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The Coca-Cola Company (KO - Free Coca-Cola Stock Report), the world's largest beverage distributor, posted decent results for the 2010 December quarter. Excluding one-time items related to the acquisition of an affiliated bottler's (Coca Cola Enterprises) North American operations (CCENA) and the associated sale of the beverage giant's distribution assets in Scandinavia, share net rose 9% year over year, to $0.72. Reported revenues, meanwhile, jumped 40%, to nearly $10.5 billion, reflecting both the sizable contribution from CCENA and solid gains within KO's long-standing operations.

Underlying top-line growth (excluding CCENA and currency effects) was approximately 8% in the quarter, well above management's sustainable 5%-6% target range. The positive comparison reflected volume increases across the company's entire geographic footprint. Indeed, worldwide volume growth was 6% in the quarter, as all six regions posted gains. Eurasia & Africa (+14%) led the pack, largely thanks to strong demand for the trademark Coke brand in Russia. The sizable North American business, meanwhile, enjoyed a 3% "like-for-like'' unit-volume increase (excluding the benefit of new cross-licensed brands like Dr Pepper), reflecting strong demand for the company's noncarbonated offerings, including Powerade (+20%), smartwater/vitaminwater (+19%), and Trademark Simply (+17%).

Continued strong global demand augurs well for Coca-Cola in 2011. Indeed, unit-volume sales should increase 4%-5% this year, thanks to higher soft-drink consumption in countries like Russia, India, and China. On the domestic front, greater control of the "route to market'' should enable Coke to both better serve major customer accounts and react to shifting consumer tastes. The company also expects to still realize as much as $150 million in CCENA-related cost savings this year. On the downside, input-cost inflation is sure to be a drag, especially given that CCENA had limited commodity-price hedges in place prior to the acquisition. All in all, we look for 2011 earnings to come in at $3.80, up 15% from an adjusted tally of $3.31 in 2010.

We remain upbeat about the company's long-term prospects, given the favorable demand environment overseas. Market opportunities in Asia remain especially attractive. In China and India, for example, per-capita consumption (PCC) of Coke products is modest, at just 20 or so individual servings a year. Comparatively, annual PCC in a more established market like Mexico is upward of 660. Thus, we see vast opportunity for strong overseas demand to support solid bottom-line growth over the 3- to 5-year pull.

These shares traded slightly higher on the news and remain a neutrally ranked investment for the year ahead. The issue's long-term appreciation potential is above average and well defined, however, at its recent price.

About The Company: The Coca-Cola Company is the world’s largest beverage company. On any given day, 1.6 billion individual servings of the company’s brands are consumed by people around the globe. Coke, Diet Coke, Sprite, Fanta, Dasani, and Powerade are just some of the marketer’s most popular beverages. Business outside North America accounts for about 75% of net sales.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.