NEW YORK (CNNfn) - Coca-Cola Co. reported an 11-percent drop in third-quarter income on Thursday but matched analysts' lowered forecasts as the soft drink maker said it has turned the corner in the wake of a contamination scare in Europe.
The Atlanta-based beverage giant earned $787 million, or 32 cents per diluted share, compared with $888 million, or 36 cents a share, in the year-ago period. The results were in line with Wall Street analysts' forecasts, as compiled by First Call.
Operating revenue rose 9 percent to $5.2 billion.
In early September, Coke said a contamination scare in Europe that forced the company to recall millions of bottles of soft drinks from shelves would lower its earnings to about 31 to 33 cents a share. Analysts previously had expected 36 cents.
Shares of Coca-Cola (KO), one of 30 stocks included in the Dow industrials, rose 1-1/8 to 53-7/8 shortly before noon Thursday.
Coke said worldwide unit case volume rose 3-1/2 percent, off the pace the company should expect, analysts said. Marketing programs in Europe have lifted sales in many countries to pre-incident levels.
"I thought volume trends were good," said George Thompson, an analyst at Prudential Securities, who has a 'strong buy' rating on Coke stock. "And the recall seems to be a thing of the past."
The company also said its earnings fell due to economic conditions in many markets, structural changes, the negative impact of foreign currencies, and the cost of building brands.
"This confirms the worst is behind us in the global meltdown in Coke's business" said Douglas Lane, a Merrill Lynch analyst who has intermediate term "accumulate" and long-term "buy" recommendations on Coke stock. He said the company appeared to bottom out in the second quarter.
Price hikes take hold
Analysts said Coke's four to five percent price increases for carbonated drinks in supermarkets, begun last spring in the United States, have taken hold. The soft drink market has been competitive for much of the last decade and that has kept a cap on any potential price hikes, they said.
"We're seeing volumes start to increase, and the sticker shock from its higher pricing has begun to wear off," added Lane. "The question is how quickly can the company return to 7-8 percent case volume growth and 15-20 percent [earnings per share] growth."
For the first nine months of 1999, Coke said net income fell to $2.5 billion, or $1.00 per share, down from $2.9 billion, or $1.18 per share, a year earlier. Operating revenues rose 5 percent to $15 billion.