Coca-Cola Chief Executive Officer Muhtar Kent said Tuesday that he expects price increases in commodities to moderate in 2012 compared with last year, but they may not have a balancing effect on the costs of the company's drinks over the next 11 months.
Pricing at Coke, he said, depends on what consumes will pay, not company costs. "It's the same philosophy that we have everywhere in the world," Kent said in a call after the company released its earnings Tuesday morning.
Coke saw sales volume in North America increase 1 percent in the fourth quarter of 2011 and 4 percent for the full year, but it came at a time when prices for consumers rose at least 1 percent and higher in some categories. Part of the increase was blamed on higher commodities prices -- specifically corn for sweeteners -- that jumped last year.
Despite rapid sales growth around the world, North America is still the company's largest market and is critical to Coke's future. After years of falling sales, the company regained momentum a few years ago -- North American sales have grown seven consecutive quarters -- and has a long-term goal of doubling global volume by 2020.
"I'm pleased that we have had many consecutive periods of growth in North America," Kent said. "Now people are able to see that we are able to sustainably grow."
Coca-Cola said overall sales improved in 2011 compared with last year, with international volume growth up 5 percent for the full year and North American sales increasing 1 percent.
The Atlanta-based company, however, saw net income fall in the fourth quarter of 2011, chiefly because it added the bottling operations from North America to its portfolio, resulting in a one-time gain of nearly $5 billion that inflated earnings last year.
Earnings for the fourth quarter of 2011, which ended Dec. 31, were $1.7 billion -- 72 cents per share. In 2010, the company had earnings of $5.8 billion in the quarter or $2.46 per share.
Operating revenue ros to $11.04 billion in the quarter and volume grew 3 percent.
For the year, earnings were down 27 percent to $8.6 billion or $3.69 per share in 2011 compared with $11.8 billion or $5.06 a share in 2010.
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