Coca-Cola Co., the world's biggest soft-drink maker, yesterday posted a lower fourth-quarter profit, weighed down by higher marketing costs and charges to repatriate foreign earnings.
The Atlanta-based company, which rolled out a flurry of new products last year and plans to keep up the tempo in 2006, said operating income fell six per cent on the rising cost of goods sold and the planned double-digit increase in direct marketing costs.
Net earnings declined to $864 million, or 36 cents a share, from $1.2 billion, or 50 cents a share, a year earlier.
The 2005 net profit included charges of 10 cents per share due to an accrual for taxes from repatriating foreign earnings and for costs incurred by an equity investee.
Analysts on average expected profit of 44 cents per share, according to Reuters Estimates.
Coke posted a seven per cent increase in fourth-quarter revenue to $5.55 billion, reflecting four per cent increase in gallon sales, three per cent benefit from pricing and mix, and one per cent benefit from structural changes.
The company, which recently named industry veteran Muhtar Kent to the newly created post of international operations president, posted a four per cent rise in unit case volume. That performance was led by continued strong growth in key emerging markets, including China, Russia, Brazil and Turkey.
Re-igniting anemic sales of core brands such as the flagship Coca-Cola Classic has been a challenge for Coca-Cola and its bottlers since the late 1990s, when many consumers starting shifting to bottled waters and other healthy drinks.
At a December investor meeting, Coke announced a slew of innovations and packaging, along with a new marketing slogan that Chief Executive Neville Isdell said would help drive volume and profit growth.
Coke shares are up 1.3 per cent so far this year and trade at nearly 18 times 2006 earnings, while rival PepsiCo Inc. is down 3.4 per cent with a price-to-earnings ratio of 19.6.
But in terms of market value, Pepsi lags Coke after overtaking it late last year for the first time.