Coca-Cola Net Climbs on Soda Sales in China, Mexico

Coca-Cola Net Climbs on Soda Sales in China, Mexico

Feb. 13 (Bloomberg) -- Coca-Cola Co., the world's largest soft-drink maker, said fourth-quarter profit climbed more than analysts estimated on higher sales of soda in Asia and Latin America and Vitaminwater in the U.S.

Net income rose 79 percent to $1.21 billion, or 52 cents a share, from $678 million, or 29 cents, a year earlier when its largest bottler wrote down the value of North American operations, Coca-Cola said today in a statement. Excluding restructuring costs, the company earned 58 cents a share.

Coca-Cola sold more soda in China and Mexico and benefited from the dollar's decline against other currencies. Chief Executive Officer Neville Isdell promoted no-calorie Coca-Cola Zero and Vitaminwater to counter waning U.S. demand for sugary soda and narrow the gap with PepsiCo Inc. and Nestle SA in the non-carbonated drinks market.

``They're really putting a lot of money behind this Vitaminwater,'' Walter Todd, who helps manage $800 million in assets for Greenwood Capital Inc. in South Carolina, said in an interview on Bloomberg Radio ``I think Coke's doing the right thing by trying to diversify away from the soft drinks.''

Sales climbed 24 percent to $7.33 billion, the Atlanta- based company said.

Eleven analysts surveyed by Bloomberg estimated average profit of 55 cents. They predicted sales of $6.88 billion.

Coca-Cola rose 42 cents to $59.92 yesterday in New York Stock Exchange composite trading. The stock fell 2.4 percent this year before today, compared with a 5.2 percent decline by PepsiCo, the world's second-largest U.S. soda maker.

Earnings Growth

Isdell said last year that he expects annual earnings per share to grow by as much as 9 percent. He told the German magazine Capital last month that sales volume would increase by 2 percent a year in the U.S. and more abroad.

Volume in Japan and North America, two of Coke's most profitable markets, gained 1 percent, the company said.

Coca-Cola gets almost three-quarters of its revenue from outside the U.S., while PepsiCo generates about 40 percent of sales overseas.

The dollar's decline against foreign currencies during the quarter contributed 8 percentage points of growth to Coca- Cola's sales, higher than the 5.5 percentage points estimated by William Pecoriello, an analyst at Morgan Stanley in Purchase, New York.

The dollar averaged 10 percent less in the quarter against the Federal Reserve's basket of currencies than a year earlier.

Sales of soda in the U.S., Coca-Cola's largest market, have fallen in volume since 2005, according to industry newsletter Beverage Digest.

Coca-Cola Zero

``They are talking about getting more drinkers into the cola category, which is great, with this Coca-Cola Zero,'' said Mariann Montagne, an analyst with Thrivent Asset Management in Minneapolis. Montagne's firm manages $70 billion in assets, including Coca-Cola shares.

The beverage maker is marketing Coca-Cola Zero, which it says tastes similar to Coca-Cola Classic, to young men who have moved to sports drinks and other non-carbonated beverages with fewer calories.

Coca-Cola's Powerade sports drink and Nestea-brand bottled teas trail PepsiCo's Gatorade and Lipton bottled teas in sales, according to Beverage Digest.

Coca-Cola bought Energy Brands Inc.'s Glaceau Vitaminwater for $4.1 billion last year. The fourth quarter was Coca-Cola's first full period selling Vitaminwater.

Coca-Cola, which controls one-tenth of the world's bottled-tea market, agreed last week to pay $43 million for a 40 percent stake in Honest Tea Inc., the maker of low-calorie organic bottled tea.

PepsiCo reported last week a 17 percent increase in fourth-quarter sales to $12.3 billion on gains from Gatorade and Lipton bottled tea in the U.S. and Doritos snacks in China and India. Net income fell 31 percent because of a tax gain a year earlier.

BLOOMBERG