Coca-Cola reports higher profit, sticks by long-term goal
(Reuters) - Coca-Cola Co on Tuesday reported a higher quarterly profit and said it was on track to achieve its goal of doubling its 2010 "system revenue," which includes its sales and those of its bottlers, by 2020.
On a conference call, Chief Executive Officer Muhtar Kent said the world's largest soft drink company would proceed by investing in its brands and seeking acquisitions.
"There's some headwind in emerging markets, but we believe they are very temporary" because the middle class in those countries is growing, he said.
In the third quarter, 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 such as transaction gains and tax matters, 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 weaker-than-expected currencies in many emerging markets and the costs of restructuring bottling operations in Brazil and the Philippines.
Chief Financial Officer Gary Fayard said he expected currency weakness to hurt operating income by 5 percent to 6 percent in the fourth quarter.
STRENGTH OF COKE BRAND
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.
"Soda is not doing great overall in the U.S.," he said, "but the Coke brand is the leading soda brand, and so the company continues to push it forward."
Kent said the Coke brand was resilient, helping the company deliver a record 181 billion beverage servings in the quarter.
Shares of Coca-Cola, which generates almost 60 percent of its revenue from international markets and nearly 70 percent from soft drinks, were up 0.2 percent at $37.97 in midday trading.
In North America, sales volume increased 2 percent overall, 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. Sparkling drink sales in the region were flat.
Volume rose 5 percent in the Asia-Pacific region, led by growth of 21 percent in Vietnam.
In China, volume increased 9 percent, including an 8 percent rise in soft drinks, without any significant pricing promotions. Executives said the nation had stabilized economically, and its people had more disposable income.
Volume rose 4 percent in Eurasia and Africa, fell 1 percent in Europe and stayed flat in Latin America, in part because storms hampered beverage sales in Mexico.
Also in Mexico, the government said in September that it was planning on levying taxes on soda to combat obesity. "A regressive discriminatory tax on one part of the food industry just is not going to work," Kent said Tuesday's call.
Kent later told reporters that the company was not even sure the tax would become law.
To capitalize on the 2014 FIFA World Cup, Coca-Cola has already begun its largest soccer-related marketing campaign, which will cover more than 170 markets.
The company 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.
(The story has been filed again to state that Coca-Cola brand helping the overall business deliver 181 billion servings in the quarter, not delivered alone in paragraph 10.)
(Reporting by Atossa Araxia Abrahamian; Editing by Lisa Von Ahn)
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