Coca-Cola Sales Trail Analysts’ Estimates on Declines Abroadby
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 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.”