June 14, 2010 / 4:03 PM / 9 years ago

UPDATE 3-Coke CFO sees bolt-on deals, slow U.S. recovery

* Says will weigh buying small US bottlers if they come up

* Sees opportunities for bottling partnerships in future

* Says hedged on euro

* Coke shares fractionally higher (Adds quotes)

By Martinne Geller

NEW YORK, June 14 (Reuters) - Coca-Cola Co (KO.N) plans to continue to do small, bolt-on acquisitions, even as it integrates the North American operations of bottler Coca-Cola Enterprises Inc CCE.N, its chief financial officer said.

Speaking at a Beverage Digest conference on Monday, CFO Gary Fayard also discussed the state of economies around the globe and the company’s currency-hedging strategy, which he said is protecting the world’s largest soft drink maker from the recent weakness of the euro.

“It’s like buying homeowner’s insurance. You have your house and you buy homeowner’s insurance because if it burns down you want to be protected. But like in the good old days, if the value went up you want to participate in the upside,” Fayard said. “That’s what we do when we hedge.”

Coke, which gets the vast majority of its sales from overseas markets, sells drink concentrate to international bottlers in local currency. Its revenue and profits are therefore directly impacted by currency exchange rates.

Fayard said Coke is hedged on the euro throughout 2010 and has some coverage for 2011 as well.

As for the state of the global economy, he said different markets are in different states of recovery. Japan, for example, is “dismal economically,” while some emerging markets of Latin America are in “rapid recovery,” he said.

In the mature markets of Europe and the United States, Fayard forecast a slow recovery and a “reset” of consumer spending, meaning the free-spending days of years past may never return.

He does not expect the United States to see a double-dip recession but said economic woes were weighing on Coke’s share price, as well as uncertainty over the Coke Enterprises deal.

BOTTLER DEAL

Fayard said the acquisition of Coke Enterprises’ North American business remains on track to close in the fourth quarter.

He also expects Atlanta-based Coke to continue to make small acquisitions, as it usually does.

When it comes to acquiring more North American bottlers that are not part of Coke Enterprises, Fayard said the company would consider individual acquisitions on their merits.

He said Coke sees opportunities for bottling partnerships down the road in North America, echoing comments made earlier by Chief Executive Muhtar Kent that signaled Coke does not intend to own the bottling assets for the long term.

Even so, Fayard said the national supply chain and sales units it is creating now could remain in the long term.

Coca-Cola aims to cut costs and have more control over its distribution through the Coke Enterprises deal. PepsiCo Inc PEP.N closed a similar deal in February, as both companies are trying to turn around a sluggish U.S. soft drink market.

Coke shares were down 2 cents at $51.63 in afternoon trade on the New York Stock Exchange. (Reporting by Martinne Geller, editing by Gerald E. McCormick and John Wallace)

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