Coke profits beat Street forecast

0 Comments | Deseret News (Salt Lake City), Feb 12, 2004 | by Harry R. Weber Associated Press

ATLANTA -- The Coca-Cola Co.'s profit slipped in the fourth quarter despite an 8 percent rise in sales and evidence the world's largest beverage maker is improving its relationship with its bottlers and its efficiency with a smaller work force.

The results, announced Wednesday, beat Wall Street's earnings expectations by a penny a share.

Atlanta-based Coke said that for the three months ending Dec. 31, it earned $927 million, or 38 cents a share, compared to $930 million, or 38 cents a share, in the year-ago period.

Excluding one-time items related to streamlining initiatives, Coke said it earned $1.13 billion, or 46 cents a share. On that basis, analysts surveyed by Thomson First Call were expecting earnings of 45 cents a share.

Revenue in the October-December period was $5.18 billion, compared to $4.80 billion in the same three-month period a year earlier.

Coke said it has been helped by its strategy in recent years to focus on its core brands and improve its relationship with its bottlers.

"Our system is absolutely unbeatable when we are aligned with our bottling partners. Well, we are aligned," chief executive Doug Daft told investors in a conference call Wednesday.

The earnings news comes as Coke faces an investigation by federal prosecutors and the Securities and Exchange Commission related to allegations made by a former employee turned whistle-blower.

Late Tuesday, Lancer Corp. of San Antonio notified the SEC that its former auditor KPMG believes that the company likely committed an illegal act by telling investors its internal investigation showed no evidence of wrongdoing related to its booking of revenue from equipment sales to Coke's fountain division.

In an earlier letter to Lancer, KPMG had not specified what illegal acts it believes Lancer committed. KPMG has since quit as the independent auditor of Lancer's books and has said it plans to withdraw three years' worth of audit opinions.

Matthew Whitley, a former Coke finance manager, claimed in a lawsuit filed in May that Coke and Lancer hid a slush fund by filing false financial information to the SEC about Lancer's sales. The SEC has launched a separate investigation of Lancer based on the Coke allegations.

Meanwhile, in recent months Coke has made management changes in its North America division to try to improve the company's domestic business, which accounts for the majority of its overall sales. In the past year, Coke has announced job cuts across several divisions totaling 2,800. The company currently has 56,000 employees.

The result of the streamlining initiatives has made Coke a "leaner, more efficient, more effective and more accountable organization," president and chief operating officer Steve Heyer said in Wednesday's conference call with investors.

In trading Wednesday on the New York Stock Exchange, shares of Coke were down 37 cents to close at $51.80.