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Coca cola gains big markets in china india { June 2007 } Original Source Link: (May no longer be active)
http://www.forbes.com/markets/2007/07/17/coca-cola-update-markets-equity-cx_er_0717markets33.htmlhttp://www.forbes.com/markets/2007/07/17/coca-cola-update-markets-equity-cx_er_0717markets33.html
Coca-Cola Stays Afloat On Global Gains
Evelyn M. Rusli , 07.17.07, 4:25 PM ET
Coca-Cola hasn't fizzled out yet.
Despite weak sales in North America, revenues grew 19% in the second quarter amid higher demand in emerging markets.
On Tuesday, the world's biggest soft drink maker said profits increased 1% to $1.85 billion, or 80 cents a share, from $1.84 billion, or 78 cents a share.
However, on a continuing operations basis, the company earned $1.98 billion, or 85 cents a share, cleanly beating Wall Street's call of 82 cents a share. Revenues also climbed to $7.7 billion from $6.5 billion.
Coca-Cola (nyse: KO - news - people ) shares drifted down 1.0%, or 56 cents, to $53.29 in pre-market trading.
Goldman Sach's analyst Judy Hong said Coca-Cola is "poised to continue to string together positive surprises and revisions."
"The result supports our view that Coke can deliver 11% to 12% EPS [earnings per share] growth that exceeds the 9% consensus over the next few years," Hong said in a Tuesday research note. Hong raised her price target to $63 from $62.
North America, which makes up 20% of the company's profits, remained the weak point in Coca-Cola's portfolio. Unit case volume decreased 2% in the region this quarter.
However, gains abroad more than offset weakness at home. Foreign unit case volume surged 9% last quarter, led by a 6% jump in trademark Coca-Cola beverages. "Carbonated soft drink volume, or 'sparkling' beverages, grew 4% globally, and noncarbonated or 'still' beverages grew 12% globally," Stifel Nicolaus analyst Mark Swartzberg said on Tuesday. "In terms of regions, every region with the expected exception of North America grew volume at or above its long-term target."
The Atlanta-based corporation has steadily increased its global exposure, especially in emerging markets such as China. According to Morgan Stanley analyst William Pecoriello, Coca-Cola now depends on emerging markets for 40% of its sales. "Emerging markets have helped Coke deliver upside over the past couple of years," Pecoriello said in a research note this month, according to the Associated Press. "Continued strength from these markets may allow Coke to continue to show upside." Coca-Cola seems particularly fixated on Asia, which management predicts will be the primary growth catalyst over the next several years.
Goldman Sach's Hong echoed the upbeat global outlook on Tuesday. "Emerging market momentum is robust, Coke is rehabilitating India, and the Philippines, Japan and Europe are on better footing," she said.
While its focus is clearly shifting abroad, Coca-Cola hopes to reinvigorate North American sales by taking advantage of the rising demand for health-conscious products. In May, Coca-Cola announced the $4.1 billion acquisition of Energy Brands, which makes the Glacéau line of vitamin water. Energy Brands "will provide Coke with an innovation platform that could help it capitalize on health and wellness trends as well as bolster its tarnished public image as a purveyor of unhealthy offerings," Morningstar analyst Matthew Reilly said in May. By taking on Energy brands, Coca-Cola is now the "fastest-growing still beverage company in North America," Coca-Cola's Chief Operating Muhtar Kent said. (See: "Coca-Cola Orders A Health Boost" )
--The Associated Press contributed to this report.
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