Coca-Cola misses on Japan earthquake disruptions
Even though profit is up 18%, shares are down as the company comes in just below what analysts hoped to see. With video.
The company missed analyst expectations for profit and revenue as a result, and the stock dropped 2.5% in morning trading to $66.06. "The high exposure to Japan remains a major uncertainty," one Credit Suisse analyst wrote in a note this week, according to Bloomberg.
But even though Coca-Cola fell short of the mark, the company's first-quarter profit still grew 18%, largely because of its acquisition of the North American bottling operations from Coca-Cola Enterprises (CCE). Profit was $1.9 billion, or 82 cents a share, up sharply from $1.61 billion, or 69 cents a share, in the year-ago period.
Post continues after this analyst interview about Coca-Cola's earnings:
Excluding certain costs like restructuring charges, profit was 86 cents -- just a penny shy of what analysts were expecting. Revenue took a 40% leap to $10.52 billion, again a bit less than the $10.57 billion analysts wanted to see.
Coke's operating profit rose by 3% in the quarter, helped along by the weaker dollar, while gross margin fell to 62.5% from 66.2%.
The company's operations in Japan represent more than 10% of operating profit, Bloomberg reported. Coke's chief executive, Muhtar Kent, has offered more than $30 million in aid after the March 11 earthquake and tsunami.
Coca-Cola is recovering nicely this year, boosting sales volumes in North America for four straight quarters, Bloomberg reported. Worldwide volume grew 6% in the first quarter. But the increase in commodity and oil prices, along with soaring costs for raw ingredients, are taking a toll for both Coke and rival PepsiCo (PEP), and Coke has raised prices in North America. Pepsi reports earnings on Thursday.
Coca-Cola relied on emerging markets for much of its volume growth. The Eurasia and Africa region saw 8% growth, followed by 7% in Latin America, 5% in the Pacific and 1% in Europe. In North America, growth was 2% excluding cross-licensed brands primarily under the Dr Pepper Snapple Group (DPS).
The "still beverage" category, which includes juice, sports drink, tea and bottled water, was a star in the quarter. Worldwide volume rose 11% in the quarter, with 12% growth coming from overseas and 8% growth in North America. Minute Maid Pulpy, which originated in China, saw 25% growth.
Coca-Cola will celebrate its 125th birthday on May 8.
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