* Q1 EPS $0.89 tops Wall Street view of $0.87
* Revenue $11.14 bln vs estimate of $10.82 bln
* Volume up 5 pct worldwide
* Shares up 2.7 percent
By Martinne Geller
April 17 Coca-Cola Co posted
higher-than-expected quarterly results after the world's largest
soft drink maker sold more beverages, even in developed markets
with economic challenges, fueling hopes that conditions are
The maker of Sprite, Minute Maid orange juice and
vitaminwater, which does business in more than 200 countries,
saw volume rise 3 percent in Germany and Japan, 6 percent in
Spain and 1 percent in the United States, in a sign that
consumers may be opening their wallets again after economic
uncertainty curbed demand.
"Despite its struggle with a sustained period of relative
high unemployment, we are pleased to see some early signs of a
slowly improving macroeconomic environment," Coke Chief
Executive Muhtar Kent said about the United States.
U.S. consumers are eating out and traveling more, Kent said,
which bodes well for consumption of bottled drinks. The trend
should continue, he added, as long as gasoline prices stay where
they are, just under $4 per gallon on average.
At the same time, performance in China may weaken as that
country's economic growth slows from the meteoric rates seen in
"As we move through 2012, we anticipate that our business in
China may not be immune to this cooling economy and therefore,
we may also see some of our volume results in China moderate to
some extent," Kent said. He added that results in Brazil should
remain steady as that country's economy recovers.
Emerging markets are still what drives Coca-Cola's growth,
said Sanford Bernstein analyst Ali Dibadj, but he said the
pickup in mature markets was a good sign.
"That's an interesting message for us, not just for Coke but
more broadly for consumer packaged goods," Dibadj said. "I don't
think the U.S. is back to what it used to be, in terms of
growth, but this would suggest that things are getting a little
Any improvement would also be most welcome to PepsiCo Inc
, whose North American drink business has lagged Coke's.
The maker of Tropicana juice, Frito-Lay chips and Quaker
oatmeal, which will report earnings next week, is boosting its
marketing budget this year in order to help lift sales.
Coke shares were up $1.98, or 2.7 percent, at $74.42 in
early afternoon trade on the New York Stock Exchange.
COMMODITIES, CALENDAR HURT
Coca-Cola's first-quarter net profit was $2.05 billion, or
89 cents per share, up from $1.90 billion, or 82 cents per
share, a year earlier.
Revenue rose 6 percent to $11.14 billion, helped by a 5
percent increase in overall volume and a 3 percent increase in
prices and mix of products sold.
Analysts on average expected earnings of 87 cents per share
on revenue of $10.82 billion, according to Thomson Reuters
In the key North American market, operating income declined
9 percent, excluding the impact of currency fluctuations, due to
higher costs for commodities such as packaging and sweetener and
one less selling day. Excluding those factors, profit would have
been up, Coke said.
Consumer Edge Research analyst Bill Pecoriello said Coke's
"profit growth was quite strong" considering the impact of those
Coke stood by its 2012 outlook for commodity cost inflation
of $350 million to $450 million and a mid-single-digit
percentage rate hit on operating income from foreign exchange
rates. But Chief Financial Officer Gary Fayard said the
commodity picture could slowly improve in coming months.
For the current second quarter, Fayard said the hit to
earnings from foreign exchange rate changes would be at the high
end of the mid-single-digit range.
Coca-Cola also said it was on track with a productivity
program aiming to save $550 million to $650 million a year by
the end of 2015.