The Coca-Cola Company. (KO)
Q3 2009 Earnings Call Transcript
October 20, 2009, 9:30 a.m. ET

Executive

Jackson Kelly - VP, Director of IR
Muhtar Kent - Chairman, President and Chief Executive Officer
Gary P. Fayard - Executive Vice President and Chief Financial Officer

Analysts

John Faucher - J.P. Morgan
Bill Pecoriello - Consumer Edge Research
Carlos Laboy - Credit Suisse
Christine Farkas - Banc of America/Merrill Lynch
Mark Swartzberg - Stifel Nicolaus & Company, Inc.
Marc Greenberg - Deutsche Bank Securities
Wendy Nicholson - City Investment Research
Judy Hong - Goldman Sachs

Presentation

Operator

At this time, I''d like to welcome everyone to The Coca-Cola Company''s Third Quarter 2009 Earning Results Conference Call. Today''s call is being recorded. If you have any objections you may disconnect at this time. All participants will be on a listen-only mode until the formal question and answer portion of the call. If you would like to ask a question please press star one on your touchtone phone, to withdraw your question press star two. If you are on a speaker phone please pick up the handset before asking your question.

Participants will be announced by their name and company. Due to the interest in this call, we request a limit of one question per person. I would like to remind everyone the purpose of this conference is to talk with investors and therefore questions from the media will not be addressed. Media participants should contact Coca-Cola''s media relations department if they have questions.

And now I would like to introduce Mr. Jackson Kelly, Vice President and Director of Investor Relations. Mr. Kelly, you may begin.

Jackson Kelly

Good morning and thank you for being with us today. I''m joined by Muhtar Kent, our Chairman and Chief Executive Officer; and Gary Fayard, our Chief Financial Officer. Following prepared remarks this morning; we will turn the call over for questions.

Before we begin, I would like to remind you that this conference call may contain forward-looking statements including statements concerning long-term earnings objectives and should be considered in conjunction with cautionary statements contained in our earnings release and in the company''s most recent periodic SEC report. In addition, I would also like to note that we have posted schedules on our company website at www.thecocacolacompany.com under the reports and financial information tab in the investor section which reconciles certain non-GAAP financial measures that may be referred to by our senior executives in our discussion this morning and from time to time in discussing our financial performance to our results as reported under generally accepted accounting principles. Please look on our website for this information.

Now, let me turn the call over to Muhtar.

Muhtar Kent

Thank you, Jackson. And good morning, everyone. I am pleased to report that the fundamentals of our business remain strong. We continue to both grow and invest in our business while generating a strong and steady cash flow. We have built a solid foundation, allowing us to focus on executing a consistent set of strategic priorities with our bottling partners. And we are continuing to deliver consistent sustainable growth.

During the third quarter, key international markets delivered significant volume growth with China up 15%, India up 37%, Mexico up 9 and Brazil up 3, yielding strong total international unit case volume growth of 4%, cycling 7% growth in the prior year quarter. Total worldwide unit case volume increased 2%, cycling 5%, despite the continued effects of the global recession across several key geographies including North America, Europe, Japan and Russia.

In these and other markets, strong macro economic headwinds continue to impact consumer spending and therefore the entire consumer goods sector. Despite this we consistently delivered quality results above and below the line. On a comparable currency neutral basis, net revenues excluding structural changes have increased 3% for this quarter and 5% year-to-date. And operating income has increased 9% for both the quarter as well as year-to-date.

As a result, despite the challenging economic environment I''m pleased to say that we have achieved our revenue and profit targets for the first nine months of the year and we remain committed to our long-term growth model going forward. We know that during difficult economic time''s consumers gravitate toward and reward the brands they know, the brands they love and trust.

That is why we were pleased to see Coca-Cola once again recognized as the world''s number one brand in the last business week Interbrand list of Best Global Brands. Our brand value increased at a time when the overall value of the top 100 brands declined for the first time in this studies history.