By Chelsey Dulaney
Coca-Cola Co. said Wednesday that results held up better than
expected in its second quarter despite the impact of a strong
dollar, as the soda giant logged broad volume growth for beverages
from Sprite soda to ready-to-drink tea.
Shares of Coke, flat over the past year, added 9 cents to $41.28
in morning trading.
The maker of Sprite soda and Dasani water, along with its
namesake cola, has been hurt by recent foreign-exchange
fluctuations.
It also has been struggling with tepid volume growth as
consumers scale back on soda. Coke has worked to offset the decline
by raising prices, especially in the U.S., where the company also
is pushing smaller packages like 7.5-ounce "mini cans'" that cost
consumers more on a per-ounce basis.
In the latest quarter, Coke said world-wide soda volumes grew
1%, led by 1% growth for the Coca-Cola brand, 6% growth for
Coca-Cola Zero and 3% growth for Sprite. Diet Coke posted a 7%
decline.
Coke noted on its conference call that flagship brand volume in
China rose by a double-digit percentage, as did mini-can volume in
the U.S.
Overall beverage volume grew 5%, driven by ready-to-drink tea
and packaged water growth.
Coke Chief Executive Muhtar Kent said on the call that the
global economy "remains uneven" and that emerging markets are
"challenged." He added that the company remains focused on bolt-on
acquisitions, rather than large purchases.
For the period ended July 3, the company posted earnings of
$3.11 billion, or 71 cents a share, up from $2.6 billion, or 58
cents a share, a year earlier. Coke said foreign currency hurt
per-share earnings by 6 percentage points in the quarter.
The quarter's bottom line was boosted by a gain on its deal with
Monster Beverage Corp. Excluding special items, per-share earnings
were 63 cents.
Revenue fell 3.3% to $12.2 billion. Organic revenue, which
strips out foreign currency impacts, grew 4%.
Analysts surveyed by Thomson Reuters had projected 60 cents a
share in earnings and $12.1 billion in revenue.
Gross margin contracted to 60.9% from 61.7% a year earlier, even
as input costs edged down 1.5%. Coke has been working through a $3
billion cost-cutting plan announced last October to redirect
savings from layoffs and zero-base budgeting to more marketing.
Coke also trimmed the top end of its 2015 share repurchase plan
to a range of $2 billion to $2.5 billion, compared with its
previous guidance for $2 billion to $3 billion in buybacks.
Mike Esterl contributed to this article.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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