Coca-Cola Co on Wednesday reported higher fourth quarter net income as it benefited from the weak US dollar, lower taxes and a late-year surge in demand for its beverages. The results surprised Wall Street, which had expected the world's largest soft-drink maker to report lower profit before special items. Instead, that figure held steady from a year earlier. Shares of Coca-Cola, which has been struggling to boost sluggish soft-drink sales and reignite its flagging stock price, rose 2.5 percent.

Net income for the quarter rose to $1.2 billion, or 50 cents a share, from $927 million, or 38 cents a share, a year earlier.

Gains from an insurance settlement, foreign tax credits and the resolution of tax matters offset one-time charges. Excluding the special items, earnings were unchanged at 46 cents a share. Analysts on average were expecting 40 cents, according to Reuters Estimates.

Revenue rose 1.6 percent to $5.26 billion, exceeding Wall Street estimates of $5.19 billion.

Coca-Cola said the weak US dollar, combined with improvements in its business late in the fourth quarter, added about 3 cents per share to its profit. A falling dollar improves financial results when overseas earnings are converted into US currency.

The Atlanta-based company's reported tax rate in the period was 15.5 percent, compared with an anticipated 25 percent.

The quarter capped a tumultuous year for Coca-Cola, which replaced its chief executive, slashed its long-term earnings growth targets and shook up its operations in a bid to return to its position as one of America's premier growth companies. Smith Barney analyst Bonnie Herzog said she still has concerns about Coca-Cola's business in key markets such as North America and Germany.

Coca-Cola is hoping to improve its fortunes in 2005 with the rollout of a flurry of drinks, including flavoured versions of Dasani water, an energy drink called Full Throttle, and Diet Coke sweetened with the sugar substitute Splenda.

One of the keys to Coke's future is capturing more consumers who have moved away from sugary soft drinks to diet versions or to healthier low- or no-calorie beverages such as water and orange juices with reduced sugar.

Doing so would go a long way toward driving up Coke's unit case volume. This key sales measure in the beverage industry rose 2 percent overall in the fourth quarter. Volume in North America, Coke's largest market, was down 1 percent.

In a conference call with analysts, Coca-Cola Chairman and Chief Executive Neville Isdell said he was not satisfied with the results, but pointed to signs that the company was getting back on track in its more than 200 markets around the world. "I'm confident given the strength of our brands around the world that we are going to be able to establish our marketing leadership," Isdell said. "I think we have a little bit of momentum going forward."

Copyright Reuters, 2005