Coca-Cola posts second quarter profit hike of 16%

COCA-COLA posted a 16% increase in second-quarter profit as North American sales volumes climbed for the first time since 2007.

Total profits rose to $2.37 billion (€1.86bn), or $1.02 a share, the company said yesterday. Excluding some items, profit was $1.06, compared with the $1.03 average of estimates compiled by Bloomberg.

Beverage volume in North America advanced 2%, compared with a 1% decline a year ago.

Global sales by drink volume grew 5%, with the Eurasia and Africa unit showing the fastest growth at 10%.

The volume growth in North America, Coca-Cola’s largest market, exceeded predictions&. Coca-Cola benefited from marketing tied to the 2010 World Cup and from surging sales of sports beverages like Powerade.

“They are having great success with their investments and marketing,” Agata Kaczanowska, a beverage-industry analyst for IBISWorld in California, said. “People will invest a couple of bucks to cool off and refresh themselves.”

Coca-Cola, the world’s biggest soft drinks maker, gained 84 cents, or 1.6%, to close at $54.08 in New York Stock Exchange composite trading. The stock has dropped 5.1% this year, while rival PepsiCo gained 5.2% and the Standard & Poor’s 500 Index declined 4.1%.

Coca-Cola’s growth outstripped PepsiCo’s in North America, where a drop in consumer confidence has escalated competition. PepsiCo posted a 1% decline in North American volume in the second quarter, excluding the effect of a distribution deal with the Dr Pepper Snapple Group.

European sales by drink volume fell 1%, hurt by “ongoing challenges” in southern and eastern Europe, Coca-Cola said.

Volume growth in the Pacific region, which amounted to 6% in the quarter, was hampered by bad weather in parts of China and Japan.

“Consumer sentiment is still not out of the tunnel, in terms of employment, in terms of real estate, in terms of banking, in terms of investment,” chairman and chief executive Muhtar Kent said yesterday. “We do see rays of hope.”

Total sales advanced 4.9% to $8.67bn. A year earlier, second-quarter profit at Atlanta-based Coca-Cola was $2.04bn, or 88 cents a share.