Coca-Cola profit flat as global sales fizzle
Soft drink maker falls short of forecasts, but sees growth in non-carbonated beverages
ATLANTA— Coca-Cola Co. reported disappointing sales for the second quarter on Wednesday and cut its outlook as global volume remained flat from a year ago.
The world’s biggest soda maker said it faced “challenging macroeconomic conditions” and “difficult external conditions” in many emerging and developing markets, including China and Argentina.
For the three months ended July 1, it said it sold more non-carbonated drinks globally, but less soda. The last time Coke’s quarterly global soda volume fell was in early 2014.
The company’s president, James Quincey, said earlier this year that its soda volume has been pressured by economic conditions in emerging markets, where sodas tend to account for a higher portion of sales.
Soda has been losing favour in more saturated markets including the U.S. for years. In North America, CocaCola said soda volume declined 1 per cent for the period, while non-carbonated drinks rose 3 per cent.
Although soda remains the flagship beverage for Coca-Cola and rival PepsiCo Inc., the companies say they are diversifying and focusing on categories with more growth potential. To offset the declines in soda volume, they’re also marketing the drinks as more premium, whether it’s by putting them in mini-cans or glass bottles, or using real sugar instead of high-fructose corn syrup.
Coca-Cola’s total revenue for the quarter fell 5 per cent to $11.54 billion (U.S.), missing the $11.69 billion analysts expected.
After stripping out the impact of currency fluctuations and acquisitions and divestitures, the company said pricing helped lift “organic” revenue 3 per cent.
The company now expects organic sales for the year to climb 3 per cent, compared with its previous forecast for growth of 4 to 5 per cent. The Atlanta-based company earned $3.45 billion, or 79 cents per share. Earnings, adjusted for nonrecurring gains, were 60 cents per share. That was more than the 58 cents per share analysts expected, according to Zacks Investment Research.
Coke shares have climbed 4.5 per cent since the beginning of the year, while the Standard & Poor’s 500 index has increased 6 per cent. The stock has climbed 11 per cent in the past 12 months.