Coca-Cola Sales Trail Analysts’ Estimates on Declines Abroad

  • Beverage company lowers its forecast for sales this year
  • Sodamakers are grappling with long-term decline in consumption

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

Sales dropped 5.1 percent 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 percent.

“It obviously was a tough quarter,” said Nik Modi, an analyst at RBC Capital Markets. “Most of the multinational companies are actually missing their revenue expectations.”

Shares of Coca-Cola fell as much as 3.9 percent to $43.13 in New York, the biggest intraday decline in three months. The stock had been up 4.5 percent this year through Tuesday.

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 percent this year, compared with an earlier forecast for a gain of 4 percent to 5 percent, the company said.

Earnings Forecast

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.

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.

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.

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.

“Are we transforming our portfolio? Yes,” Kent said. “That’s what really the future is all about for us.”

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE