Coca-Cola’s Net Income Rises Despite a Drop in Revenue

October 15, 2013
REUTERS New York Times

The Coca-Cola Company reported a higher quarterly profit on Tuesday and said it was on track to achieve its goal of doubling its 2010 “system revenue,” which includes its sales and those of its bottlers, by 2020.

Muhtar A. Kent, the chief executive of the world’s largest soft drink company, said in a conference call with analysts and investors that Coca-Cola would proceed by investing in its brands and seeking acquisitions.

“There’s some headwind in emerging markets, but we believe they are very temporary” because the middle class in those countries is growing, he said.

In the third quarter, Coca-Cola’s net income rose 6 percent to $2.45 billion, or 54 cents a share, from $2.31 billion, or 50 cents a share, a year earlier.

Excluding one-time items, the company reported earnings of 53 cents a share, in line with the expectations of analysts surveyed by Thomson Reuters.

Revenue fell 3 percent, to $12.03 billion from $12.34 billion, slightly below analysts’ estimates of $12.05 billion. The decline was largely a result of weaker-than-expected currencies in many emerging markets and the costs of revamping bottling operations in Brazil and the Philippines.

Coca-Cola’s chief financial officer, Gary P. Fayard, said he expected currency weaknesses to lower operating income by 5 to 6 percent in the fourth quarter.

A Morningstar analyst, Thomas Mullarkey, said he was encouraged by Coke’s global growth, which reached 2 percent overall, as well as the popularity of the Coca-Cola brand in North America.

“Soda is not doing great overall in the U.S.,” he said, “but the Coke brand is the leading soda brand, and so the company continues to push it forward.”

Mr. Kent said the Coke brand was resilient, helping the company deliver a record 181 billion beverage servings in the quarter.

In North America, sales volume increased 2 percent overall, largely because of the strong performance of Coke’s nonsoda offerings. Sales of noncarbonated drinks like juices and bottled water rose 5 percent, and teas, which include Honest Tea and Fuze, had double-digit percentage growth. Sales of sparkling drinks in the region were flat.