Coca-Cola’s flat sales vol­ume re­flected in Q2 re­sults

The Hamilton Spectator - - BUSINESS -

AT­LANTA — Coca-Cola’s profit tum­bled in the sec­ond quar­ter, ham­pered in part by charges re­lated to the re­fran­chis­ing of its North Amer­i­can busi­ness. But ad­justed re­sults still topped most ex­pec­ta­tions as higher pric­ing off­set flat sales vol­ume from a year ago.

The world’s big­gest bev­er­age maker is try­ing to di­ver­sify un­der new CEO James Quincey to bet­ter re­flect chang­ing tastes and the pro­lif­er­a­tion of op­tions in the bev­er­age aisle. Quincey has said that Coke has out­grown its core soda drinks, and needs to be­come a “to­tal bev­er­age com­pany.” On Wed­nes­day, Quincey noted the com­pany is in a pe­riod of “sub­stan­tial trans­for­ma­tion and change that is never easy.”

Coca-Cola’s ef­forts to adapt have in­cluded mar­ket­ing drinks that are seen as health­ier, and pledg­ing to re­duce its “su­gar foot­print.” It’s also cut­ting costs and re­fran­chis­ing bot­tling and dis­tri­bu­tion op­er­a­tions in North Amer­ica, a move that fo­cuses the com­pany more squarely on mar­ket­ing and brand build­ing.

In North Amer­ica, the com­pany said sales vol­ume was even dur­ing the quar­ter, re­flect­ing “slightly pos­i­tive” growth in car­bon­ated drinks such as Sprite and growth in juice and dairy. Vol­ume for water, en­hanced water and sports drinks de­clined, the com­pany said.

For the three months ended June 30, Coke earned $1.37 bil­lion, or 32 cents per share. That com­pares with $3.45 bil­lion, or 79 cents per share, a year ear­lier.

Earn­ings, ad­justed for one-time costs, were 59 cents per share. That’s bet­ter than the 57 cents per share an­a­lysts sur­veyed by Zacks In­vest­ment Re­search called for.

Rev­enue for the At­lanta com­pany de­clined to $9.7 bil­lion from $11.54 bil­lion, hurt by the on­go­ing re­fran­chis­ing of bot­tling ter­ri­to­ries and for­eign cur­rency fluc­tu­a­tions. An­a­lysts ex­pected $9.71 bil­lion in rev­enue, ac­cord­ing to Zacks.

Coca-Cola an­tic­i­pates full-year earn­ings per share will be flat to down 2 per cent from the prior year’s $1.91 per share. Its pre­vi­ous out­look was for the re­sults to be down 1 per cent to 3 per cent.

The com­pany, mean­while, says Coke Zero is get­ting re­vamped as Coke Zero Su­gar.

The new name is in­tended to make clearer that the drink has no calo­ries, and a new recipe is in­tended to make the drink taste more like reg­u­lar Coke. Coca-Cola isn’t spec­i­fy­ing what it’s chang­ing, but says the drink will use the same ar­ti­fi­cial sweet­en­ers.

The com­pany says the new cans and bot­tles, which will in­cor­po­rate more red like reg­u­lar Coke, will start hit­ting shelves in Au­gust.

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