Video: Coke under pressure

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updated 4/21/2004 12:07:34 PM ET 2004-04-21T16:07:34

The Coca-Cola Co. cited strong growth in North America and several international markets as it reported a 35 percent jump in first-quarter profits on a 13 percent increase in revenue.

The results, released Wednesday, beat Wall Street expectations.

The world's largest beverage maker said it earned $1.13 billion, or 46 cents a share, in the three months ending March 31, compared to a profit of $835 million, or 34 cents a share, in the same period a year ago. The year-ago results were affected by a 3-cent reduction for streamlining initiatives and a gain related to a litigation settlement.

Analysts surveyed by Thomson First Call were expecting earnings of 43 cents a share in the January-March period.

Revenue in the first-quarter was $5.08 billion, compared to $4.50 billion a year ago.

"Our results reflect our success in driving profitable volume growth of core brands in key markets," said chief executive Doug Daft, who is retiring at the end of the year.

In North America, Coke said its unit case volume increased 2 percent in the quarter. Diet carbonated soft drinks grew by double-digits and trademark Coke had low single-digit growth. The company also reported first quarter unit case volume growth of 35 percent for Powerade, 17 percent for Dasani and 7 percent for warehouse delivered juices.

But, as in past quarters, Coke's strongest growth was in its international business.

It reported 4 percent unit case volume growth in its European group, 14 percent in China and 16 percent in Argentina. Coke said it saw declines in unit case volume growth in Mexico and Brazil.

The news comes as Coke was to hold its annual meeting later Wednesday in Wilmington, Del.

The meeting was expected to be one of the more contentious for the beverage giant.

Among the shareholder proposals is an attempt to block the re-election of influential billionaire investor Warren Buffett to Coke's board. Some shareholders are concerned about his independence given the ties between some of his business interests and Coke.

McLane Co., a subsidiary of Buffett's Berkshire Hathaway holding company, paid Coke $103.9 million last year for fountain syrup and other products. Also in 2003, Coke gave McLane $11 million in agency commissions related to the sale of the company's products to customers, regulatory filings show.

Also, fast-food and ice cream chain Dairy Queen, another company Buffett owns, and its subsidiaries, paid Coke $2.2 million for fountain syrup and other products. Coke and its subsidiaries last year gave Dairy Queen and its subsidiaries $688,000 for promotional and marketing incentives for corporate and franchise stores, filings show.

Coke also has seen key management changes over the past year.

The departures started last August when Tom Moore, a Coca-Cola executive accused in a whistle-blower lawsuit of sham accounting and rigging a marketing test, stepped down. In December, Jeff Dunn, who headed Coke's North America division and oversaw a company restructuring, said he would leave.

In February, Daft said he would retire as chairman and chief executive at the end of this year after five years at the helm.

Capping things off, Coke said in a memo earlier this month that general counsel Deval Patrick also is leaving. Patrick, like Daft, will stay on until the end of the year.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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