Coca-Cola shows modest growth as business stabilizes

by Staff
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ATLANTA — For the second quarter ended June 30, Coca-Cola reported a moderate growth in income, following the stabilization of its business in all but one of its global markets.

Net income for the period increased 7% to $1,836,000,000, equal to 78c per share on the common stock, compared with $1,723,000,000, or 72c, in the same period last year.

Net revenue for the quarter also rose, gaining 3% to total $6,476,000,000, compared with revenue of $6,310,000,000 in the same period last year.

The company maintained volume share in carbonated soft drinks, sports and energy drinks, and packaged water and gained share in juice and juice drinks.

The company also achieved balanced growth across all categories, with carbonated drinks growing 3% and non-carbonated 5%. Overall, the company’s core brands — Coke, Sprite and Fanta — delivered roughly 60% of the growth in the quarter.

In its North American market, operating income grew 7%, reflecting an 8% increase in revenue growth. In the carbonated beverage segment, the company will continue to focus on innovation and energy drinks. In its non-carbonated beverage unit, the company continues to benefit from strong performances by Powerade and Dasani.

In the European Union, operating income was flat as growth in gallon sales and positive pricing failed to surmount unfavorable currency and an increased investment in key marketing initiatives. Looking forward, the company expects the launch of Coke Zero and its "The Coke Side of Life" marketing campaign to spur future growth.

In North Asia, Eurasia and the Middle East, operating income fell 6% as marketing expenses increased and strong performances in China, Russia and Turkey failed to offset weakness in core brands in Japan.

In Latin America, operating income grew 16%, following net revenue growth of 18%, partially attributable to the World Cup marketing tie-in.

In East, South Asia and the Pacific Rim, operating income increased by 4%, despite unit case volume declines in the high teens in India and the Philippines.

In Africa, operating income grew 16%, primarily reflecting increased net revenues following particularly strong growth in South Africa.

Overall case volume grew 4%, and the company’s two-year compounded growth rate equals roughly 4.5%, which is ahead of the company’s long-term growth objectives, said Neville Isdell, chairman and chief executive officer. Excluding India and the Philippines, volume would have grown 5%. Mr. Isdell said this indicates that the company is demonstrating a consistency it lacked in previous years.

"In summary, when I look around the world, I am very pleased with nearly every one of our markets," Mr. Isdell said. "There are just a few exceptions. As a result, I believe we are well positioned heading into the back half of the year.

"Most importantly, our business is much better positioned today to deliver against our expectations by balancing our portfolio of operations, as demonstrated by the fact that once again, we delivered both top- and bottom-line results aligned with our long-term growth targets. This gives me confidence that we will achieve our business objectives, and in doing so, create sustained growth and value for the benefit of our shareholders and our stakeholders."

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