Coca-Cola's profits rise, but shares dip
Coca-Cola Co. reported increases in worldwide sales and profits in the first quarter of 2010. But uneven performance across its global regions -- including another volume decline in North America -- depressed its shares.
The company Tuesday said revenue rose 5 percent to $7.52 billion in the three-month period, and profits jumped 20 percent to $1.61 billion. The company earned 69 cents per share, up from 58 cents in the same period a year ago.
Coca-Cola's worldwide sales volume, as measured in cases, grew 3 percent. International volume growth in Africa, Latin America and the Pacific region compensated for the decline in North America, where sales volume fell 2 percent and revenue dropped 6 percent.
"We consider the results . . . disappointing," said Stifel Nicolaus analyst Mark Swartzberg.
Coca-Cola shares fell about 1.5 percent in trading on the New York Stock Exchange. Analysts noted that the company's revenue growth was on the low end of expectations, as did its trends in Latin America.
"The revenue side was maybe a little bit light," said Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas. "The investor is probably being held back because Coke is not hitting on all cylinders. It's like pulling teeth, trying to get this stock to move."
Coke shares are up about 23 percent over the past 12 months, but down about 4.5 percent in 2010.
China, Coca-Cola's biggest growth market, grew by 6 percent in volume, compared to double-digit growth in previous quarters.
"We are just getting started in China and remain resolute in our commitment," said Coca-Cola CEO Muhtar Kent. "We would be disappointed if we did not achieve double-digit growth in China on an annual basis going forward."
Kent said the company is pursuing growth in a wide range of markets, from China and Germany to India and Brazil. The company says its brand scores improved in the most recent quarter, its operations churned out $1.3 billion in cash -- up more than 50 percent -- and that it is on pace to squeeze $500 million in savings out of its operations by the end of 2011.
But fixing North America remains a top priority.
"We are competing and winning around the world," Kent said on a conference call with analysts and investors. "Growing here (in North America) is not optional. It is essential to the health and future of our entire global system. North America is at the heart of many of these trends."
