Coca-Cola's profit climbs but obstacles loom

Published on NewsOK Modified: February 12, 2013 at 11:52 am •  Published: February 12, 2013
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NEW YORK (AP) — Coca-Cola is facing a tough time: people are drinking less soda in the U.S. and Europe and uncertain economic conditions around the world are weighing on the world's biggest beverage maker.

The Atlanta-based company said Tuesday that its profit rose in the fourth quarter, as it benefited from growth in emerging markets and a shift in the calendar that resulted in two extra selling days for the period. But sales volume fell in China and Europe, reflecting a pullback in consumer spending.

In North America, its biggest market by revenue, volume rose just 1 percent, boosted by its Powerade sports drinks and bottled teas. The company sold 2 percent less soda.

In a conference call with analysts, CEO Muhtar Kent said he expects 2013 will "once again be a year of challenges" but that the company nevertheless expects to hit its long-term target of 6 percent to 8 percent growth in operating income.

In the U.S., he said Coca-Cola is starting to see signs of improvement in consumer sentiment but that it was still waiting to see the impact of higher payroll taxes and gasoline prices. In China and Europe, the company said it expects volumes to start rebounding in coming quarters.

"Our view is that this is not the start of a trend," said Gary Fayard, the company's chief financial officer, noting that quarterly declines occasionally happen.

Coca-Cola, which also makes Fanta, Minute Maid and Dasani water, is increasingly looking for growth in countries where its drinks aren't yet as ubiquitous as they are in developed nations. In North America, the company is also relying on a shifting mix of beverages to boost sales amid intensifying criticism of sugary sodas.

The company is also facing tougher competition from PepsiCo Inc., which has significantly stepped up its marketing with major deals including a multiyear contract to sponsor the Super Bowl halftime show. When asked whether that push was having any effect, Kent declined to comment but noted that Coca-Cola's share of the soda market grew despite a broader industry decline.

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