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Coca-Cola 4Q profit down on charges, strong dollar

Coca-Cola 4Q profit down on charges, strong dollar

Coca-Cola Co. said Thursday that its fourth-quarter profit fell 18 percent as it felt the effect of the stronger dollar and took several write-downs, but the world's largest soft drink maker sold more of its products around the world.
The results _ including a 4 percent increase in worldwide case volume _ beat Wall Street estimates, and Coca-Cola's shares rose nearly 7 percent to $44.06 in afternoon trading.
The seller of Sprite, Fanta, VitaminWater, Minute Maid orange juice and Nestea also plans to accelerate spending cuts and said it will save $500 million a year by 2011.
"We are not content to ride out the storm," Chief Executive Muhtar Kent said on a conference call with investors. "We will leverage it as an opportunity to further build the equity of our brand and drive value for our system and customers."
The Atlanta-based company earned $995 million, or 43 cents per share, in the quarter ended Dec. 31, down from $1.21 billion, or 52 cents per share, a year earlier.
Revenue fell 3 percent to $7.13 billion from $7.33 billion a year ago. Many global consumer products makers struggled during the quarter as the stronger dollar shrank profits from products sold in other currencies. Coke said its operating income was dragged down 9 percent by currency comparisons.
Chief Financial Officer Gary Fayard said that currency comparisons would dampen operating income by 10 percent to 12 percent during the first quarter. He said offering guidance further out was not possible.
Standard & Poor's analyst Esther Kwon reiterated a strong buy recommendation on Coke shares, but she cut S&P's 2009 profit estimate by 20 cents to $3.25 and its target for the stock's price by $3 to $52.
"We see Coke continuing to benefit from the broad diversity of its operations and recent actions taken in troubled areas," the analyst wrote.
Excluding one-time items such as a charge related to its Coca-Cola Enterprises business, Atlanta-based Coke says it earned 64 cents a share. It also had restructuring costs and asset write-downs that hurt the reported results.
Thomson Reuters said analysts expected profit of 61 cents per share on revenue of $7.52 billion. Analysts typically exclude one-time items from their estimates.
The company's adjusted per-share profit excludes a 21 cent per share charge for a write-down related to Coca-Cola Enterprises, Coke's biggest bottler. The bottler took a $2.3 billion write-down in the value of its North American franchise licenses in the most recent quarter.
Coca-Cola Enterprises reported Wednesday that it lost $1.45 billion, or $2.99 per share.
Coke had another 6-cent-per-share charge for restructuring and other asset write-downs, including 1 cent for costs that included an undisclosed number of layoffs.
As unit case volume grew 4 percent, the volume of Coke rose 2 percent. In the current quarter, the company launched a new "Open Happiness" global marketing campaign, renewing its focus on soft drinks to appeal to consumers looking to spend less.
For all of 2008, profit fell 3 percent to $5.81 billion, or $2.49 per share, from $5.98 billion, or $2.57 per share, in 2007. Annual revenue rose 11 percent to $31.94 billion from $28.9 billion in 2007.