Tomahawk, WI 8/14/2013 (Basicsmedia) – The Coca-Cola Company (NYSE:KO) has been manufacturing beverages for close to a hundred years now. Currently, there are close to 500 beverages which the company has license to market, and most of them are non-alcoholic. For the most part, the company has always been profitable, although there are seasons when it sees a drop in its growth or revenues. The first two quarters of 2013 saw the company go through a period when its net income fell consecutively and this has led to some excitement in the market. Which factors contributed to drop in net income?

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This chart, which is from www.google.com/finance, shows KO’s quarterly revenue, net income and profit margin for 2012 and 2013.

How Hard Did KO’s Net Income Fall?

The fact that a global brand such as KO can go through a period when its financial results for the last two quarters collapsed, has caused a lot of jitters in the market. It is important to remember that KO has always been able to maneuver its way out of seemingly impossible situations and stand on its feet once again. The latest results indicate that the company saw its net income drop to $2.68 billion, down from $2.79 billion which it reported last year in the same quarter. This translates to $0.59 per share compared to last year’s figure of $0.61 per share.

Factors Which Led to Drop in Net Income

There are several factors which were cited for the drop in KO’s net income. One of these factors has to do with the economic weaknesses or hardships which were experienced both in China and Europe, which are two very crucial markets for Coca Cola Company. When you add these to the fact that the tastes of customers in the U.S shifted considerably, you begin to understand the reasons which led to the poor performance. In places such as India, the weather was quite unpleasant and this caused a drop in the consumption of beverages made by Coca Cola.

What is KO Doing to Reverse the Situation?

Fortunately for KO investors, this is a company with a solid reputation in terms of overcoming adversity, no matter how insurmountable it may seem. The company CEO recently reported that they are prepared to introduce smaller packages which will be sold in the regions which witnessed a sharp decline in demand for and consumption of KO beverages. Moreover, the company is still active in marketing its products through advertisements despite the losses it suffered as a result of the things which happened in China, Europe, India and elsewhere.

It is not all gloom and doom for Coca Cola Company. The company was able to declare earnings of $0.63 per share which is what the industry had projected. A number of top analysts had predicted the same thus showing that the company is still able to perform in the market. I believe that there is a lot of potential with KO. Global sales volume managed to grow by around 1%, which is lower than the figure which analysts had estimated, of around 3.3%. But more importantly is that there was growth, showing that the company’s products are still in demand.

If the company can change the shifts in consumption and attitude among its U.S customers, and ride through the weather impediments which were witnessed in Europe and India as well as other countries, I don’t see why it will fail to report an increase in net income and revenue in its next financial reports.

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