings per share to rise by high single-digit percentages.

This week, CCE raised its earnings projections for 2010 and instituted more aggressive long-term targets. The company now expects to earn between $1.78 and $1.82 per share this year, compared to a range of $1.73-$1.77 previously. The company expects to repurchase about $1 billion of its shares within the following 18 months and to pay an annual dividend of 50 cents per share.

Meanwhile, Fayard said Coca-Cola's Russian business is coming back strong, with Latin America continuing growth rates that made it the darling of the company over the past few years. Coca-Cola expects emerging markets to become a larger percentage of its business in coming years. The company's sales volume is up 4 percent this year, with revenue up 3 percent.

One blemish: Coca-Cola's business stumbled in China this year, with growth slipping. "We were a little disappointed in China," Fayard said. "We'd be very disappointed if we didn't see China back to double-digit growth by the end of the year."

Fayard said demographics will help Coca-Cola in the next decade. By 2020, the U.S. will add 31 million people to its population and the country will boast the third-highest number of teenagers, behind India and China, he said.