Coca-Cola profit flat; global volume rises
Source: | Filed in
Food & Beverage | 
Subscribe to Savvy Investor via RSS
10/20/09By William Spain & Andria Cheng
CHICAGO (MarketWatch) – Coca-Cola’s third-quarter profit was pretty much flat as volume growth in emerging markets like India to China helped overcome declines in North America and Europe, the beverage behemoth said Tuesday.
Coke (KO 53.67, -1.13, -2.05%) earned $1.896 billion, or 81 cents a share, on the period vs. $1.89 billion, or 81 cents a share, on the same quarter a year ago. Excluding a 1-cent restructuring charge, the Atlanta-based company would have earned 82 cents a share.
Revenue fell 4% to $8.04 billion from $8.39 billion.
The average estimate of analysts polled by FactSet Research had been for the company to earn 81 cents a share on sales of $8.09 billion, according to FactSet.
Unit case volume — the measure of all the company’s drinks sold worldwide — rose 2%, including a 4% increase overseas. The volume jumped 37% in India, 15% in China and 3% in Brazil. But North America was down 4% and Europe fell 2%.
“We continue to grow our currency neutral revenues, gain global nonalcoholic ready-to-drink volume and value share, expand our margins and invest in our business, all while generating tremendous cash flow,” said Muhtar Kent, chief executive, in the earnings report.
He added that the company expects “the consumer to continue facing economic uncertainties into 2010 and for consumer sentiment to recover slowly.”
Shares of Coca-Cola were down just over 2% at $53.51 in early trading.
Earlier this month, the stock was upgraded to buy from hold by Deutsche Bank, which cited “solid” volume growth, along with “better currency and commodity outlook, stable volumes and improved domestic bottler relations.”
That followed an initiation at a buy rating from Citi, where analyst Wendy Nicholson wrote that the company “had lost its way but now it’s found,” citing new management and strategies. In addition, she noted that the company is benefiting from a “now very healthy relationship with its independent bottler network.”
Finally, looking farther out, she said that with 75% of its profits coming from overseas operations, “and with the U.S. dollar weakening, we think Coca-Cola will show markedly better EPS growth in 2010, leading its valuation multiple to expand.”
