Coke reports profit drop amid shareholder unrest

Related tags The coca-cola company Dasani Coke

Coca-Cola reported an 11 per cent drop in first-quarter profit, and
experienced growing shareholder unrest at its annual meeting

Although the profit drop beat Wall Street expectations and Coke's stock rose more than 3 per cent, the world's largest beverage maker found its annual meeting filled with questions over alleged human rights abuses and water depletion.

Shareholders questioned chief executive Neville Isdell about the controversy surrounding the killings of several union workers at Coke bottling plants in Colombia and accusations that some of Coke's plants in India have depleted local groundwater. There were also minor protests outside the meeting.

Isdell countered that Coke has not done anything wrong in the two countries. A government inquiry in Colombia dismissed the accusations that Coke was complicit in the deaths and a high court in India has backed Coke over the water dispute.

"As long as anyone continues to believe these allegations, we're going to take them seriously and work to change people's perceptions,"​ Associated Press reports Isdell as saying.

Coca-Cola reported that it earned $1 billion for the January-March period 2005 compared to a profit of $1.13 billion, for the same period a year ago. Excluding one-time items, Coke said it earned $1.12 billion.

Revenue rose 4 per cent to $5.27 billion, compared to $5.1 billion recorded a year ago. Worldwide unit case volume increased 3 per cent in the quarter.

The Atlanta-based giant has had a stressful 12 months. It has had to settle a five-year European Union antitrust case by promising to scrap controversial retail discounts and by agreeing to share more display space with rivals, and had to deal with the discovery of higher than permitted levels of the chemical bromate in samples of its bottled water brand, Dasani in the UK.

A voluntary withdrawal was undertaken as a precautionary measure. The UK's Food Standards Agency said that although there was no immediate risk to public health, Coca-Cola's decision to stop selling Dasani in Britain was sensible.

And in the US, federal investigators have been investigating Coca-Cola's dealings with Japanese company Takasago International in connection with allegations of channel stuffing. It is alleged that the beverage giant overstated financial results for several years by shipping excessive beverage concentrates to Japan.

Channel-stuffing refers to the practice of convincing clients to accept unwanted or early deliveries of a product. The method is used to pad revenue, and can help a firm meet quarterly financial targets. Rebates, extended payment terms and other incentives are often provided to clients in exchange for their complicity.

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