July 23, 2015
Sugaronline | http://goo.gl/eKtlgJ
Coca-Cola Co. said Wednesday that results held up better than expected in its second quarter despite the impact of a strong dollar, as the soda giant logged broad volume growth for beverages from Sprite soda to ready-to-drink tea, according to Dow Jones.
Shares of Coke, flat over the past year, added 9 cents to US$41.28 in morning trading.
The maker of Sprite soda and Dasani water, along with its namesake cola, has been hurt by recent foreign-exchange fluctuations.
It also has been struggling with tepid volume growth as consumers scale back on soda. Coke has worked to offset the decline by raising prices, especially in the U.S., where the company also is pushing smaller packages like 7.5-ounce "mini cans'" that cost consumers more on a per-ounce basis.
In the latest quarter, Coke said world-wide soda volumes grew 1%, led by 1% growth for the Coca-Cola brand, 6% growth for Coca-Cola Zero and 3% growth for Sprite. Diet Coke posted a 7% decline.
Coke noted on its conference call that flagship brand volume in China rose by a double-digit percentage, as did mini-can volume in the U.S.
Overall beverage volume grew 5%, driven by ready-to-drink tea and packaged water growth.
Coke Chief Executive Muhtar Kent said on the call that the global economy "remains uneven" and that emerging markets are "challenged." He added that the company remains focused on bolt-on acquisitions, rather than large purchases.
For the period ended July 3, the company posted earnings of US$3.11 billion, or 71 cents a share, up from US$2.6 billion, or 58 cents a share, a year earlier. Coke said foreign currency hurt per-share earnings by 6 percentage points in the quarter.
The quarter's bottom line was boosted by a gain on its deal with Monster Beverage Corp. Excluding special items, per-share earnings were 63 cents.
Revenue fell 3.3% to US$12.2 billion. Organic revenue, which strips out foreign currency impacts, grew 4.
Analysts surveyed by Thomson Reuters had projected 60 cents a share in earnings and US$12.1 billion in revenue.
Gross margin contracted to 60.9% from 61.7% a year earlier, even as input costs edged down 1.5%. Coke has been working through a US$3 billion cost-cutting plan announced last October to redirect savings from layoffs and zero-base budgeting to more marketing.
Coke also trimmed the top end of its 2015 share repurchase plan to a range of US$2 billion to US$2.5 billion, compared with its previous guidance for US$2 billion to US$3 billion in buybacks.