Coca-Cola's chief executive asks for investor patience

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The Independent Online

Coca-Cola set a target of 2006 for turning around its fortunes and regaining its position as the world's favourite soft drinks maker.

Coca-Cola set a target of 2006 for turning around its fortunes and regaining its position as the world's favourite soft drinks maker.

Despite reporting better than expected results for the fourth quarter yesterday, Neville Isdell, the Irish chairman and chief executive who took the reins of the world's biggest beverage company in May, said he was "not satisfied" with Coke's performance in 2004.

He added that a lot of hard work was needed to rejuvenate Coke, whose key North American market has suffered from from fierce competition from Pepsi and other soft drinks makers. He said: "Do I think 2005 is going to be the perfect year? No. It would be unrealistic given where we are coming from in 2004."

But Mr Isdell emphasised there was "an energy to get this ship moving", which would make 2006 an "inflection point" when the company should start showing substantial signs of recovery.

Under Mr Isdell, Coke has concentrated on creating products to try to protect its share of the beverage market.

He said Diet Coke with Lime, launched recently in the UK, had been "extremely successful". Coke announced last week it would start manufacturing a low-calorie version of its flagship drink with Splenda, an artificial sweetener, to try to attract new customers. Shares in Britain's Tate & Lyle surged on the news as it makes sucralose, a key ingredient in Splenda.

Mr Isdell challenged critics who said introducing lots of new varieties of Coke would cannibalise its existing market. He said there were "a lot of opportunities to increase the number of drinkers of Coke".

The Atlanta-based company has been particularly marketing Diet Coke to men, where Mr Isdell said there was "lots of white space" and among women over 40.

Net profits increased in the fourth quarter by one-third to $1.2bn (£638m), or 50 cents a share, up from $927m, or 38 cents a share, a year earlier. Excluding exceptional items, such as lower-than-expected taxes, earnings per share were 46 cents, exceeding analysts' expectations of 40 cents a share.

While the Coke brand and other carbonated soft drinks continued to perform poorly in North America and Germany, sales rose in several overseas markets, including China, Brazil, South Africa and Russia.

Coke is continuing to invest in its struggling water business. The company said it reached an agreement with France's Groupe Danone over the distribution of Danone and Evian water, although it did not give details of the arrangement.

Full-year net profits increased 12 per cent to $4.8bn, or $2 a share, compared with $4.3bn, or $1.77, the year before.