Coca-Cola Q1 profit falls short of analyst projections

COCA-COLA, the world’s largest soft-drink maker, posted first-quarter profit that fell short of analysts’ projections as earthquake damage squeezed margins in Japan and total revenue trailed expectations.

Excluding items such as restructuring costs, earnings were 86 cents, compared with the 87-cent average of estimates compiled by Bloomberg. Damage from the March earthquake in Japan cut 1 cent from profit, the Atlanta-based company said in a statement.

Sales climbed to $10.5 billion, short of the average analyst estimate of $10.7bn.

Revenue suffered partly from discounting at retailers such as Wal-Mart Stores, which ate into Coca-Cola’s gains from volume sales, said Kaumil Gajrawala, an analyst with UBS Investment Bank in New York.

“Revenues were below expectations in all regions but Latin America,” Gajrawala said last night. “Much of the profit miss was driven by North America.” He advises investors to buy the shares.

Coca-Cola declined 81 cents, or 1.2%, to $66.93 at 4pm in New York Stock Exchange composite trading, the largest drop in more than a month. Coca-Cola has gained 1.8% this year, while rival PepsiCo has increased 3.6%.

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

Kent has expanded further in developing countries to widen Coca-Cola’s market lead. The company generated almost one third of its sales in the US and Canada last year, compared with 11% for Latin America and 14% for Europe.