The Coca-Cola Company has issued a profit warning. The company announced today (15 September) that, as indicated in July, second half 2004 earnings per share will be negatively impacted by challenging operating conditions in key markets.

In a statement, Neville Isdell, chairman and CEO, said: "Although it is not our practice to provide specific earnings guidance, we have made an exception today in the interest of clear and timely communication. We want to inform investors of business trends that are significantly impacting our operating environment."

Worldwide unit case volume is expected to increase by between 1% and 2% for the full year 2004, with volume growth for the third quarter in the range of flat to 1% and continuing challenging conditions in the fourth quarter, the company said.

For the second half 2004, the company was anticipating earnings per share to be in the range of US$0.88 to US$0.92, with the third quarter in the range of US$0.46 to US$0.48, prior to the consideration of any impairment charges.

In addition, the company has determined that impairment charges in the range of US$375m to US$450m are expected in the third quarter of 2004. These charges relate primarily to certain intangible assets in Germany that have been unfavourably impacted by market shifts related to the deposit law on non-returnable beverage packages enacted by the German government, Coke said.

When taking these impairment charges into consideration, the company is currently anticipating reported earnings per share for the second half of 2004 to be in the range of US$0.77 to US$0.82, with the third quarter in the range of US$0.35 to US$0.38.

"I am not satisfied with this performance or the anticipated results," Isdell added. "They are symptoms of problems that demand strong corrective actions and initiatives that will put this company firmly on its proper growth course. That is my unmistakable and immediate objective.
"An effective volume and value growth strategy is critical to the success of our system. While this strategy is working in some regions, in other key regions we still have much work to do.

"The benefit of our actions may not be immediate," Isdell warned.

In conclusion, Isdell said: "I came back to lead a growth business. I believe this is still a growth company and my intention is to put it back on track. With strong brand equity, cash flow and market position, I am confident that no other company is better positioned to capture growth in the beverage category than The Coca-Cola Company."