Coca-Cola profit falls 3% in year

by Eric Schroeder
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ATLANTA — Net income at The Coca-Cola Co. eased 3% in fiscal 2008, weighed down by a sluggish fourth quarter in which the world’s largest soft drink maker incurred significant charges related to its Coca-Cola Enterprises business. Net income in the year ended Dec. 31 was $5,807 million, equal to $2.49 per share on the common stock, down from $5,981 million, or $2.57 per share, in fiscal 2007. Net operating revenue was $31,944 million, up 11% from $28,857 million.

For the fourth quarter ended Dec. 31, net income fell 18% to $995 million, or 43c per share, down from $1,214 million, or 52c per share. Excluding a charge related to C.C.E.’s write-down of its North American business, Coca-Cola earned 64c per share in the fourth quarter.

Despite the lower results, Coca-Cola executives were pleased with the company’s performance against a backdrop of difficult economic conditions. For the year, unit case volume rose 5%, driven by broad-based growth in key emerging markets such as China, India and Eastern Europe.

"Our performance in the fourth quarter was very solid," said Muhtar Kent, president and chief executive officer. "Our fourth-quarter and full-year 2008 results reflect both the universal appeal of our global brands and the unrivalled reach of one of the world’s leading consumer products distribution systems. We delivered consistent, quality results for the quarter and for the full year. For the year, we again exceeded our long-term growth targets despite a very challenging economic environment. And importantly, we gained volume and value share in most of our leading markets through solid execution of our strategies."

A market where Coca-Cola faced challenges was North America. Operating income in the North America segment was $1,587 million in fiscal 2008, down 7% from $1,700 million in fiscal 2007. Operating revenues in the segment rose 6% to $8,280 million. The company said higher input costs and continued investment in strategic marketing initiatives offset the higher sales.

Although sparkling beverage unit case volume declined 4% in the quarter and 3% for the full year, the company said Coca-Cola Zero remains a top performer. Unit case volume of the brand rose 29% in the quarter and 36% for the full year.

In addition, still beverage unit case volume rose 1% in the quarter and 5% for the full year behind strong performance of glaceau, Fuze, and Simply and Minute Maid Enhanced Juices.

The company said it is on track to deliver $500 million in annualized savings from productivity initiatives by the end of 2011.

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