Coke Revenue Slides as Volumes Flat
27 July 2016 - 10:14PM
Dow Jones News
By Anne Steele
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 07:59 ET (11:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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