Coca-Cola gets good news: Soda sales are up

Coca-Cola reported a slightly higher-than-expected profit on Tuesday as sales in North America, its biggest market, rose for the first time in four quarters. Analysts say US consumers are still drinking less soda but are paying more for it, boosting Coca-Cola sales.

Seth Perlman/AP/File
A Coca-Cola delivery truck in Springfield, Ill. Coca-Cola reported strong quarterly financial results on Tuesday, Feb. 10, 2015.

Coca-Cola Co reported a slightly higher-than-expected profit on Tuesday as sales in North America, its biggest market, rose for the first time in four quarters, offsetting the impact of a stronger dollar on its overseas business.

Shares of the world's largest beverage maker rose 3.2 percent to $42.56 in premarket trading.

Coke's sales in North America have declined or remained flat for the last three quarters as U.S. consumers opt for healthier beverages and shift away from diet sodas due to concerns about artificial sweeteners.

North American sales rose 2 percent to $5.37 billion in the fourth quarter, accounting for about half of total sales.

Analysts say U.S. consumers are still drinking less soda but are paying more for it. Coke's prices in North America rose 4 percent overall in the quarter.

Low gasoline prices and a brighter job market have encouraged many consumers to dig a little deeper into their pockets. U.S. consumer confidence is at its highest in more than seven years, according to a report released in January.

In a research note, Stifel Nicolaus analyst Mark Swartzberg called the fourth quarter a "silver lining quarter," saying efforts to improve growth should eventually bear fruit.

Coke said in October that it was targeting $3 billion in cost savings by 2019. It also announced a timeline for selling its lower-margin bottling operations.

In an interview, Chief Financial Officer Kathy Waller said the cost-cutting plan, as well as the timeline for refranchising bottlers, was on track.

At the end of last year, the company said it would eliminate 1,600 to 1,800 positions. Those workers are being notified, Waller said.

Coke has said it would reinvest $1 billion of the cost savings into its brands. Waller said it would do the same with the remaining $2 billion, as well as invest in research and development, "if we see a great opportunity."

The company said net income attributable to shareholders fell to $770 million, or 17 cents per share, in the quarter from $1.71 billion, or 38 cents per share, a year earlier.

Excluding items such as the effects of cost-cutting measures and the refranchising of bottlers, the company earned 44 cents per share.

Analysts on average were expecting a profit of 42 cents per share, according to Thomson Reuters I/B/E/S.

Net operating revenue fell 2 percent to $10.87 billion, exceeding analysts' estimates of $10.76 billion. (Reporting by Anjali Athavaley in New York and Devika Krishna Kumar in Bengaluru; Editing by Saumyadeb Chakrabarty and Lisa Von Ahn)

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