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Coca-Cola in Europe: Charting a Rocky Run for the Yanks

The Exchange

Europe, we know, has been a very uneven place to be for many businesses and investors in the past three years. One American company operating there that's seen mixed numbers in that time reported earnings Tuesday -- Coca-Cola (KO).

Volume in Europe was up 1% in the third quarter, rising in all units despite the economic worries that continue to plague the region. Now that's not robust growth, but it's not a negative number, either. Overall, earnings for the quarter rose and were in line with estimates, while sales didn't quite reach the consensus forecast, edging up 1% from a year earlier to $12.34 billion.

Europe was more than 10% of operating revenue in the most recent quarter, totaling around $1.29 billion. That's an 8% drop from last year, though foreign exchange rates did hurt the results, and not by a small amount. Excluding currency effects and poor pricing, revenue would have been even. But again, the actual number did show that decline.

Coca-Cola chart

As the chart above shows, Europe hasn't been smooth sailing for Coke in the past couple of years in two key areas, case volume and operating revenue -- particularly the latter, which again is yanked around by currency fluctuations. Volume is based on beverages moved, so you can get a sense of how much more variable the money Coke brings in is compared with the actual amount of product it's selling. This goes back to the start of 2010, when the Greek crisis was really getting under way and rioters were beginning to take to the streets, and you can see how Coke's had the good and the bad. (Speaking of Greece, it may be still controlling the market, and bottler Coca-Cola Hellenic, Greece's largest company, just announced it's heading to more stable ground in Europe.)

How do you forecast that, exactly?

Europe is a big market for another U.S. company that, like Coke, is one of the 30 Dow stocks. That's McDonald's (MCD), which is expected to report its quarterly numbers Friday morning. The businesses aren't identical, but taking a look at two of McDonald's key metrics, again from the start of 2010, you can see how it's managed during the never-ending European crisis. This chart uses comparable-store sales and operating income.

McDonald's chart

These are two of the world's biggest, most expansive brands, and they've weathered the recession -- not just in Europe, but elsewhere -- a lot better than many companies. Imagine how they'd be doing in normal times, if such a thing exists. And now imagine how companies without their financial standing feel.