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Coke Cuts Long-Term Earnings, Sales Targets

From Reuters

Coca-Cola Co., stung by a prolonged sales downturn in North America and other major markets, Thursday lowered its key long-term earnings and sales targets.

The move came just hours before Chief Executive E. Neville Isdell met investors and financial analysts in New York for the first time since taking over the reins of the world’s largest soft drink company June 1.

Atlanta-based Coca-Cola, which has struggled for five years to boost sluggish soft drink sales and meet changing consumer tastes, now expects annual earnings per share to grow in the high single digits in percentage terms over the long term.

Unit case volumes, a key sales measure in the beverage industry, are forecast to rise 3% to 4% each year. The new growth targets do not apply to 2005.

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Coke’s previous long-term targets were 11% to 12% growth in earnings per share and 5% to 6% growth in volume.

“We believe the company’s new targets and spending are spot on -- [they are] suited to business realities and opportunities,” said Legg Mason analyst Mark Swartzberg, who reiterated his “buy” rating on Coca-Cola’s stock.

Isdell told analysts that the company had underperformed in critical areas but predicted a rebound in the coming years.

“There is strong growth ahead for this company,” he said. “There are no really quick fixes. We will take the bumps on the road and stay the course.”

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Isdell also said no major acquisitions were planned for the near future.

Coke shares, which have fallen 20% since Isdell succeeded Douglas Daft, slipped 21 cents to $40.96 on the New York Stock Exchange. They were down as much as 3.8% earlier in the day.

Coca-Cola had been under pressure from many Wall Street analysts to make its long-term outlook more realistic in light of the tough conditions facing the firm in many of its more than 200 markets around the world.

It said Thursday that it expected weakness to persist next year in North America, Germany, the Philippines and other key markets.

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The earnings forecast for 2004 was left unchanged at $1.88 to $1.90 a share.


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