Coke to Cut 20% of Corporate Workers as It Battles Soda Slump -- 2nd Update

By Jennifer Maloney and Anne Steele 

Coca-Cola Co. executives said Tuesday they plan to eliminate roughly 20% of corporate staff, as the beverage giant battles a slump in soda sales and expands a long-running cost-cutting program.

James Quincey, a company veteran who will take over as chief executive from Muhtar Kent next week, said the Atlanta-based company will cut 1,200 jobs to run a "more focused, lean corporate center."

The reductions will come from a pool of about 5,500 employees globally who work in or report to headquarters in Atlanta, a Coke spokesman said.

In 2015, Coca-Cola had announced it was cutting at least 1,600 white-collar jobs globally as part of $3 billion of cost cutting by 2019. The latest job cuts are part of an effort to expand that program by $800 million.

The company employed more than 100,000 people world-wide as of Dec. 31, including 51,000 in the U.S., though its global workforce has declined in recent years as the company divests many of its bottling operations. Five years ago, Coca-Cola employed 150,900 people around the world.

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.

Coke's beverage volumes were even in the first 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%.

Mr. Kent said the company remains on track to meet its revenue and profit targets for the year.

The beverage giant has been aiming to cut sugar from its products and diversify beyond soda as more countries weigh special taxes on high-calorie drinks to combat rising obesity and diabetes.

On Tuesday, Mr. Quincey said the company is adjusting its growth model to meet people's changing tastes and preferences.

"These portfolio changes will help our consumers moderate the amount of added sugar they consume," he said.

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.

Coca-Cola shares were little changed in Tuesday trading, up 3 cents to $43.31.

Write to Jennifer Maloney at [e-mail] and Anne Steele at [e-mail]

(END) Dow Jones Newswires

April 25, 2017 10:50 ET (14:50 GMT)

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