The Coca-Cola Co. reported its profit rose by double digits, weathering a volatile third quarter in which consumers felt pressured by economic uncertainty.
The nation’s biggest soft drink seller reported third-quarter profit was 14 percent higher than a year ago, as sales in emerging markets offset U.S. weakness.
“Our brands and our business were built for times like these,” Chief Executive Muhtar Kent said on a conference call with investors. “We are clearly in uncharted territory in these global markets. I’m confident in our ability to navigate in these challenging times.”
The company posted earnings of $1.89 billion, or 81 cents per share, in the quarter ended Sept. 26. That compares with $1.65 billion, or 71 cents per share, in the year-ago period. Excluding certain charges, earnings per share were 83 cents.
Revenue was $8.39 billion, up 9 percent.
Analysts surveyed by Thomson Reuters had expected 77 cents per share on revenue of $8.53 billion. The estimates typically exclude items.
The company saw a 5 percent increase in case volume in the quarter, including 3 percent growth in carbonated drinks and 10 percent growth in noncarbonated drinks, including juices and bottled water. International sales volume grew 7 percent, with particular strength in countries such as China, Turkey, India, Pakistan and Nigeria.
“This is well ahead of expectation and should help allay fears that global macro pressures will cause significant demand deterioration,” Goldman Sachs analyst Judy Hong wrote in a note to investors.
Shares rose $2.32, or more than 5 percent, to $46.04 in midday trading. PepsiCo shares fell 87 cents to $53.53.
Kent said sales in emerging markets would continue to fuel growth and that the market in North America will pose challenges into 2009.
Morgan Stanley analyst Bill Pecoriello expected the results to boost the company’s shares. He said a 1 percent decline in sales volume in the U.S. was better than expected.
The company’s revenue growth was helped by a 3 percent increase in concentrate sales, 2 percent price hike and 6 percent from a favorable currency comparison. Growth would have been 2 percent except for “bottler sales,” the company said
The company’s VitaminWater brand grew by double digits, and Kent said its Beijing Olympics advertising proved successful. Coming up are promotions tied to the latest James Bond movie to be released in November.
Coca-Cola’s results came a day after rival PepsiCo Inc. announced that it was cutting 3,300 jobs and closing factories to give it some “breathing room” to navigate the volatility that has reached all corners of the global economy. PepsiCo reported a 9.5 percent drop in third-quarter profit, missing Wall Street expectations.
Coca-Cola is PepsiCo’s bigger rival in the beverage industry. On Wednesday, Coke CEO Kent said, “We are winning in the marketplace.”
PepsiCo also issued a downbeat profit outlook on Tuesday, saying the dollar’s recent surge against other major currencies will hurt profits from its rapidly growing international business.
Coke’s Kent maintained a 2008 forecast for a mid-single digit benefit from currency comparisons. He had a “slightly weaker” forecast for currency in the fourth quarter but said that did not change the full-year forecast. The company’s hedging strategy helped insulate it from the effects of the stronger dollar, spokesman Dana Bolden said.
Chief Financial Officer Gary Fayard reassured investors that the company had ample liquidity.
“Our liquidity remains strong,” he said. He said the company has continued use of short-term loans, access to $2.2 billion in available credit and $8 billion in cash and liquid investments that it could tap if needed.
Coke’s long-term forecast calls for high-single digit growth of per-share profit.