Coca-Cola profits hit by Japanese quake

COCA-COLA POSTED a first-quarter profit gain yesterday that fell short of analysts’ projections as earthquake damage squeezed profit margins in Japan.

Net income advanced 18 per cent to $1.9 billion (€1.3 billion), or 82 US cents a share, the Atlanta-based company said. Excluding items such as restructuring costs, profit was 86 cents, fractionally below consensus forecasts.

Some Coca-Cola manufacturing and vending operations in Japan, which represents more than one-tenth of operating profit, were disrupted following Japan’s March 11th earthquake and ensuing tsunami. Chief executive Muhtar Kent has pledged more than $30 million in relief for the region.

“The high exposure to Japan remains a major uncertainty,” Carlos Laboy, an analyst for Credit Suisse in New York, said.

The world’s largest soft-drink maker boosted sales volumes in the US and Canada for the fourth consecutive quarter after a string of declines dating to 2007.

Performance in the region followed Mr Kent’s decision to take control of 90 per cent of the firm’s North American distribution system.

Coca-Cola boosted global sales by volume 6 per cent, with a matching increase in North America.

Carbonated soft-drink volume in Mexico rose 11 per cent, while China posted a 14 per cent gain.

First-quarter net income a year ago was $1.61 billion, or 69 cents a share.

PepsiCo, the second-biggest soft-drink company, plans to report first-quarter results this week.

Both Coca-Cola and PepsiCo face rising costs for ingredients and packaging as commodity and oil prices advance.

Coca-Cola has said input costs in North America may climb as much as $400 million this year.

PepsiCo, where about two-thirds of sales come from snacks, has said total commodity costs may increase $1.4 billion to $1.6 billion this year. – (Bloomberg)