People are drinking more Coca-Cola despite costs and a slow economy

Updated: Wednesday October 16, 2013 MYT 7:30:30 AM

People are drinking more Coca-Cola despite costs and a slow economy

NEW YORK: Coca-Cola Co on Tuesday reported quarterly earnings that met Wall Street’s expectations as it sold more of its namesake soft drinks, as well as teas and waters, despite a challenging economy. Morningstar analyst Tom Mullarkey said he was encouraged by Coke’s global volume growth, which reached 2 percent overall, as well as the popularity of the Coca-Cola brand in North America.Although net revenue fell in the third quarter, “excluding currency and structural changes, they had both revenue growth and operating income growth… and that looks pretty good,” Mullarkey said.

The Coke brand delivered a record 181 billion servings in the quarter, Chief Executive Officer Muhtar Kent said during the company’s conference call. He added that Coke was reaching younger consumers and that teens preferred it s other drinks by a 2-1 margin.

Net income rose 6 percent to $2.45 billion, or 54 cents per share, in the third quarter from $2.31 billion, or 50 cents per share, a year earlier.

Excluding special items, earnings were 53 cents per share, in line with what analysts expected, according to Thomson Reuters I/B/E/S.

Revenue fell 3 percent to $12.03 billion from $12.34 billion, slightly below analysts’ estimates of $12.05 billion. The decline was largely due to the costs of restructuring bottling operations in Brazil and thePhilippines.

Shares of Coke were down 0.1 percent at $37.87 in early trading.

The world’s largest soft-drink maker generates almost 60 percent of its revenue from international markets and relies on sodas for almost 70 percent of its global sales.

In North America, sales volume increased 2 percent, largely because of the strong performance of Coke’s non-soda offerings. Still-drink and bottled water sales rose 5 percent, and teas, which include Honest Tea and Fuze, had double-digit percentage growth. Sales of Coke’s five largest soft drinks, which include its namesake brand, Sprite and Fanta, grew by 2 percent, even though Americans are drinking less soda overall.

In Eurasia and Africa, volume increased 4 percent. In the Pacific region, it rose 5 percent, led by growth of 21 percent in Vietnam and 9 percent in China.

Volume fell 1 percent in Europe and stayed flat in Latin America.

“Some of Latin America, which is a big market, slowed,” Mullarkey said, “but Mexico had horrible storms that hit during the quarter.”

To capitalize on the 2014 FIFA World Cup, Coca-Cola has launched its largest soccer-related marketing campaign, which will cover more than 170 markets.

The company does not give quarterly forecasts, but said its long-term goals and strategies remained unchanged and that it would continue to invest in its brands.

Coca-Cola said it had repurchased $2.8 billion in stock in 2013 and planned to increase that amount to between $3.0 billion and $3.5 billion for the full year.- Reuters