Ever since GE CEO Jeff Immelt complained (privately) that the Chinese government was getting in the way of American businesses there, there’s been a steady din of talk about whether or not China is an overhyped market for multi-nationals.
It appears Coca-Cola (KO) may have just added some evidence to that.
The first paragraph of the company’s earnings release breaks it all down.
The Coca-Cola Company reports strong second quarter 2010 operating results, with volume increasing 5%, ahead of our long-term target and cycling 4% growth in the prior year. We achieved 2% volume growth in North America, demonstrating the momentum we are building for our system in this important market. International volume increased 6%. Eurasia and Africa volume grew 10% in the quarter, cycling 7% in the prior year, with a return to growth in Russia, which was up 6%. India demonstrated continued strong growth of 22% in the quarter, cycling prior year growth of 33%. Latin America volume grew 7%, cycling 6% growth in the prior year quarter, with 13% growth in Brazil and 5% growth in Mexico. Pacific volume grew 6%, cycling 6% in the prior year quarter, with 6% growth in China and double-digit growth in the Philippines and Thailand. Although Europe volume was down 1% in the quarter due to continued challenging economic conditions, Germany and Iberia both grew volume 1% and France was up high single digits.
Ok, 6% is better than France and Germany, but it’s way slower than Brazil, India, Eurasia, and Africa.
CEO Muhtar Kent also made some nervous-sounding comments.
“It is clear, however, that the state of the global economy remains uncertain in many regions, affected by ongoing deficit concerns in Europe, recent downward revisions to China’s economy and weakened consumer confidence. While this uncertainty weighs on us all, we remain resolute in our commitment to invest in our global operations and our brands for the long-term. Even during these challenging times, our brand equity is growing stronger around the world, as consumers continue to choose our brands, with 4% global growth for brand Coca-Cola year-to-date. Additionally, we continue to make tangible progress with our planning related to the efficient and effective integration of Coca-Cola Enterprises’ (CCE) North American bottling business and we remain on track to complete the transaction in the fourth quarter of 2010.
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