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Coca-Cola posted better-than-expected quarterly profits as the continued rollout of Coke Zero helped to boost sales in many countries, allaying investors' concerns the soft drink business is stagnant.
The world's biggest beverage company, whose shares rose nearly 3 per cent in late morning trade, had strong gains in emerging markets such as Russia, China and Africa, as well as moderate gains in developed markets such as Japan and the European Union, which offset an expected decline in North America.
Coke, like rival PepsiCo, has suffered amid an industry-wide slowdown in the North American market as health-conscious consumers avoid soft drinks in favour of bottled waters, teas and energy drinks. While Coke chief executive E. Neville Isdell acknowledged that weakness, he delivered an optimistic message.
"We continue to expect 2007 to be weak," said Isdell. "But we do expect to begin seeing improvement in the second half of the year."
Stifel Nicolaus analyst Mark Swartzberg called the results "the best evidence yet that a nearly three-year turnaround is working and that the company's long-term targets are sound and being achieved".
The Atlanta-based company said net income for the first quarter ended March 30 rose 14 per cent to US$1.26 billion ($1.7 billion), from US$1.11 billion.
Net operating revenue rose 17 per cent to US$6.1 billion as worldwide unit case volume, a key metric in the beverage industry, grew 6 per cent, helped by strength in Latin America, China, eastern Europe, South Africa, Nigeria and Russia.
Volume was up 17 per cent in Africa, 7 per cent in Latin America, 11 per cent in the European Union, and 5 per cent in the Pacific region. The Eurasia region, which includes south Asia, the Middle East, Russia and the Balkans, saw its volume rise 16 per cent.
The results were driven by strength of noncarbonated beverages such as Dasani bottled water, Powerade sports drink and Minute Maid juices.
- REUTERS
