Coca-Cola Profit Falls for Quarter, Year
Coca-Cola Co. said Monday that its profit fell a steep 38.7% in the fourth quarter to $193 million, reflecting lower earnings at its fruit juice division and a restructuring charge to spin off the Columbia Pictures film unit.
Excluding extraordinary charges this year and last, net income in the December quarter rose 7% on higher soft drink sales and gains in foreign revenue due to the dollar’s weakness.
For the year, Coca-Cola’s profit dipped to $916.1 million from $934.3 million, but the Atlanta-based company said its operating income was up 14% on revenue of $7.66 billion, a strong 13% sales gain.
“Because of the momentum of our soft drinks business, leadership in the citrus market and strategic investments in the bottling and entertainment businesses, we fully expect another strong performance in 1988,” Chairman Roberto Goizueta said.
Sales of cases of soda in the United States rose 6% last year, led by Coca-Cola Classic and Diet Coke. The increase well exceeded the industry average and boosted Coca-Cola’s total share of the market to 40%.
Soda sales jumped 25% overseas, resulting in higher profit from sales in countries with strong currencies. Coca-Cola said the dollar last year stood 16% lower against most strong currencies than it had the previous year.
Operating income in Coca-Cola’s fruit juices subsidiary, which includes Minute Maid and Hi-C, fell a sharp 45% in a highly competitive market. Minute Maid barely held on to its 21% market share.
Coca-Cola in the fourth quarter also took a $100-million charge to combine its entertainment unit with Tri-Star Pictures and form Columbia Pictures Entertainment Inc.
It laid off workers and reduced its stake last month in the erratic film unit from 80% to 49% by issuing shares to existing stockholders. The deal is expected to buffer Coca-Cola’s future earnings from the volatility of the film industry.
Coca-Cola’s fourth-quarter results were skewed by a one-time $375-million gain in 1986 from the sale of 51% of Coca-Cola Enterprises, a publicly traded bottling company in which Coca-Cola retains 49% control.
