Coke, Weighed by Latin America Weakness, Deepens Its Cost Cuts

By Anne Steele 

Coca-Cola Co.'s profit and revenue continued to slide in the first quarter of the year as weakness in Latin America flattened volumes, and the soda maker said it would expand its efforts to cut costs.

Overseas weakness and the stronger U.S. dollar have continued to weigh on results for the company, which generates about half its sales abroad but translates results into dollars.

For the December quarter, Coke's beverage volumes were even in the quarter globally, dragged by the macroeconomic conditions in some Latin American markets and the shift of the Easter holiday into the second quarter. Soda volumes world-wide fell 1%.

Also Tuesday, Coke said it would expand its cost-cutting program to create additional incremental savings of $800 million annually by 2019, bringing the total yearly savings target of the six-year program to $3.8 billion.

Chief Executive Muhtar Kent, who is stepping down to be replaced by COO James Quincey next week, said the company remains on track to meet its revenue and profit targets for the year.

The company also lifted the low end of its outlook for 2017. For the year, Coke now expects adjusted earnings per share to decline 1% to 3% from $1.91 in 2016. It has previously guided for a 1% to 4% decline.

In all for the quarter, Coke earned $1.18 billion, or 27 cents a share, down from $1.48 billion, or 34 cents a share, a year earlier. Excluding certain items, per-share earnings were 43 cents, a penny below the average analyst estimate, according to Thomson Reuters.

Revenue fell 11% to $9.12 billion but stayed well above analysts' predictions for $8.87 billion. The company said foreign exchange and refranchising structural changes shaved 1% and 10%, respectively, off its revenue in the quarter.

Shares edged 0.9% higher premarket to $43.32.

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

April 25, 2017 08:08 ET (12:08 GMT)

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