IUF | Coca-Cola Workers Network | Monthly : October 2007

Coca-Cola profits from sales in Japan and Brazil

By Mary Jane Credeur, Bloomberg News - Thursday, October 18, 2007

ATLANTA: Coca-Cola, the world's largest soft-drink maker, posted third-quarter profit that rose more than analysts anticipated by selling Coca-Cola Zero soda to the Japanese and bottles of tea to Brazilians. The shares rose the most in almost a year.

Net income increased 13 percent to $1.65 billion, or 71 cents a share, beating the average estimate of analysts by 3 cents. Sales jumped 19 percent to $7.69 billion, the company, based in Atlanta, said.

The focus of the chief executive, Neville Isdell, on new drinks and on rising demand in China and Brazil could result in the biggest increase in annual revenue in 13 years. To overcome falling U.S. soda sales, the company bought Vitaminwater flavored water in June and promoted no-calorie Coca-Cola Zero in Japan and Mexico.

"Management is executing and delivering in all these key markets," said Mike Morcos at Old Second Wealth Management in Aurora, Illinois. "I'm getting more bullish on Coke."

Coca-Cola rose $1.39, or 2.4 percent, to $59.15 in New York. The shares are at the highest level in six years after climbing 20 percent this year through Tuesday, outpacing a 15 percent gain by PepsiCo.

Twelve analysts surveyed by Bloomberg estimated an average profit of 68 cents a share, excluding 3 cents of costs for bottler restructurings and 3 cents of gains from the sale of a stake in a bottler. Eight analysts projected revenue of $7.29 billion. Year-ago profit was $1.46 billion, or 62 cents.

Worldwide shipments rose 6 percent in the third quarter, exceeding the company's long-term target for the third straight quarter. Volume rose at least 10 percent in China, Russia, India, Brazil and the Philippines.

"This demonstrates more consistency across key markets," said Mark Swartzberg, a Stifel Nicolaus analyst.

Coca-Cola promoted Sprite, Fanta soda and bottled tea in Japan to increase sales volume by 4 percent, the third straight quarterly gain. The company also introduced no-calorie Coca-Cola Zero soda in Japan this year.

Coca-Cola depends on soda for 80 percent of revenue, compared with less than 20 percent for PepsiCo.

SOURCE: http://www.iht.com/articles/2007/10/17/bloomberg/bxcoke.php

Coke sees progress in N America

Neville Isdell, chief executive of Coca-Cola, said on Wednesday he was seeing “the early signs of progress” in efforts to revitalise its North American operations, which account for almost 30 per cent of its sales.

While sales of its core sparkling drinks fell again in the region, the company reported a 1 per cent rise in unit case volumes and a 17 per cent increase in operating income, supported by this year’s $4.1bn acquisition of Glaceau, a maker of enhanced water drinks.

Muhtar Kent, president and chief operating officer, said that while he expected Glaceau to be “a very important catalyst for sustainable growth in North America”, Coca-Cola was continuing its focus on the sparkling drinks category, where sales have fallen as customers switch to juice, energy and water drinks. In September, the company introduced a modernised “grip” version of its 20 fluid ounce plastic cola bottle in the US, replacing a design that had been in service for 14 years, with red, silver and black labels for its Coke, Diet Coke and Coke Zero products.

Mr Kent said the company “will be coming out with a lot of innovation in packaging, and also in sales equipment as we move forward, with a key focus on the point-of-sale”.

During the company’s third quarter, net income increased by 13 per cent, to $1.65bn or 71 cents per share, ahead of Wall Street’s expectations, boosted by continued strong international growth and the impact of the weak dollar.

Coke also said that it expected raw material costs in 2008 for commodities such as corn syrup and aluminium to be either flat or down slightly.

Gary Fayard, chief financial officer, said: “We are starting to see a moderation in commodity costs impacting beverage companies, both globally and in North America, and we believe the worst is behind us.”

The company also highlighted its sales growth in China, where it said it was investing “aggressively”. During the quarter it reached 120,000 more outlets, and distributed 165,000 new coolers.

Mr Kent said that Coca Cola planned to establish its brands as “a staple in the local community” with wide availability by next year’s Beijing Olympics, where it is a leading IOC sponsor.

The Financial Times Limited 2007

"Union-busting by installment" case goes to Supreme Court: 6 years of illegally replacing union members with contract workers

In July 2001 Coca-Cola Philippines management issued an internal memo to all HR managers to freeze all hiring of regular workers. That freeze continues today as literally thousands of 5-month contract workers are rotated through the bottling plants. This practice is now the subject of a Supreme Court Case, with many more cases in the pipeline.

On 25 September, the IUF-affiliated Alliance of Coca-Cola Unions Philippines (ACCUP) passed a resolution giving full support to the Supreme Court case filed by the General Santos Coca-Cola Plant Free Workers Union against Coca-Cola Bottlers Philippines Inc (CCBPI), a wholly owned subsidiary of The Coca-Cola Company.

The petition calls for a review of the decision of the National Labour Relations Commission (NLRC) to dismiss the union’s strike notice filed back in January 2002 and the failure of the Court of Appeals to recognize the unfair labour practices that have decimated union membership over the past 5 years. The original strike notice was filed in response to CCBPI’s contracting out of 41 essential positions normally staffed by union members and which are explicitly included in the collective bargaining unit represented by the union.

After declaring a freeze on hiring regular employees in July 2001, CCBPI engaged the services of labour hire agencies to suppy contract workers who would be exempt from union membership. This includes JLBP Corporation Services which CCBPI engaged on 1 April 2002 under a “temporary” arrangement for 6 months. But more than 5 years later JLBP continues providing hundreds of workers on non-renewable 5 month contracts to do essential tasks on the bottling lines. Despite claims that JLBP is a specialized, independent contractor, the fact is it only has paid-up capital of 100,000 Pesos (US$2,230 or 1,580 Euro at today’s exchange rates) and has no tools, equipment or machinery of its own. All of the tools, equipment and machinery used by JLBP contract workers are owned by CCBPI.

CCBPI refuses to provide the union with copies of the contracts signed by the workers hired through JLBP, and maintains its “freeze” on any new hiring of regular workers. So while the hiring of regular workers has been “frozen” for more than 5 years, hundreds of contractual workers who are excluded from union membership have been rotated through the company’s General Santos bottling plant. In effect it means that since July 2001 no new union members could be recruited, while retirement and redundancy over the years cut the existing number of union members by more than 50%.

The union argues that the intention of CCBPI was not to cut costs or reduce the overall workforce, but simply to cut the number of workers represented by the union in collective bargaining. As union members retired or became redundant, they were replaced with contract workers who simply couldn’t join the union. In its petition to the Supreme Court this process is described as “union-busting by installment”.

In the same resolution passed on 25 September, ACCUP declared its support for the case filed in the Court of Appeals by another affiliate, Samahang Manggawa ng Coca-Cola (SAMACOKE). This case also concerns CCBPI’s use of short-term contracts and casualization as a means of union-busting.

For backround please read: Workers hired on 5 month contracts, assigned to positions formerly held by "redundant" regular workers [February 23, 2007]