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Business News/ Companies / Coca-Cola Q2 profit tops expectations
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Coca-Cola Q2 profit tops expectations

Coca-Cola Q2 profit tops expectations

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Chicago: Coca-Cola Co reported a better-than-expected quarterly profit on Tuesday, as growth in markets such as India and China helped offset the impact of the stronger US dollar.

The world’s largest soft-drink maker earned $2.04 billion, or 88 cents per share, in the second quarter, ended 3 July, compared with $1.42 billion, or 61 cents per share, a year earlier.

Excluding items, profit fell 9% to 92 cents per share, topping analysts’ average forecast of 89 cents per share.

Coke’s shares rose more than 1% in premarket trade before retreating, falling 13 cents to $50.90.

Operating revenue fell 9% to $8.27 billion, hurt by the stronger US dollar which reduced the value of international sales. Sales by volume rose 4%.

Atlanta-based Coca-Cola’s broad geographic footprint, especially in developing markets such as India and China, has helped it weather an industry-wide slowdown in the United States. Coke gets the bulk of its revenue from abroad, where soft-drink sales are still growing despite the weak global economy.

Volume fell 1% in North America but rose 5% internationally. Volume jumped 33% in India and 14% in China. International sales growth overall had been in the 5-7% range last year.

The future of Coke’s North American business model, through which it sells drink concentrate to a network of independent bottlers that in turn bottle and distribute the drinks, has been called into question after rival PepsiCo Inc launched a takeover bid for its two biggest bottlers.

“We believe our unique global franchise model is the best way to win in the market," Coke chief executive Muhtar Kent said in a statement on Tuesday.

Kent has several times defended the company’s franchise model, but analysts have said that if PepsiCo succeeds in its bid, Coke may have to follow suit to erase what would likely be a large competitive disadvantage.

Coke does not provide specific earnings forecasts, but said in April it was looking to reach its long-term target of 3-4% volume growth and high single-digit earnings-per-share growth this year.

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Published: 21 Jul 2009, 06:42 PM IST
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