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Clouds over Coca Cola

Tuesday, July 16, 2013 - 01:57

July 16 - Coca Cola blamed bad weather, along with stormy overseas economies for its profit drop. Bobbi Rebell reports.

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No smiles at Coca Cola. The soft drink heavyweight feeling the weight of the global economic slowdown and the weather. Profits fell because with less money to spend- people bought less soda. But Coke says things are looking better for the second half of the year. Standard and Poor's Beth Ann Bovino: SOUNDBITE: BETH ANN BOVINO, DEPUTY CHIEF ECONOMIST, STANDARD & POOR'S (ENGLISH) SAYING: "Well I think Coca Cola like many other companies are seeing a softness in the U.S., certainly a recession in the eurozone, and softness abroad. I think this is kind of in line with what we are seeing for the U.S. economic outlook. We are seeing though that we do expect in the second half of the year once the headwinds from the U.S. government starts to dissipate, probably much later in the year we could see an improvement in the second half so we are in align with Coca Cola." There are a lot of reasons why people drank less of Coke's products around the world. Besides consumers having less disposable money- the weather was really bad. Monsoon season started early in India- Europe had floods- and in the U.S. it rained a lot. Coke said there was more rain in June than they have seen in 50 years. According to weather analysts Planalytics- in the US- weather alone was responsible for a one percent drop in soft drink sales. Shares of Coke, a Dow stock, fell on the news- but analysts- see sunnier skies ahead: Bill Schmitz at Deutsche Bank has a buy on the company and wrote: "Global market shares have been resilient and relative valuation remains compelling…" Bonnie Herzog at Wells Fargo Securities wrote: "Overall we believe Coca Cola's long-term growth story remains intact. We suggest long-term investors build positions on weakness." And Coke says the skies are clearing and the second half could see a rebound- weather trends are returning to normal- and changes put in place in regions like China- where sales have been flat- are expected to finally start to pay off.

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Clouds over Coca Cola

Tuesday, July 16, 2013 - 01:57