Coca-Cola profit falls despite international success

Posted by Isobel Drake on 22nd April 2009

First quarter profit at The Coca-Cola Company has fallen by 10 per cent, as currency fluctuations and one-time costs outweigh an increase in unit case volume of 2 per cent.Internationally, the Company achieved unit case volume growth of 3 per cent led by strong gains in the key future growth countries of India (31%) and China (10%). Latin America was resilient, while they “outperformed the industry” in Europe despite “significant macroeconomic challenges” leading to a 2 per cent volume decline.

Globally, the Company said they gained volume and value share in nonalcoholic ready-to-drink beverages for the seventh consecutive quarter.
“While the global economic environment remains challenging, we are well positioned for long-term growth. Our business was built for times like these,” said Muhtar Kent, President and CEO, The Coca-Cola Company. “We again exceeded our long-term profit target and delivered solid volume results. Importantly, in many worldwide markets, we outperformed the non-alcoholic ready-to-drink industry, driving further volume and value share gains. I am confident that, armed with strong brands and solid business fundamentals, our experienced management team will continue delivering against our long-term targets.”

Coca-Cola’s main rival, PepsiCo, surprised analysts on Monday with the announcement they would try to acquire their own bottlers. The move is anticipated by analysts to place pressure on Coca-Cola to make a similar move.

“This is a little bit like a game of chess in which certain moves automatically precipitate equivalent moves,” Tom Pirko, president of Bevmark LLC, a beverage industry consulting firm, said – according to Reuters. “They (Coke) are not going to compete as effectively in North America against the (Pepsi) system leaving distribution and bottling as it is. They’re probably going to have to do the same thing.”

Coca-Cola dismissed the need for them to match Pepsi’s move, however, implying their supply chain was the most efficient in the industry.

“Our strong foundation, consistent set of strategic priorities, and alignment with our invaluable bottling partners were drivers of our continued success this quarter,” Mr Kent said. “Our system is truly like no other, and is now more aligned and more capable of creating value for our consumers, our customers, and our shareowners. All of this provides us confidence that The Coca-Cola Company will continue to deliver consistent, long-term sustainable growth and with great resolve will come out of this tumultuous period much better than when we entered.”