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Coke 2Q net drops 21%
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July 15, 1999: 10:07 a.m. ET
European product recall, Kosovo war, monsoon cited for woes abroad
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NEW YORK (CNNfn) - Coca-Cola Co. posted a 21 percent drop in second-quarter net income Thursday, matching downwardly revised analysts' estimates, as the company chronicled a long list of sales woes in Europe, China and elsewhere.
The Atlanta-based beverage maker earned $942 million, or 38 cents per diluted share, in the quarter ended June 30, down from $1.19 billion, or 48 cents per share, a year earlier.
"This past year can be characterized as a period of volatility and uncertainty in the global economic environment," CEO M. Douglas Ivester said.
"Looking back, the depth of the economic downturns in many markets has been greater than we had originally anticipated," he said.
The results were on target with analysts' estimates of 38 cents per share, according to the consensus forecast reported by the First Call Corp.
Analysts recently adjusted their projections after the company warned that earnings would be hurt by a contamination scare in Europe, which resulted in a product recall of millions of cans and bottles of soft drinks in Belgium, France and the Netherlands that was the biggest in company history.
Coke's worldwide case volume dropped
2 percent in the second quarter.
Coca-Cola (KO) stock has struggled recently as the company tries to regain its momentum. Shares gained 1-1/8 to 63 early Thursday, well off their 52-week high of 88-15/16.
Coca-Cola said the quarter's results were dragged down by about 2 cents to 3 cents per share because of problems in Europe. In addition to the product recall, sales slipped in Russia and Eastern Europe as a result of NATO's bombing campaign against Yugoslavia and continuing financial turmoil in Russia, the company said.
Coca-Cola's problems extended far beyond Europe, however. Worldwide, second-quarter case volume dropped 2 percent, compared with 10 percent growth in the 1998 period.
Case volume dropped 9 percent in China, in part because of severe flooding in the eastern part of the country in June and anti-American sentiment after NATO's accidental bombing of the Chinese embassy in Belgrade, the company said.
Case volume slid 2 percent in India, compared with a 33 percent increase a year earlier, largely because of a monsoon during the quarter.
The company also said performance was weaker in Brazil, Venezuela, Colombia and South Africa because of economic conditions in those regions. Civil unrest in Zimbabwe also hurt southern Africa sales, Coca-Cola said.
In North America, case volume dropped 1 percent, compared with 8 percent growth in the 1998 period. Coca-Cola attributed the drop to a rise in retail prices of soft drinks.
Net operating revenue for the quarter totaled $5.38 billion, up from $5.15 billion a year earlier.
For the first half of the year, net income dropped 18 percent to $1.69 billion, or 68 cents per diluted share. Revenue rose 2 percent to $9.8 billion. 
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Coca-Cola
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