Coke, Weighed by Latin America Weakness, Deepens Its Cost Cuts
April 25 2017 - 7:23AM
Dow Jones News
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 Anne.Steele@wsj.com
(END) Dow Jones Newswires
April 25, 2017 08:08 ET (12:08 GMT)
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