Coke profit up despite more soda slippage

Trend toward mini-cans has helped Atlanta company.

North American sales volume for regular Coke fell again in the second quarter, but Coca-Cola CEO Muhtar Kent says there is a good explanation.

The trend toward mini-cans is helping the Atlanta-based beverage giant grow profits because of their higher price per ounce, Kent said Wednesday during an earnings call with media. But their diminutive size hurts overall volume figures.

“It generates more revenue for us ... but you will have a volume shift,” he said.

Coke shares fell more than 3 percent on Wednesday’s quarterly report before recovering a bit late in the session.

The company posted an overall revenue decline of 5 percent, to $11.54 billion. Coke leaders cited softening business and currency issues in international and emerging markets, including China, Venezuela and Brazil.

Profit, however, rose 11 percent to 79 cents per share.

Coke lowered organic revenue growth expectations — which exclude currency swings and other factors — to 3 percent for the rest of the year, down from 4 percent to 5 percent, on assumptions that its international challenges will continue.

Wells Fargo Securities analyst Bonnie Herzog said in notes that overall Coke had a solid second quarter, despite flat volume growth.

“While we are disappointed with the outlook, we continue to believe that the outlook for FY17 and beyond will improve with (Coca-Cola’s) revised business model once refranchising is complete,” Herzog said.

Revenue in North America, grew 2 percent in the quarter. Volume for carbonated beverages slipped 1 percent.

Coke’s carbonated business has struggled as North American consumers increasingly switch to teas, water and energy drinks. Volume for “still” drinks, which includes waters, juices and tea, was up 3 percent in the quarter while positive volume for Sprite and Fanta— which can also be found in mini-cans — were pulled down by regular Coke’s underperformance.

Kent insisted that revenue from carbonated drinks is still growing at home and abroad.

“It still a healthy category, very profitable,”