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Coca-Cola profit slips as commodity costs rise
Coca-Cola's 2Q net income slips on rising commodity costs, despite growth overseas
By The Associated Press

NEW YORK (AP)  The Coca-Cola Co. says its net income slipped in the second quarter from a year ago, as rising costs for ingredients offset its expansion overseas.

The world's biggest beverage maker  which makes Minute Maid, Powerade and Dasani  says revenue growth was powered by emerging markets such as India, where volume rose 20 percent.

But that was offset by higher costs for ingredients, which rose 5 percent from a year ago, and weakness in Europe. Several regions there suffered from economic uncertainty and poor weather, and sales volume fell 4 percent.

In the U.S., the Atlanta-based company said sales volume rose 1 percent, while a mix of higher prices and a variety of smaller bottles and cans helped lift revenue 5 percent. However, volume for its flagship sparkling beverages  or sodas such as Coke and Sprite  fell 2 percent.

As soda consumption in the U.S. continues to decline, Coca-Cola has increasingly been looking past its namesake drink for growth. For example, the company said volume of its still beverages, such as Powerade and Smartwater, rose 8 percent in the quarter. Its juice brands rose 3 percent, driven by growth in its lower-calorie Minute Maid offerings.

Given the saturated U.S. market, Coca-Cola is also increasingly pinning its fortunes on international markets where the ranks of middle-class consumers are multiplying at a rapid clip.

In the U.S., for example, Coca-Cola estimates that the per capita consumption of its drinks on average is more than one 8-ounce serving a day. By contrast, consumers in India drink an average of just 12 servings over the span of an entire year.

As a result, Coca-Cola is racing to establish an early dominance in foreign markets that could help determine its growth trajectory in the years to come. Last month, for example, the company said it would accelerate its investment in India to $5 billion over the next eight years. That's more than double the $2 billion it invested since re-entering the country in 1993.

When taking into account all the drinks it offers locally, Coca-Cola now has a stable of more than 500 drinks.

For the three months ended June 29, the company said it earned $2.79 billion, or $1.21 per share. That's down from $2.8 billion, or $1.20 per share, in the year-ago period, when there were more outstanding shares.

Not including one-time items, the company said it earned $1.22 per share. Revenue rose 3 percent to $13.09 billion. Analysts polled by FactSet on average expected earnings of $1.19 per share on revenue of $12.89 billion.

Shares of Coca-Cola rose 80 cents to $77.28 in pre-market trading.

Earlier this month, Coca-Cola shareholders approved a 2-for-1 stock split, the company's first in 16 years.

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