Updated from 8:22 a.m. EDT

Coca-Cola

(KO) - Get Report

on Friday reported a 36% jump in its quarterly earnings, narrowly beating Wall Street expectations, on strong worldwide volume growth and savings from cost-cutting measures.

The world's largest soft drinks company earned $1.07 billion, or 43 cents a share, after non-recurring items in the third quarter of 2000, compared to a profit of $787 million, or 32 cents a share, in the same period last year.

Excluding the non-recurring items, Atlanta-based Coca-Cola earned 42 cents a share in the period, slightly higher than the consensus forecast of 41 cents a share, according to analysts surveyed by

First Call/Thomson Financial

.

But Tim Swanson, analyst at

A.G. Edward & Sons

, estimates that 2 cents of Coca-Cola's earnings per share came from tax benefits it received from the consolidation of the

Hellenic Bottling Company

. Without the favorable tax comparison, Coke would have fallen just short of the consensus estimate.

During the quarter, the merger of

Coca-Cola Beverages

TST Recommends

and Hellenic Bottling Company was completed to create

Coca-Cola HBC

, cutting Coca-Cola's equity ownership in the bottler from 50.5% to about 24%. The ownership change helped the soda giant recognize a non-cash gain of $118 million in the quarter.

"It was essentially a 40-cent (per share) quarter which may be why people are not all that impressed with their results," said Swanson.

Indeed, shares of Coca Cola finished Friday regular trading down $2.31, or 4%, at $54.81 after the company announced its third-quarter earnings.

Coca-Cola saved a penny per share, as expected, from its organizational restructuring and continues to expect restructuring savings for the full year 2000 to be approximately $150 million on a pretax basis.

The impact of the organizational realignment on the company's year-to-date earnings has been approximately $560 million pretax, or 16 cents per share after tax. The Atlanta-based company still expects the full-year pretax financial impact of the organizational realignment to be approximately $725 million.

Flat North American sales during the quarter were offset by growth overseas, led by a 24% increase in unit case volume in China and a 10% jump in case volume overall in its Asia Pacific Group. Total worldwide gallon shipments in the third quarter increased 8%.

But analysts remain concerned about the company's domestic volume growth.

"They need to focus on market execution," said Swanson. "This year, they were held back by very aggressive pricing initiatives by bottlers at the retail level."

If the bottlers moderate their efforts, Swanson said Coca-Cola's volume levels should improve. "But it remains to be seen how the dynamics between the bottler and the company will play out, from a profitability standpoint," he added.

Swanson has a "maintain" reading on the stock. His firm does not have an underwriting relationship with Coca-Cola.

The company is also vulnerable to further losses should the euro remain at its current levels, or depreciate further.

Still, Coca-Cola said it remains comfortable with previously established objective of worldwide unit case volume growth of 5 percent for 2000 and with the current range of estimated earnings per share for 2000 and 2001.

On average, analysts are expecting earnings per share of $1.44 for fiscal year 2000 and $1.75 per share for the following fiscal year, according to First Call/Thomson Financial.