Coke Profit and Revenue Fall as Volume Is Flat--2nd Update
April 20 2016 - 11:28AM
Dow Jones News
By Anne Steele
Coca-Cola Co. on Wednesday said revenue and profit declined in
its latest quarter as soda volume was flat amid weakness
abroad.
Shares, up 13% over the past three months, fell 1.8% premarket
to $45.77, although results edged in just above Wall Street's
expectations.
Coke has been struggling with weakness overseas, with key
countries such as Russia and Brazil in recession, consumer demand
weak in Europe and Japan, and China's economy slowing. Weakening
foreign currencies also are hitting Coke, which generates about
half its sales abroad but translates results into dollars.
The company has been able to offset that in part by raising
prices and steering consumers to smaller packages that cost more
per ounce in its U.S. market.
For the first quarter, Coke reported that its beverage volumes
grew 2% both world-wide and in its key North American market.
Chief Executive Muhtar Kent said amid a "challenging global
macro environment," the company delivered "positive top-line growth
and strong underlying margin expansion."
"We are confident that we have the right strategies in place to
achieve our full-year outlook," he said.
Noncarbonated drinks, which include tea, packaged water and
sports drinks, continued to log strong growth at 7%, driven by
solid volume across all key categories except for juice and juice
drinks which declined slightly. Soda volumes were even in the
quarter globally, and in North America, where growth in Sprite,
Fanta and energy drinks was offset by a decline in the namesake
Coca-Cola brand.
Overall, Coke posted a profit of $1.48 billion, or 34 cents a
share, down from $1.56 billion, or 35 cents a share, a year
earlier.
Excluding certain items, per-share earnings were 45 cents,
edging in above the 44 cents analysts polled by Thomson Reuters had
forecast.
The company said foreign exchange shaved 12 percentage points
off its per-share earnings in the quarter.
Revenue fell 4% to $10.28 billion. Analysts polled by Thomson
Reuters had forecast revenue of $10.27 billion. The top line was
hurt by one less day compared with the prior-year period.
Also Wednesday, Coke, which has been accelerating the
restructuring of its North American operations, outlined more
changes to its bottling network.
Ulysses "Junior" Bridgeman, a former NBA player and founder of
Manna Inc., signed a letter of intent to buy territory from Coke in
Missouri, Illinois, Kansas and Nebraska. He will also acquire a
production facility in Lenexa, Kan. Bedford, N.H.-based Coca-Cola
of Northern New England will take on additional territory from the
company throughout New England, acquiring production facilities in
Needham Heights, Mass., and Hartford.
The company also said bottlers in Mississippi and Colorado would
expand their operations and bottlers in Florida and Chicago would
acquire a total of 10 production facilities. Coke also said it
plans to grant additional territory rights in Albuquerque, N.M., to
Swire Coca-Cola USA.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
April 20, 2016 11:13 ET (15:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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