Coca-Cola Co., the world’s largest beverage company, posted third-quarter revenue that missed estimates, after North American sales declined and global volume grew less than predicted. The company also embarked on a plan to cut $3 billion in annual expenses by 2019.
Revenue fell to $11.98 billion in the quarter from $12 billion a year earlier, Atlanta-based Coca-Cola said in a statement. Analysts had estimated $12.1 billion on average, according to data compiled by Bloomberg.
Chief executive officer Muhtar Kent is struggling with sluggish international growth and mounting concerns at home over obesity and artificial sweeteners. The woes overshadowed a US market-share gain from the company’s 'Share a Coke' programme, which replaced its logo on bottles and cans with common names and phrases. Kent has also been squeezing expenses, including additional cost cuts. “We recognise that we need to increase the scope and pace of change as we continue to face a challenging macroeconomic environment,” he said in the statement.
The shares fell as much as 4.1 per cent to $41.50 in early trading in New York. They had risen 4.8 per cent this year, compared with a 3-per-cent gain for the Standard & Poor’s 500 Index.
Sales volume declined 1 per cent in North America, while global volume grew 1 per cent in the quarter. Mark Swartzberg, an analyst at Stifel Nicolaus & Co., had projected global growth of 3.4 per cent.
Quarterly Profit
Net income fell 14 per cent to $2.1 billion, or 48 cents a share, from $2.45 billion, or 54 cents, a year earlier. Excluding some items, profit was 53 cents a share, matching analysts’ estimates.
As part of the plan to streamline Coca-Cola, the majority of company-owned distribution territories in North America will be sold back to independent bottlers by the end of 2017, with most of the rest being refranchised by 2020.
“We worry that bigger issues will continue to plague the company,” Vivien Azer, an analyst for Cowen & Co. in New York, said in a note. “Macro-weakness in emerging markets, in particular Latin America, concerns over diets and currency headwinds, to name a few.”
Bloomberg News, edited by ESM
