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EARNINGS ROUNDUP

Coca-Cola's net income drops 22%

February 15, 2007|From Bloomberg News

Coca-Cola Co. said Wednesday that fourth-quarter profit fell 22% after its largest bottler wrote down the value of its North American unit on reduced soda sales and higher raw material costs.

Net income declined to $678 million, or 29 cents a share, from $864 million, or 36 cents, a year earlier, Atlanta-based Coca-Cola said. Volume in North America will be weak in the first half of this year, Chief Financial Officer Gary Fayard said.

North American volume fell 2% in the company's fourth quarter, its worst performance in 2 1/2 years, on declines in soda and discounted water brands such as Dannon. Chief Executive Neville Isdell has focused on Coca-Cola sales in emerging markets including China and Russia as U.S. consumers switch to sports drinks and tea, markets led by PepsiCo Inc.

Excluding the write-down, Coca-Cola earned 52 cents a share, helped by a 3-cent-a-share tax benefit. That beat by 2 cents the 50-cent average estimate of analysts surveyed by Bloomberg.

Sales rose 6.9% to $5.9 billion on gains in fast-growing markets such as China, Russia and Mexico. Global volume rose 4%, helped by new advertisements for Georgia Coffee in Japan.

Shares of Coca-Cola fell 33 cents to $47.88.

Coca-Cola Enterprises Inc. on Tuesday wrote down the value of its North American unit by $2.9 billion amid lower soft-drink sales and increased costs for aluminum and high-fructose corn syrup used for sweetening. That reduced Coca-Cola's profit by 23 cents a share.

Coca-Cola holds a 36% stake in Atlanta-based Coca-Cola Enterprises and depends on the bottler for 80% of its North American volume for bottles and cans.

CEO Isdell has struggled to lift U.S. soda sales as consumers cut back on sugary drinks in favor of water, tea, juice or sports drinks, categories led by PepsiCo's Aquafina, Lipton, Tropicana and Gatorade brands.

Coca-Cola's Dasani and bottled tea each rose more than 10%, and the Powerade sports drink increased "mid-single digits," the company said.

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