Coca-Cola Co warned Tuesday that foreign exchange rates that boosted its earnings in the third quarter would turn against the company in the fourth quarter.
The world’s largest soft-drink maker gets the majority of is sales from outside the United States, so shifts in currency and the effects of hedging strategies could have a noticeable impact on results.
“That may be spooking folks a little bit because this is a huge, huge international story,’’ said Edward Jones analyst Jack Russo. “How currency moves definitely has an impact on the stock.
Coke posted a third-quarter profit that slightly beat Wall Street estimates, helped by higher sales volume, price increases, as well as the currency benefit.
But it said that currency exchange rates will reduce its fourth-quarter operating income by a low- to mid-single-digit percentage rate, while still boosting full-year income by a low- to mid-single-digit rate.
There was strong growth in emerging markets such as India and China, and sales volume in North America gained as well, despite a 2 percent price increase, which often has the effect of curbing sales.
The company raised prices 3 percent in North America on its core soda brands to counteract higher costs for commodities such as fuel and sweetener. Excluding a bump from new cross-licensed brands such as Dr Pepper, Coke’s soda volume fell 1 percent, but was offset by increases of 9 percent for Powerade and 39 percent for Gold Peak tea.
The company said it anticipates an $800 million increase in costs this year, up from a prior expectation for a $700 million increase.
Net income was $2.22 billion, or 95 cents per share in the third quarter, up from $2.06 billion, or 88 cents per share, a year earlier.
Excluding items, earnings were $1.03 per share.
Revenue jumped 45 percent to $12.25 billion, boosted by last year’s acquisition of its North American bottling operations, price increases and a 5 percentage-point currency benefit. Analysts expected revenue of $12.01 billion.
Worldwide volume rose 5 percent. Volume in North America also rose 5 percent, supported by the new cross-licensed brands. Excluding those brands, North American volume was up 1 percent.
Volume increased 7 percent in Latin America, 2 percent in Europe, 7 percent in the Eurasia and Africa segment and 6 percent in the Pacific region.