KO Coca Cola Company

Coca-Cola Co. posted said revenue slid more than expected in the latest quarter on flat soda volume amid continued weakness abroad, particularly in developing markets.

Shares, which have risen 4.5% this year, lost 1.2% premarket to $44.34.

Overseas weakness has damped Coke's results recently, with key countries such as Russia and Brazil in recession, lower consumer demand in Europe and China's economy slowing. The stronger U.S. dollar has also hurt the company, which generates about half its sales abroad but translates results into dollars.

Higher prices and smaller packaging in the U.S. that costs consumers more per ounce has helped Coke offset those declines. In the June quarter, Coke reported that its beverage volumes were flat world-wide but grew 1% in its key North American market.

On Wednesday, Chief Executive Muhtar Kent said "challenging macroeconomic conditions, structural changes and foreign-exchange headwinds" dragged on the top line, but he pointed to 3% organic revenue growth.

He said strong performance in the company's largest and most developed markets, including the U.S., Mexico and Japan, was offset by difficult external conditions in emerging and developing markets, including China and Argentina.

"These factors combined to put pressure on our volume and top-line performance in the quarter, especially where we own bottling businesses," Mr. Kent said. "In these international operations where external headwinds have proven to be more severe than originally forecast, we are taking action by reassessing local market initiatives where needed."

During the quarter, noncarbonated drinks, which include tea, packaged water and sports drinks, grew 2%, driven by strong performance across most categories except for juice and juice drinks which declined due to industry weakness in China.

Soda volumes declined 1% in the quarter globally—on weakness in certain emerging markets—and in North America, where growth in Sprite, Fanta and energy drinks was offset by a decline in the namesake Coca-Cola brand.

In all for the quarter, Coke posted a profit of $3.45 billion, or 79 cents a share, up from $3.12 billion, or 71 cents a share, a year earlier. Excluding certain items, per-share earnings were 60 cents, topping the 58 cents analysts polled by Thomson Reuters had forecast. The company said foreign exchange shaved 10 percentage points off its per-share earnings in the quarter.

Revenue slipped 5.1% to $11.54 billion, below analysts' prediction for $11.64 billion.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

July 27, 2016 08:05 ET (12:05 GMT)

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