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Coca-Cola Sales Trail Analysts’ Estimates on Declines Abroad

Published on Jul 27 2016 2:26 PM in Drinks tagged: Coca-Cola / PepsiCo / Soft Drinks

Coca-Cola Sales Trail Analysts’ Estimates on Declines Abroad

Coca-Cola, the world’s largest soft-drink company, posted second-quarter sales that missed analysts’ estimates as falling revenue abroad outweighed modest gains in the US.

Sales dropped 5.1 per cent to $11.5 billion, the Atlanta-based company said in a statement on Wednesday. Analysts projected $11.6 billion, on average. Earnings were 60 cents a share, beating analysts’ 58-cent average estimate.

Chief Executive Officer  Muhtar Kent has introduced new package sizes and started a $3 billion cost-cutting initiative to boost profit, but those efforts were outweighed by slowing international revenue. Second-quarter sales slipped in all of Coca-Cola’s regional units except for North America, where they gained 2.2 per cent.

The company trimmed its forecast for so-called organic revenue. The figure, which excludes the effects of acquisitions, divestitures and currency-exchange rates, will grow about 3 per cent this year, compared with an earlier forecast for a gain of 4 per cent to 5 per cent, the company said.

Earnings per share will fall 4 percent to 7 percent this year, excluding some items, the company said. That equates to profit of $1.86 to $1.92 a share. Analysts estimated $1.94, which would be a 3 percent drop.

Long-Term Decline

Coca-Cola, PepsiCo Inc. and Dr Pepper Snapple Group have faced declining sales volumes as consumers turn to healthier alternatives. Carbonated soft-drink sales slid in the 12-week period ended June 5, according to Pablo Zuanic, an analyst at Susquehanna Financial Group who cited IRI data. Per-capita soda consumption in the U.S. fell to a three-decade low in 2015, according to data from Beverage Digest, a trade publication.

Coca-Cola said Wednesday that global sales volume was little changed in the second quarter. Pricing and sales mix improved by about 3 percent.

To combat the long-term decline in soda consumption, Coca-Cola has broadened its portfolio of products. The company took a stake in L.A. Aloe LLC, an aloe water-maker, last month. It also invested in Suja Life LLC, an organic-juice maker, in August, with an option to buy the balance of the company after three years. Coca-Cola previously bought a stake in energy-drink maker Monster Beverage Corp. and Keurig Green Mountain Inc.

Some municipal governments are turning against soda, too. Last month, Philadelphia became the first major U.S. city to pass a tax on diet and sugar-added beverages.

News by Bloomberg, edited by Hospitality Ireland

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