Coca-Cola 2Q net income rises on overseas growth

AP News
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Posted: Jul 19, 2011 7:25 PM
Coca-Cola 2Q net income rises on overseas growth

Coca-Cola Co.'s second-quarter profit rose 18 percent on strong growth overseas and the acquisition of a bottler. The results beat expectations and the company's stock hit a 52-week high Tuesday.

The world's largest beverage maker has shown consistent growth for years because of major gains in emerging markets such as Latin America, India and China, coupled with steady sales in established markets.

Coca-Cola, based in Atlanta, is now relying more critically on these regions as its business in established markets like the U.S. and Europe continues to be crimped by economic woes.

CEO Muhtar Kent said the results in an uncertain economy are a testament to the company's strong brands and business fundamentals.

"Many middle-class consumers, especially those in developed economies, are still feeling somewhat confused and fragile," Kent told investors. "At the same time, however, many emerging markets are doing quite well. ... With this as a backdrop, our focus is on maintaining a long-term vision of where the world is headed and in turn, where the Coca-Cola company wants to go."

Coca-Cola reported Tuesday that its net income rose to $2.8 billion, or $1.20 per share, from $2.37 billion, or $1.02 per share, in the same quarter last year. Revenue climbed 47 percent to $12.74 billion, largely on its bottler acquisition.

The results beat analyst forecasts of $1.15 per share on revenue of $12.39 billion, according to FactSet.

Coca-Cola, which has more than 500 brands including Fanta, Sprite, Dasani and Minute Maid, said its global sales volume increased 6 percent. The company's international sales volume was up 6 percent and sales volume rose 4 percent in North America.

Revenue gain was largest in North America due to its acquisition of its largest bottler. Its revenue jumped 15 percent in its Africa markets, 10 percent in Europe, 13 percent in Latin America and 21 percent in Asia.

But the company said some uncertainty remains in Japan following the March earthquake and tsunami. While the company does not issue full earnings guidance, it said that is likely to decrease its full-year earnings by 3 cents to 5 cents per share.

The rising costs for ingredients and packaging that weighed on the company last quarter remain high, but the company said it has adequately adjusted its expectations for the year based on pricing. Coca-Cola said it has raised prices for what U.S. consumers pay in stores by 1 to 2 percent already to offset those costs and has an additional 2 to 3 percent increase planned for the second half of the year.

Company leaders also said while commodity costs, which have been a top concern of most consumer products companies this year, will remain a challenge, they estimate some of those pressures may begin to mellow next year.

Shares of the company rose $2.20, more than 3 percent, to close at $69.32 Tuesday.

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Sarah Skidmore contributed to this report from Portland, Ore. Michelle Chapman contributed from New York.