Coca-Cola profits fall on contamination scare

NEW YORK, OCT 21: The Atlanta-based company reported quarterly earnings of 787 million, or 32 cents per share, compared with 888 millio...

NEW YORK, OCT 21: The Atlanta-based company reported quarterly earnings of 787 million, or 32 cents per share, compared with 888 million, or 36 cents per share after a 1 cent gain, in the same period a year earlier.

The quarterly results met Wall Street estimates, which were adjusted after the company warned of lower profits and volume weakness in September, according to earnings forecast firm First Call/Thomson Financial.

Revenues jumped 9 per cent in the quarter to 5.19 billion, reflecting price hikes in North America and structural changes in the bottling system, Coke said. Those gains were partially offset by the negative impact of a stronger dollar.

Shares of Coke were down 5/16 at 52-1/2 in early morning trading on the New York Stock Exchange amid a broad market sell-off. Coca-Cola said the overall impact of this summer8217;s European product withdrawal on third-quarter earnings was about 2 to 3 cents per share after tax. The company added it is seeing steady improvements and expects to be back at pre-incident levels by the end of this year.

quot;This past year has not been what the company8217;s shareowners or its management, most especially me, want or expect,quot; Coke Chairman and CEO Douglas Ivester said in a release. quot;Both our volume and profit results and our stock price have disappointed us all, even recognising the difficult circumstances.

But8230;I can only be optimistic about the long-term outlook for the global economy, and thus our ability to deliver on our stated long-term volume and earnings objectives,quot; he said, adding that the company is better off than it was a year ago.

With a 3.5 per cent rise in worldwide unit case volume, the beverage giant said it is encouraged by improving business conditions in Germany, Japan and Brazil.

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One per cent of that rise in worldwide case volume was attributable to the company8217;s acquisition of Cadbury Schweppes for about 970 million, completed in the quarter. The deal adds brands such as Schweppes, Canada Dry, Dr. Pepper and Crush.

North American volume trends that have been hurt by price increases in the supermarket are rebounding, the company said. Third-quarter unit case volume was up 2 per cent.

Coke8217;s main rival, Pepsi Co Inc., posted better than expected quarterly profits earlier this month, mainly due to strong returns from its snack and juice units.

Coke said currency exchange rates have begun to stabilise,and it expects that currency fluctuations will have less of a negative impact on operating results in the year 2000.