Coke profits keep their fizz

Shares in Coke and arch-rival Pepsi climb higher

Soft drinks giant Coca Cola has unveiled a sharp increase in profits and sales, crediting strong demand in its core US market.

The company said on Wednesday that profits for the April to June period came in at $1.29bn (£774m), up 15% on the same period last year.

Sales were also up 15% on the year at $5.37bn.

Coca Cola said the increase reflected strong demand for its Minute Maid fruit juice brand and its flagship Coca Cola beverage in the US.

Its new Vanilla Coke drink, launched earlier this year, also contributed to the higher sales figure.

Wall Street investors welcomed the news, marking Coke shares 48 cents higher to $50.85 in afternoon trade in New York.

Shares in arch-rival Pepsico also gained.

Accounting change

The company's strong US sales outweighed a sluggish performance in Latin America, where revenues were hit by currency devaluations.

But the company expects to benefit from the dollar's recent weakness against the euro, which will increase the dollar value of its European revenues.

"We are encouraged by the recent moves in currency as a weaker dollar will result in real benefits for us going forward," said Coca Cola chief financial officer Gary Fayard.

The company added that its recent decision to book executives' stock options as expenses - a move applauded by advocates of greater transparency in corporate accounts - will trim its 2002 earnings by about one cent per share.

The accounting change is due to come into force in the October to December period this year.