Coca-Cola issues China growth warning

<p>Coca-Cola has issued a warning concerning China’s slowdown.</p>

One of the world’s most recognisable companies has issued a warning that growth in China may be slowing more than expected.

Coca-Cola stated today (October 17th) that its soft drink sales in the world’s number two economy over the course of the third quarter of this year were higher by two per cent.

This is down from seven per cent expansion in the country during the second quarter of the year.

However, Coke’s sales volumes in China are still higher by six per cent in 2012 compared to the same period last year, while in Europe and the US this figure is higher by one and two per cent respectively.

Chief executive of Coca-Cola Muhtar Kent remarked: “It is reasonable to expect that China’s ongoing economic slowdown may have a short-term effect on our industry and on our business.”

However, he added that the Asian superpower will continue to remain a key market for growth for the beverage manufacturer.

Asia is an important region for Coca-Cola, with the company recording a net profit of $2.3 billion (£1.4 billion) for the July-September period – a four per cent year-on-year gain – thanks to its growing popularity there.

Sales were up 19 per cent in Thailand and 15 per cent in India over this timeframe compared to 2011.

The conglomerate’s proposal to concentrate on these emerging markets makes for a shrewd business plan, as the company intends to boost its market share still further.

Indeed, earlier this year, Coca-Cola announced investment plans worth $5 billion in India, spread over an eight-year period.

So, despite China’s slowdown, Asian has remained an important component in the company’s success.

Furthermore, Coca-Cola recently returned to Burma after 60 years, following the US government’s decision to lift some trade sanctions against the country.

At 08:00 BST, the Hang Seng in Hong Kong was one per cent higher to an index value of 21421.7 points.

And at close of play on Wall Street in New York last night Coca-Cola was down by 0.6 per cent to $37.90 per share.

Learn all about CFD trading strategies and the stock market at City Index.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.