Coca-Cola Co's (KO.N) fourth-quarter revenue missed analysts' estimates as lingering economic softness hurt results in Europe and China, sending its shares down 2.7 percent.
The world's largest soft drink maker, with brands such as Sprite, Fanta and Minute Maid, on Tuesday said worldwide sales volume climbed 3 percent, below some analysts' estimates. Also disappointing were a 4 percent decline in China and a 5 percent drop in Europe, analysts said.
"I think they're diverse enough so that some things go up and some things go down and they manage OK," said Bernstein Research analyst Ali Dibadj. "You certainly wish they were firing on all cylinders, but this environment doesn't necessarily allow that to happen."
Revenue for the quarter rose 4 percent to $11.46 billion, missing analysts' average estimate of $11.53 billion, according to Thomson Reuters I/B/E/S.
In an interview, Coca-Cola CEO Muhtar Kent said performance in China and Europe was not to his satisfaction, though he expects both regions to improve as 2013 unfolds. Still, he noted that the company's overall performance was in line with its long-term goals, which call for growth of 3 percent to 4 percent for volume, 6 percent to 8 percent for operating earnings, and high single-digits for earnings per share.
"In our opinion we haven't missed any revenue targets. We said we would meet or exceed our long-term growth targets ... and we've met them, for the quarter and the year," Kent said.
He cited "prolonged uncertainty in Europe, the ongoing transition of the economy in China, the lukewarm recovery in the United States, and ongoing challenges for Japanese consumers." He expects challenges in those markets to continue.
Coke did have some bright spots, reporting volume growth of 10 percent in the Eurasia and Africa segment, 5 percent in Latin America, 1 percent in North America, and 2 percent in the Pacific region. The company also reported profit slightly above Wall Street estimates, fueled by better margins.
Coca-Cola does not give quarterly financial forecasts but said that for the full year 2013 it expects $100 million in increased commodity costs related to sweeteners, juices, metals and plastic.
It also forecast a one-time hit to earnings in the current quarter related to the devaluation of the Venezuelan currency. As a result of that move, the foreign exchange impact on 2013 results may be slightly worse than previously expected, Chief Financial Officer Gary Fayard said.
Coke is also seeing tougher competition from PepsiCo Inc (PEP.N), which is working hard to improve its North American beverage business. Pepsi has increased marketing spending with a focus on core brands like Pepsi-Cola, and analysts say the renewed effort is working.
"Unfortunately, given that volumes aren't that robust, the success of one player certainly has a negative impact on the success of the other," Bernstein's Dibadj said.
PepsiCo is due to report quarterly earnings on Thursday.
Coke said fourth-quarter net income was $1.87 billion, or 41 cents per share, up from $1.66 billion, or 36 cents per share, a year earlier.
Excluding restructuring charges and other one-time items, earnings were 45 cents per share, topping analysts' average estimate by a penny, according to Thomson Reuters I/B/E/S.
Coca-Cola shares were down $1.03 at $37.58 in afternoon trading.
Barclays analyst Michael Branca advised buying the shares on Tuesday's weakness, noting that the 2013 outlook "seems no worse than the most bearish of forecasts."
(Reporting By Martinne Geller in New York; Editing by John Wallace)