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Coca-Cola’s Profit Up As Sales Grow Worldwide

Tue, 10/16/2012 - 12:08pm
CANDICE CHOI,AP Food Industry Writer

NEW YORK (AP) — The Coca-Cola Co. has a formula for growth in the volatile economic climate: sell more of its drinks in emerging markets and evolve its stable of products at home, where concerns over sugary drinks are intensifying.

The world's biggest beverage maker, which makes Sprite, Fanta and Dasani water, said the strategy helped it sell more of its drinks in every region during the third quarter, with global sales volume up 4 percent. But the Atlanta-based company was nevertheless hit by unfavorable currency exchange rates as well as pressures to keep price hikes in check, particularly in economically hard-hit regions in Asia and Europe.

Total revenue rose just 1 percent as a result, which was shy of Wall Street expectations.

In its flagship North American market, Coca-Cola has been relying on a shifting mix of drinks in response to changing consumer tastes and criticism over the role sugary drinks play in fueling obesity rates.

The 2 percent increase in sales volume in the region was driven by what Coca-Cola refers to as its "still beverages," such as Powerade sports drinks and Fuze teas. Coke Zero, which was introduced in 2005 as a better-tasting alternative to traditional diet sodas, saw growth of 9 percent. But overall sales volume of its sodas in the region was flat from a year ago.

In Europe, volume rose 1 percent but revenue declined 8 percent because of unfavorable currency exchange rates and a less profitable mix of products.

Companies that do a lot of their business overseas are hurt when the dollar is strong because sales in other countries' currencies translate into fewer dollars back home.

As growth slows in developed markets, countries such as India have become a greater focus for Coca-Cola. During the quarter, sales volume in the country rose 15 percent with the Coca-Cola brand up 34 percent. Coca-Cola announced this summer that it would accelerate investment in the country over the next eight years.

Emerging markets such as India represent far greater growth potential for Coca-Cola. The company estimates that per capita consumption of its drinks in the country is 12 servings a year, compared with 403 servings a year in the United States.

CEO Muhtar Kent said that the results for the quarter show the company has been able to "crack the calculus for growth" even in the tough economy.

"We have done this by consistently investing in our system and our brands to ensure that our global portfolio is more relevant and healthier today than it has ever been," he said.

Coca-Cola said it earned $2.31 billion, or 50 cents per share, for the period. That compares with $2.22 billion, or 48 cents per share, in the year-ago quarter. Not including one-time items, the company says it earned 51 cents per share, in line with analyst expectations.

Revenue rose 1 percent to $12.34 billion, but fell shy of Wall Street expectations of $12.4 billion. Not including the impact of currency exchange rates, revenue rose 6 percent.

Shares of Coca-Cola were up 7 cents at $38.20 in pre-market trading.

 

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