By Anne Steele and Mike Esterl 

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

Shares lost 3.5% to $43.33 in morning trading as the company posted flat overall volume.

Atlanta-based Coke also gave full-year guidance for comparable earnings per share below Wall Street expectations, saying it anticipates the metric to decline 4% to 7% from a year earlier, implying a range of $1.86 to $1.92. Analysts polled by Thomson Reuters had forecast $1.94.

The company said it now expects organic revenue -- which strips out foreign-exchange swings and structural items -- to increase just 3% this year. That is down from its earlier forecast of 4% to 5% growth.

The company reiterated it still expects adjusted pretax income to increase 6% to 8% in 2016, boosted by higher pricing and a $3 billion cost-cutting program that has lifted operating margins.

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 quarter, Coke reported that its beverage volumes were flat world-wide but grew 1% in its key North American market.

Coke said it increased prices 3% globally as the company increasingly focuses on revenue, not volume, to fuel growth.

But the most recent quarter represented the first time that Coke's overall volumes didn't grow since 1999. It was also the first time that soda volumes declined since the first quarter of 2014.

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 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 and Mike Esterl at mike.esterl@wsj.com

 

(END) Dow Jones Newswires

July 27, 2016 11:31 ET (15:31 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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