Coca-Cola profit tops view

NEW YORK (Reuters) - Coca-Cola Co reported a better-than-expected quarterly profit on Thursday, helped by double-digit volume gains in China, India and Eastern Europe, and its shares rose more than 7 percent.

More than three-quarters of Coke's sales volume comes from abroad, and that has helped it stay resilient over the last year as growth in emerging markets offsets slowing sales in North America.

"Volume was better than I expected it would be and the earnings were better," said Steve Dixon, portfolio manager of the Global Beverage Fund at New York-based Arnhold & S. Bleichroeder. Dixon's fund holds shares in Coke, the world's top soft-drink maker, and its rival PepsiCo Inc .

"What really (stood) out to me was the consistency of the results across geographies and product lines, of course with the exception being North America," he said.

Coke said net income fell to $995 million, or 43 cents per share, in its fourth quarter, from $1.21 billion, or 52 cents per share, a year ago.

Excluding items such as an impairment charge related to its largest bottler, Coke earned 64 cents per share. Analysts on average were expecting 61 cents, according to Reuters Estimates.

Revenue fell 2.7 percent to $7.13 billion, hurt by recent divestitures of some bottlers and the strengthening U.S. dollar, which depresses the value of overseas sales. Worldwide sales by volume rose 4 percent.

Dixon noted that Coke's global scope increases its exposure to currency fluctuations, which could prove problematic if the dollar continues to rise.

Coke said the stronger dollar reduced quarterly operating income 9 percent and forecast a hit of 10 percent to 12 percent for the current first quarter. It did not estimate currency's impact on full-year results, saying volatility made it "impossible to forecast."

Excluding the impact of currency, Coke's long-term performance targets call for operating income to increase 6 percent to 8 percent, and earnings per share to grow at a high single-digit rate.

"Our picture of success for 2009 is to achieve those targets, as well as enhancing brand health and gaining share, despite the difficult operating environment," Chief Financial Officer Gary Fayard said on a conference call.

As a global economic slowdown causes consumers to cut back on discretionary spending, Coke has been able to increase its sales and market share in the fourth quarter.

Volume of carbonated soft drinks such as Coca-Cola, Fanta and Sprite rose 2 percent in the quarter. Other beverages such as juice, bottled tea and water rose 11 percent.

Volume fell 3 percent in North America. It rose 6 percent in Latin America, 2 percent in Europe, 9 percent in the Pacific region and 7 percent in the Eurasia and Africa segment.

The company said it was on track to deliver $500 million in annualized savings from productivity improvements by the end of 2011.

Coke shares rose $3, or 7.3 percent, to $44.34 in late morning New York Stock Exchange trading.

(Editing by Maureen Bavdek)