UPDATE 4-Coca-Cola profit beats on North America growth

* Q2 adj EPS $1.06/shr, tops Wall St view of $1.03/shr

* Revenue rises to $8.67 bln from $8.27 bln a year ago

* North American volume up for 1st time in over 2 yrs

* Shares up 2.07 pct (Adds comments from company executives)

By Martinne Geller

NEW YORK, July 21 (Reuters) - Coca-Cola Co (KO.N) reported a higher-than-expected quarterly profit as smaller can sizes and new drink variations helped push up North American sales volume for the first time in over two years.

Chief Executive Muhtar Kent said the strong performance would continue for the world's largest soft drink company, whose brands include Diet Coke, Sprite and Minute Maid. Coca-Cola shares rose 2.07 percent.

"What we are seeing today is not an aberration," Kent told analysts on a conference call. "We firmly believe that North America will be a growth market of great opportunity for the next 10 years and beyond."

Coke said on Wednesday global sales volume rose 5 percent in the second quarter, driven by gains in all of its markets except Europe, where volume fell 1 percent due to a weak economy.

The global increase was ahead of the 3 percent gain expected by UBS analyst Kaumil Gajrawala and exceeded his estimate for various regions, including North America.

North America sales volume rose 2 percent, besting the performance for archrival PepsiCo (PEP.N), which reported a 1 percent decline for the region, excluding a deal with Dr Pepper Snapple Group (DPS.N). [ID:nN20121792]

Kent said the growth may not be steady for every quarter.

"There will be bumps along the way. The consumer, in terms of his or her sentiment, is still not out of the tunnel," Kent told reporters. "But we do see rays of hope -- more mobility in the United States, more people going out, entertainment metrics are better."

In other markets, Coke's sales volume rose 7 percent in Latin America, 6 percent in the Pacific region and 10 percent in the Eurasia and Africa region.

Atlanta-based Coke said quarterly net income was $2.37 billion, or $1.02 per share, up from $2.04 billion, or 88 cents per share, a year earlier.

Excluding one-time items, Coke earned $1.06 per share, topping analysts' average estimate of $1.03, according to Thomson Reuters I/B/E/S.

Revenue rose 5 percent to $8.67 billion.

Coca-Cola shares rose $1.10 to $54.34 on the New York Stock Exchange early Wednesday afternoon. Pepsi slipped 0.2 percent.

LONG-LOST GROWTH

The last time Coke reported North American volume growth was for the fourth quarter of 2007, which was boosted by the acquisition of vitaminwater. Excluding acquisitions, volume hasn't grown since the second quarter of 2006, according to a company spokesman.

Kent said Coke may have gotten a boost in its second quarter from aggressive marketing tied to the World Cup soccer tournament.

But he stressed that the return to growth was a result of strategies the company has been working on for some time, such as introducing lower-calorie products like PowerAde Zero and new package sizes like a 90-calorie mini-can of Coca-Cola.

The company said it gained market share in both carbonated drinks, like Coca-Cola and Sprite, and noncarbonated drinks like juices and teas. Overall volume of carbonated drinks rose 3 percent in the quarter, while noncarbonated drink volume rose 10 percent.

Coke gets the bulk of its revenue from overseas and is therefore impacted by fluctuations in foreign currency rates.

Coke is completely hedged for 2010 on the euro, which has weakened significantly versus the U.S. dollar, but CFO Gary Fayard forecast foreign exchange would have a low single-digit negative impact on operating income starting in the third quarter, after having a positive impact in the second quarter.

Coke and Pepsi are also taking dramatic steps to turn around their North American performance, acquiring their biggest bottlers there to cut costs and exert more control over distribution.

Coke said integration planning for the pending acquisition of Coca-Cola Enterprises Inc's (CCE.N) North American business remained on track with an expected close in the fourth quarter. PepsiCo closed its deal in late February. (Reporting by Martinne Geller; Editing by Michele Gershberg, Maureen Bavdek and Richard Chang)