Coca-Cola Profit Jumps 37 Percent
Thursday October 20, 2:59 pm ET
By Harry R. Weber, AP Business Writer
Coca-Cola Says Turnaround Working Amid 37 Percent Profit Jump
[Kendall, Do you still follow Coca-Cola? If so, what do you think? Regards, Shawn]
ATLANTA (AP) -- The Coca-Cola Co., which suffered in the past from uneven execution and an exodus of top-level officials, said Thursday its turnaround is working amid a 37 percent jump in third-quarter profit on strong sales in China and Japan. Weak spots were Germany and India.
The results reported by the world's largest beverage maker beat Wall Street expectations, prompting Coke's shares to rise and reaffirming analysts' confidence in the company's global strategy.
A significant increase in marketing spending in the fourth quarter "could further drive momentum leading into 2006," UBS analyst Caroline Levy said in a research note.
The company's chief executive, Neville Isdell, said in a conference call with investors that Coke's turnaround is on target, stoked in part by growth in non-carbonated drinks.
"We're on a journey," he said. "I am satisfied with our progress to date, and believe our 18- to 24-month turnaround is on track. But I'm also realistic, and I realize there may be some bumps in the road."
Strong international growth -- particularly double-digit growth in Africa -- shows that Coca-Cola is "the only truly global beverage company," Isdell said.
Yet, declines that continue in India, the Philippines and Germany were a concern.
"It's going to take time to get these markets to where we want them to be," Isdell said.
The company also said it is monitoring energy prices to determine the potential effect on future results.
Coca-Cola said it earned $1.28 billion, or 54 cents a share, for the three months ending Sept. 30, compared to a profit of $935 million, or 39 cents a share, for the same period a year ago.
Excluding one-time items, Coke said it earned $1.36 billion, or 57 cents a share, in the third quarter. On that basis, analysts surveyed by Thomson Financial were expecting earnings of 53 cents a share in the third quarter.
Revenue in the July-September period rose 8 percent to $6.04 billion, compared to revenue of $5.60 billion in the same period a year ago.
Overall, unit case volume increased 5 percent in the third quarter. The company said it saw strong sales of its water brands, but soft sales of carbonated soft drinks, which saw unit case volume slip 1 percent.
In North America, unit case volume grew 3 percent. Unit case volume declined 1 percent in Germany, but increased 4 percent in Japan. Coke's unit case volume was especially strong in China, where it grew 23 percent in the third quarter. It was weak in India, however, where it dropped 22 percent in the quarter due to raw material and distribution cost increases as well as the lingering effect of pesticide allegations, which Coke says are false.
Dominique Reiniche, president of Coca-Cola's European Union Group, said the company is working to address problems it has had in certain parts of Europe. She said multinational teams were forged to rapidly transfer knowledge between different European markets. Researchers in Italy and Central Europe have joined forces to launch healthy juices under the Minute Maid brand, she said.
For the first nine months of the year, Coca-Cola said it earned $4.01 billion, or $1.67 a share, compared to a profit of $3.65 billion, or $1.50 a share, for the same period a year ago. Nine-month revenue was $17.55 billion, a 6 percent increase compared to the $16.54 billion recorded a year ago.
Coke shares rose 45 cents, or 1.1 percent, to $42.25 in afternoon trading Thursday on the New York Stock Exchange.
Associated Press Writer Greg Bluestein in Atlanta contributed to this report.
The Coca-Cola Co.: coca-cola.com
biz.yahoo.com |
