Coca-Cola's profit rises despite sluggish growth in face of bumpy global economy

NEW YORK, N.Y. – Coca-Cola reported a higher quarterly profit as the world’s biggest beverage maker managed to sell more of its drinks despite choppy economic conditions.

The maker of Sprite, Powerade and Vitaminwater said global sales volume edged up 2 per cent for its third quarter, helped by its performance in countries such as China, India and Russia.

Still, the company conceded that it was facing an economic slowdown in many parts of the world including Mexico, where the government is also considering a tax on sugary soft drinks.

In a conference call with analysts, CEO Muhtar Kent pushed back at the suggestion that the company’s days of growth were coming to an end. He noted that the company is emphasizing affordability and smaller packages to “keep the drinkers base growing” in developing markets.

That strategy is critical for “when economies also start turning up and when disposable incomes start heading north,” he said.

Kent also shot down the prospect of the tax in Mexico, saying that such measures don’t work and that he didn’t want to discuss the matter any further because “the discussions under progress.”

“We’ve made our case to the government,” he said. The company stood by its goal to double system-wide sales by 2020, from 2009.

Back in the U.S., where soda has been under fire as well for fueling obesity rates, the Atlanta-based company rolled out smaller cans and bottles of soda that are more profitable and better suit the reduced portions people are seeking. Coca-Cola is also focusing on other drinks, such as flavoured water, as Americans continue to cut back on soda.

In North America, for instance, soda volume was flat for the period, following a 4 per cent decline in the previous quarter and flat growth a year ago. But uncarbonated drinks such as tea, juice and bottled water rose 5 per cent. That lifted overall volume for the region by 2 per cent.

Meanwhile, soda sales are faring much better in developing markets. The company said its namesake brand saw volume growth of 22 per cent in India. In China, soda volume rose 8 per cent.

The company blamed volatile economic conditions for more disappointing results in other parts of the world. In Europe, volume fell 1 per cent. Coca-Cola also cited hurricanes for a 2 per cent volume decline in Mexico.

For the quarter, the company said it earned $2.45 billion, or 54 cents per share, up from $2.31 billion, or 50 cents per share, a year ago.

Not including one-time items, earnings per share were 53 cents, which was in line with Wall Street expectations.

Revenue fell 3 per cent to $12.03, hurt by structural changes and unfavourable currency exchange rates. Analysts had expected $12.05 billion, according to FactSet.

The results for the quarter were boosted by a gain related to a bottling transaction in Brazil.

Shares of Coca-Cola Co. rose 1.6 per cent at $38.51. Over the past year, the stock is down almost 1 per cent.


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