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Coca-Cola Posts Big Net Loss

Beverages: Write-downs for acquisitions boost expenses. But operating profit nearly meets analysts' estimates.

April 17, 2002|From Bloomberg News

Coca-Cola Co., the world's largest maker of soft drinks, reported a large loss Tuesday because of a fall in the value of some of its acquisitions, whereas sales in North America had their largest gain in three years.

The first-quarter net loss of $125million, or 5 cents a share, compares with net income of $863million, or 35 cents, a year earlier. Write-downs for acquisitions because of an accounting change reduced profit by 37 cents a share, the company said.

But operating earnings, which exclude one-time items, were 37 cents a share--a penny below estimates by analysts surveyed by Thomson Financial/First Call.

The Atlanta-based company said North American sales were boosted by demand for Coca-Cola Classic, Dasani water and Powerade sports drinks.

Chief Executive Doug Daft has been pressed to come up with new beverages and ads to stem competition from No. 2 PepsiCo Inc., investors said. He introduced Diet Coke with lemon last year and will roll out Vanilla Coke next month.

Shares of Coca-Cola, which also makes Minute Maid juices, rose $1.49, or 2.8%, to $53.88 on the New York Stock Exchange. The stock has jumped 20% since the end of January, compared with a 2.4% decline in the Standard & Poor's 500 index.

Sales in the most recent quarter rose 3% to $4.08 billion, the company said.

Coca-Cola had a gain of 1 cent a share for the sale of brewer Kaiser and costs of 6 cents related to investments in Latin America. Fluctuations in overseas currencies, including the Japanese yen, reduced earnings by 3 cents, Coca-Cola said.

The company said it expected to meet analysts' earnings estimates this year, an average $1.78 a share, according to Thomson Financial/First Call. Coca-Cola said it would have a gain of 1 cent from a slightly lower tax rate.

A decline in the value of some currencies compared with the dollar still is expected to reduce profit by 8 to 10 cents a share, Chief Financial Officer Gary Fayard said.

The forecast for 2002 volume sales, or amount of cases shipped, remains an increase of 5% to 6%, the company said.

"The return to 5% volume growth is by any measure a huge success," said analyst Herb Achey of U.S. Trust Co., whose $75 billion in assets include 5.3 million Coca-Cola shares.

First-quarter volume sales in Japan, Mexico, Germany and the U.S. rose more than 5%, Coca-Cola said. The company benefited from promotions for the Winter Olympics and the Super Bowl and an early Easter holiday.

In North America, where the company gets about a third of revenue, sales of colas such as Coca-Cola Classic and Diet Coke rose 3%. Volume sales jumped 20% for Powerade, 60% for Dasani water.

A year earlier, North American sales rose only 1% because of competition from PepsiCo.

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