4th UPDATE:Coca-Cola 2Q Profit Rises 18% On Volume Growth

Coca-Cola Co. (KO) global momentum continued in the second quarter with strong growth in emerging economies like China and India offsetting muted growth in North America, putting shares on pace to post their largest one-day gain in more than two years.

Coke shares were recently up $2.26, or 3.4% in recent trading, to $69.38, after the company reported an 18% increase in second-quarter earnings, beating analysts' expectations. If the gains hold, then Coke would have the highest daily increase since June 2009.

Coke posted global organic volume growth of 5%. In China, where volume rose 21% last quarter, Coke's sales hit one-billion cases year-to-date, double the rate it was five years ago. The company is trying to get more Chinese consumers to drink its products by adding more affordable sizes, selling more to small and medium-sized customers and putting in more coolers.

"You've got a lot of people that haven't touched or tasted a Coke product in over six months," Coke's Chief Executive Muhtar Kent said Tuesday in an interview.

The global results contrast with more difficulties in developed markets. In the closely watched North American business, organic volume was flat during the quarter, the worst among the company's five regions.

"At best, it's a weak recovery," Kent said, with consumers grappling with weak employment. "This translates into a consumer that's not happy and confused."

Coke's North America business will be put further to the test in the coming weeks, as Coke plans to raise prices 3% to 4% starting next month.

Coke and top rival PepsiCo Inc. (PEP) are both raising prices to offset higher costs, though the headwinds aren't getting worse. Coke maintained its view that costs will be $700 million higher this year, but not nearly as much in 2012 as costs abate.

Coke is also facing a renewed challenge at home from PepsiCo, which recently launched its first new advertising campaign behind its flagship Pepsi-Cola drink in three years. Pepsi-Cola, which reports second-quarter results Thursday, is on the offensive after slipping to the No. 3 spot in the U.S. soda market last year, behind regular Coke and Diet Coke.

Coke's earnings rose to $2.8 billion, or $1.20 a share in the second-quarter, up from $2.4 billion, or $1.02 a share, a year earlier. Excluding items like restructuring charges, earnings rose to $1.17 a share from $1.06.

Revenue jumped 47% to $12.74 billion, with results boosted by last year's $12.3 billion acquisition of the North American bottling operations of its biggest bottler. Revenue got a 6% lift from currency translation.

Coke also said it can now restart share repurchases after suspending them for most of the second quarter as it considered "strategic alternatives." The company said it plans to buy back at least $2.5 billion of its shares by year's end, the high end of prior guidance.

"We were looking as well as engaged in discussions with various parties," Kent said, declining to elaborate further on those talks.

Kent added Coke is "always looking'" for bolt-on acquisitions in the U.S. and elsewhere and didn't rule out pausing share repurchases again, depending on the scope of any potential acquisition.

He declined to comment on any potential interest in buying Hansen Natural Corp.'s (HANS) Monster energy drink or Arizona Beverage Co.'s iced-tea business, which is reportedly for sale. Coke lags behind in energy and tea drink sales, stoking periodic speculation that it could pursue acquisitions.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; paul.ziobro@dowjones.com

--Mike Esterl of The Wall Street Journal contributed to this article.

Hansen Natural (NASDAQ:HANS)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024