Soft drinks group Coca-Cola Bottling Co. has seen its net income increase to US$11.9m for the second quarter, compared to US$10.8m for the same period a year ago.

However the company announced that net sales in the quarter declined 3.4%, reflecting lower bottle/can volume, which was down 4.3% in the second quarter and 1.9% in the first half.

The company blamed the decline in net sales on unseasonably cool and abnormally wet weather across its markets as well as less aggressive retail pricing by several of the company's large customers.

As a result, income from operations was also down to US$6.3m or 19% for the period. The reduction in income from operations was partially offset by declines in interest expense and minority interest. In addition, the company's second quarter income tax provision was favorably impacted by a US$3.1m benefit resulting from the completion of a tax audit.

J. Frank Harrison, III, chairman and CEO, said that he was disappointed with operating income through June, but was pleased with the company's expense control and continued success in debt reduction.

He said: "Due to the fixed nature of many of the company's costs, weaker than anticipated net sales translate into lower operating income.

"Despite higher wage rates and a significant increase in the cost of pension and health care benefits, the company's operating expenses were up less than 3% for the first half of 2003.

William B. Elmore, president and COO, attributed some of the company's net sales performance through the first six months to industry wide softness in its markets.

Elmore said: "Although our volume has been weak during the first half of 2003, our market share has remained stable. The unseasonably cool and wet weather we have experienced so far this year appears to have had a dampening effect on overall beverage sales in our territories, especially in the higher margin immediate consumption market."