Volumes remained flat in Europe

Volumes remained flat in Europe

The Coca-Cola Co has blamed Eastern and south-east Europe for driving flat volumes in Europe for its first quarter.

The firm today (20 April) reported a 20% increase in net profits to US$1.16bn for the three months to 2 April, and a 5% increase in sales to $7.53bn.

However, while Eurasia and Africa grew by 11% in volume terms, Europe unit case volume remained flat.

Coca-Cola's chairman and CEO, Muhtar Kent told analysts at the firm’s earnings conference today that the weakness in Europe was a result of performances in Eastern and south-east Europe.

“I can tell you that certainly Eastern Europe and south-east Europe were not as strong as some of our markets, and Spain continues to be challenged,” Kent said.

However, he added that, while Russia had also experienced a “very difficult” consumer environment in 2009, the country was now beginning to show “positive developments”.

“Russia always goes deeper and comes back quicker with more rigour, and so that is what we are going to see in Russia I believe,” Kent told analysts. “You will see more market return and Russian consumers getting back to their normal spending habits in the coming year or so.

“Russia, after a very difficult consumer environment where we saw double digit decline in 2009, is beginning to show positive developments,” Kent said. “As we go into the summer, I believe we will see sequential improvement in the sentiment and spending of the (Russian) consumer, and improvement in our business.”

Kent added that a “return to normality” in Eastern Europe however, is likely to take “a little longer”.

Nonetheless, despite flat unit case volume in Europe, the firm experienced a 5% lift in Germany.

Kent told analysts that Germany was “not a market that needed to be fixed” and that he was confident about the performance of the market going forward.

“The UK volume was slightly down but it is important to understand that Germany has nothing to do with what happened in this past quarter,” Kent said. “Germany was not a market that needed to be fixed. We’ve been working on getting Germany right. It is more than 50% right and I am confident looking into the future it will start yielding good dividends as we start franchising Germany.”

Elsewhere, Kent said Japan remained a “very challenging” and “complex” market, but going forward is confident of improvements.

Coca-Cola's shares dropped $0.81 or 1.46% to $54.51 at 15.58 GMT.