Coca-Cola profits rise amid higher sales in North America

Coca-Cola's profits rose in the third quarter amid higher drinks sales in North America, India and China, even as overall revenue declined as the company faced volatile economic conditions in much of the world.

The world's largest soft drinks company by sales said net income rose 6 per cent to $2.45bn, or 54 cents a share, from $2.31bn, or 50 cents a share, a year ago. Excluding one-off items, the company earned 53 cents a share, in line with Wall Street's expectations.

However, revenues slipped 3 per cent to $12.03bn from $12.34bn, coming in slightly below consensus estimates of $12.05bn. Sales gains were offset by the costs of selling bottling operations in the Philippines and Brazil and by unfavourable foreign exchange rates.

Muhtar Kent, chief executive, said the figures were "sound", amid an "ongoing challenged macroeconomic environment". But, he added, "we remain constructively discontent". The company said it was on track to reach its goal of $200bn in revenue by 2020.

"Management reaffirmed its long-­term vision remains on track; however, we remain concerned about the short term, with global volume performance still relatively weak," said Bonnie Herzog, analyst at Wells Fargo.

Global sales volumes rose 2 per cent, as a 2 per cent rise in North America helped offset a 1 per cent decline in European demand. Sales also grew in the Pacific region, led by a 21 per cent rise in Vietnam and 9 per cent growth in China, and in Eurasia and Africa.

Growth was flat in Latin America as sales fell in Mexico - Coke's second-largest market - and Brazil.

Coke has relied on growth in emerging markets to cushion falling soda sales in the US, but it has been pinched by the recent slowdown.

"Emerging markets have become increasingly more volatile, further exacerbating a challenging global landscape," Mr Kent told investors on a conference call on Tuesday.

To keep winning drinkers among emerging market consumers with growing disposable incomes, the company has been pushing smaller sizes and keeping prices low. "A billion new middle class bodes well for us," he added.

But analysts said Coke is still facing headwinds in many parts of the world.

"It has become clear that Coca-Cola is susceptible to the widespread consumer issues that have been referenced by other multinational [consumer packaged goods] companies - notably slowing growth in many emerging market territories," said Michael Branca, analyst at Barclays.

The company is also confronting escalating health concerns in some markets, including Mexico, where the government is considering a 1 peso per litre tax on soft drinks.

"Regressive taxes do not work, period . . . the consumer suffers," Mr Kent said. Coke had "made its case" to the Mexican government, he said.

In the US, he said that the negative consumer sentiment" accompanying the government shutdown and threat of default "is most likely going to impact business of all natures" but that he believed "logic will prevail" among lawmakers

"Everyone wants this to be over and this to be a bad dream."

Coca-Cola shares were up 0.1 per cent at $37.95 at midday in New York.

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