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Coca-Cola Profit Gains 8.1% as Sales Volumes, Pricing Rise

Oct. 18 (Bloomberg) -- Coca-Cola Co., the world’s largest soft-drink maker, posted an 8.1 percent increase in third-quarter profit after boosting global sales volumes and raising retail pricing in North America.

Net income advanced to $2.22 billion, or 95 cents a share, from $2.06 billion, or 88 cents, a year earlier, Atlanta-based Coca-Cola said today in a statement. Excluding some items, profit was $1.03 a share, topping the $1.02 average of 13 analysts’ estimates compiled by Bloomberg.

Chief Executive Officer Muhtar Kent has built new plants in emerging markets and pushed more profitable package sizes overseas, helping boost global case volume sales 5 percent in the quarter. Coca-Cola also raised pricing 2 percent to retailers in North America, its largest market.

“They are still growing in terms of volume, and that’s what you want to see,” Chris Shanahan, a San Antonio-based analyst at Frost & Sullivan, said today in a telephone interview. “They are able to maintain organic growth.”

Coca-Cola fell 0.4 percent to $66.74 at 4:15 p.m. in New York. The shares have gained 1.5 percent this year, while rival PepsiCo Inc. has decreased 4.5 percent.

Third-quarter revenue rose 45 percent to $12.2 billion, helped by the Coca-Cola’s purchase of its largest bottler last year. The average estimate of 10 analysts was $12 billion.

International Sales

Sales volumes gained 7 percent in Latin America, 6 percent in the company’s Eurasia and Africa region and 5 percent in North American and its Pacific units. The gains were the result of investments made throughout several years, Kent said today in an interview.

“You have to take a long-term approach to investments and a shorter term approach to execution,” said Kent, who last month announced a plan to spend $3 billion in Russia in the next five years to develop Coca-Cola’s brands.

Coca-Cola said today it plans to buy back as much as $3 billion of its shares this year, up from its previous target of at least $2.5 billion. The company said today it has repurchased $2.2 billion shares so far this year.

Chief Financial Officer Gary Fayard said today on a conference call that the company’s commodity costs will jump $800 million this year from 2010, more than the $700 million Coca-Cola previously estimated. The increase is driven by higher costs for corn syrup used as a sweetener and petroleum-based plastic for bottles and packaging.

Coca-Cola said in July it would boost North American pricing as much as 4 percent in the second half of the year to offset higher commodity costs.

(Coca-Cola held a conference call at 9:30 a.m. New York time to discuss results. To listen, visit LIVE <GO>.)

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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