just On Call - China slowdown won't hamper expansion, says Coca-Cola CEO

By | 17 April 2012

The Coca-Cola Co is confident of growth in Asian markets

The Coca-Cola Co is confident of growth in Asian markets

The head of Coca-Cola Co has said that the company will continue to expand in Asia, despite conceding that China is suffering from a slowdown.

Global volume and value shares grew across all of Coca-Cola's lines, according to Q1 results, released earlier today (17 April), with Pacific and Eurasian markets leading the way. While Thailand and India posted 24% and 20% volume growth respectively, China saw volumes rise by a lesser 9% in the three months to the end of March.

But, in a conference call with investors today, CEO Muhtar Kent said China's recent rapid gains will face a short-term squeeze.

“No matter who you talk to there, whether it's store owners, government officials or local-government officials, they will tell you the country is going through a cooling-down period,” said Kent, who visited the country last month. He added, however, that he feels the cooling down will be good for China's long-term sustainable growth.

“Volume results will moderate but we expect double-digit growth in the long-term,” Kent said.

He added that PepsiCo's recent alliance with Tingyi will not change Coco-Cola's game plan in China. Coca-Cola recently opened its largest bottling facility in China, which Kent said showed the company's commitment to the country.

In Thailand, where the Coca-Cola brand rose in volume by 30%, plans are in place to expand the company's investment, Kent said. He also highlighted Vietnam, Indonesia and West Asia as the company's future areas for global growth.

“In Asia overall, there will be a little cooling but it holds great long-term prospects and will help to lead the world out of the global macro-economic issues,” Kent said.

The positives in Asia overshadowed weaker results in Coca-Cola's European market, which posted volume growth of 1%. But, Kent said that the company still has confidence in the market and pointed to volume growth of 6% in Spain in the face of economic problems.

He also said the US is still capable of producing growth, adding that economic conditions for the company there have improved compared to six to 12 months ago.

Overall, net profits in the first three months of this year increased by 8% to US$2.05bn, according to Q1 results. Net sales were also up, rising by 6% to $11.1bn. Operating profit rose 10% in the same period, reaching $2.51bn. 

Expert analysis

The Coca-Cola Company - Strategy, SWOT and Corporate Finance Report

This report covers the company’s structure, operation, SWOT analysis, product and service offerings, detailed financials, and corporate actions, providing a 360° view of the company.

Sectors: Company results, Soft drinks, Water

Companies: PepsiCo, Coca-Cola Co

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