Coca-Cola Co., the world’s largest soft-drink maker, said second-half earnings will miss analysts’ estimates because of sluggish sales in North America and Europe.

Its shares traded yesterday at their lowest level since May 2003.

Profit will be 77 cents to 82 cents a share, the Atlanta-based company said in a statement, compared with 88 cents a year earlier. Coca-Cola was expected to earn 99 cents in the second half, the average estimate of more than 16 analysts surveyed by Thomson Financial.

E. Neville Isdell, who returned from retirement in June to become chief executive, said a lack of management talent and ineffective advertising hurt sales.

The forecast is a setback for Mr. Isdell, who is trying to improve lackluster sales growth as health-conscious consumers shun its carbonated soft drinks.

“It’s a pretty big ship to turn around, and I don’t think it’s turning right now,” said Brian Holland, director of research at Cleveland-based Boyd Watterson Asset Management, which has about $3.8 billion in assets and sold its roughly 250,000 Coke shares in February. “Management has a daunting task.”

Yesterday’s announcement broke with the company’s practice, announced in December 2002, of not giving earnings guidance.

In dropping the forecasts, Coca-Cola was following the lead of billionaire Warren Buffett, the company’s largest shareholder, who said forecasts were a distraction from long-term company objectives.

“We have made an exception today in the interest of clear and timely communication,” Mr. Isdell, 61, said in a statement. “We want to inform investors of business trends that are significantly impacting our operating environment.”

Shares of Coca-Cola dropped $1.71, or 3.99%, to $41.16 in New York Stock Exchange composite trading. The shares fell 7.8% on July 23, the biggest drop since October 2002, after the company announced that second-quarter sales rose at the slowest pace in more than two years. The stock had declined 1.5% in the past year.

The company is “stretched at the moment” in talent and has “morale issues to address,” Mr. Isdell said on a conference call.

Steve Heyer resigned June 9 as president after the board passed him over for chief executive. Among the executives who left in the last three years are Jeff Dunn, who headed North American operations; Tom Moore, president of its soda-fountain business; Stephen Jones, formerly its top marketing officer; and General Counsel Deval Patrick.

Coca-Cola’s marketing isn’t effective enough, Mr. Isdell said citing 52 ads the company ran worldwide during the World Cup soccer finals in 2002. “That is expensive,” he said.

A commercial of a woman drinking a Coca-Cola as she walks down a street singing a cappella is now airing in 20 countries including America.

“That sort of initiative is working,” he said. “We are putting in a disciplined process to assure it is working. We have to make sure our marketing is more effective than it has been.”

Third-quarter profit will be 35 cents to 38 cents. The company was expected to earn 54 cents, according to the analysts.

Worldwide unit case volume is expected to increase 1% to 2% for 2004, short of the company’s goal of a 5% yearly gain. Growth for the third quarter is anticipated to be in the range of flat to 1%.

The company’s average annual sales growth of 2.3% the past five years lags behind PepsiCo Inc.’s 3.8%. PepsiCo earlier this month affirmed its 2004 forecast of at least $2.29 per share.

Sales growth in the American carbonated-soft-drink market has been less than 1% annually over the past five years as consumers turn to healthier drinks. In this fast-growing market, PepsiCo’s Gatorade and Tropicana juices have a bigger share than Coca-Cola’s Powerade and Minute Maid.

American demand for Coca-Cola’s C2, a new soda with half the calories and carbohydrates of regular drinks, is probably 80 million to 100 million unit cases a year, based on sales of the 20-ounce bottles, Mr. Isdell said.

On a per-can basis, C2’s price in eight-packs was higher than Coca-Cola’s and some rivals’ brands, hurting its displays at supermarkets. The retail price will be reduced to about $1.99 for eight packs, he said.

“It is not a blockbuster, but it is a winner,” Mr. Isdell said.

Coca-Cola’s third-quarter results will include $375 million to $450 million in charges primarily related to a container- deposit law in Germany.

Germany introduced a law mandating deposits of as much as 50 euro

cents ($0.62) on non-reusable containers of beverages in January 2003.

Sales of canned soft drinks and beer last year declined as supermarkets withdrew products from their stores to avoid taking back containers. The European Commission plans to challenge the law in court, arguing that it discriminates against imports.

Coca-Cola gets 80% of revenue from abroad. Its volume decline in Northern Europe follows its March recall of 500,000 bottles of its Dasani water in the U.K. A lab analysis found as much as 2.5 times the allowable level of bromate, a carcinogen, in the water. The recall also stalled plans to introduce Dasani in France and Germany.