UPDATE 5-Coke’s North America sales spur profit growth

* Q3 adj EPS 92 cents tops Wall Street view of 89 cents

* Revenue rises 5 pct to $8.43 bln

* Worldwide volume up 5 pct; North America up 2 pct

* Coke shares up 0.7 pct to new high, Pepsi falls 1.1 pct
(Adds CEO comments)

By Martinne Geller

NEW YORK, Oct 19 (BestGrowthStock) – Coca-Cola Co (KO.N: ) reported
higher-than-expected sales and earnings on Tuesday, helped by
its second straight quarter of improved beverage sales in North
America.

The world’s largest soft-drink maker has made turning
around the ailing North American market a top priority. It
bought its largest bottler in the region, developed high-tech
fountain machines that can dispense 100 different drinks,
introduced smaller can sizes and improved its marketing.

But that goal is far from complete as Coke integrates the
North American operations of Coca-Cola Enterprises Inc (CCE.N: ),
which it bought earlier this month.

“This is not a victory lap. First stability, then growth,”
Coke Chief Executive Muhtar Kent said in an interview.

The maker of Sprite, Fanta, Minute Maid and vitaminwater
said volume in North America rose 2 percent in the third
quarter. That follows a 2 percent rise in the second quarter,
which was its first increase in more than two years.

Coca-Cola does not give earnings forecasts and Kent
declined to say whether the increases would last.

“We feel our investments, our marketing, our brand health
metrics are all in a good place,” Kent said. “There is still a
very challenging environment out there. With that, you will
certainly see us outperform the industry.”

Coke’s shares rose 0.7 percent to a 52-week high, while the
wider stock market fell on concerns over China’s move to raise
interest rates. [ID:nLDE69I1ZT]

Shares of rival PepsiCo (PEP.N: ), which trimmed its full-
year profit forecast earlier this month amid a tough consumer
environment, fell 1.1 percent. Excluding benefits related to
Pepsi’s purchase of its own North American bottlers, its volume
in the Americas was flat.

The deals should give both companies more control and
flexibility in selling their drinks.

“Investors don’t fully appreciate the sustainability of
what Coke is doing,” said Consumer Edge Research analyst Bill
Pecoriello. “Coke will have to continue to do this quarter
after quarter into 2011.”

Pecoriello said his 2011 earnings estimate is more than 10
cents per share above Wall Street’s consensus. He is bullish
about Coke’s opportunities to cut costs and improve its
business from the bottler acquisition.

“If you couple a positive North America, which has been a
drag on results for years, with very strong international
growth, you have best-in-class (performance),” he said.

Coke’s third-quarter net income was $2.06 billion, or 88
cents per share, up from $1.90 billion, or 81 cents per share,
a year earlier.

Excluding items, earnings were 92 cents per share, topping
analysts’ average estimate of 89 cents, according to Thomson
Reuters I/B/E/S.

Revenue rose 5 percent to $8.43 billion as worldwide volume
rose 5 percent. Analysts had forecast revenue of $8.3 billion.

STRENGTH AROUND THE WORLD

Coke’s results were helped by a 1 percentage point
contribution from higher prices. Coke expects price and mix of
goods to have a neutral impact for the full year.

Coke said its efforts to integrate the bottler are well on
track, and repeated its cost-savings target of at least $350
million per year, phased in over the next four years. It also
expects to buy back about $2 billion in shares by the end of
2010.

It plans to have its new Freestyle soda fountains in 15
markets by the end of the year. Kent declined to say what the
ultimate potential of the soda fountains were, except that its
current plan is “right on target.”

Coke said international volume rose 6 percent, fueled by
growth of 12 percent in the Eurasia and Africa business, 11
percent in the the Pacific region and 4 percent in Latin
America.

Volume rose 30 percent in Russia, and the company cited the
strength of its core soda brands such as Coca-Cola. Volume rose
11 percent in Japan, the biggest increase in more than a
decade, as record-high temperatures spurred sales of soft
drinks. The company also posted gains of 13 percent in Brazil
and 19 percent in the Philippines.

One soft spot was Mexico, where volume was flat, due in
part to bad weather. Volume in Europe was slightly positive,
but rounded to even, Coke said.

In afternoon trading, Coke’s shares were up about 30 cents,
or 0.5 percent, at $60.30 on the New York Stock Exchange.
(Reporting by Martinne Geller; Editing by Dave Zimmerman and
Maureen Bavdek)

UPDATE 5-Coke’s North America sales spur profit growth