Coke profits rise slightly

By Joe Guy Collier

For the AJC

Coca-Cola Co. posted Tuesday slight gains in volume and profits for the third quarter but said it was difficult to predict when consumer spending would fully rebound.

Coca-Cola Chairman and CEO Muhtar Kent said he would be disappointed if the company does not show improvement in the fourth quarter.

The marketplace, though, will remain challenging, Kent said. While the overall economy is showing some positive signs, consumer behavior often lags in a recovery, he said.

“Consumers haven’t yet felt the improvement in terms of their psyche and mindset,” Kent said.

Atlanta-based Coca-Cola, the world’s largest beverage firm, has fared well during the recession. Its global reach and affordable consumer products have helped sustain growth.

Coca-Cola reported Tuesday net income of $1.896 billion in the quarter ending on October 2. It made $1.89 billion in the same quarter last year.

The company had earnings per share of 82 cents, excluding one-time items. That beat expectations of 81 cents a share, according to a survey of analysts by Thomson Reuters.

Revenues fell 4 percent to $8 billion primarily because of unfavorable exchange rates for foreign currency.

Coke's overseas results are diminished when the dollar strengthens. A weakening dollar is expected to help results in the fourth quarter.

In a note to investors, Stifel Nicolaus beverage analyst Mark Swartzberg said Coca-Cola's results were "light versus expectations" but profit growth, excluding the impact of currency, met or exceeded expectations. Stifel Nicolaus has a "buy" rating on Coca-Cola and PepsiCo.

Coca-Cola’s sales volume, measured in cases, rose 2 percent in the third quarter. Carbonated soft drink sales rose 1 percent while sales volume for still beverages, which includes juices, teas and waters, grew 7 percent.

Sales volume rose significantly in China, India and Mexico. China benefited from double-digit growth in the Sprite and Minute Maid brands.

Sales volume was down in North America, Europe, Japan and Russia, areas hard hit by the recession.

In North America, where sales volume was down 4 percent, Coca-Cola said it faced aggressive pricing from competitors and a difficult economy. A shift in the July 4th holiday from the third to second quarter of this year also affected results.

Coca-Cola has introduced new product packages and increased marketing to reach consumers, Kent said. The company is rolling out a 2-liter bottle that uses Coke's iconic contour shape and will launch later this year a 9o-calorie mini can. Working with its bottlers, Coca-Cola also has put a greater emphasis on in-store marketing.

"We believe these strategies represent value-creating ways to engage and win consumers within the four walls of our customers' outlets," Kent said.

Coca-Cola Third-quarter Highlights

Net income rose less than 1 percent to $1.896 billion and revenues fell 4 percent to $8 billion. Excluding the impact of currency translations revenues would have risen.

Unit case volume rose in every region except Europe, down 2 percent, and North America, down 4 percent. Latin America posted the largest increase at 7 percent.

Carbonated soft-drinks rose 1 percent in case volume. Still beverages, such as juices, teas and waters, rose 7 percent.