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Coca Cola

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scaled back its long-term targets for earnings and sales growth Thursday, and pledged to increase spending on marketing and operational initiatives.

The soft drink giant is now targeting annual volume growth of 3% to 4%, down from the increase of 5% to 6% projected earlier. It expects operating-income growth of 6% to 8% and earnings per share growth in the high single digits, down from the previously expected 11% to 12% growth.

The new forecast came as a result of an operational review that new chairman and chief executive Neville Isdell has been conducting for several months, along with other company officials.

"As we have assessed our future growth opportunities, we believe we have outlined realistic and achievable financial growth targets over time," Isdell said in a statement. "We believe that once we take the necessary steps to get back on our path to growth, our company will be well positioned to reach these targets."

For fiscal 2004, Coke reiterated its previous earnings guidance, calling for net income of $1.88 to $1.90 a share, up from last year's earnings of $1.77 a share. Wall Street's estimates call for a better performance, forecasting $1.99 a share, according to Thomson First Call.

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Shares of Coke were down 48 cents, or 1.2%, to $40.69 in premarket trading.

The company expects continued weak results in key markets such as North America, Germany and the Philippines in 2005. In response to the situation, it plans to increase "marketing and innovation" expenses by $350 million to $400 million a year. The money will be used for worldwide marketing efforts, support in emerging markets with high-growth potential and bolstering the company's new products pipeline.

Isdell has previously acknowledged systemic problems in the company's culture, left over from previous management teams, that have stifled innovation and left it trailing its chief rival,


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in new growth markets, such as noncarbonated beverages. He was named to lead the company in May to replace the retiring Doug Daft.

On a positive note, Coke expects to enjoy positive impacts on its results next year from currency translation gains. It said it will decide during 2005 whether to reinvest any positive currency benefits once those benefits have been realized.