Coca-Cola Q2 profit spikes 9% on revenue gains

by FoodBusinessNews.net Staff
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ATLANTA — The Coca-Cola Co. reported a 9% jump in second-quarter profit on solid gains in revenue, as the Atlanta-based soft drink maker posted net income in the second quarter ended July 1 of $1,723,000,000, equal to 72c per diluted share. The results compared with net income of $1,584,000,000, or 65c per share, in the second quarter of last year.

Operating income for the second quarter totaled $1,972,000, up 9% from the previous year.

Excluding one-time items — a favorable lawsuit settlement and tax-related benefits — Coca-Cola earned $1.64 billion, or 68c a share. On that basis, analysts surveyed by Thomson Financial were expecting earnings of 64c a share.

Overall, unit case volume increased 5% in the second quarter, led by a 7% increase in international operations.

In Coke’s key North America Unit, the company said unit case volume increased by only 1% in the quarter, helped by case volume growth in both the diet, light and noncarbonated beverage categories, and despite a 1% decline in overall soft drink unit case volume.

Finally, packaging and product innovations are advancing in line or ahead of expectations with the rollout of Coca-Cola Zero and Diet Coke Sweetened with Splenda, along with the continued expansion of Dasani flavors and Full Throttle.

Last month, Coke reached an agreement with European regulators to restrict the company’s business agreements with merchants. The agreement required the company to open up more shelf and cooler space to rivals in Europe.

Under the deal, Coca-Cola cannot make exclusive arrangements with stores and cafes in Europe that stop them from serving rival brands, or offer them rebates for buying more of its brands.

The agreement applies to 27 countries in Europe. The agreement followed years of complaints by Purchase, N.Y.-based PepsiCo, Inc., which accused Coke of squelching competition in Europe.

Unit case volume in Europe rose 4%, and net revenues rose 8%. Germany, where unit case volume declined 12% in the first quarter, was down 1% in the second quarter due to the success in gaining limited availability of company products in most discounters and the cycling of prior year double-digit unit case volume decline.

Despite these positive changes, the company still expects the challenging environment in Germany to persist through the second half of the year.

Neville Isdell, chief executive, said he was pleased by the results, though he stressed that the company still needs to do more, especially at home.

"One quarter does not guarantee sustainable results," Mr. Isdell said. "We still have considerable work ahead of us in the U.S. and in markets like Germany, the Philippines and, in particular, India, as well as to improve our performance in the areas of innovation and marketing."

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