Coca-Cola’s health kick fails to offset daunting challenges overseas

COCA- Cola Co.’s bid to offer lower- calorie drinks and healthier options has yet to fix its daunting challenges overseas.

Pushing more wholesome beverages, water and smaller cans, especially at home in the US, lets the company woo consumers and generate higher profit margins. But currency fluctuations, sluggish international economies and pressure on its core soda business continue to cloud CocaCola’s future.

Earnings may decline as much as four per cent in the coming year, hurt in part by a sweeping overhaul of its operations, CocaCola said last Thursday. In a plan underway for years, the beverage giant is offloading large swaths of its company- owned bottling operations. Coca- Cola is on track to complete spinoffs of all its US bottling in 2017.

The company, which sells products in more than 200 countries, also is dealing with especially strong headwinds in emerging markets such as Latin America. Coca- Cola is facing “persistent macro- economic pressures in our emerging and developing markets,” Chief Executive Officer Muhtar Kent said in a statement. The results underwhelmed investors, who sent the shares down as much as 2.9 per cent to US$ 40.81 ( RM184) in New York trading, the biggest intraday decline in three months. The stock fell 3.5 per cent last year, hampered by the company’s difficult outlook.

The Atlanta-based company reported a two per cent decline in sparkling-beverage volume during the fourth quarter. Its still- drink category – a proxy for some of its more healthful options – rose two per cent, but that remains a smaller piece of the business. Earnings amounted to 37 cents a share in the period, matching analysts’ estimates.

In North America, the picture was brighter: Smaller package sizes helped revive soft drinks sales in the fourth quarter and stem volume declines for the year. — WP-Bloomberg