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Coke Quarterly Profit Falls 24 Percent

ATLANTA -- Coca-Cola's worldwide sales volume barely budged in the third quarter, while profits tumbled 24 percent, reported The Atlanta Journal-Constitution.

"Overall, I'm not pleased," said Coke chairman and CEO E. Neville Isdell, who is still early in the process of trying to formulate a turnaround plan for Coca-Cola.

Coke's third quarter, which was dampened by poor results in North America and parts of Europe, closed with profits of $935 million, a drop of 24 percent. Coke's sales revenue totaled $5.66 billion, down slightly compared with 2003.

Isdell, who took the helm in June, said he's looking at Coke's troubles on two main levels. "First are opportunities that can be resolved immediately," he said in a conference call Thursday with analysts and investors. These include such moves as trying to boost demand for Coke's lackluster mid-calorie cola, C2, by cutting prices.

Coke also faces tougher tasks, such as improving morale and "bench strength" in management. "These are what I call getting the basics right," Isdell said.

Sales volume growth, an important indicator of performance that measures the number of cases sold, is currently at the lowest rate of the decade. Volume increased 1 percent worldwide, the same as in the second quarter. Coke's worst spots included Germany, where volume declined 16 percent because of deposit laws that have hurt sales.

In North America, volume slid 3 percent, chiefly because of soft retail traffic, poor weather and higher prices. The company said retail pricing increased 6 percent during the quarter, which spanned July through September.

Although there were poor results in some key markets, Isdell highlighted upsides in several places, notably Brazil, China and South Africa. In those countries, sales of carbonated soft drinks grew 14 percent, he said. "These markets are proof-positive that we can, and do, grow [carbonated soft drinks] when we do the right things for the business," Isdell said.

While there has been softness in several markets, notably the U.S. soft drink business, Isdell said beverage sales continue to grow worldwide. "We're in a great industry," he said. "There's not a problem. We just have to get the offerings right."

Coke's third-quarter results, released after the stock market closed, may have been disappointing overall, but they came as little surprise, given that the company had already issued projections in September.
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