Coke Profit and Revenue Fall as Volume Is Flat--2nd Update

By Anne Steele 

Coca-Cola Co. on Wednesday said revenue and profit declined in its latest quarter as soda volume was flat amid weakness abroad.

Shares, up 13% over the past three months, fell 1.8% premarket to $45.77, although results edged in just above Wall Street's expectations.

Coke has been struggling with weakness overseas, with key countries such as Russia and Brazil in recession, consumer demand weak in Europe and Japan, and China's economy slowing. Weakening foreign currencies also are hitting Coke, which generates about half its sales abroad but translates results into dollars.

The company has been able to offset that in part by raising prices and steering consumers to smaller packages that cost more per ounce in its U.S. market.

For the first quarter, Coke reported that its beverage volumes grew 2% both world-wide and in its key North American market.

Chief Executive Muhtar Kent said amid a "challenging global macro environment," the company delivered "positive top-line growth and strong underlying margin expansion."

"We are confident that we have the right strategies in place to achieve our full-year outlook," he said.

Noncarbonated drinks, which include tea, packaged water and sports drinks, continued to log strong growth at 7%, driven by solid volume across all key categories except for juice and juice drinks which declined slightly. Soda volumes were even in the quarter globally, and in North America, where growth in Sprite, Fanta and energy drinks was offset by a decline in the namesake Coca-Cola brand.

Overall, Coke posted a profit of $1.48 billion, or 34 cents a share, down from $1.56 billion, or 35 cents a share, a year earlier.

Excluding certain items, per-share earnings were 45 cents, edging in above the 44 cents analysts polled by Thomson Reuters had forecast.

The company said foreign exchange shaved 12 percentage points off its per-share earnings in the quarter.

Revenue fell 4% to $10.28 billion. Analysts polled by Thomson Reuters had forecast revenue of $10.27 billion. The top line was hurt by one less day compared with the prior-year period.

Also Wednesday, Coke, which has been accelerating the restructuring of its North American operations, outlined more changes to its bottling network.

Ulysses "Junior" Bridgeman, a former NBA player and founder of Manna Inc., signed a letter of intent to buy territory from Coke in Missouri, Illinois, Kansas and Nebraska. He will also acquire a production facility in Lenexa, Kan. Bedford, N.H.-based Coca-Cola of Northern New England will take on additional territory from the company throughout New England, acquiring production facilities in Needham Heights, Mass., and Hartford.

The company also said bottlers in Mississippi and Colorado would expand their operations and bottlers in Florida and Chicago would acquire a total of 10 production facilities. Coke also said it plans to grant additional territory rights in Albuquerque, N.M., to Swire Coca-Cola USA.

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

April 20, 2016 11:13 ET (15:13 GMT)

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